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Middle East and North Africa hotels see 11 per cent drop in rates

Oil industry struggles and a flurry of new rooms in Dubai saw good value to be had, according to HotStats
01/11/2017

Pictured: Dubai

Oil industry struggles and a flurry of new rooms in Dubai saw good value to be had at hotels in the Middle East and Africa in September, according to the latest poll by HotStats.

The region saw a 10.8 per cent drop in average room rate to $159 (£119), despite a 1 per cent increase in room occupancy. Year-on-year decline in sector rates was also recorded in the corporate (8 per cent) and residential conference (8.6 per cent) segments.

Pablo Alonso, CEO of HotStats, said: “Despite oil prices hitting a two-year high in late September, a number of key economies across the Middle East and Africa continue to face challenges as they come to terms with the reduction in oil output due to OPEC-imposed cuts and many look to non-oil industries to stimulate growth. 

“The current challenges in the oil industry have seen Saudi Arabia fall into recession in Q2 2017 with the Qatar economy also struggling. Alongside this, the political landscape in the region is facing major issues. The current challenges in the Middle East & Africa suggest the hotel market will continue to struggle in the short term.” 

While Dubai is one of the few key economies in the region that is much less reliant on the oil industry, the city is facing challenges of its own, as the city’s bedstock multiplies in preparation for Expo 2020.

In September, hotels in Dubai saw year-on-year declines in both room occupancy (4.2 per cent) and average room rate (8.7 per cent) to $163 (£123).

But the year-on-year fall could have been bigger, with more than 4,000 bedrooms added to the Dubai market in the year to Q3 2017. These have included the 414-bedroom Rixos JBR and the 238-bedroom DoubleTree by Hilton Business Bay, bringing the total number of rooms available to 82,200 bedrooms.

“The additions to stock in the Dubai hotel market, many of which are in the mid-market segment, are inevitably diluting top line performance which is having a knock-on effect on the rest of the profit and loss,” said Alonso.

“Despite this, construction projects in the city are continuing unabated and a further 4,100 bedrooms are due to enter the market in Q4 2017, with up to 40,600 rooms being developed in the next two and a half years in the lead up to Expo 2020.”

Across in Kuwait in September, hotels saw a 7.1 per cent decline in average room rate and a 5.2 per cent increase in occupancy.


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