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Performance Talk

Dina Maaty by Dina Maaty
June 15, 2015
in People
A A

Rupprecht Queitsch, CEO of INHOCO – International Hospitality Consulting Group discusses Dubai’s Q1 performance levels

In Q1 2015, Dubai has the highest ADR and RevPAR among the top 12 cities in the world. With an ADR of USD 267.90; RevPAR of USD 230,57 and occupancy of 86.1% Dubai surpasses Paris, Hong Kong and New York. Only Sydney and Tokyo experience similar occupancy levels, but at a much lower ADR.IMAGE 1 copy

While a great performance compared to global cities, at high ADRs due to relative high share of luxury hotels, locally Dubai is experiencing a slight slowdown in performance. During Q1.2015 the average occupancy in Dubai hotels fell by 2.2% vs Q1.2014 and ADR reduced by 5.0% vs Q12014. Egypt and Lebanon are regaining some of their lost markets – in particular from Russian and Ukrainian tourists, but also from Eurozone countries choosing a value offering due to their weaker Euro.

However, the main reason for the drop in individual hotel occupancy in Dubai is that demand is outpaced by the continued growth of room supply, with supply growing 6.2% the last 15 months, while hotel demand in March was “only” 4.5% vs last year.

In 2015 the sub-areas within Dubai are also starting to take form, each catering for very different target groups. Old Dubai (Deira and Bur Dubai) attracting smaller businesses with the many traditional 3-4 hotels with low rates, still experience the highest occupancy levels of 90%.

Luxury leisure tourist choose The Palm and JBR Beach, where demand has outpaced the high growth in room inventory (9.9% added supply in JBR alone). Meanwhile, the Downtown area has struggled to keep up, with 5.4% less room sold vs Q1.2014. The opening of the Dubai Opera House and increased events at Dubai Exhibition Centre may see the return of Downtown performance.

Finally the area around Sheikh Zahed Road, ideally located for corporate travel, still see an increase in demand (+5.7%), though not at the same speed as the new supply (+7.7%).

In order to achieve the ambitious goal set by DTCM of 20 million visitors in 2020, the tourism industry must diversify and cater for budget and middle class. In Q1.2015 the room supply still grew within Upscale and luxury segments, welcoming e.g. Hyatt Regency Dubai Creek Heights; the Manzil Downtown Dubai; and the Pullman Hotels and Resorts at Jumeirah Lakes Towers. However, a large number hotel developments within the Midscale segment have been announced, latest HMH announced a doubling of their rooms in the UAE – many through mid-scale and B&B brands. The success of these hotels will allow Dubai to maintain the position as one of the most attractive destinations in the world, reaching new target audiences and maintaining a high occupancy and healthy RevPAR.

 

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