Dubai: Falling room rates seen this year across Dubai’s four- and five-star hotels are likely to continue in the next four months due to currency fluctuations and an increasing room supply, tourism analysts say.
Christopher Hewett, associate director at TRI Consulting, said average room rates (ARR) in Dubai are expected to drop by 5-7 per cent from September to December compared to the same period in 2014.
“The trend of falling average room rates will continue. This is due to the sharp reduction in the spending power from visitors due to the stronger US dollar, weak euro and more recently, the devaluing of the Chinese yuan, which will have an impact on the growing Chinese market,” Hewett said.
Echoing similar views, Philip Wooller, area director at research firm STR Global, expects ARR to drop by around 3-4 per cent during the next four months.
“Average rooms rates will continue to decline but not at the same rate as the first half of the year,” he said.
The weakening of the euro and rouble, as well as the strengthening of the US dollar to which the UAE dirham is pegged, has resulted in fewer European and Russian visitors travelling and spending money in the UAE this year. Some Gulf Arab travellers are also looking elsewhere for a vacation, to Europe for instance, as the euro weakens against the US dollar.
The economic slowdown in China and the devaluation of the yuan by 3.5 per cent against the US dollar earlier this month is expected to keep Chinese tourists from travelling and spending money in the UAE.
Nikola Kosutic, research manager at consultancy Euromonitor International, said the expenditure by Chinese tourists in Dubai is likely to drop by 15-20 per cent in the second half of this year.
Hewett expects the devaluation of the yuan to impact Chinese visitor numbers. Wooller, meanwhile, does not think there will be an impact on visitor numbers in the next three to four months.
“[China] is a big population and this won’t do enough to impact travel to Dubai,” he said.
While ARR is likely to drop in the coming four months, occupancy is expected to be on par with last year or slightly lower, according to analysts.
Wooller anticipates an occupancy of 79.5 per cent during the September-December period, slightly down compared to last year’s 81 per cent.
Hewett, meanwhile, expects occupancy to be steady as hotel room supply and demand balance, the cooler weather attracts more tourists, and business travellers increase in numbers as business events open.
As a result of a lower ARR, revenue per available room (RevPAR — an industry measure of rates and occupancies) is likely to drop by 5-7 per cent in the next four months, he said.
Around 1,200 rooms are set to enter the Dubai market between September and December, according to Wooller.
Dubai aims to add 20,000 rooms by next year, according to the Dubai Corporation for Tourism and Commerce Marketing (DCTCM).
