Hotels in the UAE recorded refuses in main performance indicators for 2017, even though occupancy rates edged up, as per analysts STR.
It stated in a new research note that occupancy throughout the UAE increased by 0.5 percent previous year to 75.1 percent compared to the last year.
However, average daily rates (ADR) and revenue each available room (RevPAR) reduced by 3.8 percent and 3.3 percent respectively.
STR stated that the reduction were partly because of expanding supply growth which influences hotel performance in the country, specially as Dubai is developing to welcome about 25 million tourists for the Expo 2020 event.
Analysts stated that, “Not only will the amount of new hotel supply continue to influence Dubai’s ADR, the type of new hotel supply entering the market will create a shift in the pricing landscape, with more offerings in the Midscale segment. The market has been historically dominated by the upper-tier hotel classes. Additional offerings in the middle-pricing tiers, however, has helped the market’s demand continue to rise, as a wider price range has made Dubai more accessible at various travel budgets.”
STR stated that Dubai proceeds to add new tourism attractions to motivate demand expansion, assisting the market drive hotel demand as inventory expands.
Analysts mentioned that Abu Dhabi is following a same trend, but at a tiny scale because of smaller market size. Along with hotel supply developments, the market is adding many new cultural attractions, including the Louvre Abu Dhabi, which opened in November, and additional museums slated to open in the coming years.
STR stated, “An expected increase in oil prices, combined with sustained growth in the non-oil sector, should drive economic expansion in Abu Dhabi in 2018, allowing the economy to rebound from relatively flat performance during the previous 12 months. That should be an encouraging signal that the hospitality industry will turn the corner.”
The research note also mentioned that hotels in Kuwait witnesses mixed fortunes during 2017, with occupancy increasing by about 9 percent to 56.7 percent but ADR reducing by 4.7 percent. RevPAR increased 3.7 percent.
It also stated, “Demand, up 12 percent in 2017, has continued to grow following the economic downturn caused by lower oil prices. However, room rates have now reduced for three consecutive years.”
In the wider Middle East region, hotels mentioned negative 2017 performance results with occupancy down by 1.1 percent to 65 percent, ADR down 4.5 percent and RevPAR reducing by 5.6 percent.
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