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28 March 2024

Hotel occupancy surges in capital

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Hotels in Abu Dhabi reported a surge in demand during October  while occupancy levels in Dubai touched 2007 levels, according to the latest HotStats survey of full-service hotels in six regional cities by TRI Hospitality Consulting.

Abu Dhabi registered the largest increase in occupancy in the region, growing by 9.7 percentage point to 82.8 per cent in October 2011 and moving closer to Dubai which saw occupancy increase to 87.3 per cent during the month.

However, the capital city saw its average room rates continue to drop to $156.89, closing the month 18.6 per cent below the same period last year. This has resulted in a drop in the bottom line as gross operating profit per available room (GOP PAR) for the month dropped by 8.2 per cent to $121.54.

“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,” said Peter Goddard, managing director of TRI Hospitality Consulting in Dubai.

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 amongst its GCC peers.

In Abu Dhabi, hotels have gained from some of the international events hosted by the city in October, including the Abu Dhabi Medical Congress and the 10-day long Abu Dhabi Film Festival. Although the exact number of visitors this year is not yet available, the Abu Dhabi Film Festival is estimated to have attracted more than 30,000 visitors in 2010 including nearly a thousand film professionals and journalists, boosting demand for hotel rooms.

In Dubai, the growth trend in hotel performance has continued into October as the city registered the largest RevPAR growth (13.1 per cent) amongst the six cities surveyed, achieving a RevPAR of $196.85 for the month.

Hotels in the city saw occupancy levels soar to 87.3 per cent assisted by the surge in demand during the week-long GITEX Technology Week and GITEX Shopper which saw visitor numbers touch 169,018 this year.

TRevPAR achieved double digit growth in October to reach $350.39, boosting GOP PAR by 84 per cent from $87.23 in the previous month (September) to $159.86 during the month.

“The 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. DTCM statistics for October 2007 indicate an occupancy rate of 84.58 per cent 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 much lower than those in the boom time,” added Goddard. 

Egypt uncertain, Saudi stable

Egypt remains under the grip of uncertainty while Saudi markets remain stable in October.

Occupancy levels for four out of the six cities surveyed by HotStats for the month of October 2011 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 per cent for the month, 34.4 percentage points lower than the previous year, although ARRs have remained relatively stable at $118.46.

The significant drop in occupancy and the growth in payroll (by 10.2 percentage points) have resulted in GOP PAR to more than halve to $47.63.

Hotels in Sharm El Sheikh reported an occupancy of 63.3 per cent and ARR of $56.93 for the month, lower by 29.5 percentage point and 24.8 per cent respectively compared to the same period in 2010. Hotels here achieved a TRevPAR of $63.46 which was 44.3 per cent lower than the previous year, while GOP PAR was down by 61.3 per cent at $26.34.

“The recurrence of violence in Egypt will certainly delay the recovery of tourism demand in these two markets. Anecdotal evidences suggest that hotels located on the outskirts of Cairo are doing better than those located closer to the city centre and Tahrir Square which is the focal point of the ongoing protests. Sharm El Sheikh on the other hand is likely to see further improvement in hotel performance metrics in the coming months if the city remains peaceful", said Goddard.

Jeddah and Riyadh, the two major markets in Saudi Arabia, saw occupancies dip marginally during October.

In Jeddah, occupancy dropped two percentage points to 73.8 per cent while ARR posted an increase of 8.5 per cent and stood at $196.08.

Riyadh achieved an occupancy of 69 percent which is 2.4 percentage points below the previous year. Average room rates (ARR) in Riyadh remained relatively stable at $274.97 while revenues and profitability reported marginal decline during the period. GOP PAR for Riyadh hotels was reported at $176.48 which is 5.2 per cent below the same period in the previous year.

“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. The increase in ARR in Jeddah is attributed to the Corniche properties increasing the rates on the back of constant occupancy levels, a move which was also followed by city based hotels,” Goddard said.