Summer takes toll on Dubai’s hotels
The occupancy and average room rates of Dubai hotels recorded declines in May, leading to a drop in revenue per available room, or RevPAR — a performance metric in hospitality industry.
Yousef Wahbeh, head of Transaction Real Estate at Ernst & Young for the Middle East and North Africa, said the seasonal impact of the summer on Dubai’s hospitality sector is visible this year. Occupancy at Dubai hotels steadily declined to 79 per cent in May from a yearly high of 89 per cent in March.
Ernst & Young findings, however, is contradictory to the latest survey by TRI Hospitality Consulting showing a strong growth in revenues and profits for Dubai hotels in May.
Wahbeh observed that a key outcome of the financial crisis was the adaptability of operators in dealing with rate drops in the market.
“We should not infer that this seasonal declines would effect the yearly profitability of Dubai’s hotels. On the contrary, full year numbers could well exceed market expectations,” he said.
“Elsewhere in the region, Bahrain witnessed a period of stabilization with year on year occupancies rising from 16 per cent in May 2011 to 39 per cent in May 2012,” said Wahbeh. Another destination seeing positive growth, and a return from the Arab Spring, is Sharm Al Sheikh which witnessed a growth in average room rate from $20 in May 2011 to $29 in May 2012, he pointed out.
TRI Hospitality Consulting’s the HotStats survey, conducted in six Middle East and North African cities, said RevPAR in Dubai increased 9.6 per cent to $195.47 in May driven by a 6.5 per cent growth in average room rate to $247.96. Gross operating profit per available room for the month saw a growth of 12.4 per cent to $145.93, according to HotStats.
“The strength of Dubai’s hotel market was once again shown in May with hotels improving in all areas of performance, especially with occupancy increasing to 78.8 per cent,” argued Peter Goddard, managing director of TRI Hospitality Consulting in Dubai.
In May, Dubai hotels also recorded a nominal increase of 2.3 percentage point in occupancy to 78.8 per cent compared to the same month last year as corporate demand replaced by the leisure segment, which is attracted to the discounted rates and packages offered during the summer season, according to HotStats.