April 14--The stellar performance of Dubai's tourism sector last year has cemented its position as one of the top 10 destinations in the world and the emirate is expected to maintain the growth in hotel demand in 2013 and beyond, according to a report.

According to the HotStats 2013 hotel industry report for the UK, Europe and Mena region, Dubai's hotel market has grown from strength to strength in 2012 on the back of improved business confidence, increased tourism numbers and the city's appeal as a regional event destination.

The emirate was targeting in excess of 10 million hotel guests during the year while Dubai International Airport hit another landmark as passenger traffic exceeded 50 million, making it the third-busiest airport in the world.

"Dubai's hospitality sector is driven by a mix of leisure, business and Mice [meetings, incentives, conferencing and exhibitions] demand and as the city is witnessing a growth from all these markets, we expect a continuation of solid performance figures in 2013," Peter Goddard, managing director at TRI Hospitality Consulting, told .

He said Dubai could witness a slight drop in GCC and regional leisure tourists in 2013 as the improved political stability and security in the traditional leisure destinations such as Egypt, Turkey and possibly Lebanon will entice regional and international travellers back to these locations.

"We believe corporate and conference demand will strengthen as the improvement in business sentiment and the growth in other sectors of the economy will spur further corporate activity in the city this year."

He said the expansion of Dubai Airport will have a direct impact on the tourism market with the opening of Concourse A increasing the airport's capacity from 60 to 75 million passengers per year.

"This new addition to the airport infrastructure coupled with Emirates airline's aggressive expansion plans, alliance with Qantas Airlines and the increasing use of A380 aircraft on routes, will increase passenger numbers and ultimately tourists in 2013," Goddard said.

The HotStats 2013 report said there was a marked improvement in the overall business optimism and economic activity in Dubai during the year 2012, which was led by the tourism sector.

"With a number of new projects announced, such as the Mohammed bin Rashid City, and previously-delayed schemes coming back to life in 2012, Dubai is forecasted to achieve impressive economic growth in 2013 and beyond," the report said.

The four- and five-star hotel market last year achieved a 2.4 percentage point increase in room occupancy to 79.7 per cent, which is impressive given the increase in new supply throughout 2012. The rise in occupancy, coupled with a four per cent increase in achieved average room rate to $304.60, helped hotels in Dubai achieve revenue per available room, or RevPAR, growth of 7.3 per cent to $242.77 in 2012.

The report said the growth in volume also contributed to a 2.5 per cent increase in food and beverage, or F&B, revenues, which reached $154.40 per available room. Overall, Dubai hotels reported a 5.6 per cent rise in RevPAR, which stood at $425.32 at the end of 2012.

The report further said the rise in revenues and a reduction in operating expenses resulted in a 15 per cent year-on-year increase in gross operating profit per available room to $187.27. Furthermore, key departmental profits remained strong in 2012 with rooms and F&B profits increasing to 81.3 per cent and 43.3 per cent, respectively.

About the 2013 outlook, the report said Dubai is expected to experience a substantial increase in hotel supply throughout the city which could present challenges for certain submarkets in the short term.

"The overall improvement in economic activity, the continuing instability in Arab Spring countries and the relentless expansion of Emirates airline are expected to maintain the growth in hotel demand in Dubai in 2013 and beyond," the report said.

Goddard said the hospitality sector was buoyant in the UAE in general and Dubai in particular last year. Hotels across the country witnessed strong growth in demand driven by the diversion of tourists from the countries affected by Arab Spring to safer locations such as the UAE.

"The trends within individual markets appear to be significantly different, particularly in the two major markets -- Dubai and Abu Dhabi."

He said other markets, including Ras Al Khaimah -- which achieved its target of one million visitors in 2012 a month ahead of schedule -- and Fujairah posted good results on the back of increased demand from European visitors and the spillover from Dubai.

"The Dubai hospitality market benefitted the most from the Arab Spring as both regional and international tourists preferred Dubai due to its large stock of quality hotels, excellent connectivity by air and the availability of a variety of tourism attractions including shopping festivals, sports and activities, exhibitions and events, etc, making it a complete shopping and entertainment destination by itself."

In the latest HotStats survey of full service four- and five-star hotels by TRI Hospitality Consulting, hotels in Dubai maintained a strong performance in February as the occupancy rose 5.3 percentage points to 90.1 per cent while average room rate stayed highest in the region at $334.79.

"Dubai continues to be the star player in the region as both corporate and leisure demands remain at their peak throughout the month of February," Goddard said.

In Abu Dhabi, he said hotels have struggled to maintain revenues and profits during the year primarily due to the intense competition which has triggered a rate war across all segments of the market. However, in the latest HotStats survey, hotels outdid last year's trend as tourists flocked to the capital for a number of conferences, including the International Defence Exhibition. Conference-driven demand boosted average room rates by 10 per cent to $203.3 while occupancy levels hit 80.8 per cent in February.

"A number of conferences held in Abu Dhabi have helped boost occupancy across hotels lifting performance indicators to record numbers, as operators strive to monetize steadily increasing demand," Goddard concluded.

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(c)2013 the Khaleej Times (Dubai, United Arab Emirates)

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