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Sun 4 Aug 2013 02:40 PM

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Dubai, Abu Dhabi hotels post strong growth in H1

Dubai occupancy tops 86% while demand in Abu Dhabi grows by 13% - TRI Hospitality survey

Dubai, Abu Dhabi hotels post strong growth in H1
(AFP/Getty Images)

Dubai hotels recorded occupancy rates of 86 percent in the first half of 2013 while demand for Abu Dhabi hotels grew 13.4 percent, according to the latest HotStats survey by TRI Hospitality Consulting.

Hotels in Dubai saw rate-driven profitability growth in June while demand continued to increase in Abu Dhabi, the survey showed.

Abu Dhabi hotels continued to attract an increasing number of visitors in June with hotels recording a 9.7 percent growth in occupancy during the month.

Although demand increased, average room rates (ARR) declined 7.7 percent to $115.12. However it was not enough to prevent an 8.3 percent rise in revenue per available room (RevPAR), the survey said.

Peter Goddard, managing director of TRI Hospitality Consulting in Dubai, said: "Abu Dhabi is continuing to see an increase in visitor demand. The growth in demand is attributed to a 25 percent increase in visitors to the capital and a 12.6 percent rise in passengers through Abu Dhabi International Airport during the first half of the year.

"Although the market continues to rebound and strengthen, hoteliers continue to face considerable challenges in reversing declining average rates in the response to a substantial increase in supply."

The survey said Dubai's hotel market continued to dominate regionalperformance in June, as occupancy increased by 3.6 percent to 79.2 percent, ARR rose 6.2 percent to $207.49, and RevPAR increased 11.2 percent to $164.22.

"Dubai's hotel market continues to grow from strength to strength with a 3.5 percent growth in occupancy levels to an impressive 86 percent for the first half of the year.

"The high levels of demand continue to be driven by the strong economic activity within the city, coupled with its attractiveness as an all-round leisure destination.

"Furthermore, high attendance levels at large annual events and festivals have also contributed to this growth and assisted in boosting occupancy during certain periods of the year," added Goddard.

Elsewhere, corporate demand was the driving factor behind Kuwait's hotel performance so far in 2013, the survey said.

In June, Kuwait achieved a 10.7 percent growth in RevPAR performance to $147.84 driven by a 5.6 percent increase in occupancy.

The survey showed Kuwait's hotel market has shown resilience in the first half of the year with occupancy levels and ARR improving by 4.7 percent and 1.7 percent respectively, boosting RevPAR by 10.3 percent to $159.98.

Riyadh's hotel market maintained performance levels in June compared to the same period last year, albeit with a slight reduction of 0.7 percent in ARR to $223.67.

For the first six months of 2013, the market witnessed a 1.3 percent increase in occupancy to 68.4 percent, but average rates fell by 2.1 percent to $242.75.

Hotels in Jeddah recorded 85.4 percent occupancy in June, similar to the same period last year, but ARR rose by 16.1 percent to $263.11, the second highest in the region.

This growth saw total revenues and profitability increase by 11.7 percent and 17.1 percent respectively during the month.

"Saudi Arabia's two main hotel markets recorded opposite trends in the first half of the year with Riyadh experiencing a reduction in average rate and profits while Jeddah continues to strengthen," said Goddard.

"Although, Riyadh is currently facing a situation of declining rates, this is only expected to continue in the short term as the market adjusts to the sharp increase in supply.

"Jeddah has been able to capitalise on strong demand by increasing average rates during peak periods, resulting in an increase in RevPAR by 12.1 percent. We expect this to continue for the remainder of 2013."