Dubai hotels prime for rebound as vaccine rollout gains traction

Dubai - A Deloitte Middle East hospitality survey suggests that the market recovery to 2019 levels may not be until 2023, or possibly later as hospitality companies are revising their business strategies and building resilience towards the new normal

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Issac John

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Dubai hotels ended 2020 with occupancy rates returning to pre-pandemic levels. Hotel occupancy rates for December 2020 clocked in at 71 per cent – the highest rate since February – stated research firm STR. — AFP file
Dubai hotels ended 2020 with occupancy rates returning to pre-pandemic levels. Hotel occupancy rates for December 2020 clocked in at 71 per cent – the highest rate since February – stated research firm STR. — AFP file

Published: Sun 31 Jan 2021, 5:29 PM

With Covid-19 vaccine currently being rolled out and Expo rescheduled to start on 1 October 2021, Dubai’s hospitality sector is priming for a rebound after a challenging pandemic-stricken low-occupancy year.

A Deloitte Middle East hospitality survey suggests that the market recovery to 2019 levels may not be until 2023, or possibly later as hospitality companies are revising their business strategies and building resilience towards the new normal.


Oliver Morgan, director and head of Development in Deloitte’s Real Estate team in the Middle East, said in the short-term, cash management and financing/lender considerations are some of the main priorities across all real estate sectors. “Macro-economic and demographic factors as well as related government initiatives are likely to define the shape and pace of recovery for the real estate sectors in 2021.”

“The Dubai hotel market has experienced a major shock and has had to adapt during a very difficult period. With the vaccine currently being rolled out, Expo rescheduled to start on 1 October 2021 and Dubai’s fiftieth year since nationalization, it is hoped that a rebound will occur and performance matrices return to much healthier levels towards the end of this year,” said Robin Williamson, head of Real Estate, Deloitte Middle East.


Dubai hotels ended 2020 with occupancy rates returning to pre-pandemic levels. Hotel occupancy rates for December 2020 clocked in at 71 per cent – the highest rate since February – stated research firm STR.

Data also shows that absolute average daily rate (ADR) and Revenue per available room (RevPAR) were at the highest in Dubai since January. ADR registered at Dh608.92, down 9.1 per cent YOY, while RevPAR was Dh432.34, down 18.2 per cent.

According to the data, occupancy rates reached as low as 23 per cent in Dubai hotels during the pandemic days in 2020 after record-breaking 2019 when Dubai received 16.73 million overnight visitors.

Deloitte’s seventh annual Middle East Real Estate Predictions 2021 report noted that the reduction in international visitors due to Covid-19 travel restrictions also impacted footfall and spending at bricks and mortar stores.

Other key findings in Deloitte’s report include tenants remain in the driving seat as rent declines for residential properties continue into 2021. “Demand for secondary market residential properties has outpaced transaction volumes for off-plan units, whilst cash transactions still dominate. Meanwhile developers are offering discounts, fee waivers and rent-to-own incentives in an attempt to attract buyers.”

The report noted that growth in the e-commerce segment has increased the requirement for storage and fulfillment centres, boosting the demand for warehouses.

According to data supplied by real estate consultancy Core, Dubai’s realty sector, which witnessed a surge in the supply of residential units year-on-year in 2020 regardless of the disruptions caused by the pandemic, is expected to add 39,000 units in 2021.

Last year, the market saw the delivery of nearly 36,000 units, marking an increase over the number of units that were added to the market in the previous year

According to Data Finder, the real estate insights and data platform under the Property Finder group, Dubai recorded Dh72.49 billion sales through 35,434 transactions in 2020 as compared to Dh80.99 billion earned through 40,132 property deals in the corresponding period of 2019, reflecting a year-on-year decrease of 10.6 per cent in sales and deal value due to the outbreak of the Covid-19 pandemic.

As per the data, approximately 14,749 of the total transactions were for off-plan properties and 20,685 were for secondary/ready properties. In terms of value, off-plan properties recorded sales worth Dh20.31 billion while secondary/ready properties earned Dh52.18 billion last year.

— issacjohn@khaleejtimes.com


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