Abu Dhabi: Five and four star hotels in Dubai continued to experience weakening average room rates (ARR) in October, falling 8.1 per cent to $312 while occupancy levels remained strong, albeit marginally lower than the same period last year, reaching 83 per cent.
According to the latest Middle East and North Africa Hotels Market Review issued by HotStats, a drop in Revenue Per Available Room (RevPAR) was coupled with lower food and beverage revenues, which fell 12 per cent.
The decrease in F&B revenues drove total revenues per available room down 8.8 per cent to $423. Higher operating expenses and lower overall revenues pushed gross operating profit per available room down 17 per cent to $195.
Christopher Hewett, associate director at TRI Hospitality Consulting, said that a change in dynamics as well as a change in the tourist mix has led to falling room rates in Dubai.
“A lot of the Russian and European travellers that brought about strong rates are subsiding, and a lot of that is due to the currency fluctuations. The euro is dropping and the dollar is strengthening, so on those two bases alone, Dubai has become significantly more expensive so hotels have had adjust by dropping their rates to maintain occupancy levels,” he told Gulf News.
Russia and Europe have long been Dubai’s key source markets in tourism, but a fall in the euro and rouble this year have taken a toll on visitors from both markets.
“I think over the next 12 months, we are going to see the same level of performance; occupancy levels will remain somewhat stable, but we expect to see another reduction in room rates of probably five to eight per cent.
Total revenue has fallen about eight per cent in October, and profits, as a result, have fallen as well,” Hewett said.
A statement issued by HotStats showed that year-to-October figures have also dipped, with average room rates falling to $267.5 in the year-to-October 2015 period from $287 in the same period last year.
Across the UAE’s borders, four- and five-star hotels in Manama also saw a decline in all performance indicators in October, driven by weak demand. Occupancy levels fell 6.2 percentage points to 51 per cent, impacting ARR and RevPAR, which fell 14.6 per cent and 24 per cent respectively.
Similarly, Doha’s hotel market saw a drop in demand in October, with occupancy rates sliding 1.4 percentage points to 75 per cent. The fall in demand pushed ARR and RevPAR down 12.7 per cent and 14.3 per cent respectively.
Performance was different in Saudi Arabia, however, with Riyadh’s hotels showing strong demand levels in October, as four- and five-star hotels recorded a 12 percentage point increase in occupancy to 66 per cent. However, hoteliers were unable to capitalise on the strong demand as ARR fell by 1.1 per cent to $226.
