Hotels in Dubai and Abu Dhabi maintained strong occupancy levels in May but witnessed a decrease in revenue per available room (RevPAR) when compared to the same month last year.

While Dubai hotels recorded 77.8 per cent occupancy, Abu Dhabi registered 73.5 per cent, according to EY MENA Hotel Benchmark Survey Report.

Dubai's hospitality market saw a decline in RevPAR by 11.6 per cent in May 2017, mainly due to the reduction in average daily room rate from $225 in May 2016 to $211 in May 2017.

Dubai, which drew nearly 15 million international visitors in 2016, recorded an 11 per cent jump in overnight visits in the first quarter.

Dubai hosted 4.57 million tourists compared to 4.1 million a year earlier in the quarter. Visitors from India, Saudi Arabia and the UK accounted for a third of the total number during the period, with India becoming the first country to record almost 580,000 visitors in any quarter.

Dubai's vibrant hospitality sector, which surpassed 100,000th room milestone in 2016, is set to witness a sustained boom as the overall room supply remains on track to hit 134,000 by the end of 2018.

Dubai expects occupied room nights in hotels and hotel apartments to reach 35.9 million, representing a 10.8 per cent compound annual growth rate (CAGR) from the end of 2015 to the end of 2018. As such, the overall room supply is expected to reflect similar growth, reaching 134,000 rooms by the end of 2018.

In May, Abu Dhabi's hospitality market witnessed a drop in RevPAR by 20.3 per cent from $92 in May 2017 to $73 in May 2016. The decrease was mainly due to the average room rate being lowered from $119 in May 2016 to $100 in May 2017, along with a decline in average occupancy by 3.8 per cent when compared to May 2016.

"The majority of the Mena hospitality industry experienced a decrease in earnings during May 2017 as both lower occupancies and lower average room rates reduced overall RevPAR," said Yousef Wahbah, Mena Head of Transaction Real Estate at EY.

In Saudi Arabia, Jeddah saw the highest occupancy rates for the region at 80.2 per cent and the highest RevPAR at $247 in May 2017. Moreover, the hospitality markets in Madinah and Makkah experienced positive gains in RevPAR this month when compared to May 2016.

Madinah's hospitality market witnessed an increase in average occupancy of 6.1 per cent in May 2017 when compared to the same period last year. Average daily room rates also increased from $179 in May 2016 to $180 in May 2017, resulting in an overall boost in RevPAR by 12.2 per cent from $92 in May 2016 to $104 in May 2017.

Makkah's hospitality market witnessed an increase in RevPAR of 90.5 per cent when compared to the same period last year. The rise was mainly due to the average room rate increasing from $142 in May 2016 to $275 in May 2017. Makkah was able to maintain occupancy levels of 41 per cent year-on-year. The increase in Madinah and Makkah's hospitality market may be attributed to the beginning of the holy month of Ramadan where many worshippers prefer to perform Umrah and visit Madinah.

Elsewhere in the region, Cairo's hospitality market witnessed a decrease in occupancy by 10.1 per cent from 74.4 per cent in May 2016 to 64.3 per cent in May 2017.

However, the average room rate increased from $47 in May 2016 to $87 in May 2017, resulting in a rise in RevPAR by 61.9 per cent when compared to the same time last year.

The report said Jeddah, Makkah, and Madinah are expected to continue this strong trend due to the holy month of Ramadan. "As Eid Al-Fitr is expected to fall on the 25th of June, it is anticipated that certain touristic destinations across Mena will experience strong performance during the last week of June."

Source: Khaleej Times