Dubai's hotel sector reported a 15 percent drop in revenues during the first ten months of the year, despite occupancy levels remaining relatively static.

According to The Middle East Hotel Benchmark Survey by EY MENA, occupancy levels across Dubai stood at 73.5 percent between January and October 2019, down only slightly from an average of 74 percent during the same period last year.

However, average room rates across the period was $217, down from $254 during the same period last year. As a consequence, the average Revenue per Available Room (RevPAR) was down 15 percent to $160.

Performance during the period varied across the UAE. Abu Dhabi reported a 6.9 percent increase in RevPAR and 2.7 percent increase in occupancy, while Ras Al Khaimah reported a 8.4 percent drop in RevPAR, despite a 2.2 percent increase in average occupancy.

The best performing city in the region during the ten month period was Beirut, which reported a 19.2 percent increase in RevPar and a 5.6 percent increase in occupancy. However, this is not likely to continue as monthly figures for the Lebanese city show that protests in the latter half of the year have already had an impact, with RevPAR in October down 19.5 percent and occupancy levels down 14.9 percent.

Looking to the future, an industry report in November found that the UAE has a hotel construction pipeline of nearly 53,000 rooms, about 30 percent of the market's existing supply.

STR’s October hotel pipeline data showed the UAE is leading the Middle East's pipeline of 434 projects accounting for 119,991 rooms. The UAE (52,810 rooms) was followed by Saudi Arabia with 38,912 rooms, which represents 38.3 percent of existing supply.

An industry analyst last month also said the Dubai hospitality market will require 'complete repositioning' to continue to be successful. Filippo Sona, managing director, Global Hospitality at Drees & Sommer, said consolidation of average room rate in Dubai is here to stay, adding that $180-200 is going to be the new average five-star room rate.

“It is time for hoteliers to reposition and reinvent themselves. The main issues surround the business model. For example, staff accommodation, currently provided by hotel owners in Dubai, is a massive cost that is neither sustainable nor necessary. It will become obsolete. This is for two reasons,” Sona said.

“Firstly, Dubai’s residential market is stable but expanding, and there will be units coming online that hotel employees can afford to rent. Secondly, the trend towards outsourcing hotel services, from security to housekeeping, is growing and coupled with developments in technology that will make hotel operations more efficient, hotels will require smaller workforces in the future."

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