Dubai hotels' revenues, occupancy remain strong

Dubai: Hotels in Dubai have shown stronger growth in rates, revenue and occupancy compared to those in Abu Dhabi during the first nine months of 2011, according to the latest survey of full-service hotels across six regional cities.

Riyadh had the highest rate and revenue while Sharm Al Shaikh took the biggest hit in those two measures, the Mena Chain Hotels Market Review by TRI Hospitality Consulting showed.

The survey studied hotels in Dubai, Abu Dhabi, Sharm Al Shaikh, Cairo, Riyadh and Jeddah. The sample is made of 77 hotels in the four and five star segment with an average of 330 bedrooms.

Dubai had the highest hotel occupancy at 80.4 per cent in the first nine months of 2011 but grew only 2.4 per cent in that period compared to Abu Dhabi's growth of 8.4 per cent to reach 67.2 per cent occupancy, the survey revealed.

Cairo, which was the centre stage of the revolution, saw its hotel occupancy decline by 32.1 per cent but Sharm Al Shaikh showed the greatest decline by 33.1 per cent during the same period.

Riyadh showed the highest RevPar (revenue per available room) at $157.5 (Dh578.5), which increased by 12.8 per cent for the calendar year to September — the biggest increase among the six cities. The popular Red Sea resort of Sharm Al Shaikh took a staggering 50.3 per cent drop in its RevPar to reach $25.2.

Dubai hoteliers increased RevPar by 8.5 per cent to $154.3 while their counterparts in Abu Dhabi saw a decrease of 6.8 per cent to $102.4.

Maintaining pressure

The number of hotel guests in the capital rose 14 per cent in the first nine months of the year compared to the same period last year according to the Abu Dhabi Tourism Auth-ority.

"Regardless of the growth in demand, the continued growth in supply, albeit at reduced levels compared to the last couple of years, is likely to maintain the pressure on rates and increase the risk of oversupply in Abu Dhabi in the short to medium term," said Peter Goddard, managing director of TRI Hospitality Consulting in Dubai.

Dubai hotels' year-to-date total gross operating profit (GOP by total available rooms) of $110 was 30.9 per cent higher than Abu Dhabi's and second only to Riyadh among the six cities covered in the survey.

Dramatic drop

In Sharm Al Shaikh, the GOP PAR dropped a whooping 66.8 per cent and in Cairo by 56.9 per cent.

"Hotel performance levels in Cairo are not likely to improve until the protests subside, the security situation improves and international travellers put Egypt back on their travel itinerary. In the short term, performance is likely to remain subdued under the threat of possible violence associated with the proposed general election planned in November and presidential election planned in early 2012," said Goddard.

Sharm Al Shaikh, however, is likely to bounce back faster than Cairo because of the vested interests of tour operators who own and operate hotels, charter flights and holiday packages to Sharm Al Shaikh and other resort destinations along the Red Sea coast, he said.

Riyadh had the highest ARR (average room rate) at $260.3 and the lowest in Sharm Al Shaikh with $48.10.