By David Thompson
Preliminary data has been released indicating year-on-year declines across numerous hospitality performance indicators
A preliminary October 2016 performance data report by STR has indicated Dubai experienced a 2% occupancy decrease to 77.9%.
The research also showed a 10.3% ADR decrease to AED 767.58 (US $208.97) and a 12% RevPAR decrease to AED 598.09 ($162.83).
The report indicated performance declines were consistent with significant supply growth.
Based on daily data from October, Dubai reported increases in supply of 6.0% and demand of 3.9% in year-on-year comparisons.
The absolute occupancy level was reported to be the lowest for an October in Dubai since 2011.
STR will release actual October 2016 results later this month.
I think perhaps that this is the start of a steady decline, it is impossible to keep building and opening hotels with the expectation that Occupancy and RevPAR will remain consistently high.
The mathematics are simple, too many rooms given falling demand dilutes average profitability. Sure the World Expo will happen over a 6 month period in 2020 and there will be a short term spike in demand, but like hosting the Olympics occupancy after the event will fall dramatically.
To be honest it may be wise to put a hold on new hotel builds before it's too late. Grand-scale hospitality infrastructure is all very well but like unoccupied luxury residential properties, it soon begins to lose value and head towards 'White Elephant' investment status.