Dubai hotels see 86% occupancy in May, but RevPAR drops

Hotels in Dubai recorded strong average occupancy of 86 per cent during the month of May but revenue per average room (RevPAR) dropped, a new report by EY said.

RevPAR fell by 7 per cent, from $200 in May 2015 to $186 in May 2016.

An 8.9 per cent drop in RevPAR was also recorded by Abu Dhabi hotels last month, the report found.

Meanwhile occupancy levels in the UAE capital remained the same as May last year, at 81 per cent.

“While occupancy rates remained high in both Dubai and Abu Dhabi, their hospitality markets witnessed a decrease in RevPAR mainly due to the drop in average daily rates in both cities,” said MENA head of Transaction Real Estate at EY Yousef Wahbah.

Overall, the report found that Middle East hotel performance was mixed in the month of May.

Jeddah’s hospitality market recorded an 11 per cent increase in average occupancy when compared to May 2015 with RevPAR also up 33 per cent.

“The increase in Jeddah’s occupancy maybe ascribed to the start of the summer holidays and it being the summer escape for its nationals during this time a year,” the report said.

Meanwhile hotels in Madina and Doha saw a dip in performance last month.

Madina’s hospitality market witnessed a decrease in RevPAR of 26.5 per cent along with a 17 per cent slump in average occupancy.

Qatari capital Doha also saw occupancy drop from 72 per cent in May 2015 to 66 per cent in May 2016, with RevPAR falling by 23.2 per cent.

“The drop in occupancy maybe attributed to government spending cuts that have effected business tourism which constitutes to about 70 per cent of Doha’s hotel demand,” the report stated.

Muscat’s hospitality market witnessed an increase in average occupancy of 3 per cent, although RevPAR decreased by 3.5 per cent.

“Overall, the Middle East hospitality markets are weathering the economic conditions quite well,” said Wahbah.

“The favourable weather, regional business conferences and leisure destinations across the region continue to attract tourists into the Middle East.”

In a recent report, research firm STR Global said there were 153,818 rooms in 546 hotels in the construction final planning and planning stages in the Middle East in May, a 32.7 per cent year-on-year increase.

Within the region, the UAE had the second highest number of rooms under construction with 27,344 in 93 hotels, compared to 34,680 across 77 hotels in Saudi Arabia.

Read more here: 10,000 hotel rooms to open in Dubai this year