Abu Dhabi and Dubai hotel rates down double digits in May

Both markets and much of the MENA region faced challenging conditions leading to lower earnings



Hotel rates in Abu Dhabi and Dubai decreased significantly last month as hoteliers continued to face pressure, according to EY.

In the professional services firm’s report, it found that both cities maintained strong occupancy levels of 73.5 per cent and 77.8 per cent respectively but saw sizeable declines in revenue per available room (RevPAR) compared to May 2016.

RevPAR in Dubai was down 11.6 per cent due to a reduction in the average daily rate from $225 to $211 while Abu Dhabi fared even worse with RevPAR down 20.3 per cent and the average daily rate declining from $119 to $100.

Elsewhere in the Middle East and North Africa region, EY noted a decrease in earnings with some exceptions.

Jeddah saw the highest occupancy rate in the region at 80.2 per cent and the highest RevPAR at $247. There were also gains in Madinah and Makkah with the former seeing a 6.1 per cent increase in occupancy, $1 rise in average daily room rate from $179 to $180 and boost in RevPAR by 12.2 per cent from $92 to $104.

Makkah witnessed a 90.5 per cent increase in RevPAR compared to the previous year, with the average room rate increasing from $142 to $275 and an occupancy rate of 41 per cent.

Increases in both cities were attributed to the beginning of the holy month of Ramadan where many worshippers prefer to perform Umrah.

EY said strong performance in Jeddah, Makkah and Madinah was expected to continue in June due to the holy month, while some Middle Eastern tourist destinations could see improved performance due to the Eid Al Fitr holiday, expected to fall on June 25.

Regional hotels suffered last year as the falling oil price and strength of the dollar impacted spending.

Read: GCC hotels seek return to growth after a tough 2016

This trend continued in the first quarter when research firm STR noted year-on-year RevPAR decreases ranging from 30 per cent in Jeddah, to 22 per cent in Riyadh, 17 per cent in Manama, 16 per cent in Doha, 15 per cent in Muscat, 8 per cent in Abu Dhabi and just under 4 per cent in Dubai.