Hotel revenues in Gulf fall sharply

Dubai: The Gulf's hospitality industry witnessed a sharp fall in occupancy rates and revenue per available rooms (RevPARs) in key markets during the first six months of the year, an industry expert said.

"The Gulf to a large extent has been impacted by low levels of economic activity around the world. The slowdown has impacted the inflow of tourists and business people into the region," said Robert O'Hanlon, Tourism, Hospitality and Leisure Partner at Deloitte Middle East.

In the Gulf, Oman experienced a significant decline of 19 per cent in occupancy rates during the first six months to June this year when compared to the same period last year, according to data provided by Smith Travel Research Global.

Qatar suffered a 14.52 per cent decline, the UAE 14.13 per cent, Bahrain 10.12 per cent, Kuwait 4.31 per cent and Saudi Arabia 3.88 per cent drop.

In RevPAR, the UAE suffered the worst fall of 28.8 per cent during the first six months to June, followed by Qatar at 12.41 per cent, Kuwait 12.04 per cent, Bahrain 8.67 per cent, and Oman 7.1 per cent. Saudi Arabia was the lone market in the Gulf to register a 3.97 per cent rise.

In the UAE, Dubai's occupancy dropped by 12.9 per cent and RevPAR declined steeply by 35 per cent during the first half of this year compared to the same period last year while Abu Dhabi's RevPAR grew by 3.2 per cent during the period. However, for June the RevPAR for Abu Dhabi was 12.2 per cent lower than in June last year.

"The rebound of the hospitality industry in the Gulf is dependent on the recovery of key source markets such as Europe. Revival of key markets will possibly increase the demand for leisure and related segments while demand from the business segment is likely to increase upon the recovery of the Gulf economies," he said.

He said governments in the region have been and continue to be committed to develop tourism as one of the key pillars of their economies. This is in view of the economic diversification strategies adopted by most governments in the region to reduce their dependence on oil. The governments have continued their macro-level induced demand generation efforts to facilitate inflow of tourists to the region.

The total revenues earned by the industry in the Gulf region was $3.40 billion (Dh12.47 billion) during the six months to June this year - a decrease of 12.82 per cent compared to $3.90 billion during the same period last year.

The UAE suffered a fall of 20.53 per cent in revenue to $2.09 billion during the first half of this year from $2.63 billion during the same period last year. Saudi Arabia is the lone market to register a rise of 10.37 per cent in revenue to $666.60 million during the period to $603.95 million.

Robert said stakeholders in the hospitality industry will continue to benefit from constant monitoring of tourism demand from their primary source markets, which would help in customising tourism products to suit changing needs of such markets.

As spending power of customers in key primary markets have decreased, a workable option could be to proactively offer 'value for money' products over the short- and medium-term. "Lower demand coupled with increase in supply of tourism infrastructure was the main cause. The situation is expected to improve during the coming years as hotel operators in the region are committed to attracting tourists by offering attractive value packages to tourists worldwide," said Ghassan Aridi, CEO of Alpha Tours. "I am confident that Dubai will overcome the present crisis. We had very bad expectations at the start of the year. But right now it [this year] will be much better than expected, but the revenues and volume will not be the same as last year," he said.

"In the UAE, 169 projects comprising more than 58,000 rooms are in the total active pipeline," Robert said quoting STR Global report.

Among the key markets, Dubai reported the largest number of rooms in the construction phase where of the 33,319 rooms in active pipeline, 11,196 rooms are in the construction phase. Abu Dhabi has 11,196 rooms in the construction phase out of the 16,994 rooms in the total active pipeline.