01/02/2017 06:06 AST
Hotels in Dubai were the top performer in the region in 2016, but the hospitality market as a whole continued to face some challenges, according to the latest research.
The Middle East Hotel Benchmark Survey Report, produced by EY, showed that hotel operators across the Middle East and North Africa (Mena) region witnessed a negative performance in 2016 compared to a year earlier, as the subdued global economic climate pressured room rates downward.
“The hospitality market was greatly affected by the drop in oil prices over 2015 and 2016, forcing many hotels to lower their room rates while also suffering from lower occupancy,” said Yousef Wahbah, Mena head of transaction real estate at EY.
The report stated that strong occupancy levels were recorded in Abu Dhabi, Dubai and Ras Al Khaimah in 2016, but the revenue per available room (RevPAR) experienced a decline, owing to the supply outpacing demand of hotel rooms, coupled with a drop in tourists travelling to Dubai due to the decline in euro and Russian rouble against the US dollar.
“The majority of markets experienced a drop in RevPAR due to a slower global economy, making 2016 a challenging year for the hospitality industry,” EY said in its report.
Fewer guests booked hotel rooms in Abu Dhabi, where occupancy levels dropped by 1 per cent point compared to a year earlier to 77 per cent, while the average room rate slipped by 15.1 per cent, from $147 in 2015 to $125 in 2016. The average rooms yield also dropped 16.3 per cent, from $116 to $97.
In Dubai, occupancy levels remained flat at 80 per cent, while RevPAR fell from $216 to $200, though both indicators are still the highest in the Mena region. The average room rate in the emirate also declined by 7.7 per cent, from $268 in 2015 to $247 in 2016.
Hoteliers contacted by Gulf News had earlier said that an oversupply of rooms, coupled with stiff competition and lower influx of tourists from key markets, is putting pressure on hotel performance.
"[There is] more supply in the market. This leads to buyers dictating rates as opposed to the bouyant markets that were prevalent a couple of years ago," Greg D'Souza, director of sales and marketing at Millennium Plaza Hotel, told Gulf News.
Outside Dubai, Ras Al Khaimah looked promising, with its occupancy levels rising by 7.2 per cent points, from 64.8 per cent in 2015 to 72.1 per cent in 2016. Average room rates, on the other hand, got cheaper, declining slightly from $166 to $162. The average yield generated per room stood at $117, showing an 8.8 per cent rise from $108 a year earlier.
The good news, though, is that there has recently been an increase in visitor influx from China, following the relaxation in UAE visa policy. It was announced in September that Chinese visitors will now be granted visas on arrival at airports across the country.
“Increased travel from Chinese tourists because of the change in the UAE visa policy helped improve the hospitality market in Dubai during the last three months of the year,” EY said.
Gulf News
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