Hotel market in Dubai feels heat of summer

Hotels across Dubai witnessed a decrease in RevPAR by 12.5 per cent in April 2015 when compared to a year ago.



By Abdul Basit/chief Reporter

Published: Fri 12 Jun 2015, 12:59 AM

Last updated: Wed 8 Jul 2015, 3:17 PM

Dubai - Dubai’s hospitality market witnessed a softer performance in April with hotels dropping room rates in order to maintain their occupancy levels over 84 per cent.

This was revealed in EY’s Middle East Hotel Benchmark Survey Report. Citing a reason, the report said the hot weather hit the market. The market is likely to be further impacted by a decrease in travel from Russia and Europe, given the weaker rouble and euro, it added.

Hotels across Dubai witnessed a decrease in RevPAR by 12.5 per cent in April 2015 when compared to a year ago. The city maintained a healthy occupancy rate of 84.2 per cent in April compared to 85.4 per cent in April 2014; however the drop in ADR from $326 in April 2014 to $289 in April 2015 accounted for the drop in the overall performance of the market.

Abu Dhabi’s hospitality market witnessed a positive increase in all key performance indicators in April 2015 with occupancy increasing from 84 per cent to 86 per cent in April 2015. The surge in occupancy was coupled with a significant rise in ADR from $220 in April 2014 to $236 in April 2015, which resulted in an increase in RevPAR of 9.1 per cent in April 2015 when compared to the same period last year. The increase in occupancy was attributed to Cityscape Abu Dhabi.

“It is clear that a number of key markets are still demonstrating stable growth in their hospitality sectors despite the drop in oil prices. However as we move into the summer months and hotter weather, occupancy rates are expected to gradually decrease across the region,” said Yousef Wahbah, partner and head of Mena Transaction Real Estate at EY.

The report, which also covers North Africa markets, mentioned that Cairo led the region in hospitality performance in the first quarter of 2015. Beirut and Doha also performed strongly, it added.

“In the Mena region, Cairo, Beirut and Doha’s hospitality markets in particular witnessed robust growth in the first quarter of 2015. This demonstrates continued political stability in the region and greater confidence amongst tourists of the current security situation. The first quarter is also typically peak tourism season for the region due to milder weather. The hospitality sectors in these markets consequently witnessed an increase in conferences and events during this period,” Wahbah said.

Cairo led the region in hospitality performance in the first quarter of 2015. Its RevPAR increased significantly by an impressive 106.6 per cent due to an increase in both the average room rate and occupancy.

Following Cairo, Beirut witnessed a 46.5 per cent increase in RevPAR in the quarter due to a 14 per cent increase in overall occupancy and an eight per cent increase in average room rate compared to the same quarter a year ago.

Leading the GCC, Doha’s RevPAR increased by 22.2 per cent compared to the first quarter of last year. Hotel rates increased from $204 in the first quarter of 2014 to $167 in the same period this year. This was mainly due to the 11.5 per cent increase in ADR and a growth in occupancy from 69 per cent in the first quarter of 2014 to 76 per cent in the first quarter of 2015.

Cairo continued to witness a double-digit increase in RevPAR of 78.7 per cent in April 2015 when compared to the same period last year. This was mainly due to the increase in average occupancy from 35 per cent in April 2014 to 49 per cent in April 2015 due to the Easter break holidays.

Jeddah and Riyadh’s hospitality market performance dropped when compared to the same period last year, witnessing a decrease in RevPAR of nine per cent and 9.5 per cent, respectively, in April 2015 compared to April 2014.

“Overall, the growth in the number of visitors to the region is expected to keep pace with hotel room supply.  This is due to a number of factors, including an increasing demand for enhanced medical tourism, theme parks, retail outlets and current preparations that are underway for the 2022 Fifa World Cup and Expo 2020 Dubai,” said Wahbah. — abdulbasit@khaleejtimes.com


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