Dubai's hospitality sector: the new gold rush?

Dubai's hospitality sector: the new gold rush?
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Published February 25th, 2014 - 10:09 GMT via SyndiGate.info

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The vibrant hospitality sector in Dubai continued to outperform other markets in the region by recording strong growth across all key performance indicators
The vibrant hospitality sector in Dubai continued to outperform other markets in the region by recording strong growth across all key performance indicators

Around 2,780 new branded hotel rooms, all within the four- and five-star segment, were added to Dubai’s hotel supply in 2013.

The vibrant hospitality sector in Dubai continued to outperform other markets in the region by recording strong growth across all key performance indicators, or KPIs, in 2013, while boosting room capacity with the launch of several new hotels, Ernst & Young said in its latest industry survey on Monday.

Dubai’s hospitality market has rapidly absorbed this influx of new supply and continued to perform exceptionally well, with a healthy occupancy of 80 per cent being maintained in 2013 combined with an increase of 6.4 per cent in average daily rate, or ADR, resulting in an overall revenue per available room, or RevPAR, of $223 in 2013, an increase of 5.9 per cent on 2012,” the survey report said.

In 2013, Dubai’s air passenger traffic soared 15.2 per cent to 66.43 million compared to 57.68 million recorded during 2012 as the city drew more than 10 million visitors.

The latest report by STR Global said only Dubai could achieve a double-digit ADR growth in the Middle East and Africa, or MEA, in January this year, reflecting the sustained buoyancy of the city’s hospitality sector.

Dubai’s ADR surged 12.8 per cent to $308.64 as Abu Dhabi reported double-digit occupancy increases in the first 2014 month.

The MEA region as such reported a 3.3 per cent increase in occupancy in January to 62 per cent, a 4.8 per cent increase in average daily rate to $187.15 and an 8.2 per cent increase in revenue per available room to $115.96, STR Global said. During January, Dubai posted 82.4 per cent occupancy with ADR rising 8.9 per cent to Dh945.90 and RevPAR growing 10.7 per cent o Dh779.56.

EY said both Abu Dhabi and Al Ain also witnessed an increase in RevPAR of 7.4 per cent and 13.5 per cent, respectively, in 2013 compared to 2012.

In December 2013, Dubai recorded an increase in RevPAR of 3.4 per cent compared to the same period last year, with occupancy levels dropping marginally by 1.1 per cent from 83.4 per cent in December 2012 to 82.3 per cent in December 2013.

The Ernst & Young report said the UAE’s stable occupancy rates and increases in RevPAR in December 2013 can be largely attributed to the peak season for tourism, given the country’s mild winter weather.

“December has always been a peak month for tourism in the Emirates, attracting visitors from the region, as well as from around the world, to its many tourist attractions,” EY said in a statement.

Yousef Wahbah, Mena head of Transaction Real Estate at EY, said several GCC cities, notably Dubai, Manama, Jeddah and Kuwait City, recorded positive change in their hospitality KPIs in 2013, compared to 2012.

Manama witnessed an increase in RevPAR of 10.8 per cent during 2013, compared to 2012. Average occupancy in the city increased from 37 per cent in December 2012 to 42 per cent in December 2013. These increases can be attributed to the numerous conferences hosted in Manama in December, including the Annual World Islamic Banking Conference.

Jeddah recorded a 9.3 per cent increase in RevPAR during the year 2013 compared to 2012, mainly due to an increase in corporate demand in the city, as well as the lack of new supply of four- and five-star hotel rooms during 2013.

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