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Wed 20 Jan 2016 02:04 PM

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Dubai hotels set to see 'new norm' of 70-75% occupancy

New Deloitte report says average daily rates will under be under pressure in 2016 as competition increases

Dubai hotels set to see 'new norm' of 70-75% occupancy
The Palazzo Verscae Hotel in one of the most recent luxury properties to open in Dubai.

Rising competition among Dubai's hotel operators will bring a "new norm" for occupancy rates in the city of between 70-75 percent in 2016, according to a new report.

Deloitte's annual Real Estate Predictions Report for Dubai said occupancy levels are set to drop from the 77.5 percent witnessed last year as new hospitality projects continue to enter the market.

The report also predicted that as operators compete for occupancy, it is expected that average daily rates (ADR) will soften further during 2016, which should encourage growth in visitor volumes required to support the investment in tourism infrastructure.

Deloitte also said serviced apartments are likely to be an area of focus in 2016, driven by key source market trends, growing visitor demand for longer average lengths of stay and better value accommodation.

The report added that planned capacity increase at Dubai's airports to approximately 97 million in 2016 will present more opportunities to capitalise on hospitality demand from transit and destination visitor growth.

Deloitte's report also predicted that there will be a further moderation in retail sales growth in 2016 against a strong dollar and slowing demand from international source markets such as Russia, China and parts of Europe.

It said retail rental growth will be relatively flat in 2016, with the exception of super prime malls, adding that some secondary malls will need to incentivise the major retail groups to retain brands.

Deloitte forecast that the food and beverage retail sector will go from "strength to strength" in 2016, driven by greater brand penetration and expansion, while there will also be good prospects for fashion retail following the completion of the initial phase of D3 Design District in Dubai.

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