UAE hotels see a rise in occupancy as room rates drop in 2017

Additional offers in the mid-market pricing has helped continue a rise in market demand

Dubai, UAE.
Dubai, UAE.

As Abu Dhabi and UAE continue to add tourist attraction, UAE hotels saw a marginal increase in occupancy and drop in average daily rates, according to a recent STR study.

"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 average daily rates (ADRs), the type of new hotel supply entering the market will create a shift in the pricing landscape, with more offerings in the Midscale segment," it said in a statement.

According to study, last year, occupancy levels in the UAE increased 0.5% to 75.1% while ADR fell 3.8% to AED 599.58 (US $163). The revenues per available room (RevPar) dropped by 3.3% to AED 450 ($122).

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The UAE hotel market, which has usually been dominated by upscale hotels, now also offers hotels in the mid-market pricing. The wider pricing has helped the market demand to continue to see a rise as this has attracted budget traveller, the statement added.

"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,” STR said in the statement.

"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," the statement added.

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