Dubai hotels to claw back profits
Dubai hoteliers worked hard to claw back profit levels in by reducing costs despite a 6.8 per cent decline in 2016
dubai — Dubai hoteliers worked hard to claw back profit levels by reducing costs despite a 6.8 per cent profit decline in 2016, market data from HotStats suggests.
Hoteliers in Dubai have faced a number of issues that have negatively impacted top and bottom line performance in 2016, including significant additions to hotel supply, HotStats said in a market review.
The new supply included major projects such as the 1,004-bedroom Westin Al Habtoor City and 828-bedroom Atana Tecom, as well as a migration to three-star hotel products and economic challenges led by the drop in oil prices.
In the first half of 2016, hotels in Dubai were succumbing to these pressures, during which period profit per room fell by 13.2 per cent, which was primarily as a result of 11.3 per cent decline in RevPAR (revenue per available room).
However, by the fourth quarter of 2016, hotels in Dubai had begun to claw back profit through cost savings, illustrated by the 0.7 per cent increase in profit per room in the period from October to December 2016, which was achieved in spite of a 4.4 per cent decline in RevPAR.
For 2016 overall, although hotels in Dubai suffered a year-onyear profit decline of 6.8 per cent, they successfully reduced their cost base with savings in labour (+1.7 per cent) and overheads (+2.8 per cent).
In 2016, Dubai recorded a five per cent increase in room supply as the city crossed the 100,000mark, reaching a tally of 102,845 rooms, according to data released by Dubai Tourism.
“As Dubai celebrated the opening of numerous new luxury properties such as The St Regis Dubai, W Dubai and Westin at Al Habtoor City, Palazzo Versace Dubai and Jumeirah Al Naseem, there has been a marked focus on broadening the destination appeal to the family segment
There has been a marked focus on broadening the destination appeal to the family segment as well as the mid-market audiences
Dubai Tourism
as well as the mid-market audiences,” Dubai Tourism said in a statement.
“Reflective of the success of this agenda, 2016 saw a significant boost in the number of properties in the three and four-star range,” it said.
Three-star hotel room capacity grew by 24 per cent in 2016 while four-star capacity grew by eight per cent as several boutique new entrants such as the Rove Hotels have carved a niche positioning for themselves in the market.
Beyond accommodation, new additions to the destination portfolio include the opening of attractions such as IMG Worlds of Adventure, the world’s largest indoor theme park, and Dubai Parks and Resorts, the region’s largest integrated theme park resort.
Additionally, 2016 witnessed the opening of Dubai Opera, a world-class entertainment venue, hosting some of the most internationally acclaimed performances and productions, and City Walk, Dubai Tourism said.
— issacjohn@khaleejtimes.com