Dubai hotel occupancy touches peak levels of 2007

Occupancy levels at hotels in Dubai touched 2007 levels in October while Abu Dhabi reported a surge in demand, according to the latest HotStats survey by TRI Hospitality Consulting.

The study of hotels in six regional cities showed that the UAE capital registered the largest increase in occupancy in the region, growing by 9.7 percent to 82.8 percent and moving closer to Dubai which saw occupancy increase to 87.3 percent.

However, Abu Dhabi saw its room rates continue to drop to $156.89, closing the month 18.6 percent below the same period last year.

This resulted in a drop in the bottom line as gross operating profit per available room (GOP PAR) for the month dropped by 8.2 percent to $121.54.

Peter Goddard, managing director of TRI Hospitality Consulting, said: "Occupancies across regional destinations typically improve from October as the region experiences the exit of hot summer months and the onset of cooler weather conditions.

"This is when these markets see the leisure demand pick up and large commercial centres witness an increase in corporate and MICE demand, which benefits major MICE destinations such as Dubai and Abu Dhabi."

He said hotels in Dubai and Abu Dhabi have also benefited from the Arab Spring this year as the country is perceived to be safe, politically stable and relatively liberal among its GCC peers.

In Dubai, the growth trend in hotel performance has continued into October as the city registered the largest RevPAR growth (13.1 percent) amongst the six cities surveyed, reaching $196.85.

"The significant growth in demand has helped Dubai hotels to achieve occupancy levels comparable to or perhaps slightly better than 2007 when the market was reaching its peak," said Goddard.

Official statistics for October 2007 indicated an occupancy of 84.58 percent for the five and four star markets.

"However, the latest HotStats survey within these markets indicate that the hotels are currently achieving stronger demand levels although the rates achieved are significantly lower than those in the boom time", added Goddard.

The survey showed that Egypt remains under the grip of uncertainty while Saudi Arabian markets remained stable in October.

Occupancy levels for four out of the six cities surveyed by HotStats in October reported a decline while average rates showed varying levels of growth.

Cairo and Sharm El Sheikh continued to be the loss leaders across most of the metrics while the Saudi cities of Riyadh and Jeddah saw marginal decline in occupancy levels.

Egypt saw an escalation in tension during the month as a military action lead to the death of 26 protesters, culminating in the resignation of the deputy prime minister in the interim cabinet.

The escalation in tension caused hotel occupancies in Cairo to remain subdued at 47.4 percent for the month, 34.4 percent lower than the previous year, although average rates remained relatively stable at $118.46.

"The recurrence of violence in Egypt will certainly delay the recovery of tourism demand in these two markets," said Goddard.

Jeddah and Riyadh, the two major markets in Saudi Arabia, saw occupancies dip marginally during October. In Jeddah, occupancy dropped two percent to 73.8 percent while average rates posted an increase of 8.5 percent and stood at $196.08.

Riyadh, the capital city a major regional commercial hub, achieved an occupancy of 69 percent which was 2.4 percent lower than October 2010.

Average room rates in Riyadh remained stable at $274.97 while GOP PAR fell 5.2 percent to $176.48.

"Hotels in Jeddah and Riyadh have shown strong resilience in the face of the ongoing global economic problems mainly due to the strong demand originating from the corporate and government segments," added Goddard.