Hotels in the Middle East reported negative 2017 room rate performance results, according to data that was posted by STR.
United Arab Emirates
- Occupancy: +0.5% to 75.1%
- Average daily rate (ADR): -3.8% to AED599.58
- Revenue per available room (RevPAR): -3.3% to AED450.04
STR analysts note that supply growth continues to affect hotel performance in the country, especially with Dubai’s build-up to the 2020 World Expo and beyond.
“Not only will the amount of new hotel supply continue to influence Dubai’s ADR, the type of new hotel supply entering the market will create a shift in the pricing landscape, with more offerings in the Midscale segment,” said a spokesperson.
“The market has been historically dominated by the upper-tier hotel classes. Additional offerings in the middle-pricing tiers, however, has helped the market’s demand continue to rise, as a wider price range has made Dubai more accessible at various travel budgets.”
Dubai continues to add new tourism attractions to stimulate demand growth, helping the market drive hotel demand as inventory expands.
Abu Dhabi is following a similar trend, but at a smaller scale due to a smaller market size.
“Along with hotel supply developments, the market is adding several new cultural attractions, including the Louvre Abu Dhabi, which opened in November 2017, and additional museums slated to open in the coming years,” said the spokesperson.
An expected increase in oil prices, combined with sustained growth in the non-oil sector, should drive economic expansion in Abu Dhabi in 2018, allowing the economy to rebound from relatively flat performance during the previous 12 months. That should be an encouraging signal that the hospitality industry will turn the corner.
- Occupancy: +8.8% to 56.7%
- Average daily rate (ADR): -4.7% to KWD62.17
- Revenue per available room (RevPAR): +3.7% to KWD35.23
Demand, up 12.0% in 2017, has continued to grow following the economic downturn caused by lower oil prices. However, room rates have now decreased for three consecutive years. December 2017 represented the first month with year-over-year ADR growth (+8.3%) in Kuwait since July 2016 and was just the fourth positive ADR month for the country since the beginning of 2015.