Dubai luxury hotels' occupancy stays strong as room rates drops

Average room rates drop to Dh1,156

Five and four star hotels in Dubai continued to experience weakening average room rates (ARR) in November, falling 6.9 per cent to $315.03 (Dh1,156), whilst occupancy levels remained strong, albeit marginally lower than the same period last year at 84.9 per cent.

The 8.1 per cent decrease in revenue per available room (RevPAR) was compounded by significantly lower food and beverage revenues which fell 12 per cent, driving total revenue per available room (TRevPAR) 10.9 per cent lower to $449.80. Higher operating expenses compounded lower overall revenues, reducing gross operating profit per available room (GOPPAR) by 15.8 per cent to $214.83.

Occupancy levels plunged in Sharm El Sheikh in November following the crash of a Russian civilian airplane in early November. A subsequent ban on travel and cancellation of flights to the region from Russia and various European countries severely impacted performance in the Rea Sea destination. Occupancy levels fell 25.9 percentage points to 36.2 per cent, resulting in a 42 per cent drop in RevPAR to $17.94. Fixed payroll expenses compounded the fall in top line revenues, pushing profit margins to their breaking point with GOPPAR dropping to $1.24.

 Weak demand in Doha and Jeddah impacts hotel profits

 The continued low oil prices are starting to have an impact on Doha's hotel market as demand levels fell in November with occupancy levels dropping 5.5 per centage points to 75.1 per cent. The fall in demand impacted all remaining performance indicators with ARR and RevPAR dropping 12.8 per cent and 18.8 per cent respectively. Higher F&B demand offset the softer room revenue; however it was not sufficient enough to prevent GOPPAR reducing 24.4 per cent to $142.99.

Jeddah hotels witnessed softening demand levels in November with four and five star hotels recording a 3.8 percentage point reduction in occupancy to 70.7 per cent.

Hoteliers were unable to offset the falling demand as ARR fell by 3.8 per cent to $245.05. The decrease in occupancy levels had a negative effect on the remaining performance indicators with RevPAR and TRevPAR falling 8.8 per cent and 3.8 per cent respectively. Higher operations expenses compounded lower revenues with GOPPAR dropping 21.2 per cent to $108.23.

Although Beirut hotels witnessed a 3.7 percentage point reduction in occupancy levels to 58.2 per cent in November, hoteliers were able to yield significantly higher ARR which rose 15.8 per cent to US$142.29. The growth in ARR had a positive impact on all performance indicators with RevPAR and TRevPAR increasing 8.9 per cent and 15.2 per cent respectively. However higher operational expenses limited the growth in profits with GOPPAR increasing 3.3 per cent to $23.20.

[Image via Shutterstock]
 

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