Repulsive prices or the 'Ramadan effect'? Dubai's hotel occupancy down
Hotel occupancy in Dubai declined in June for the second consecutive month as demand slows down in the summer heat and new supply enters the market.
According to preliminary data by global consultancy STR Global, hotels posted an occupancy rate of 75 per cent, marking a 5.5 per cent drop compared to the same period last year, while average daily rate (ADR) was marginally up by 1.4 per cent to Dh658, and as a result, revenue per available room (RevPAR- a benchmark for performance) dropped 4.2 per cent to Dh493.68.
“ADR continued to grow, posting the highest levels of any June since 2008. However, such an increase was not able to fully offset the negative occupancy performance,” said Elizabeth Winkle, managing director of STR Global, in a statement.
Rashid Aboobacker, senior consultant at TRI Hospitality Consulting, expected occupancy to have reached around 80 per cent in June. He estimates that ADR was 10-15 per cent higher compared to the same period in 2013, while RevPAR was 7-10 per cent more.
In May, though, hotel occupancy in the emirate stood at 79.4 per cent, a 3.2 per cent drop from 2013’s 82.5 per cent, according to data from global consulting firm EY. ARR and RevPAR declined to Dh896 and Dh711, respectively.
“This is mainly due to the additional supply of over 3,400 new branded hotel rooms, all within 4 and 5 star hotel segments which have been added to Dubai’s hotel supply over the past year,” said Yousef Wahbah, EY’s head of transaction real estate for the Middle East and North Africa.
In the UAE, hotel occupancy touched 75 per cent in May, while ADR and RevPAR reached Dh686 and Dh516.87, respectively, stated STR Global.
According to the consultancy, the Middle East and Africa hotel development pipeline includes 589 hotels, with 137,784 rooms as of May. The UAE and Saudi Arabia make up 70 per cent of the hotel rooms in the region’s pipeline.
Aboobacker expects Dubai’s hotel occupancy to fall further in July and pick up in August, standing at 70-75 per cent. Many travellers from the Gulf Cooperation Council (GCC) countries are likely to visit Dubai during the month to celebrate Eid, which falls in late July and will run until early August.
Hotel room rates in Dubai normally peak during the January-April period and the two Eid holidays, and rise significantly during the months that are packed with events.