Abu Dhabi: Average daily rates (ADR) of hotel rooms in Dubai fell 5.6 per cent in February to reach around Dh983, while occupancy at hotels also dropped 1.9 per cent to reach 86.6 per cent, according to preliminary data by STR Global, a global data research firm.

Meanwhile, room supply went up 6.1 per cent, and demand grew 4.1 per cent last month, STR Global said in a statement released on Thursday.

The drop in daily rate was accompanied with a 7.4 per cent decrease in revenue per available room (RevPAR) to Dh852. However, an overall 1.4 per cent increase in RevPAR is expected in 2015.

Elizabeth Winkle, managing director of STR Global, said that the increase in room supply continued to put pressure on rates, leading to the decline in RevPAR performance.

“The outlook for 2015 remains positive, however, as Q3 and Q4 are expected to overcome a weaker start of the year. Downside risks remain that market ADR will be soft in response to the growing supply,” Winkle said in a statement.

With occupancy levels above 80 per cent, she did not expect a sharp fall in rates, though.

Other industry analysts also found an imbalance in the supply-demand equation leading to lower occupancy rates.

Christopher Hewett, senior consultant at TRI Hospitality Consulting, said he expected supply to continue surpassing demand levels, resulting in a continuous drop in occupancy levels.

“I think the impact from that will be that hotels will try to maintain market share, and the traditional way of doing this is by reducing rates. So, we’ll potentially see a situation where not only occupancy, but average rates fall as hotels try to maintain their market share,” he told Gulf News.

In yet another report released recently, average room rates (ARR) of four- and five-star hotels in Dubai dropped 4.6 per cent in January compared with the same month last year and edged up 1 per cent in Abu Dhabi in the same period, according to a HotStats survey. ARR across Dubai’s hotels dropped to $383.66, while occupancy edged up 0.4 per cent to 86.5 per cent, which resulted in revenue per available room (RevPAR, an industry benchmark for performance) to decline by 4.2 per cent to $331.9 in January. Gross operating profit per available room (GOPPAR) fell by 7.4 per cent to $281.79, pressured by a 19.2 per cent decline in food and beverage revenue.