Dubai hotels bank on iftar buffets to overcome falling room rates

Dubai hotels are ramping up iftar sales in a bid to overcome the double whammy of tumbling room rates and empty restaurants.

A weaker euro, which has depreciated by about 20 per cent against the US dollar-pegged dirham over the past year, has been at the heart of the industry’s woes.

A sharp drop in tourists from sanction-hit Russia has been a further blow as thousands of new hotel beds pull room rates lower.

Average room rates at hotels have already fallen 6.4 per cent so far this year, according to Chris Hewett, a senior consultant at TRI Consulting.

“With rates expected to be lower this summer, there will be attractive deals for visitors from non-European markets,” he said.

During Ramadan, hotels try to attract customers by offering iftar buffets in their restaurants, which are typically closed during daylight fasting hours.

The Amwaj Rotana on Dubai’s Jumeirah Beach Residence strip has increased its iftar capacity to about 200 people, up 22 per cent from last year, with a slight increase in price to Dh165 per person, up from Dh159. The price can drop to Dh140 with early bird bookings.

The hotel has also introduced its lowest room rates ever, starting from Dh199 if booked online until October 3. The property opened in 2010.

“We monitored the trends and saw the demand for iftar, and [decided to lower rates now as] we have more hotels and new ones coming up,” said Jasmine Arika, the director of marketing and communications at Amwaj Rotana.

The average revenue per available room for the next three months through August at hotels in Dubai Maria is expected to fall 4 per cent to US$138, Colliers International said. The biggest drop in the measure is expected at the hotels on the Palm – a 13 per cent decline to $204.

At the Ramada Downtown, rooms are about 10 per cent cheaper than a year ago.

“We are giving away free night stays in eastern Europe and India, both of which are new markets for us”, said Samir Arora, the general manager of the Ramada Downtown.

The Sharia-compliant property has increased prices for iftar to Dh135 per person from Dh120 last year, based on demand from primarily Arabian Gulf guests.

At the Emirates Group-owned JW Marriott Marquis, where 40 per cent of the guests are group visitors, there is also more capacity this year for iftar buffets.

The Business Bay property has increased the capacity to 700 people from 600 last year, while prices have remained static.

It is also slashing food and beverage prices by half to cope with lower sales during Ramadan.

“The summer will be a real test,” said Bill Keffer, the general manager at JW Marriott Marquis Dubai.

“There is not too huge a rate decline this year compared to the last [for the property]. There might be some in July and August,” he said.

Hoteliers say the decline in Russian tourists, which was initially felt in the beach hotels, is now trickling down to affect city hotels as well.

“The beach hotels then tend to go after new markets, and that affects us,” Mr Keffer said. “With new supply coming into the market, there is more challenge around the rates – but Dubai is a resilient city.”

The average room rate in April fell 12.8 per cent year-on-year across four and five-star properties to $373.78, according to the latest Hotstats data.

Food and beverage sales plummeted by 19.8 and 26.7 per cent respectively during the period.

“Food and beverage revenue was lower [in April] because of the reduced spending power from in-house guests who likely opted for more affordable options outside of the hotels,” said Mr Hewett of TRI Consulting, which published the data, in an earlier interview.

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