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Ramadan 2015


Dubai hotels holding steady during Ramadan despite a supply increase

With the end of Ramadan 2015, STR Global is pleased to present results from Dubai.

When analysing the performance for Dubai, the Emirate can be divided into two key markets: Jumeirah Beach Residences (JBR) & Palm Jumeirah, which represent leisure destination hotels and Downtown/Business Bay & Sheikh Zayed Road that focus more on attracting the business segment. The two areas provide an interesting comparison both with each other and with the rest of Dubai regional.

According to STR Global, occupancy in Dubai remained at 42.1% throughout Ramadan, unaffected by the year to date (YTD) increase of +6.2% in supply and Revenue Per Available Room (RevPAR) saw a small drop from 245 AED to 228 AED year-over-year.

Dubai (210 Hotels)

Dubai sold 139, 500 additional rooms year on year during Ramadan which indicated a rise in demand. 

The apparent challenge in the first six months of the year was to maintain the Average Daily Rate (ADR). Due to changing market dynamics, hoteliers have become more competitive in their pricing; this has been reflected by a drop of -40 AED in ADR for the Ramadan period, year on year.  

Historically, occupancies have remained between 75% and 80%, and with the start of Ramadan, occupancy rates saw a drop to just above 40%. 

“On a 12 month cycle the impact of Ramadan in the summer months has a smaller effect on the room rates because hotels offer more strategic pricing during these months. As Ramadan starts to move towards the stronger seasonal months the 12 month moving average for both occupancy and ADR are likely to drop”, reported Philip Wooller, Area Director of Middle East and Africa at STR Global.

Dubai Occupancy and ADR comparisons 2014

 

2015 

JBR and Beaches (37 selected properties)

The leisure oriented market, JBR and Beaches, saw an increase of +10.2% in its supply, year on year.  The area reported an increase of +1.1 % in occupancy, whilst ADR dropped by -31 AED; from 803 AED to 772 AED. 

2014, ADR and occupancy comparisons

2015 

Compared to Downtown/Business Bay and Sheik Zayed Road (SZR)JBR and Beaches saw a stronger performance in June with a RevPAR of 379 AED.

Downtown/Business Bay and Sheik Zayed Road (SZR) (37 selected properties)

Downtown/Business Bay and SZR saw a growth in supply of +34.2% and +6.9% respectively. Despite supply increases in 2015, occupancy saw a small change from 33.6% in 2014 to 34.1% in 2015.

The market reported a growth of +30% in demand, whilst ADR saw a drop of -8.7% compared to performance during Ramadan last year.

2014, ADR and occupancy comparisons

2015

SZR performed at an average occupancy rate which was -15% lower than JBR.

Dubai seems to find an occupancy equilibrium no matter what changes occur to the market dynamics  – in all cases where supply has increased the demand for rooms has risen roughly in line with the supply trend. As the hotel landscape in Dubai changes and the Emirate moves towards the Expo 2020 it may be that Dubai will find a new ‘norm’ with the the average daily rate achieved, comments Philip Wooller.

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