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Sat 8 Aug 2015 09:57 AM

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Dubai, Abu Dhabi hotels suffer occupancy, rates slump in June

Hotstats survey reveals extent of summer slowdown, Ramadan as occupancy in both cities falls significantly

Dubai, Abu Dhabi hotels suffer occupancy, rates slump in June
(AFP/Getty Images)

Four and five star hotels in Dubai suffered the effects of falling demand in June with occupancy levels falling 9 percent to 68.4 percent, according to a new report.

Figures from hospitality data firm Hotstats showed that average room rates (ARR) fell by 2.1 percent to $206.35 during the month, with revenue per available room (RevPAR) decreasing 13.4 percent to $141.22.

Hotels in the city also witnessed a significant drop in food and beverage revenues owing to the low demand during Ramadan, which subsequently led to a 16.1 percent drop in total revenue per available room (TRevPAR), the report said.

As a result of falling revenue levels, hotel profits were impacted with gross operating profit per available room (GOPPAR) plummeting 36.4 percent to $62.49.

The hotel market in Abu Dhabi was impacted by the traditional summer slowdown and compounded by the onset of Ramadan, which lead to negative performance metrics for the month.

An 8.8 percent increase in payroll costs increased overall operating expenditures and further compounded the reduction in hotel profit margins.

Hotels in the UAE capital saw a dramatic decline in profitability in June, with a 96.5 percent drop in GOPPAR to $1.11.

The reduction in profit levels was characterised by a 10.5 percent decrease in occupancy and ARR falling 2.3 percent, leading to a 16.8 percent reduction in RevPAR to $71.43.

According to the report, the performance of hotels in Riyadh was negatively affected by a 6.1 percent reduction in occupancy to 59.1 percent as a direct result of a substantial decrease in demand.

A marginal drop in ARR by 0.2 percent resulted in RevPAR declining 9.5 percent. However hotels were able to offset the decline in room revenue with strong food and beverage demand which resulted in a 2.2 percent rise in TRevPAR to $249.09 when compared to the same period last year.

Increased operational expenses and payroll costs eroded profit margins with GOPPAR experiencing a 7.3 percent decline to$96.98.

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