Fewer hotel rooms booked in Dubai Where have the tourists gone? Analysts explain factors behind decl
Dubai: The popular attractions in Dubai, including the musical fountain, Dubai Mall, Burj Khalifa and other major landmarks are still attracting hundreds of visitors each month, but there aren’t as much tourists checking into hotel rooms as they used to be, analysts and hoteliers said.
Hoteliers contacted by Gulf News confirmed that although Dubai is still enjoying good weather, the occupancy rates in their properties last month dropped by as much as five per cent.
In a research note released on Sunday, Emirates NBD said Dubai’s hotel sector is currently facing headwinds, with the average hotel occupancy averaging at 86.2 per cent last February, which is two percentage points lower than in February 2014.
Revenues don’t look promising, either, with the revenue per available room (RevPAR), a key indicator of financial performance in the hospitality industry, also declining by 7.7 per cent year on year last month, the ninth consecutive month of decline.
Alper Can Bulcum, cluster general manager of Ramada Plaza Jumeirah Beach Residence and Ramada Sharjah, said they saw a slight drop in occupancy in February but he added that they were able to maintain "good business."
"One of the reasons for the business drop in this area of Dubai was the decrease in the number of tourists from the Commonwealth of Independent States (CIS) market which is normally at its peak during these months," said Bulcum.
"There is also the shift of school holidays to March from Kuwait. The [other] markets [like] Egypt and Turkey are targeting similar markets with Dubai, promoting better weather, beaches, etc."
Habib Khan, general manager of Arabian Courtyard Hotel and Spa, said their occupancy dropped by about 5 per cent compared to last year.
"Inventory has increased in Dubai which had taken the share. The Euro drop also affected the European market which was key during the month," Khan told Gulf News.
"Egypt tourism is reviving and taking market share.[Moreover,] Gulfood [an annual food and hospitality show in Dubai] wasn't that busy as it used to be. All these factors affected the occupancy."
Analysts, on the other hand, attributed the not-so stellar occupancy rates to the strengthening of the US dollar and increased supply of hotel rooms.
The value of the greenback has gone up against a number of currencies, including those in the emerging markets where Dubai’s visitors mostly come from. This has consequently eroded the purchasing power of a number of Dubai’s visitors.
“Many of the key markets for Dubai are emerging markets which have been particularly hard hit by currency weakness relative to the USD,” Emirates NBD said.
Adding to the pressure on occupancy rates, the hotel sector in Dubai is seeing more hotels entering the market. Dubai wants to keep adding more hotel rooms until 2020.
As of January 2015, 38 new hotels were under construction, representing 16 per cent of the current room supply. The number of hotel rooms went up by 6.8 per cent last month compared to a year earlier, while the total supply last year increased by 7.8 per cent year on year.
STR Global’s data showed that around 11,000 more rooms are still in the planning or final planning states, so the supply is expected to expand further.
“As the authorities are targeting a doubling of hotel room from 2012 to 2020, this trend is set to continue,” said the bank.
In comparison, the hotel sector in Abu Dhabi is not facing serious challenges. The revenue per available (RevPAR) room in Abu Dhabi grew by an “astonishing” 29.2 per cent last month compared to a year earlier, while occupancy rate rose by 1.22 percentage point to 80.6 per cent.
“The trend evident in Abu Dhabi has been one of rising occupancy rates and RevPAR, despite a stronger USD. We also note that the supply of hotel rooms in Abu Dhabi has grown at a faster pace than in Dubai (11 per cent year on year in February 2015 and 11 per cent for the full year 2014).
The bank, however, noted that there are fewer hotels in Abu Dhabi, about less than one third the number in Dubai. The UAE capital’s RevPAR is also 33 per cent lower than in Dubai.
Emirates NBD, however, pointed out that the 86.2 per cent hotel occupancy in Dubai last month is still within “healthy” levels and slightly higher than January’s 85.8 per cent.
