Abu Dhabi: Four- and five-star hotels in Dubai continued to experience weakening Average Room Rates (ARR) in December, falling 4.6 per cent to $316 (Dh1,160), while occupancy levels remained strong, albeit at a marginally lower level than in December 2014 at 80.2 per cent.
According to the latest findings by HotStats, a market intelligence provider, revenues per available room (RevPAR) dropped 5.9 per cent in December, compounded by lower food and beverage revenues, which slid 18 per cent. This drove total revenue per available room (TRevPAR) 10.3 per cent lower to $434.2.
Higher operating expenses and lower revenues fuelled a drop in gross operating profit per available room by 14 per cent to $201.
Rashid Aboobacker, associate director at TRI Consulting, said that greater supply in Dubai’s hospitality market was helping to push down performance, with new inventory significantly increasing competition.
“On the demand side, a stronger dollar and the challenges faced by Russian and Chinese markets have continued to be a challenge. However, the number of travellers has continued to grow, including from China,” Aboobacker said.
According to HotStats, in Abu Dhabi, hoteliers were able to maintain stable room rates, but occupancy levels fell 5.5 percentage points. The drop in demand levels led to a 6.9 per cent fall in RevPAR to reach $131.
Decline in corporate demand
Meanwhile, TRevPAR declined 7.6 per cent to $268.5.
“[The decline in Abu Dhabi’s hotels] appears to be primarily driven by a decline in corporate demand in the city, presumably as a result of the decline in oil prices as the emirate’s economy is largely driven by oil and gas sector, while the conference demand appears to have increased during the month compared to last year,” Aboobacker said.
He added that the main challenges facing the industry this year will stem from lower oil prices and their impact on local and regional economies.
Global macroeconomic issues like currency fluctuations coupled with security issues are also expected “to play a key role in the tourism demand to the region this year,” Aboobacker said.
“Based on our outlook, we expect occupancies in Dubai to remain flat or drop marginally, and rates drop by 5-7 per cent in 2016. Given the stronger reliance on corporate demand, we expect occupancy in Abu Dhabi hotels to drop a couple of points this year while the average rates are likely to remain flat,” he said.
Drop in RevPAR
Elsewhere in the GCC, demand levels fell 3.4 percentage points to 66.4 per cent in Doha in December, the HotStats report said. Lower demand coupled with a 13.9 per cent reduction in ARR to $197 resulted in an 18.2 per cent drop in RevPAR to reach $131.
In Jeddah, hotels continued to witness softening demand levels in December, with four and five star hotels recording a 6.2 percentage point reduction in occupancy to 65 per cent. Hoteliers were unable to offset the falling demand as ARR fell by 7.2 per cent to $237.
