UAE hotel rates slump to lowest level since 2005

UAE hotel rates slump to lowest level since 2005
UAE hospitality sector reported a dip.
Published: 4 December 2016 - 1:24 a.m.
By: Louise Birchall

Hotels operating in the UAE continued to see declines in occupancy and room rates during October, according to the latest data from STR.

It said the UAE's hospitality sector reported an occupancy dip of 2.9% during the month to 75.6%, while average daily rates (ADR) dropped 9.6% to AED 668.05 (US $181.90), the lowest for an October since 2005.

As a result, revenue per available room (RevPAR) declined by 12.3% to AED 505.34.

STR said October was the 22nd consecutive month of year-over-year ADR decreases in the UAE, due in part to consistent and significant supply growth, which is up by 5.1% year to date). At the same time, demand has remained strong, up 5% year to date.

In Dubai, hotels saw occupancy fall by 2% to 78%, ADR was down 9.8% to AED 764.63 ($208.19) and RevPAR dropped 11.6 percent to AED 596.16 ($162.32).

STR said strong supply growth (up 5.8% year to date) has slightly outpaced a year-to-date demand increase (up 5.6%) in the market. In addition to the strong development pipeline, STR analysts attributed Dubai’s performance to a decline in visitors from the drop in oil prices.

In Riyadh, Saudi Arabia, STR reported decreases in occupancy (down 7.2% to 56.2%), ADR (down 3.6% to SR 796.30 ($212.21) and RevPAR (down 10.6% to SR 447.46 ($119.25).

STR said as one of the Gulf’s key hubs, Riyadh is heavily dependent on corporate travel but that business has suffered with the drop in oil prices, and coupled with significant supply growth (up 8.9% year to date), Riyadh’s performance has slumped.

Regionally, hotels in the Middle East reported a 4.4% decrease in occupancy to 64%, a 9% drop in ADR to $174.19 and a 13% decline in RevPAR to $111.48.

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