Short stay transit visa plan 'to boost UAE hotel sector'

Leading up to Dubai Expo 2020, the hotel sector is being driven by short-term prospects, but performance remained softened in 2018, said a real estate industry expert.

The introduction of short-stay transit visas announced by the government is expected to positively impact the tourism sector overall, stated JLL, a leading professional services firm that specialises in real estate and investment management.

The JLL report said UAE's hotel market was gearing up for one of its busiest periods as its hotel construction pipeline is forecast to peak over the next two years due to the upcoming Expo 2020.

In Dubai, a further 24,600 rooms are expected to enter the market by 2020 while Abu Dhabi is set to receive about 1,200 rooms, stated the property industry expert in its 2018 Year in Review report.

Notable projects opening in 2019 include Hilton the Palm and The Royal Atlantis on Palm Jumeirah and the Mandarin Oriental in Jumeirah, Dubai, as well as The Fairmont Hotel, located in the Marina Peninsula in Abu Dhabi, it added.

In the past, the entry of new keys into the hotel market has pressured occupancy and room rates despite visitation continuing to increase.

According to a report by Knight Frank, market performance has continued to deteriorate in the UAE's hospitality sector with occupancy falling by 2.0 per cent, average daily rate (ADR) by 5.8 per cent and revenue per available room (RevPAR) by 7.7 per cent in the year to date to November 2018, compared to the same period a year earlier.

In 2018, around 5,400 rooms were added in Dubai, with 1,300 rooms entering in the last quarter of 2018, bringing the total supply to 89,000 rooms.

In Abu Dhabi, 2018 saw the delivery of approximately 1,900 keys, with 900 hotel keys being added in Q4. Notable additions included The Edition Hotel in Al Bateen, Rixos Hotel and Jumeirah Hotel, both on Saadiyat Island, amongst others. Total hospitality stock in Abu Dhabi now stands at 23,700 keys.

With market performances having remained dull in 2018, the performance in the year ahead will heavily depend on how quickly these new investments and regulations have an impact.

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