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UAE hotel rates in October slump to lowest level since 2005

Hotels operating in the UAE continued to see declines in occupancy and room rates during October, according to the latest data from industry consultants STR.

It said the UAE’s hospitality sector reported an occupancy dip of 2.9 percent during the month to 75.6 percent, while average daily rates (ADR) dropped 9.6 percent to AED668.05, the lowest for an October since 2005.

As a result, revenue per available room (RevPAR) declined by 12.3 percent to AED505.34.

STR said October was the 22nd consecutive month of year-over-year ADR decreases in the UAE, due in part to consistent and significant supply growth, which is up by 5.1 percent year to date). At the same time, demand has remained strong, up 5 percent year to date.

In Dubai, hotels saw occupancy fall by 2 percent to 78 percent, ADR was down 9.8 percent to AED764.63 and RevPAR dropped 11.6 percent to AED596.16.

STR said strong supply growth (up 5.8 percent year to date) has slightly outpaced a year-to-date demand increase (up 5.6%) in the market. In addition to the strong development pipeline, STR analysts attributed Dubai’s performance to a decline in visitors from the drop in oil prices.

In Riyadh, Saudi Arabia, STR reported decreases in occupancy (down 7.2 percent to 56.2 percent), ADR (down 3.6 percent to SR796.30) and RevPAR (down 10.6 percent to SR447.46).

STR said as one of the Gulf’s key hubs, Riyadh is heavily dependent on corporate travel but that business has suffered with the drop in oil prices, and coupled with significant supply growth (up 8.9 percent year to date), Riyadh’s performance has slumped.

Regionally, hotels in the Middle East reported a 4.4 percent decrease in occupancy to 64 percent, a 9 percent drop in ADR to $174.19 and a 13 percent decline in RevPAR to $111.48.

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