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Fri 1 Nov 2013 11:11 AM

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Dubai hotel rates rise amid strong demand in Sept

Luxury hotels increase average rates by 8.5% as occupancy remains strong at 76% - report

Dubai hotel rates rise amid strong demand in Sept

Dubai hotels performed strongly in September with four and five star hotels posting growth in all key indicators, according to the latest HotStats MENA Chain Hotels Market Review.

The report said Dubai's luxury hospitality sector witnessed an 8.5 percent growth in average rates to $235.34 while occupancy rates rose by 3.1 percent to 76 percent.

These figures drove a 13.1 percent increase in revenue per available room (RevPAR) to $178.84, the report published by TRI Hospitality Consulting said.

Dubai also saw marginal increases in food and beverage revenues which solidified a 10.3 percent growth in total revenue per available room (TRevPAR) to $338.88.

The growth in top line performance resulted in significant increases in bottom line results with gross operating profit per available room (GOPPAR) increasing 13.7 percent to $98.

Peter Goddard, managing director of TRI Hospitality Consulting in Dubai, said: "Dubai's strong performance in 2013 continued in September with hotels recording an increase in all key performance indicators.

Occupancy remained strong during the month at 76 percent, helping drive year to date figures to an impressive 79.5 percent.

"The strong demand has allowed hoteliers to be aggressive on average rates which rose 8.5 percent in September and with the high season almost upon us, we project the continuation of strong growth for the remainder of 2013."

Elsewhere in the Gulf's tourism sector, Doha hotels recorded mix results in September with ARR and Occupancy experiencing lower performance levels compared to the same period last year.

ARR was down 0.3 percent to $229.49 and continues the trend in 2013 in which rates have fallen 2.1 percent compared to 2012. Occupancy fell 1.1 percent in September to 61.7 percent.

The fall in top line performance resulted in RevPAR falling 2.1 percent.

Goddard added: "In the past two years Doha has witnessed a sudden influx of new hotels entering the market which put immense pressure on the performance of existing hotels, especially average rate.

"The results for 2013 indicate that the market is starting to show signs of recovery in occupancy levels which is attributed to a growing leisure market and continued economic strength of the city. However due to the markets heavy reliance on corporate demand, average rates continue to decline as new hotels penetrate the market with attractive offers, forcing existing hotels to compete on price."

Riyadh hotels witnessed a marginal decrease in room performance in September with occupancy and ARR falling 0.4 percent and 0.8 percent respectively to 61.3 percent and $240.80.

This saw RevPAR performance drop 1.4 percent to $147.60.

The Riyadh market continues to experience intensive competition in 2013 as a wave of new hotels enter the city, especially in the midmarket segment.

This has put pressure on occupancy and average rate as new supply outweighs demand and new hotels launch aggressive sales and marketing campaigns in order to establish a position in the market, Goddard said.

"With a strong future supply pipeline in the Saudi capital, the market is expected to witness a further pressure on performance levels as new hotels penetrate the market with discounted rates," he added.

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