Oct. 30–Abu Dhabi turns corner as ARR rises; Dubai hotels? profit climbs

Dubai: The UAE’s hospitality industry sustained steady growth during the summer by posting a nominal rise in occupancy levels last month ahead of high season in the emirate, according to a report.

Abu Dhabi hotels turned the corner as average room rates, or ARR, began an upward trend in line with occupancy while the hotels in Dubai profits rose despite marginal decline in ARR in September.

TRI Consulting, which released the latest HotStats survey of full-service four- and five-star hotels in the Middle East and North Africa region, said the recovery of the Abu Dhabi hotel market continued to gain momentum with positive performance in September compared to the same period last year.

The survey said ARR increased by 4.2 per cent to $128.96 while occupancy grew by 6.6 percentage points to 76.6 per cent, resulting in revenue per available room, or RevPar, rising 14 per cent to $98.76.

“Abu Dhabi’s hotel market is going from strength to strength with a strong performance in September boosting year-to-date figures. The continual increase in occupancy levels to 74.2 per cent up to September has allowed hoteliers to drive higher average room rates for the first time higher than 2013 levels,” Peter Goddard, managing director of TRI Consulting, said in a statement to on Wednesday.

Total revenue per available room, or TRevPar, was impacted by decline in beverage revenues of 5.3 per cent, however the strong room performance led to a 9.4 per cent increase over the same period last year to $219.13. The growth in RevPar directly impacted gross operating profit per available room, or GopPar, which increased by 42.4 per cent to $47.73.

“We project this upwards trajectory to continue as the city braces itself for the high season with notable events such as the Formula 1 Abu Dhabi Grand Prix and the opening of the much-anticipated Yas Mall in November,” Goddard said.

Dubai hotel gains continue

Four- and five-star hotels in Dubai witnessed a mixed performance in September with occupancy levels growing 2.1 percentage points to 78.2 per cent. However, ARR declined marginally during the month, falling 3.2 per cent to $231.36 and as a result RevPar reduced by 0.5 per cent to $180.88.

The survey said contraction in room revenues did not materially impact the overall top-line performance as food and beverage revenues increased by five per cent, boosting TRevPar by 2.1 per cent to $353.86. A reduction in a number of operational expenses had a significant impact on profitability levels as GopPar increased by 8.3 per cent to $111.58, according to the survey.

“Dubai hotels showed a growth in occupancy levels in September as the market witnessed a return to business after the summer period. Although, hotels recorded a 2.1 percentage point increase in occupancy, a rare decline in average rates directly impacted RevPar levels for the month,” Goddard said.

“Year-to-date figures indicate that hotels in Dubai have managed to increase ARR by 3.8 per cent while occupancies have remained stable, which confirms the strength of the market particularly with the increase in hotel room supply witnessed during the year,” he added.

Mat Green, head of research and consultancy for the UAE at CBRE Middle East, said the demand for mid- to low-end residential offerings is expected to remain strong in the short term due to limited supply and high demand.

“Much of this demand is being generated by solid growth in the services sector, particularly from the retail and hospitality industries. With 53,000sqm gross leasable area of retail space and 6,000 hotel and hotel apartment rooms expected by 2015, the demand for executive staff accommodation is also forecast to remain high, particularly with many existing staff accommodation facilities achieving occupancy levels of over 90 per cent,” he said.