More UAE hotels could close down, says Cavendish Maxwell
Report also suggests more properties will not reopen
Due to lingering travel restrictions and the massive hit coronavirus has had on businesses, many of the UAE’s hotels could still remain closed or operate at minimum capacity further into the year, according to a report by Cavendish Maxwell.
July 2020 gave Dubai hotels a much-needed boost, with the emirate reopening for international guests. Hospitality groups operating across the emirate saw a growth in bookings soon after the news was announced, with many suddenly becoming optimistic for the rest of 2020.
However, according to valuation consultancy Cavendish Maxwell, Q3 2020 will still be a very difficult period for the industry.
As of June 2020, 16 percent of the UAE’s hotels tracked by Cavendish Maxwell had either closed or operated at minimum capacity. On a room basis, 27 percent had closed in Dubai vs eight percent in Abu Dhabi.
In the same month, Dubai’s RevPAR crashed by 73.5 percent compared to June 2019, with Abu Dhabi’s falling by 13.6 percent. Abu Dhabi’s resort industry in particular saw RevPAR fall by 48 percent, while Ras Al Khaimah and Fujairah stood at -32 percent and -42 percent respectively.
Q3 2020 is thought to see RevPAR decline by 65 percent for Dubai and 42 percent for Abu Dhabi’s resort sector. The UAE capital’s hotel sector could do slightly better, with RevPAR only thought to drop by 17 percent. RAK and Fujairah meanwhile are forecast to decline by 36 percent and 43 percent when compared to Q3 2019 performance.
Cavendish Maxwell’s research suggests that a typical UAE hotel needs to maintain around 40 percent occupancy to break even.