A new report has found that hotels in Abu Dhabi suffered sharp declines in revenue and occupancy over the past year due to a rapid influx of new hotels in the capital. By contrast, revenues at Dubai hotels appear to be stabilising, perhaps indicating that the worst of the economic downturn is behind them.
In Deloitte's latest analysis of STR Global's hotel industry data, revenue per available room (revPAR) in Abu Dhabi plunged to $142.47 for the year to February 2010, compared to $300.60 during the corresponding period in 2009.
Occupancy rates in the capital also witnessed a steep decline to 55.7%, compared to 81.4% in the previous period. Rob O'Hanlon, Tourism, Hospitality and Leisure Partner at Deloitte Middle East, says the revPAR and occupancy declines are a reflection of the changes in supply and demand in the capital.
'If you look at Abu Dhabi, especially in the five-star category, quite a lot of new supply came onboard in the past year,' he told AMEInfo.com. 'On Yas Island in particular, hotels were fast tracked to be put in place in time for the inaugural Formula One event.'
Establishing market presence
As is the case anywhere, it will take time for these new properties to establish a presence in the market, he contends, noting that hotels typically offer discounted rates to introduce guests to their properties. 'Hotels understand that they have get people who have not even heard of the property to come and have a first look and get a feel for whether or not it has a style and quality they are looking for,' he said.
Hotels in the capital have also been hurt by the fact that there have been delays in the delivery of some new attractions that were slated to open, he noted. But owners invest for the long term and are experienced enough to know that the opening of their hotels may not coincide with the roll out of new tourism generating projects, he said.
'It will take some time for these new hotels to be absorbed by the demand, and until that happens you will see evidence of fluctuations in occupancy and revenue simply due to whether or not there are major events taking place,' he added.
Dubai revenues hold steady due to the extended stay of tourists in Dubai Hotels.
In Dubai, revPAR stabilised over the same period, dropping just $5 to $199.14 while occupancy rates rose nearly nine percentage points to 79%. Dubai hotels are going through a readjustment following a period where its room rates and lack of supply were really out of line with the rest of the world, O'Hanlon noted.
'I think what Dubai is doing really well is understanding that it has to do things differently to attract guests,' he said. 'In addition to beefing up its marketing around some of the traditional events such as the shopping festivals and things of that nature, it also adopting other innovations such as offering free stay nights. The easy days are gone. Now it's as tough there as it is any place in the world, and they have to keep being.
