Dubai hotel rates to continue falling in the summer

Dubai: Hotel performance in Dubai is expected to cool down this summer, tourism analysts said.

Hotels have traditionally seen a slump during the hot summer months. But performance is likely to be lower this summer compared to the same period in 2014 as a result of a stronger dollar and weaker euro, as well as the recovery of regional destinations like Egypt, according to Christopher Hewett, senior consultant at TRI Consulting.

The euro has been slipping against the US dollar and other currencies over the last year, falling from a high of 1.38 to the dollar in the first quarter of 2014 to around 1.11 today.

“Occupancy is going to be a little bit lower (by 2-3 per cent) compared to last summer because demand is there in the market. Average room rates (ARR) will be down by 5-7 per cent and revenue per available room [RevPAR — the standard industry measure] by 7-10 per cent,” Hewett said. He did not state the base figures.

ARR fell 12.8 per cent month-on-month in April to $373.78, while occupancy declined to 84.9 per cent, pushing down RevPAR to $317, according to a report from research firm HotStats. Gross operating profit per available room (GOPPAR) dropped 19.5 per cent to $273.

Meanwhile, Philip Wooller, area director at research firm STR Global, expects the performance of hotels in the emirate this summer to be similar to the same period last year.

“It will be comparable to last summer because rates drop anyway,” he said.

Accor Hotels’ four- and five-star Dubai properties are likely to see a 3-5 per cent dip in ARR this summer and a 2-3 per cent drop in occupancy compared with the same period in 2014, which is expected to lower RevPAR by 2-3 per cent, said Olivier Hick, vice president of operations at the French hotel chain. He, however, did not state the base figures.

To get more guests checking in, Accor has “been marketed heavily for the summer with an aggressive digital plan as well as an incredible summer campaign,” he said.

Accor is maintaining profitability of its Dubai hotels by taking a number of measures such as temporarily stopping the hiring of staff and saving more energy.

“We have reviewed some structural organisations, maximise saving energy with our Planet 21 program and objectives. Furthermore within our hotels we have maximised productivity, increased vacations planning and froze some of our recruitment for the last 6 months,” Hick said.

He said that based on forward bookings for the summer, Accor’s Saudi Arabian guests staying at its four- and five-star hotels in the emirate have dropped by around 5 per cent compared with the same period in 2014, while guests from Russia have fallen by up to 15 per cent.

The weakening of the rouble since last year, under the weight of western economic sanctions and tumbling oil prices, has kept some Russians from travelling. Today, it is around 56 to the dollar.

Meanwhile Dubai-based luxury hotel chain Jumeirah Group expects its Dubai hotels to perform similarly to the summer period last year.

“We are already seeing strong forward sales in our city hotels, with business on the books between 3-5 per cent higher than last year at Jumeirah Emirates Towers and Jumeirah Creekside Hotel,” said Piers Schreiber, group vice president of corporate communications & public affairs, by email.

Similarly, Jihad Fattouh, acting general manager at First Central Hotel Suites, said: “The occupancy rates for First Central Hotel Suites is projected to remain at a stable number for the summer period.”