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Mon 4 May 2015 03:53 PM

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Dubai hotels feel the pinch as revenues and room rates fall

An increase in new supply coming into the market, combined with the drop in visitors from Russia are among the main factors attributed to the drop

Dubai hotels feel the pinch as revenues and room rates fall

Four and five
star hotels in Dubai saw average room rates (ARR) fall by 5.5 percent to
$380.85 in March, according to the latest data from HotStats.

An increase in new
supply coming into the market, combined with the drop in visitors from Russia
are among the main factors attributed to the drop.

Occupancy
levels remained stable during the month at 88.8 percent, however the reduction
in ARR had a flow-on effect on revenue per available room (RevPAR), which fell
by 4.8 percent to $338.25.

A reduction in
food and beverage revenues further reduced total revenue per available room
(TRevPAR) which dropped by 8.9 percent.

Although
operational expenses were marginally reduced, the lower overall revenues
resulted in gross operating profit per available room (GOPPAR) falling by 7.8
percent to $306.62.

Conversely,
hotels in neighbouring Abu Dhabi recorded a 6.5 percent growth in ARR to
$167.62 as the market capitalised on strong visitor demand, with hotels in the
emirate achieving an average occupancy level of 83.9 percent, an increase of
1.3 percentage points on the same period last year.

The strong rate
performance boosted RevPAR levels and offset a reduction in food and beverage
revenues, allowing TRevPAR to rise by 4.1 percent to $287.50. As a result of
stronger revenues, GOPPAR levels increased by 2.2 percent to $107.53.

While revenues
up were for Doha hotels, profits were down due to higher operational expenses,
according to the HotStats. The strengthening demand and higher ARR’s in four
and five star hotels in Doha drove a 6.6 percent rise in RevPAR to $185.95 in
March.

Doha’s
increased attraction as a regional tourist and transit hub has resulted in a
greater number of visitors to the country, which is having a positive impact on
hotel performance. Although rooms’ revenue increased during the month, lower
food and beverage revenues softened the TRevPAR growth to 3.8 percent.

Higher
operational expenses had a significant impact on bottom-line performance as it
reversed the increase in overall revenues and drove GOPPAR down by 3.5 percent
to $180.17.

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