Dubai hotels report increase in profit

Dubai: Hotels in Dubai reported an increase in profits while those in Abu Dhabi continued to see rates and profits decline for the month of June, according to the results of the latest HotsStats survey by TRI Hospitality Consulting.

Statistics reveal that average room rates (ARR) in Abu Dhabi hotels fell 8.5 per cent to $115.68 (Dh425.47), which resulted in a reduction in gross operating profit per available room (GOPPAR) by 12.6 per cent to $53.76.

Dubai hotels, on the other hand, continued their strong performance for June with a 50.4 per cent increase in GOPPAR to $86.26, driven by an 8.3 per cent increase in Total Revenue per Available Room (TRevPAR) besides posting a 10.3 per cent increase in revenue per available room (RevPAR) to $147.55.

“Abu Dhabi hotels are yet to show any indication of a stabilisation in ARR’s this year, although occupancy levels have started to plateau,” said Peter Goddard, managing director of TRI Hospitality Consulting in Dubai, adding that Dubai, meanwhile, was “back in action again” this June as a favourite summer holiday destination for domestic and regional travellers.

Explaining further, Goddard said that the reduction in Abu Dhabi hotels’ ARR is a direct consequence of the increased competition in the capital and when coupled with an increase in payroll by 2.7 percentage points, resulting a sizable impact on overall hotel profitability. He added that the “modest increase” in occupancy levels was the only positive indicator during the month.

“As the [Abu Dhabi] market is expecting more than 20 new hotels over the next three years, the continuing rate war is likely to cause further damage to hotel owners unless some kind of consensus emerge amongst the hoteliers to maintain rates” Goddard pointed out.

As for the Dubai market, TRI expects hotels’ performance levels to remain strong until “early part of 2013” when the market is expected to witness a considerable addition to supply, said Goddard.

— Rohma Sadaqat is a trainee at Gulf News.