Average Abu Dhabi hotel rates slump 10% so far in 2016

New report says occupancy rates in UAE capital fall 2.3% in the year to August while RevPAR plummets 12%
Average Abu Dhabi hotel rates slump 10% so far in 2016
By Staff writer
Sat 22 Oct 2016 01:57 AM

Abu Dhabi’s hotel performance remained under pressure over the first eight months of the year with double-digit room rate declines, according to a new report.

JLL's Q3 Abu Dhabi Real Estate Market Overview showed that average daily rates (ADR) fell by 10 percent in the year to August when compared to the same period last year.

City wide ADRs stood at $121 in same period while overall occupancy rates were calculated at 70 percent, down 2.3 percent on the same time last year.

JLL said that as a result, revenue per available room (RevPAR) lost 12 percent to reach $85 over the first eight months of the year.

David Dudley, international director and head of Abu Dhabi Office at JLL MENA, said: “The general trend for Abu Dhabi’s hospitality market has been positive growth of tourism demand being offset by a decline in corporate demand and new supply completions. In balance this has resulted in a slight increase in demand reducing pressure on occupancy rates but a decline in average room rates.”

The report highlighted increased supply with two new hotel openings adding more than 400 rooms to the market this quarter – the Marriott Downtown Abu Dhabi at Bloom Central and Gloria Downtown Hotel.

The serviced apartments sector also witnessed the delivery of the Marriott Executive Apartments at Bloom Central. A further 1,500 rooms are expected in the capital by the end of the year from three large hotel openings - Grand Hyatt Hotel and Residence Emirates Pearl, Millennium Bab Al Qasr and the Marriott Al Forsan.

JLL said hotel occupancies in Abu Dhabi have remained largely stable at 70 percent this quarter, adding that the hospitality industry’s diversification towards leisure tourism continues to gain traction and has reduced pressure on occupancy rates.

Dudley added: “The medium term hospitality market outlook remains highly positive due to wide-ranging government initiatives including the expansion of Abu Dhabi International Airport and Etihad Airways, further improvement of Abu Dhabi’s leisure offering, the hosting of world-class events and major campaigns by Abu Dhabi Tourism & Culture Authority to promote Abu Dhabi internationally.”

The report also said no major completions took place during Q3 in Abu Dhabi's retail market, with total retail stock remaining at approximately 2.6 million sq m. Approximately 51,000 sq m of retail space is expected to be delivered by the end of 2016, primarily within mixed-use schemes.

However, JLL added that supply is expected to increase drastically by 2018 with the delivery of Al Maryah Central Mall and Reem Mall among others.

Average line store rents within well-located malls on Abu Dhabi Island remained stable at AED3,000 per sq m per year.

Dudley said: “While real estate rentals are largely declining, retail rents have actually remained stable this quarter and there are minimal mall vacancies. To keep down vacancies, we’ve seen mall operators continuing to offer incentives to attract retailers but the reduction in consumer retail spending has continued throughout this quarter.

“The government’s continued investment in Abu Dhabi’s leisure tourism offering is expected to boost retail spending in the long run with increased numbers of tourists but in the short term a reduction in corporate hospitality is still affecting retail spend.”

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