Dubai hotels post profits, occupancy growth in June

Hotels in Dubai saw a boost in profits and occupancy levels in June following increase in demand from domestic and regional travellers during the summer festival, according to the latest survey by TRI Hospitality Consulting.

By Muzaffar Rizvi

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Published: Mon 30 Jul 2012, 11:00 PM

Last updated: Tue 7 Apr 2015, 2:39 PM

The HotStats survey, conducted in six Middle East and North African cities, said Dubai hotels continued their strong performance last month with a 9.2 per cent increase in average room rate (ARR) to $191.24, causing a 10.3 per cent increase in revenue per available room (RevPAR) to $147.55.

The survey said occupancy levels remained stable with a 0.7 percentage point increase over the same period last year.

“Dubai was back in action again this June as a favourite summer holiday destination for domestic and regional travellers. A further boost in demand was provided by the Dubai Summer Surprises, an annual shopping and entertainment festival, which is a major attraction for families,” Peter Goddard, managing director of TRI Hospitality Consulting in Dubai, said in an e-mail statement to Khaleej Times on Sunday.

The highlight of the performance of Dubai hotels was a 50.4 per cent increase in gross operating profit per available room (GOPPAR) to $86.26, driven by an 8.3 per cent increase in total revenue per available room (TRevPAR) and one per cent reduction in payroll expenses.

“Our HotStats data for Dubai hotels in June highlights the strength of the overall market, particularly the hotels’ ability to command a substantial increase in ARR on the back of strong demand. Hoteliers have identified that the market can support an increase in rates, especially when offered with various value-added products and services,” said Goddard.

“We believe Dubai performance levels will remain strong until early part of 2013 when we expect the market to witness a considerable addition to supply,” he added.

The Mena chain hotels sample for the survey was composed of 84 hotels with an average hotel size of 330 bedrooms in four and five-star segments. The survey was conducted in full-service hotels of Dubai and Abu Dhabi (UAE); Riyadh and Jeddah (Saudi Arabia); and Cairo and Sharm El Sheikh (Egypt).

Rates fall in Abu Dhabi

Hotels in Abu Dhabi continued to see rates and profits decline in June as the competition intensify in the emirate’s hotel industry. Average room rate fell 8.5 per cent to $115.68 last month resulting in a reduction in GOPPAR by 12.6 per cent to $53.76. The reduction in ARR is a direct consequence of the increased competition in the capital and when coupled with an increase in payroll by 2.7 percentage points, resulting a sizable impact on overall hotel profitability.

The modest increase in occupancy levels was the only positive indicator during June and is attributed to the increase in tourists visiting the city.

“Abu Dhabi hotels are yet to show any indication of a stabilisation in ARR’s this year, although occupancy levels have started to plateau. The 13 per cent increased room supply has been absorbed by the 14 per cent increase in tourists nights reported by the Abu Dhabi Tourism Authority in the first five months of 2012, however new entrants continue to undercut rates in order to penetrate the market,” Goddard said.

“As the market is expecting more than 20 new hotels over the next three years, the continuing rate war is likely to cause further damage to hotel owners unless some kind of consensus emerge amongst the hoteliers to maintain rates” he added.

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