Dubai saw an increase in tourist arrivals by 5.1% in the first quarter 2016, with 4.1 million visitors. But this moderate rate within a context of strong growth in supply leads to a slight drop in occupancy rate, and a strong drop in prices that drags the RevPAR down.
According to the Director General of Dubai Tourism, Helal Saeed Almarri, this tendency is justified by a series of initiatives that have been implemented such as the strengthening of public/private partnerships, communications and marketing activities, projects for restructuring, as well as events programs.
Moreover, the supply is diversifying: while keeping its position as a "luxury destination," the hotel supply has many midscale properties. The opening of the Dubai Opera House and several theme parks are expected to broaden the profile of guests.
But one of the results is also that Dubia's room capacity is up sharply: as of March 31, 2016, 676 properties and 98,949 rooms in all hotel categories and apart hotels, versus 84,534 as of January 1, 2014 (the leaders on the market, those that will establish themselves there and results across several years are detailed in Hospitality Report Middle East North Africa). In just over two years the supply grew by more than 17%; and the trend should continue since the Emirate wishes to reach 25 million visitors in 2020 (read our article). Parallel to this strong growth in supply, the drop in oil prices affects demand from certain source markets, especially neighboring sources.
As a result, according to data from HotelCompset, the moderate increase in arrivals (+5.1%) is producing a slight drop in occupancy rates at hotels: -0.7 points in the first quarter 2016, to a level that remains excellent nonetheless (87.6%). On the other hand, a sharp drop in prices (-8.7%) causes the RevPAR to fall sharply, bringing it down 9.5% in the first quarter.
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