Dubai hotel room rates hit all-time high Surge 51% in 6 months to Dh1,255 per night

A series of tourism events held in the city throughout the month of March, including several exhibitions and high profile sports events such as Dubai Duty Free Tennis Championships, Dubai World Cup and Dubai International Boat Show helped to push hotel room rates in Dubai to an all-time high.

Visitors paid an average room rate of more than $341 (Dh1,255) per night that month, according to the Dubai-based TRI Hospitality Consulting’s HotStats report for the month of March 2012.

This compares favourably with average room rate of $290 (Dh1,065) that the emirate’s hotels charged at the peak of the boom, in August 2008, when Dubai hotel rates were rated as the most expensive in the world, higher than those in New York and Paris, traditionally elite tourist and business destinations.

“March was one of the busiest months in Dubai in terms of the exhibitions and events although there were few major exhibitions, but the city hosted some high profile sports championships during the month including the Dubai Duty Free Tennis Championship and Dubai World Cup,” said Peter Goddard, Managing Director of TRI Hospitality Consulting in Dubai.

“Regardless of the relatively limited number of overseas visitors which these glitzy events are likely to have attracted, they have and will continue to provide tremendous boost to DTCM’s efforts to promote brand Dubai across the international markets. This in turn will help Dubai’s tourism and hospitality market both in the short and long term,” he added.

While hotel rates across the world saw sharp declines in 2009 and 2010 owing to the global economic slowdown and its consequent impact on tourism, visitors – both business and leisure – are once again flocking to the emirate, with Dubai’s average room rates steadily increasing in the past six months.

Dubai’s average room rates stood at $225 (Dh826) in October 2011, translating to a surge of more than 51 per cent in the past two quarters.

“Revenue Per Available Room (RevPAR) in Dubai increased 9.3 per cent to $298.29 [Dh1,095] in March driven by a 6.8 per cent growth in Average Room Rate (ARR) to $341.77 and a relatively marginal increase of 2 percentage point in occupancy. In terms of profits, GOPPAR [Gross Operating Profit Per Available Room] for the month saw a growth of 12.6 per cent to $271.5 [Dh997], significantly higher than the other GCC city surveyed by HotStats,” the TRI report highlighted.

Profitability at Dubai hotels has been rising remarkably on the back of a turnaround in the emirate’s economic fortunes, coupled with the fact that a large number of regional tourists who may have earlier opted for traditional tourist hotspots such as Egypt are now routing their business to ‘safe haven’ Dubai.

“Hotels in Dubai reported growth in revenues and profits while Abu Dhabi saw rates and profits decline in March 2012, according to the latest HotStats survey of full-service hotels in six MENA cities by TRI Hospitality Consulting,” the report stated.

TRI surveyed hotels in Abu Dhabi, Cairo, Dubai, Jeddah, Riyadh and Sharm El Sheikh for its monthly report.

“Performance levels for hotels in Abu Dhabi remained subdued in March compared to the same period last year,” TRI noted in its report.

The average room rates in Abu Dhabi hotels slumped to below $150 in March, down from over $173 in February 2012.

“In Abu Dhabi, the sharp drop in profitability of four and five star hotels is driven by a combination of factors and not just limited to the impact of the drop in rates. While this has certainly had a negative impact on the citywide RevPAR, our HotStats survey indicates that a more substantial drop in non-rooms revenues such as conference and banqueting revenues and food and beverage revenues, as well as a notable increase in certain costs such as payroll costs and utilities have caused additional damage to the bottom line,” said Goddard.

Although occupancy in Abu Dhabi hotels remained stable at 74.8 per cent, average room rates for the month declined 12.2 per cent, causing a similar decline in revenue per available room (RevPAR), TRI said.

“The 10.1 per cent drop in total revenues per available room (TRevPAR), combined with a 3.7 percentage point increase in payroll has resulted in a sharp drop in profits during the month which saw GOPPAR drop 18.7 per cent to reach $101.64” in Abu Dhabi, the report said.