UAE hotel industry demonstrates remarkable resilience in 2011

UAE-The year 2011 has been a period of remarkable resilience for the UAE hotel industry given a significant uptick in room occupancy levels — a key measure to gauge the growth of the tourism sector.

The UAE’s superb tourism and hospitality infrastructure and swelling line-up of tourist attractions, holiday and leisure spots as well as shopping malls have continued to lure regional and international holiday makers, cruise travellers, businessmen and shoppers in droves, sending the hotel occupancy to a level above the regional and global average.

The Arab Spring has also abetted the upswing in the flow of visitors, with thousands of tourists who have been traditionally going to Egypt, Tunisia, Syria and Libya opting for the safe and secure holiday ambience of the UAE.

Hospitality industry sources said the UAE hotels have been recording a steady upswing in occupancy levels along with higher average room rates since October 15 on the fast increasing appeal of the country as a MICE destination.

Travel industry analysts predict that this upsurge would continue until the end of the Dubai Shopping Festival in February 2012.

With international visitors to Dubai continue to grow beyond eight million by the end of 2011, hotels in the emirate are expected to see revenue per available room, or RevPAR surge by eight to nine per cent in 2011, STR Global said in its latest forecast.

The steady stream of tourists is also expected to help boost demand growth of nearly 15 per cent for the full year, said the research firm that provides a single source of global hotel data.

Most hotels in Dubai and Abu Dhabi have been showing a significant rebound since the second week of October following an increased in flow of visitors spurred by exhibitions, conferences and mega sports events.

A majority of hotels in Dubai and Abu Dhabi show occupancy levels as high as 85 per cent. This his upward momentum is widely expected to continue with the tourist season getting into full swing.

With Dubai emerging as the world’s 18th destination in terms of the volume of international visitor spend estimated to be $7.8 billion in 2011, the UAE once again recorded the largest number of new hotel rooms under way in the Middle East and Africa region, data from STR Global shows.

The UAE continued to post the largest number of rooms in the total active pipeline with 40,176, followed by Saudi Arabia with 5,531 rooms.

Dubai, which has the most buoyant hospitality sector in the Middle East, is home to more than 370 hotels in the five- to one-star categories providing over 52,000 rooms, and nearly 200 hotel apartments in deluxe and standard categories, offering more than 22,000 units.

In October, Dubai hotels recorded a 13.5 per cent surge in revenue per available room rates, or RevPAR, to $194.05, the second highest in the Middle East and Africa region, according to STR Global. The other two markets with double-digit RevPAR growth rate are Jeddah (14.5 per cent to $146.77) and Muscat (10.2 per cent to $180.43).

A recent Mena Chain Hotels Market Review by TRI Hospitality Consulting, which studied hotels in Dubai, Abu Dhabi, Sharm Al Shaikh, Cairo, Riyadh and Jeddah, shows that Dubai had the highest hotel occupancy at 80.4 per cent in the first nine months of 2011. Abu Dhabi’s occupancy topped 67.2 per cent.

According to the Dubai Department of Tourism and Commerce Marketing, the emirate’s hotels played host to 6.64 million guests in the first three quarters of 2011, up by 11 per cent compared with the same 2010 period. The guest nights rose by 26 per cent to reach 23.68 million, while the average length of stay increased by 14 per cent during the same period. During the nine-month period, revenues of hotels and apartments increased by 19 per cent to cross the Dh10.96 billion, with the share the revenues of hotels increasing by 20 per cent and that of hotel apartments by 13 per cent.

The strong participation at 2011’s Arabian Travel Market running was a resounding testament of the UAE’s fast reviving fortune as a choice destination for global leisure seekers and holiday makers.

The upbeat outlook for the region’s travel industry by the International Air Transport Association, the global aviation organisation, also keeps alive hopes of continued buoyancy for the UAE travel and tourism sector.

Bullish projections about the region’s air traffic sector by Boeing also supplement the optimistic view of the industry, which has a come a long ways from the doldrums.

Industry sources also point out that the recession affecting the business traveller market appears to be well on the road to recovery, especially within the GCC region and wider Middle East.

However, the steep appreciation of the dirham, which is pegged to the dollar, will be dampener on the optimism, as travel to the UAE will cost more for the tourists.

“The UAE will see a slowdown in the flow of tourists from India and eurozone countries, traditionally the strong markets for the tourism sector, following the steep fall of the rupee and euro against the local currency,” said a leading tour operator.

“However, it will be a short-term phenomenon. Once the dollar weakens as projected, the UAE will once again become a sought after destination for tourist from these counties,” he said.

This year, Dubai, the world’s ninth global tourist destination, outshines cities such as New York, Amsterdam, Kuala Lumpur and Shanghai in terms of the sheer number of inbound tourists expected to arrive this year. The emirate is expected to draw 7.9 million international visitors this year, representing a growth rate of 17.3 per cent when compared to 2010.

CB Richard Ellis recently ranked Dubai among the top 10 most popular business locations in the world with more than half of the biggest global conglomerates operating offices in the city. The rankings compared global cities by the number of international firms operating offices there, using 280 companies as a benchmark. Of those companies profiled, just over half (56.1 per cent) have an office presence in Dubai ranking it in ninth place overall, while the UAE as a whole was ranked 15th in the country ranking, with 171 companies present (61.1 per cent).

Abu Dhabi expects to see an increase of 15.5 per cent in international visitors with the total tourist spend surging 21.8 per cent to $2 billion this year.

Abu Dhabi hotel guest figures also hit record highs recently. In July, some 189,486 guests stayed in the emirate’s hotels and hotel apartments, the Abu Dhabi Tourism Authority said. The performance pushed occupancy levels up nine per cent to 65 per cent and overall revenue up six per cent to Dh271 million.

Regional guest arrivals led the performance surge with those from the GCC, soaring 98 per cent on the same month last year to 19,828, and from the wider Arab market increasing by 44 per cent to 22,383, while both Europe and Asia recorded 28 per cent month-on-month comparison returns.

Dubai Chamber of Commerce and Industry director-general Hamad Buamim said the next phase of Dubai’s growth would likely come from tourism and trade sectors, driven by new demand in the GCC, China, India and Africa.

MasterCard, the world’s second biggest payments network, said that nearly two-thirds, or 70 per cent, of UAE consumers are set to travel for leisure in the coming months.

According to the latest findings of a MasterCard survey, the UAE will continue to be a popular destination of choice, both globally and regionally. “With its attractive variety of retail and hospitality options, we expect GCC consumers in particular to travel to the UAE in high numbers,” said Raghu Malhotra, general manager for Middle East of MasterCard Worldwide.

According to STR Global, the new hotel room supply growth in 2012 is expected to reach 9.6 per cent, causing both rate and occupancy to slow down.