Dubai hotels see tourism pick-up amid Arab Spring

Hotels in Dubai reported strong RevPAR and profit growth during the month of September, according to the latest data published by TRI Hospitality Consulting. Since the beginning of 2011, Dubai's tourism and hotel sector has witnessed strong signs of recovery as the Arab Spring diverted both international and regional tourists to safer locations such as Dubai, the data showed. Both occupancy and average rates in the emirate improved in September as the city emerged out of the low demand summer and Ramadan seasons, TRI Hospitality added. Its data said occupancy rates at Dubai hotels hit 78.6 percent in September compared to 71.8 percent in the same month last year. The increase in tourists prompted hoteliers to increase rates by 10.9 percent in September, resulting in a 21.5 percent growth in revenue per available room (RevPAR), TRI Hospitality said in a statement. It added that gross operating profit per available room (GOP PAR) rose 24.6 percent compared to September 2010. Dubai hotels' year-to-date GOP PAR of $110.10 is 30.9 percent higher than its neighbouring city of Abu Dhabi and second only to Riyadh among the six cities covered in this survey. Riyadh and Jeddah emerged as leaders for both rate (ARR) and profit (GOP PAR) in the Middle East. The two cities achieved ARR of $245.70 and ARR $212.70 respectively in September, and managed to post GOPPAR well above the other four cities covered in the survey. Riyadh's occupancy rates grew by 18.7 percent, while RevPAR rose by 52.6 percent and GOP PAR surged by 91 percent compared to the same month in 2010. Jeddah posted a 10.4 percent growth in RevPAR and 11.8 percent growth in GOP PAR for the month. Peter Goddard, managing director of TRI Hospitality Consulting in Dubai, said: "Dubai hotels have clearly benefited from the Arabic Spring and such trend is unlikely to change until there is greater stability in the hot spot areas of Egypt and Syria. "However, with the uncertainty related to the ongoing economic problems in the Euro region, there is a downside risk that the European tourist inflow into Dubai may decline, which might slightly dampen the year-end figures." He added: "Hotels in Riyadh and Jeddah have seen a surge in demand in September due to a combination of reasons. The exit of Ramadan out of September and into August this year and the spill over of Eid holidays into September have favoured the month's figures. "More importantly on a macro level, the ongoing security issues in the Levant and the government's efforts to promote domestic tourism have resulted in an increasing number of Saudi travellers now spending more time holidaying in the Kingdom, which also benefited hotels in Riyadh and Jeddah." In Abu Dhabi, TRI Hospitality data suggested room rates (ARR) fell in September by seven percent compared to the same month last year, although occupancy levels improved by a similar margin as Dubai. During the 12 months to September, Abu Dhabi posted a 20.9 percent decline compared to the same period in 2010. According to Abu Dhabi Tourism Authority, the number of hotel guests rose 14% in the first nine months of this year compared to the same period last year. "Regardless of the growth in demand, the continued growth in supply, albeit at reduced levels compared to the last couple of years, is likely to maintain the pressure on rates and increase the risk of oversupply in Abu Dhabi in the short to medium term," said Goddard. TRI Hospitality said Cairo saw its hotel occupancy drop by 22.8 percent while Sharm El Sheikh registered a decline of 15.9 percent in September compared to last year. "Hotel performance levels in Cairo are not likely to improve until the protests subside, the security situation improves and international travellers put Egypt back on their travel itinerary," said Goddard. "In the short term, performance is likely to remain subdued under the threat of possible violence associated with the proposed general election planned in November and presidential election planned in early 2012."