More rooms than visitors
Hotels struggle as market floods
Dubai hotels are struggling to fill rooms as supply is outstripped by demand from visitors, according to new research.
STR Global, the data research firm, said a 3.9 per cent increase in demand from guests was outmatched by a 6 per cent increase in the number of new hotel rooms.
The firm’s comparison of figures for October 2015 and October 2016 also found occupancy rates dropped by 2 per cent to 77 per cent – the lowest rate in that month since 2011.
“Even though demand is growing, it has not kept pace with supply,” an STR analyst told 7DAYS.
Revenues per available hotel room – known as Rev PAR – also slipped 12 per cent to Dhs598.09 ($162.83).
This means bad news for hoteliers but a boost for visitors.
“Dubai has been an extremely hot potato for so long that it’s not surprising to see that it’s cooled off after a while,” the STR analyst said.
“Though Dubai is not as oil dependent as other Middle Eastern key markets like Abu Dhabi, Doha and Manama, that has had a huge effect on the region and could have spilled over for Dubai. Dubai was one very expensive destina- tion, and if you want to keep attracting customers it has to come to the point where you find a balance, and this is what’s happening now. With the lower prices a different plethora of tourists are coming to Dubai.”
STR said occupancy rates would continue to drop while hotel rates could be expect to fall further.
STR said: “Overall occupancy is probably going to stay because demand continues to grow.
“It will come to a point where the drop in rate will probably not be sustainable anymore and there’ll be a return to growth, but when that will happen is impossible to say.”
Despite the current surplus, many hotel groups will be expanding in anticipation of Expo 2020, when 25 million visitors are expected over six months.
STR also noted: “The 70 per cent occupancy is quite high when you look at occupancy across the globe.”