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RevPAR falls to lowest level in a decade at Dubai hotels

Revenue per available room (RevPAR) figures for Dubai hotels have slumped to their lowest level in a decade, according to a new report.

JLL’s Q3 2017 Dubai Real Estate Market Overview report said that RevPAR for the first eight months of 2017 has fallen to AED503 (US $136.9).

The pressure on rates and revenue comes as a further 1,800 keys were added to the market in the third quarter of the year, bringing the total stock of quality hotel rooms in Dubai to almost 82,200.

A potential 4,100 keys could enter the market over the last quarter of the year, the report said.

JLL said another trend in the market is the refurbishment of existing rooms, for example the renovation of the Atlantis (Palm Jumeirah), where 1,539 keys were released back into the market this quarter.

Despite the recent push towards mid-scale hotels, the supply remains primarily focused on 4 and 5 star properties, the report said, adding that occupancies have hovered at a healthy 75% since the beginning of the year.

"Although the strategy of many hotels across the city is currently focused on maintaining high occupancy levels at the expense of daily rates, it is important to note that Dubai remains one of the strongest performing hotel markets globally in terms of RevPAr and other financial indicators," noted the JLL report.

It added: "The decrease in the Dubai hospitality market performance is perceived as an adjustment of the market rather than an indication of distress. The outlook for Dubai remains positive, especially as the city continues to invest heavily in tourism infrastructure and diversify towards new source markets such as South East Asia."

Dubai has seen a 55% growth in arrivals from China, following the relaxation of visa regulations at the end of 2016.

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