Hoteliers across the UAE are expected to end the year on a not-so-stellar note amid lackluster revenues from hotel rooms, but Expo 2020 could help the industry improve their numbers.

Most hotels in the country, particularly in Dubai, Sharjah and Fujairah, will see their full-year revenue per available room (RevPAR) decline between 7 per cent and 16 per cent, according to new figures released by Colliers International.

An important metric for measuring hotel performance, RevPAR is calculated based on the average daily room and occupancy rates.

In its latest Middle East and North Africa (Mena) Hotel Forecast, Colliers looked at the occupancy and average daily rates of properties in at least ten locations across the UAE and indicated that the majority are experiencing falling RevPAR.

The hotels, however, are still experiencing “relatively stable” occupancy levels, according to a company spokesperson, adding that the decline on RevPAR has been attributed mainly to increasing hotel room supply.

“The drop can be attributed to an increase in hotel supply as well as growth in price-sensitive source markets,” Saqib Jafri, associate manager at Colliers International, told Zawya.com.

Jafri said, hoteliers in the UAE are expected to see an increase in occupancy and RevPAR levels in 2020, especially during the hosting of the World Expo.

Dubai Expo 2020, which will be held in October, is expected to attract more than 25 million visitors from more than 192 countries.

Properties in Dubai Creek / Festival City will see their RevPAR drop by 7 per cent this year compared to a year ago, while those in Shaikh Zayed / Dubai International Financial Centre (DIFC) will post a 10 per cent decline, according to data from Colliers.

Properties in Palm Jumeirah and Dubai Marina / Jumeirah Beach Residence will register a decline of 9 per cent and 12 per cent, respectively.

The figures for hotels in Ras Al Khaimah Beach, Sharjah and Fujairah not so encouraging. Their revenues from room business are likely to drop by 10 per cent, 14 per cent and 16 per cent, respectively.

Hotels in the city centre of Abu Dhabi, however, can expect an increase of 2 per cent in RevPAR, but properties located in Abu Dhabi beach will be posting zero increase, Colliers said.

With more new hotel rooms in the market, hoteliers are prompted to lower their room rates to beat the competition.

“Hotel rooms are being competitively priced in an effort to stimulate demand and keep up with accelerating room supply. This has been a common trend among the majority of key markets in the Middle East since the drop-in oil prices in 2014,” analysts at STR said in a separate report.

According to Colliers, the rate of decline in earnings from hotel rooms in Dubai Creek / Festival City and Palm Jumeirah will slow down to 1 per cent and 2 per cent, respectively, while earnings those in DIFC/ Shaikh Zayed Road and Dubai Marina / JBR will not increase next year.

(Writing by Cleofe Maceda; editing by Seban Scaria)

(cleofe.maceda@refinitiv.com)

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© ZAWYA 2019