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Wed 4 May 2016 02:25 PM

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Dubai hotels to face further pressure on rates, revenue in 2016

CBRE report says expanding supply, sustained US dollar strength, global economic uncertainty to check market growth

Dubai hotels to face further pressure on rates, revenue in 2016

Dubai’s tourism market continues to see downward pressure on occupancy, rates and room revenue amid expanding supply, sustained US dollar strength, and global economic uncertainty, according to real estate consultancy CBRE.

Its Q1 2016 Dubai MarketView report said deflation across all key performance indicators had been registered during the first quarter. 

However, it added that the emirate still remains one of the world’s top performing hospitality markets from the perspective of average daily rates (ADR).

Mat Green, head of Research & Consulting, CBRE Middle East, said: “The GCC comprised roughly one quarter of all visitors to the emirate, driven by strong growth from Dubai’s main source market, Saudi Arabia.

"The number of Saudi guests rose by close to 14 percent, with 476,000 overnight visitors recoded in the period January to March. Oman was identified as the second largest source market in the GCC with 322,000 visitors, which was 32 percent higher than the same period in 2015. This was then followed by Kuwait and Qatar.”

According to recent data published by STR Global, Dubai’s average occupancy rate fell by around 1 percent during the first three months of 2016 versus the same period last year, while ADRs dropped by around 10.1 percent. 

This culminated in an 11 percent dip in revenue per available room (RevPAR). However, Dubai remains one of the best performing markets in the GCC, with various markets in Saudi, Qatar and Oman actually experiencing more pronounced declines as a result of low prices and the negative impacts on the economy and corporate demand in particular. 

According to figures published DTCM, Dubai attracted around 4.1 million visitors during the quarter of 2016, which reflected a 5.1 percent increase over the same period last year. Growth was primarily driven by a solid increase in visitor numbers from the GCC and India.  

Outside of the GCC region, India remains the key source of visitors, with 467,000 guests recorded during Q1, equating to a 17 percent increase over 2015 performance. There was also strong growth from United Kingdom, with a 10 percent increase year-on-year against the arrival of 334,000 visitors.

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