Dubai hotel room rates record steepest drop in four years

Strong dollar, weak Euro hits demand and squashes food and drink revenues, says latest Hotstats data
Dubai hotel room rates record steepest drop in four years
By Sarah Townsend
Sun 31 May 2015 11:52 AM

Hotel room rates in Dubai fell by almost 13 percent in April, the biggest drop in four years, new analysis has revealed.

Figures from hospitality data firm Hotstats showed that room rates across four- and five-star hotels in Dubai fell by 12.8 percent in April, to $373.78.

As the weak Euro and strong US dollar took its toll on the industry, hotels were forced to reduce room rates in order to maintain occupancy levels at 84.9 percent.

Unfortunately this had a significant impact on hotels’ overall profitability, which fell by 19.5 percent in April compared to the same period last year, Hotstats said.

Food and beverage revenues were also affected, falling by 19.8% and 26.7% respectively and resulting in a 15.7% decline in total revenue per available room (RevPAR).

And higher operating expenses compounded the lower overall revenues, forcing gross operating profit per available room down by 19.5 percent to $273.13, according to the Hotstats data.

Hotstats’ March data saw average room rates for four- and five-star hotels in Dubai fall by 5.5 percent to $380.85 – attributed to an increase in new supply and a drop in visitors from Russia.

In a report earlier this month PWC pointed out that the UAE needs to build more midscale hotels to maintain the growth of its hospitality sector.

PWC said most mature markets have a “pyramid” distribution of properties, with the majority of rooms in the economy or budget segment, and only a few at the ultra-premium end but in the Middle East, this pattern is inverted.

PWC partner Philip Shepherd said: “Future growth, for Dubai and Abu Dhabi alike, may depend on achieving a better balance of four star, family and economy hotels.”

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