UAE hotel space rises but yields stay steady

The UAE added a big chunk of new hotel space to accommodate an influx of new tourists last year – but a key measure of profitability remained flat.

Room yields, a measure of a hotel’s financial performance, fell by 1.3 per cent in Dubai last year compared with the previous year, while yields in Abu Dhabi decreased by 0.1 per cent. Yields are expected to increase slightly this year.

In February, a busy season for Dubai’s hotels, yields were down 5.6 per cent against the previous year. This was the result of a lower occupancy rate coupled with flat average room rates.

Room yield is the combination of total occupancy and average room rate, and provides an indication of the revenue that a typical room produces over a given time period.

Occupancy in Dubai fell slightly by 2.3 percentage points to 79.7 per cent last year, down from 82 per cent in 2013, according to data from the consultancy Ernst and Young.

This fall in occupancy followed the addition of 4,000 rooms across the year, taking the city’s total to 64,200 at the year’s end.

Dubai expects to add 27,000 room keys over the next four years as part of announced projects. This figure is likely to increase as new projects are unveiled.

Average room rates in Dubai stood at US$275 per night last year, but are expected to increase in most places in the emirate, according to data from the property consultancy Colliers International.

Dubai hotel yields are expected to rise by between 1 and 2 per cent this year as slightly lower predicted occupancy rates are cancelled out by higher room charges.

In Abu Dhabi, overall hotel supply rose by 8 per cent last year, with increased tourist numbers pushing occupancy to 73 per cent – a gain of 6 percentage points over the previous year.

Overall tourist numbers increased by 20 per cent last year compared with the previous year – with 3.8 million visiting the emirate in total.

Room rates fell slightly, dropping from $205 to $202 per night. They are expected to fall further this year, according to Colliers.


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