Dubai hotels record upswing in supply and demand

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Dubai hotels record upswing in supply and demand

Published: Mon 14 Jan 2019, 7:31 PM

Last updated: Mon 14 Jan 2019, 9:38 PM

Hotels in Dubai recorded significant growth in both supply and demand in December 2018 year on year, but suffered slight drop in occupancy and average daily rate, ADR, according to preliminary data from STR. 
While supply jumped 8.6 per cent in tandem with a demand surge of 5.6 per cent, occupancy declined 2.7 per cent o 79.2 per cent and ADR dropped 4.3 per cent Dh758.80.
Revenue per available room (RevPAR) declined 6.9 per cent to Dh600.98, STR data shows.
STR analysts noted that the story remains the same for Dubai. "Demand (room nights sold) continues to grow, but an influx of new inventory is pressuring occupancy and ADR levels."
"When looking at individual days during December, New Year's Eve was the strongest with occupancy reaching 97.1 per cent (+1.9 per cent year over year) and ADR at Dh1,703.15 (-2.0 per cent). The market closed the month with five consecutive nights of occupancy above 90 per cent," STR analysts said.
Across the Middle East & North Africa, profit levels at hotels remained under pressure in November, as revenues were hit by declines in both price and volume in the normally reliable commercial segment, according to the latest data tracking full-service hotels from HotStats. 
Profit per room continued along a downward trend, as year-over-year GOPPAR (Gross operating profit per available room) fell 8.8 per cent to $92.74.
"Though the number was 33 per cent higher than the profit per room recorded in the region for year-to-date 2018, it represented a third consecutive month of profit decline," said HotStats said in a report.
Falling profit levels were hit by declining revenues across all departments this month, including rooms (down 4.6 per cent), Food & Beverage (down 5.7 per cent), Conference & Banqueting (down 2.6 per cent) and Leisure (down 4.4 per cent), on a per-available-room basis.
The report said once again, the drop in revenue was impacted by rising costs, which included a 0.9-percentage-point increase in payroll to 25.4 per cent of total revenue, as well as a 1.0-percentage-point increase in overheads, which grew to 24.1 per cent of total revenue.
While top- and bottom-line revenue at hotels in the region were ahead of the YTD performance due to the typical uplift in activity from the commercial segment, there was a distinct weakening in the sector as rates fell in both the Residential Conference (down 11.7 percent) and Corporate (down 15.9 per cent) segments.
 "The Middle East & North Africa hotel market continues to be challenged and, unfortunately, it is the base business that is now being hit the hardest, with crippling rate decline in the commercial segment over the last 36 months, including a drop of $50 in the corporate segment and more than $35 in the residential conference segment," said Michael Grove, Director of Intelligence and Customer Solutions, EMEA, HotStats.
One outlier is Abu Dhabi, which fared well in November, recording a 1.8-per cent increase in profit per room, in spite of a 2.2-per cent decrease in TRevPAR.
November is typically a strong month of top- and bottom-line performance for hotels in Abu Dhabi, which is fuelled by demand from the Formula One Grand Prix. This month was no exception, with GOPPAR peaking for the year at $145.76, almost 200 per cent above the profit per room recorded in the UAE capital for YTD 2018, at $49.78, HotStats data shows.
The month also provided some respite from a fairly challenging year for Abu Dhabi hotels, which have recorded five months of YOY profit decline so far in 2018, leaving YTD GOPPAR levels 5.5-per cent lower than during the same period in 2017, said the report. -


Issac John

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