Dubai hotel rates close to AED1,000 in Q1

STR Global data shows mixed fortunes for hotels across the Gulf region in first quarter
Dubai hotel rates close to AED1,000 in Q1
The Burj Al Arab, one of Dubais most iconic hotels.
By Andy Sambidge
Sun 29 Apr 2012 07:28 PM

Dubai hotels saw an average occupancy rate rise of 8.2 percent in the first quarter of 2012, boosting average daily rates (ADR) to nearly AED1,000, new figures have showed.

The emirate's ADR reached AED964.86 in Q1, an increase of nearly nine percent on the same period last year while revenue per available room (RevPAR) increase by 17.6 percent on the back of 86.6 percent occupancy rates, STR Global data said.

It showed that Dubai and Abu Dhabi benefited from a fairly similar demand growth, with Dubai growing by 11 percent and Abu Dhabi by 9.7 percent in Q1.

However, considering the supply growth since 2011, the impact on RevPAR performance has been quite different.

In Abu Dhabi since December 2011, the city has seen double-digit supply growth, reaching 16.7 percent in Q1 2012.

The additional room inventory resulted in declining occupancy by 6.0 percent to 64.1 percent. Abu Dhabi’s ADR during the first quarter of the year was AED633.85, a decrease of 11.7 percent compared to the previous year.

STR Global data showed that the major markets across the GCC reported mixed results in RevPAR following mostly positive performance for year-end 2011.

Jeddah and Al Khobar in Saudi Arabia both experienced continued RevPAR improvements during the first quarter of 2012.

Excluding Makkah and Madinah, Jeddah was the star performer in RevPAR growth for the first quarter, STR Global said, adding that the city benefited from demand growth (up 17.3 percent) and a temporary reduction of available rooms as the Westin Jeddah closed for refurbishment between October 2011 and summer 2012.

Al Khobar saw RevPAR in Q1 2012 increase to SR414.16 (up 18 percent), led by occupancy reaching 57.3 percent (up 13.4 percent) compared to the previous year.

Elsewhere in Saudi Arabia, Riyadh’s supply growth (up 11.5 percent) in Q1 2012 outpaced demand (up 3.1 percent). This resulted in an occupancy decline of 7.5 percent to 63.2 percent.

“The majority of markets across the GCC have weathered the recent storms fairly well”, said Elizabeth Randall, managing director of STR Global.

“We have seen demand growth for most markets in the region, highlighting the stronger underlying fundaments of stability and attractiveness to regional and international visitors.

"Increasing room inventory has been a dominant factor influencing performance in the past and will continue to do so as the region remains attractive for hotel owners and operators. Dubai and Abu Dhabi are interesting case studies to show how hotel markets can cope with balancing demand and supply."

In Doha, occupancy declined by 10.5 percent to 63.6 percent in Q1, led by double-digit supply growth (up 17.4 percent), which outpaced demand growth of 5.1 percent.

The competitive environment has led ADR to decline to QR827.8 (down 4.5 percent) in Q1 compared to the previous year.

Manama continued to see RevPAR performance declining to BD35.87 (down 9.0 percent) in Q1 2012, compared to the previous year.

While March 2012 saw an increase in occupancy (up 112.1 percent), the increase was from a low occupancy base in March 2011 of 21.2 percent. Demand for the destination improved 1.1 percent for the first quarter this year.

Kuwait saw occupancy reaching 57.3 percent (down 6.6 percent) in the first quarter. During the same period, ADR declined by 1.9 percent to KD63.00. Kuwait was the only market reporting a demand decline (down 5.0 percent) for the first quarter.

Whilst ADR declined by 7.3 percent to OR94.98 in Muscat, the city’s hotels saw occupancy reach 67.3 percent (up 3.5 percent) resulting from increased demand (up 8 percent) for the first quarter of 2012.

Muscat’s demand increase outweighed its supply increase of 4.3 percent.

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