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Hospitality sector in Dubai sees slight drop


Compared to April, the performance slowed down in May 2014, which is in line with the city’s typical summer season. — Bloomberg file picture

Muscat: In May 2014, Dubai's hospitality market witnessed a slight drop, with overall average occupancy decreasing by approximately 3.2 percentage points (pp) over the last year, coupled with a slight drop in Average Daily Rate (ADR) of 1.2 per cent and decrease in revenue per available room (RevPAR) by 2.5 per cent.

This is mainly due to the additional supply of over 3,400 new branded hotel rooms, all within 4 and 5 star hotel segments which have been added to Dubai's hotel supply over the past year.

Compared to April, the performance slowed down in May 2014,  which is in line with the city's typical summer season. Occupancy fell by approximately 5.0 pp month on month, while average room rates decreased from $327 in April 2014 to $244 in May 2014.

Commenting on the survey, Yousef Wahbah, MENA Head of Transaction Real Estate at EY said:"May 2014 was another good month for the Middle East and North Africa (MENA) region's hospitality industry. As we move into the summer months, we can expect to see slight decreases in occupancy rates, largely due to the change in climate, decrease in visitors' numbers and slowdown following the holy month of Ramadan.

However, despite these factors, a number of key markets have still been demonstrating stable growth across Key Performance Indicators (KPIs).

In the wider MENA region, key hospitality markets witnessed positive increases in May 2014, including Manama, Amman and Doha.

Manama recorded an increase in RevPAR of approximately 36.3 per cent in May 2014 when compared to May 2013. This increase is mainly due to an increase in average occupancy from 34.0 per cent to 46.0 per cent during the same period. This was coupled with a slight increase in ADR of 2.4 per cent. These increases can be largely attributed to a number of conferences held in Manama. Also, in May, the city hosted events for petrochemical, property, construction and architecture sectors.

Doha's hospitality market continues to record positive growth this year, with RevPAR increasing by approximately 18.7 per cent in May 2014 when compared to the same period last year. This increase in RevPAR was mainly attributed to a rise in average occupancy from 68.0per cent in May 2013 to 79.0 per cent in May 2014. In addition, Doha's ADR saw an increase of 3.3 per cent in May. These increases can be attributed to a number of events and conferences held in Doha in May, including Trans Middle East, World Stadium Congress and the Doha Forum.

Amman's ADR increased by approximately 18.0 per cent from the same period last year, jumping from $155 in May 2013 to $283 in May 2014. This resulted in an increase in RevPAR of 29.3 per cent. Additionally, in May, Amman's overall occupancy reached 70.0 per cent, a 6.0 percentage points increase. These increases can be credited in part to the conferences Amman hosted in May, which included The Soccerex Asian Forum, Investing in the Levant, Sofex Trade Show, and the Special Operation Forces Exhibition.

Makkah and Sharm El Shaikh, however, saw a decline in their hospitality market performance in May 2014 when compared to the same period last year.

Makkah's hospitality market witnessed a decrease in RevPAR, from $80 in May 2013 to $58 in May 2014, mainly due to a drop in ADR by approximately 28.4 per cent. The decrease in ADR can be attributed to the hotel operators' pricing strategies in order to attract visitors to the Holy City.

Sharm El Sheikh's hospitality market continues to suffer in 2014, compared to the same period last year.
ADR increased from $46 in May 2013 to $53 in May 2014. However, the increase in ADR was offset by a drop in average occupancy of 18.0 per cent pp during the same period. This resulted in a decrease in RevPAR of 19.5 per cent.

The MENA region's hospitality industry remained largely stable in May 2014, despite a little decline in a few markets. It is expected that the industry will see a slowdown in the summer months, as it does every year. However, we remain positive about the MENA hospitality market as a whole and continue to predict strong growth through the rest of 2014.

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