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Thu 3 Dec 2015 10:24 AM

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Dubai hotels see October occupancy fall despite rates cut

STR Global data shows occupancy rates dip 2.5% despite double-digit fall in average daily rates

Dubai hotels see October occupancy fall despite rates cut
(AFP/Getty Images)

Hotels in Dubai saw occupancy dip 2.5 percent to 80 percent in October despite the market seeing a reduction in average daily rates (ADR) to spur competition.

According to STR Global figures, the Dubai market reported double-digit decreases in ADR (down 11 percent to AED871.96) and Revenue per available room (RevPAR) (down 13.2 percent to AED697.20).

It said the shift of Eid al-Adha from October 2014 to September 2015 negatively affected performance, especially at the beginning of the month.

"ADR in the market has continued to decline in year-over-year comparisons as the market prices more competitively to try to stimulate the traditional levels of high demand," said STR Global in a statement.

The figures also showed that hotels across the UAE experienced a 0.7 percent decrease in occupancy to 78.5 percent as well as double-digit decreases in ADR (down 10.3 percent to AED753.30) and RevPAR (down 10.9 percent to AED591.31).

Supply growth (up 5.1 percent) outpaced demand (up 4.4 percent) for the month, resulting in the slight dip in occupancy.

STR Global analysts attributed the drop in ADR to a weak Euro. With a decrease in international arrivals from Europe, hotels have lowered rate in an effort to sustain demand.

According to STR Global, Qatar saw a 6.2 percent decrease in occupancy to 74.1 percent in October and a 6.2 percent decline in RevPAR to QR515.91. ADR in the country remained flat at QAR695.85.

Supply increased by 5.5 percent for the month - the highest growth for any month in Qatar since March 2013. With supply growth above 3 percent for each month since August, occupancy has decreased by at least 5 percent in three straight months. 

Regionally, hotels in both the Middle East and Africa reported negative results in the three key performance metrics.

Compared to October 2014, the Middle East subcontinent reported a 4.6 percent decrease in occupancy to 67.4 percent, a 12.3 percent drop in ADR to $200.66 and a 16.3 percent decline in RevPAR to $135.24.

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