More supply than demand affecting Dubai’s hotel occupancy

Occupancy is down in Dubai hotels last month, even as there is an increase in available hotel rooms and and strong demand, according to STR, the leading hotel data and benchmarking site.

Dubai reported declines across the three key performance metrics. Occupancy fell 2.0 percent to 78.0 percent, Average daily rate (ADR) was down 9.8 percent to $208.17 (Dh764.63) and Revenue per available room (RevPAR) dropped 11.6 percent to $162.30 (Dh596.16).

Strong supply growth (+5.8 percent year to date) has slightly outpaced a year-to-date demand increase (+5.6 percent) in the market.

In addition to the strong development pipeline, STR analysts attribute Dubai’s performance to a decline in visitors from the drop in oil prices. 

Hotel inventory 

The hotel inventory, as per Dubai Tourism and Commerce Marketing (DTCM) statistics, touched 676 establishments, with 91 five-star, 106 four star and 265 one to three-star hotels, 66 deluxe apartments and 148 standard hotel apartments.

The UAE reported decreases in each of the three metrics. Occupancy dipped 2.9 percent to 75.6 percent, and ADR dropped 9.6 percent to $181.87 (Dh668.05), the lowest for an October since 2005.

As a result, RevPAR declined 12.3 percent to $137.58 (Dh505.34). October was the 22nd consecutive month of year-over-year ADR decreases in the UAE, due in part to consistent and significant supply growth (+5.1 percent year to date). At the same time, demand has remained strong, up 5.0 percent year to date.