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Mon 4 May 2009 07:13 AM

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Abu Dhabi hotel rates buck global Q1 downturn

But Jones Lang Lasalle predicts hotel room revenues in the UAE will fall 22% in 2009.

The price of booking a hotel room in the UAE capital rose in the first quarter as the Abu Dhabi hospitality market bucked a negative regional trend.

RevPAR in the city grew 16.8 percent in the quarter, driven by average room rate growth of 24.3 percent, according to a report by Deloitte.

Middle East RevPAR dropped 12.9 percent to $142 in the same period, as occupancy levels declined 9 percent.

The same measure grew 157.6 percent in Beirut to $110, making it the strongest performer in the region.

Dubai dragged on the regional average as RevPAR plunged 36 percent to $203 amid slowing tourism and increased supply.

“There are several factors that will help ensure a brighter, long term future for the Middle East including its geographical position, mix of source markets, growing importance as an aviation hub and the size of investments in the region,” said Rob O'Hanlon, tourism, hotel and leisure partner at Deloitte Middle East

“In the meantime, it will be a fine balance between maintaining the standards of quality travellers expect in the Middle East, but at a lower cost; offering greater value while maintaining profitability.”

Abu Dhabi’s performance was helped by modest supply and its focus on business travellers.

In Dubai, overall hotel occupancy is down to 73 percent from 85 percent in the same period last year, but luxury hotels have seen a slide of closer to 30 percent.

That is because the majority of their customers are from the leisure segment of the market, said Arnaud Andrieu, vice president at CBRE Hotels Middle East.

“The bottom has not been reached yet but we are very close to it, and I see it at the end of 2009,” he said.

Jones Lang LaSalle (JLL) believes RevPAR in the UAE will fall by around 22 percent this year on a 28 percent rise in supply.

By contrast, it sees a RevPAR surge of 61 percent in Lebanon, where supply growth will be in lower, single digits.

RevPar has grown annually by as much as 20 percent in some Middle Eastern markets over the last nine years.

“This extended period of strong growth has resulted in levels of performance that are unsustainable in the long term. Room rates in some markets have reached levels that have become uncompetitive relative to more mature hotel markets overseas,” JLL said in a report last week.

But despite a forecast correction in RevPAR in 2009, hotel markets across MENA are still expected to achieve some of the world’s highest levels of gross operating profit this year, it added.

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