Dubai Adds 2,950 Branded Hotel Rooms in Upbeat 2013 Along with a Lift in ADR

Jan. 25–Hospitality market continues to perform well, with rise in ADR.

Dubai’s hospitality market registered only a slight drop in revenue per available room (RevPAR) performance in November 2013 despite the year witnessing the addition of 2,950 new branded hotel rooms in the city.

Dubai’s hospitality market has rapidly absorbed this influx of new supply and continued to perform exceptionally well, as RevPAR has only declined by 0.3 per cent, according to Ernst & Young’s Middle East Hotel Benchmark survey. Dubai’s new hotel supply in 2013 included several major five-star hotel openings such as the Ocean View Hotel, the Ritz Carlton extension on Jumeirah Beach, Sofitel Palm Jumeirah, Anantara Plam Jumeirah, Oberoi, and Conrad.

In November, Dubai’s overall average occupancy decreased by approximately 5.1 per cent compared to November 2012, however, average daily rate (ADR) increased by 5.6 per cent. Dubai’s hospitality market performance improved month over month in November, with ADR increasing from $330 in October 2013 to $333 in November 2013, which was coupled with an increase in average occupancy of three per cent during the same period.

According to STR Global, Dubai’s ADR growth of 9.9 per cent to $290.68 in November far outpaced the regional average growth rate. STR said that the UAE, which is already among the top five countries in the world for new hotel openings over the past five years, saw positive growth throughout the first 11 months of 2013. The country has the longest pipeline of rooms under construction with an additional 32,107 rooms in the offing.

The EY Hotel Benchmark survey noted that Abu Dhabi increased its supply of branded four and five star hotels in 2013 by introducing approximately 1,700 new branded hotel rooms primarily due from the Dusit Thani, Rosewood, St. Regis Nation Towers as well as some others.

“Abu Dhabi has witnessed a slight decrease in ADR in November 2013, dropping from $256 to $250 year on year, resulting in minor decline in RevPAR of 0.7 per cent during the same period,” said Yousef Wahbah, Mena head of transaction real estate at EY. In Saudi Arabia, holy city of Madinah and Riyadh’s hospitality markets registered a decline in RevPAR in November 2013 compared to November 2012. Madina’s RevPAR decreased by 35.7 per cent as compared to November 2012 figures, mainly due to low ADR in November 2013, which averaged at $158 compared to $214 in November 2012, coupled by a drop in average occupancy of seven per cent during the same period.

Holy city of Makkah also registered a decrease in ADR of 33.3 per cent in November 2013, compared to the same period last year, declining from $364 in November 2012 to $243 in November 2013. Riyadh’s hospitality market performance also decreased during the same period, as average occupancy declined by 16 per cent, in addition to a decrease in ADR from $235 in November 2012 to $209 in November 2013, resulting in a decline in Riyadh’s RevPAR of 33.5 per cent.

Occupancy rates in Muscat increased by 12 per cent with ADR dropping slightly by 0.4 per cent resulting in an overall increase in RevPAR of 16.5 per cent compared to the same time last year.

Elsewhere in the GCC, Bahrain experienced a slight three per cent increase in occupancy with ADR declining by two per cent and RevPAR increasing overall by 5.3 per cent respectively, compared to November 2012. Doha saw a slight dip in its occupancy rates, with November recording a three per cent decrease and a 16.5 per cent decrease in RevPAR largely due to rates dropping from $289 in November 2012 to $252 in November 2013.