UAE hotels’ revenues, occupancy ‘likely to move lower this year’

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UAE hotels braved a tough year in 2020 and are looking to 2021 with hope following the vaccine rollout. However, increased upcoming supply amid a slow revival in demand will see revenue and occupancy levels likely move lower in 2021, according to Cavendish Maxwell, a leading property consultancy and chartered surveying firm providing services in the Middle East and Africa.

 

As expected, 2020 was a tough year for the hospitality industry in the UAE, with several hotels in shuttering on a temporary or permanent basis.

 

However, some others have used the pandemic as an opportunity to revisit and cut operating costs thereby improving margins not only for 2020 but beyond. As a result, they have successfully brought down the occupancy rate required to break-even, which is lower than the typical 40 per cent, said the expert in its Q4 2020 UAE Property Market Report, containing key data and trends for Dubai, Abu Dhabi and the northern emirates. 

 

The report was compiled by the firm’s in-house strategy and consulting team in collaboration with its extensive client and partner portfolio, drawing on proprietary data from real estate intelligence platform, Property Monitor.

 

Revealing the key insights and trends during the fourth quarter of the year, Cavendish Maxwell, said it expects small and mid-tier hotels to face difficulties if they continue to solely rely on room revenues without expanding their revenue streams. Also, with increased upcoming supply amid a slow revival in demand, ADR and occupancy levels will likely move lower in 2021, it added.

 

Cavendish Maxwell pointed out that 2020 was the year of staycations as hotels looked to ramp up domestic tourism in the absence of overseas visitors. Hotels launched innovative campaigns at attractive prices including offering rates that included dining, free upgrades and free cancellations. Sheikh Mohammed bin Rashid Al Maktoum launched the first federal domestic tourism campaign titled ‘World’s Coolest Winter’. Spread over 45 days, the campaign aimed to highlight the varied attractions of the UAE and promote the country as a single united destination for tourism. According to government figures, the number of room nights sold to domestic visitors jumped from 2.74 million during May-October 2019 to 5.68 million in the same period in 2020, an increase of 107 per cent.

 

Apart from reopening attractions that were initially closed during the peak of the pandemic, new attractions and properties have opened their doors to visitors. Dubai Safari Park, Palm West Beach and the Palm Fountain at Palm Jumeirah were some of the new attractions launched during Q4 2020. Riu Dubai, Nakheel’s 800-room joint venture with Spain’s RIU Hotels & Resorts was the first attraction to open at Dubai’s Deira Islands in 2020.

 

While ramping up domestic tourism, Dubai has also launched initiatives for international travellers since opening up the borders on July 7. The government has launched the ALSAADA Tourist Card which provides tourists discounts on dining, shopping, entertainment, health and beauty services. Tourists will receive the card free of charge on their arrival in Dubai and it will remain valid until the tourist leaves the emirate.

 

After a landmark peace agreement was signed between the UAE and Israel in Q3 2020, the UAE has been quick to cater to Israeli and Jewish guests, opening up direct flights to Israel and offering kosher food across hotels and restaurants. More than 50,000 Israelis have already visited the UAE since the Abraham Accords peace agreement was signed in September, according to the country’s tourism minister, it added.

 

With the aim to further increase Dubai’s appeal among tourists, and attract repeat visitors, the Dubai government has announced new laws governing the timeshare industry to protect operators and investors of such properties. Timeshares allow for partial ownership of a property along with use for a certain period in the year. They are a more flexible and affordable option than purchasing a vacation home.

 

Abu Dhabi has been slower than Dubai in easing restrictions in a effort to keep the rate of infections low. However, occupancy in Abu Dhabi hotels for 2020 was on par with Dubai, data from STR Global shows.

 

Beginning December 31, Abu Dhabi was expected to ease entry rules for tourists from various international destinations while adhering to strict safety measures. To make it easier to enter the emirate, 18 new drive-through DPI testing centres were set up on the Abu Dhabi border, it said.

 

Earlier in December, the Abu Dhabi Emergency Crisis and Disasters Committee had started working with authorities to resume all economic, tourism, cultural and entertainment activities within the following two weeks.

 

In a continuous effort to increase the appeal of Abu Dhabi for residents and tourists alike, Abu Dhabi Municipality has constructed four new pocket parks in Shakhbout City. Spread over a total area of 24,575-sq-m the parks include children’s areas, barbeque spaces and seating areas, the report said.

 

To effectively respond to the challenges created by the pandemic and to prepare for tourism and hospitality in a post-Covid-19 world, the northern emirates are taking various yet unified measures to benefit residents and visitors.

 

Ras Al Khaimah offered complimentary Covid-19 PCR testing for international visitors at least until the end of 2020. With measures such as this, the emirate has been awarded the ‘Safeguard Assurance’ Label from Bureau Veritas and the World Travel and Tourism Council (WTTC) Safe Travels Stamp. For the second year in a row, the emirate has been recognised as the Gulf Tourism Capital, acknowledging its early and sustained action to curb the spread of Covid-19.

 

Between June and August, Ras Al Khaimah ran the ‘Shortcation’ staycation campaign inviting domestic visitors to experience natural and cultural attractions. The campaign saw 15,000 room nights recorded during its first 12 weeks. Aimed at visitors and adventure enthusiasts, Ras Al Khaimah has launched new attractions including the first Bear Grylls Explorer Camp, which will also have accommodation from 2021, and the highest restaurant in the UAE, 1484 by Puro, it said.

 

Ajman hotels joined Ras Al Khaimah in receiving the Bureau Veritas certification for adopting the highest safety protocols to protect guests and employees from the pandemic. In line with the Ajman Vision 2021 to build a happy society where members contribute to its development, Ajman Tourism

Development Department launched the Jadara programme to help hospitality staff better serve people of determination.

 

Sharjah has also recognised the potential held by youth tourism services in contributing to the growth of the tourism and hospitality sector. To improve the quality of services provided to the youth tourism sector, the Sharjah Commerce and Tourism Development Authority will manage, supervise and develop services of youth hostels located in the emirate while the Sharjah Archaeology Authority will oversee the maintenance and preservation of the facilities.

 

Umm Al Quwain has opened its Mangrove Beach in Khor Al Yeefrah to visitors. The beach is the first of its kind in the emirate and aims to promote environmental tourism and highlight the importance of mangroves. – TradeArabia News Service



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