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UAE hotel room rates post 3.8% decline, but occupancy still high at 75%

Revenue per available room declines slightly

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Room rates in UAE today are likely to be cheaper than they were years ago.

Dubai: If you’re planning a staycation or holiday in the UAE in winter, now is a good time to book that hotel property you’ve been dreaming to stay in. According to the latest data, there’s a chance you can still score a good room rate. 

Hotel data specialist STR reported on Wednesday that the average cost of overnight stays at hotels across the country, commonly referred to as average daily rate (ADR), dropped 3.8 per cent to Dh599.58 in December 2017 when compared to a year earlier.

Analysts said the hotel market is still adding rooms faster than demand can keep up, and it has driven prices down over the past year. The market has also seen the entry of properties catering to the mid-scale segment, further widening the options for guests at different budgets.

“Supply growth continues to affect hotel performance in the country, especially with Dubai’s build-up to the 2020 World Expo and beyond,” STR said in a report.

The hotels’ revenue per available room (RevPAR) has consequently dropped by 3.3 per cent to Dh450.04, but at least occupancy is still high at 75.1 per cent, up by 0.5 per cent.

Dubai added more properties in the hospitality industry last year, and as of the end of 2017, supply in the market stood at 82,000 hotel rooms, an increase of 5.23 per cent over the previous year, according to a JLL report.

More properties are still expected to open, with 17,400 and 9,200 keys due to enter the market in 2018 and 2019, respectively. One of the key developments to watch out for is the Bluewaters Island in Dubai Marina, which is envisioned to be the next tourism hotspot.

“Not only will the amount of new hotel supply continue to influence Dubai’s ADR, the type of new hotel supply entering the market will create a shift in the pricing landscape, with more offerings in the midscale segment,” STR said.

The entry of hotels in the middle-pricing tiers, however, has helped the market’s demand continue to rise. “A wider price range has made Dubai more accessible at various travel budgets,” STR said.

“Dubai continues to add new tourism attractions to stimulate demand growth, helping the market drive hotel demand as inventory expands.”

A similar trend can be observed in Abu Dhabi, but “at a smaller scale due to a smaller market size.”

The UAE capital has also seen new hotel developments and attractions, including the Louvre Abu Dhabi, which opened to the public last November, with more museums expected to open in the next few years.

“An expected increase in oil prices, combined with sustained growth in the non-oil sector, should drive economic expansion in Abu Dhabi in 2018, allowing the economy to rebound from relatively flat performance during the previous 12 months. That should be an encouraging signal that the hospitality industry will turn the corner,” STR said. 

 

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