Dubai hotels record 8.3% drop in average daily rate

Hotels in Dubai posted the largest average daily rate (ADR) decrease in the Middle East and Africa last month, according to data from STR Global.

The ADR fell 8.3 per cent to $175.62 (Dh644), and the next largest decrease – a drop of 6.8 per cent to $200.50 – was in Abu Dhabi.

"Historically, ADRs decrease during Ramadan and this year was no exception," said Darroch Crawford, Managing Director of Premier Inn. "However, there has been a significant decline in both business and leisure demand over the summer months versus last year and September was no exception."

One of the key reasons for the drop in the ADR was an increase in the supply of hotel rooms. Almost half the 120,589 hotel rooms under construction in the Middle East and Africa are being built in the UAE, according to STR Global. The UAE is building 57,126 rooms, while Saudi Arabia is second with 10,986 rooms.

Hotels in the Middle East and Africa witnessed mixed year-over-year results in the three key measurements reported in US dollars for September 2009.

The region's occupancy dropped 8.2 per cent to 56.9 per cent, ADR increased 1.5 per cent to $140.66 and revenue per available room (RevPar) fell 6.9 per cent to $80.

Elizabeth Randall, Managing Director of STR Global, said: "September showed the lowest monthly RevPar decline (-6.9 per cent) for the region since December 2008. However, while we have seen declines in RevPar in recent months, the earlier start of Ramadan in mid-August this year benefitted September's results as business was stronger than in the same month last year. RevPar benefited from the first increase in average room rate since March 2009.

"It is good to see more cities reporting monthly RevPar increases with Amman, Beirut, Cairo, Istanbul and Jeddah all growing in comparision to last year. It will be interesting to see if this positive sentiment continues over the coming months."

Beirut reported the largest increases in all three metrics – occupancy rose 56.2 per cent to 58.1 per cent; ADR increased 57.5 per cent to $255.71; and RevPar jumped 146 per cent to $148.70.

Istanbul's occupancy rose 11.7 per cent to 71.1 per cent and Cairo witnessed 2.6 per cent occupancy growth to 54.1 per cent. Riyadh experienced the largest occupancy decrease, falling 25.8 per cent to 34.3 per cent, followed by Muscat (-18.0 per cent to 37 per cent) and Cape Town, (-17.8 per cent to 50.6 per cent).

Other than Beirut, two markets reported double-digit ADR increases – Amman (+17.9 per cent to $134.71) and Cairo (+15 per cent to $118.68).

Three markets experienced RevPar decreases of more than 15 per cent – Riyadh (-21.3 per cent to $77.83), Abu Dhabi (-16.9 per cent to $129.92) and Muscat (-15.3 per cent to $72.83).

Hotels in the Asia-Pacific region experienced mixed results for all three key performance metrics last month.

In year-over-year measurements, the Asia Pacific region's occupancy rose 1.4 per cent to 62.3 per cent, average daily rate declined 7.7 per cent to $123.72 and revenue per available room fell 6.3 per cent to $77.12.

"Asia Pacific reported the lowest RevPar declines (-6.3 per cent) since September 2008," said Randall. "A slight increase in occupancy boosted RevPar – it was the first increase in occupancy since October 2007.

"The coming months should see improvements on the poor performance of the last quarter of 2008, which had been weakened by the economic downturn. Beijing, Hong Kong and Shanghai saw smaller declines compared to the post-Olympic period, reporting RevPar decreases of only 9.2 per cent, 11 per cent and 19.2 per cent respectively."

Among the key markets, Beijing reported the largest occupancy increase, up 18.8 per cent to 57.1 per cent, followed by Phuket (+13.3 per cent to 46.0 per cent) and Sydney (+10.5 per cent to 79.0 per cent). Two markets posted double-digit occupancy declines: New Delhi (-12.2 per cent to 63.2 per cent), and Bali (-10.6 per cent to 76.0 per cent).

Three markets posted double-digit ADR increases: Bali (+15.4 per cent to $130.64); Tokyo (+14.1 per cent to $228.19); and Osaka (+13.5 per cent to $123.29).

New Delhi reported the largest ADR decrease, falling 37.2 per cent to $157.20. Three other markets posted ADR decreases of more than 20 per cent: Mumbai (-30.7 per cent to $170.96); Beijing (-23.6 per cent to $97.44); and Shanghai, China (-22.6 per cent to $107.59).

Seoul, South Korea, experienced the largest RevPar increase, up 15.9 per cent to $132.10, followed by Osaka with a 13.2 per cent increase to $94.75. New Delhi (-44.8 per cent to $99.32) and Mumbai (-31.3 per cent to $103.27) reported the largest declines in RevPar for the month.

The European hotel industry posted decreases in year-over-year results. Figures for occupancy, average daily rate and revenue per available room ranged from double-digit losses to double-digit gains, depending on the market and the currency used for comparison.

"The hotel performance for the next few months will see a recovery over the bad fourth quarter of 2008, when the worldwide economic downturn accelerated RevPar declines," said Randall. "September showed the lowest RevPar drop since October 2008 as RevPar declines have stabilised over recent months.

"Occupancy levels boosted RevPar as average room rates continued their double-digit decline across Europe's sub-regions, the exception being Western Europe, which only saw an ADR decrease of 6.5 per cent."

Venice saw the largest occupancy, up 5.5 per cent to 73.2 per cent, followed by London (+3.8 per cent to 84.4 per cent) and Salzburg (+2.8 per cent to 73.7 per cent). Cities that saw occupancy falls were Antwerp (-12.9 per cent to 65.4 per cent), Budapest (-12.6 per cent to 67.9 per cent) and Prague (-12.5 percent to 66.6 per cent).

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