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.
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