Hotel revenues to drop in Dubai but grow in Abu Dhabi in 2015
Dubai hotels likely to see 2.4% dip in revenue per available room
Dubai: Revenue per available room (RevPAR — an industry benchmark for performance) is expected to drop by 2.4 per cent this year in Dubai’s hotels but increase by 6.7 per cent in Abu Dhabi, according to a new report.
The report by consultancy PwC indicates that while RevPAR is likely to decrease to $184.6 in Dubai this year as a result of lower occupancy and average daily rate (ADR), it is forecast to grow by 6.6 per cent to $196.8 in 2016. Occupancy is expected to grow from 77.4 per cent this year to 80.7 per cent in 2016, while ADR is likely to increase from $238 to $243.7 during the same period.
Hotels in the capital, too, are expected to record a rise in RevPAR next year by 8.3 per cent to $122.7 from $113 in 2015. The anticipated growth in occupancy and ADR to 80.7 per cent and $152 respectively will be driven by infrastructure spend, moderate supply increases, and higher tourist numbers, PwC said in the report.
“Economic growth, continued infrastructure spend, and increasing tourist numbers are likely to support future growth. However, many of the challenges seen in 2014 will continue in 2015, including lower visitor numbers from Russia and the broader CIS [Commonwealth of Independent States] region, high levels of supply, and concerns over the euro,” it said.
In Dubai, occupancy rates were down 1.8 per cent last year, while ADR grew 2.4 per cent, resulting in RevPAR edging up 0.5 per cent compared with the previous year, falling short of PwC’s forecast of a 6.5 per cent increase.
In Abu Dhabi meanwhile, occupancy was up 9 per cent and ADR was down 2.3 per cent, causing RevPAR to grow by around 6 per cent over 2013.
Total revenue per available room [TRevPAR] in cities including Dubai, Abu Dhabi, Doha, Muscat, Jeddah and Riyadh fell “appreciably” for most operators in 2014, according to the report.
“The fall in the oil price, which had a considerable impact on visitor numbers, especially from Russia, with a steeper fall towards the end of the year. This has a disproportionate effect on hotel revenues in the region, as Russian tourists tend to spend a lot more on food and beverage and leisure within the hotel than other national groups of travellers … we believe Russian spend may be down around 50 per cent in Q4,” PwC said in the report.
The consultancy said that it will “take time” for the effect of lower oil prices on the number of tourists to the region to reverse. “In the interim it will mean that supply -or more accurately oversupply — could become an issue in some parts of the region, especially at the increasingly crowded luxury end of the market,” it added.
