Hotels in Dubai saw a boost in profits in June while Abu Dhabi continued to see rates and profits fall, according to the latest HotStats survey of hotels by TRI Hospitality Consulting.
Average room rates (ARR) in Abu Dhabi fell 8.5 percent to $115.68 in June resulting in a reduction in gross operating profit per available room (GOPPAR) by 12.6 percent to $53.76.
According to TRI Hospitality, the reduction in ARR was a direct consequence of the increased competition in the UAE capital.
When coupled with an increase in payroll by 2.7 percent, it resulted in a "sizable impact on overall hotel profitability", it added in a statement.
The modest increase in occupancy levels was the only positive indicator during June and was attributed to the increase in tourists visiting the city.
Dubai hotels continued their strong performance for 2012 in June with a 9.2 percent increase in ARR to $191.24, resulting in a 10.3 percent increase in RevPAR to $147.55.
Occupancy levels remained stable with a 0.7 percent increase over the same period last year.
Dubai hotels also saw a 50.4 percent increase in GOPPAR to $86.26, driven by an 8.3 percent increase in total revenue per available room (TRevPAR) and a one percent reduction in payroll expenses.
Peter Goddard, managing director of TRI Hospitality Consulting, said: "Abu Dhabi hotels are yet to show any indication of a stabilisation in ARR this year, although occupancy levels have started to plateau."
He said new entrants continue to undercut rates in order to penetrate the market in Abu Dhabi with more than 20 new hotels set to open over the next three years.
Goddard added: "Our HotStats data for Dubai hotels in June highlights the strength of the overall market, particularly the hotels' ability to command a substantial increase in ARR on the back of strong demand.
"We believe Dubai performance levels will remain strong until early part of 2013 when we expect the market to witness a considerable addition to supply."
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