Low occupancy rates hit Dubai hotels
Chain aims to have 20 hotels in the region by 2018
Operators confirm they have either laid off staff or frozen new hiring
Dubai: Some hotels in Dubai have either laid off some staff or stopped hiring, as low occupancy rates continue to threaten the hospitality business, Gulf Newshas learnt.
One of the leading luxury resorts, Atlantis, The Palm, has let go of at least 27 employees, although none of the company’s waiters, bellhops, bartenders and other front-desk personnel were affected.
Another hotel, the Arabian Courtyard Hotel and Spa, told Gulf News that they have frozen new hiring due to the downtrend and that they are currently evaluating the situation.
“Occupancy and revenue has dropped. We shall evaluate the situation and, if needed, we may adopt certain contingency plans, including extending leave, granting local leave and ultimately reducing staff as a last option,” Habib Khan, general manager at Arabian Courtyard Hotel and Spa, told Gulf News.
Occupancy rates in Dubai’s hotels dropped in the first few months of the year following the dramatic decline in oil prices in the last quarter of 2014. Operators attributed the slowdown to the fall in visitor numbers from Europe, especially Russian travellers — whose spending power has been eroded due to the euro’s devaluation against the dollar — as well as regional instability and growing hotel room supply.
Following the decline in revenue and occupancy numbers, hiring specialists noted a slowdown in overall recruitment activity, although a number of hotels are still hiring. One employment index noted that the growth in online hiring in the Middle East’s hospitality industry dropped by 10 percentage points from 53 per cent in February 2015.
A spokesperson from Atlantis, The Palm, confirmed to Gulf News that they have made changes to their staffing structure and laid off 27 personnel in response to changing “market dynamics”. The hotel refused to confirm the positions of personnel who were laid off, although it did say that none of the front desk or staff who are in direct contact with the guests were affected. “We have revised our staffing structure by approximately 27 positions to streamline our operations and create additional efficiencies in response to evolving market dynamics,” said the spokesperson.
“These changes will not have any impact on guest experience, quality and standards. Our 3,300 colleagues at [the hotel] will continue their excellent work to provide experiences exceeding our guests’ expectations each and every day.”
Regional instability
Some smaller hotels in Dubai, however, said they have not reduced their staff requirements, citing that their occupancy levels are still looking good. According to PwC this month, hotels in Dubai are likely to see a 2.4 per cent decline in revenue per available room (RevPar) this year, although the numbers are expected to bounce back next year.
Khan said one of the key factors causing the decline in occupancy levels is regional instability. “Many countries’ foreign missions have declared the Middle East unsafe from their citizens, and therefore, those who are not too familiar with the geography of Dubai/emirates tend to assume it’s also a troublesome area.
“Russian travellers to Dubai have significantly reduced due to their socioeconomic situation. Another factor is added rooms inventory vis-a-vis visitors this year. Effective last quarter of 2014, Dubai is witnessing a gradual decline in demand, thus affecting the overall occupancy and average rate in Dubai, not in any particular area.”
Although they have not terminated their staff, Ahmad Al Ansaari, chairman of Central Hotels, said the subdued outlook is due to the increase in hotel room supply.
“With the rise of many hotels joining the competition, there are many options for the business and leisure travellers, which could attribute to the forecast drop,” he said.
Mousa Al Hayek, COO of Al Bustan Centre and Residence, noted that there has been a decline in the number of visitors from Russia and broader CIS (Commonwealth of Independent States), but their current occupancy level is still 12 per cent higher than last year.
“The low oil prices and strong dollar resulted in devaluation of currencies in most of the countries from where Dubai is getting its fair market value. The fluctuation and drop of the euro were also major concerns which affected the occupancy rate in Dubai hotels,” said Al Hayek.
The emirate’s hotels incurred a 1.9 per cent decline in occupancy in February, following the dramatic decline in oil prices in 2014, according to STR Global.
“UAE has now become a much more expensive destination for those residing in the Eurozone,” said PwC in its report.
“The issue now is whether the significant decline in visitor numbers during the last quarter will reverse, and if so, how quickly. This is especially important given the enormous supply set to come on-stream in the next couple of years,” said Philip Shepherd, partner at PwC Middle East.
