UAE hotel sector sees strong rebound in Q1 – News

The improvement in overall performance was mainly driven by beachfront and luxury developments, which benefited from strong leisure demand



Expo 2020 Dubai. The average hotel occupancy rate has increased significantly, with Dubai recording the highest occupancy rate at 80.7%, according to data published by CBRE. — AFP archive photo”/>

The UAE recorded the highest occupancy rate in hotel bookings in 15 years during Expo 2020 Dubai. The average hotel occupancy rate has increased significantly, with Dubai recording the highest occupancy rate at 80.7%, according to data published by CBRE. — AFP archive photo

Published: Wed 20 Apr 2022, 03:33 PM

The UAE hotel market performed well in the first quarter of 2022, supported by the World Expo and the rebound in international visitor numbers.

The improvement in overall performance was mainly driven by beachfront and luxury developments, which benefited from strong leisure demand, according to JLL’s Q1 2022 UAE Market Overview Report. In addition, high-end and mid-range hotels recorded higher average daily rates (ADRs).

Khawar Khan, head of research for the Middle East, Africa and Turkey region at JLL, said operators could consider adopting a more robust revenue management strategy to help owners achieve a higher bottom line after the pandemic.

“The resulting short-term impact may be a slight drop in performance, but this should ultimately lead to longer-term improvements.”

Highest occupancy rate in 15 years

The UAE recorded the highest occupancy rate in hotel bookings in 15 years during Expo 2020 Dubai. The average hotel occupancy rate has increased significantly, with Dubai recording the highest occupancy rate at 80.7%, according to data published by CBRE.

Expo 2020 Dubai recorded over 24 million visits during the six-month event and welcomed 192 countries. The event accelerated the recovery of the local economy after the Covid-19 pandemic. Besides the hospitality sector, retail, tourism, aviation and many other industries have benefited from the Expo.

In March, Dubai’s hospitality industry reported 90% or more occupancy in any given month for the first time since 2007, thanks to the final weeks of Expo 2020, which ended March 31. “Like previous Expos in Shanghai (2010) and Milan (2015), the end of the ‘mega event’ proved to be the busiest for Dubai. The last time monthly occupancy in Dubai hit 90% was in March 2007, when there were around 90,000 fewer rooms on the market,” says a report from STR. The occupancy rate reached 91.7% in March, while average daily rates reached Dh891.46 and revenue per available room at Dh817.9.

Trade markets are doing well

According to JLL, in the UAE office market sector, building on the momentum seen in the last quarter of last year, rents for well-managed quality office buildings continued to perform well. In Dubai, average Class A rents in the CBD increased by 9.0% year-on-year to approximately Dh1,840 per square meter per year in the first quarter of 2022. On the same basis, Class A rents in Abu Dhabi increased by 5.0% to an average of 1,650 Dh per square meter per year. Financial and technology companies remain the main drivers of demand for Class A office space, with the majority of leases signed by occupiers active in these sectors.

“Flexible workspaces are attracting strong interest from new market entrants, as well as some companies taking a ‘wait-and-see’ approach before signing long-term leases elsewhere due to changing market conditions. “Khan added.

JLL’s report noted that in the residential market, an additional 42,000 units are expected to be completed. In the retail market, the easing of restrictions and the continued recovery in tourism continued to offer some respite. Some retailers, particularly in the F&B segment, reported strong revenues – surpassing levels seen before the Covid-19 pandemic.

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