Cheaper hotels said to offset slump in Dubai luxury sector in Q1

New report says mid-market sector has proven to be resilient amid falls in overall occupancy, RevPAR
Cheaper hotels said to offset slump in Dubai luxury sector in Q1
By Staff writer
Sat 11 Jul 2015 09:34 AM

The mid-market hotel sector has proven to be resilient in Dubai in the first quarter of 2015 amid declining performance in the luxury sector, according to a new report.

The Knight Frank report, cited by Hotelier Middle East, showed that negative performance overall in Dubai was largely attributable to global currency fluctuations and a declining Russian market.

In the first quarter of the year, occupancy in the city's hotels fell by 2.2 percent, while average daily rates fell by 5 percent to AED984 ($267.89) in annual terms.

This resulted in a 7 percent RevPAR drop, although the report said Dubai remains among the leading markets in the Middle East in terms of average rate and occupancy.

Demand for mid-market hotels is helping to support average occupancy levels, which are above market-wide averages, the report said.

The mid-market segment showed a year-on-year RevPAR increase of 0.5 percent during the first quarter, which was driven by an increase in average rate a time of declining performance for the luxury and upper upscale segments.

The increase in demand for mid-market hotels in Dubai has been driven by a growing middle class in key source markets such as the GCC, China, India and Africa, along with a younger guest profile, with limited disposable income, Knight Frank added.

The current push toward mid-market development will reinforce Dubai’s standing as an emergent hotel market through the provision of a more diverse product offering, it said.

The report said that as more internationally branded mid-scale hotels come to market, the next asset class to see raid growth in the medium term is likely to be the budget sector as the hotel market matures further.

A number of international hotel operators have ambitious mid-market pipelines for the Middle East region, including Hilton Worldwide, which last month signed an agreement with Wasl Hospitality and Leisure to open a further two mid-market properties in Dubai under its Hampton by Hilton and Hilton Garden Inn brands.

 

Click here to read more from our Hospitality Report 2015

 

 

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