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Sat 7 Sep 2013 11:25 AM

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Dubai hotel occupancy rate falls to two-year low

New report says both Dubai, Abu Dhabi see profits and revenues decline during July

Dubai hotel occupancy rate falls to two-year low
(AFP/Getty Images)

Hotels in Abu Dhabi and Dubai saw profitability and revenue decline during July, according to the latest HotStats survey of hotels in seven MENA cities by TRI Hospitality Consulting.

The impact of summer coupled with restrictions on sales and consumption of food and liquor imposed during Ramadan had noticeable impact on hotel performance in the UAE.

Occupancy levels in Dubai fell to their lowest in two years, according to the survey.

In the capital, average room rates (ARR) fell 4.7 percent to $105.82 and triggered negative growth in revenue per available room (RevPAR) of 3.8 percent.

The survey said tourism incentives offered by SummerFest Abu Dhabi helped to relieve the decline in occupancy typically seen during this period, as occupancy grew 0.5 percent to 50.1 percent.

Nonetheless, due to high operating costs, Abu Dhabi was the only market surveyed by HotStats to see negative profitability levels which fell from marginal levels last year.

Hotels in Dubai also suffered during July, with a 16.8 percent reduction in RevPAR and a 12.5 percent drop in occupancy to 54.6 percent, despite ARR rising 2.2 percent to $196.87.

Peter Goddard, managing director of TRI Hospitality Consulting Middle East in Dubai, said: "As expected, Dubai has seen performance reach the lowest point of the year in absolute terms.

"This naturally resulted from a lack of events, coupled with the fact that this month is traditionally characterised by low demand. As Ramadan moved earlier into July, occupancies reached the lowest level seen in two years.

"On the other hand, occupancy levels in Abu Dhabi grew 0.5 percent, amplified by the success of SummerFest Abu Dhabi which targeted GCC nationals and local residents." 

The survey also said Kuwait hotels saw RevPAR decline 2.2 percent to $101.02, driven by a fall in ARR of 3.8 percent to $236.15.

Hotels registered modest growth in occupancy of 0.7 percent to 42.8 percent.

Four and five star hotels in Jeddah continued to register strong growth, with performance in July exceeding year to date levels, the survey showed.

As a regionally renowned seaside destination, Jeddah benefitted from recurrent tourism during peak season coupled with being a stopover destination for pilgrims en route to the Holy Cities of Makkah and Madinah during the month of Ramadan.

Occupancy reached a robust 81.2 percent, and Jeddah was the only market surveyed by HotStats to see positive RevPAR growth, which increased 11.6 percent to $214.75, driven by a 15.3 percent growth in rates.

Conversely, a marginal increase in average rates of 0.9 percent in Riyadh was insufficient to negate the 4.2 percent decline in occupancy to 43.9 percent which drove RevPAR down 7.9 percent to $96.06.

Goddard added: "Occupancies in Jeddah have exceeded 80 percent for the third consecutive month, as the market continues to see strong demand from leisure tourists during peak season.

"Additionally, Jeddah generated additional demand from Umrah pilgrims stopping over on their way Makkah and Madinah during the holy month of Ramadan.

"Riyadh continues to struggle due to the lack of corporate activity that generally provides a demand base during high season. During the summer, the Royal Family and Government of Saudi Arabia relocate to Jeddah from Riyadh, resulting in negative occupancy growth that places heavy pressure on the bottom line."

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Rashid 6 years ago

Restaurants in hotels must be open during Ramadan. Dubai is an international city and a major tourists destination.