RevPAR Premium Declines for Dubai's Beach Properties

---

(News Source: STR Global)

(LONDON, UK) -- Data released today from STR Global illustrates the difference in performance of Dubai's hotels in the Jumeirah beach area and those in the rest of the city. 

Dubai has suffered dramatically compared to the Middle East region as a result of the recent economic crisis.  The year-on-year percentage change in revenue per available room (RevPAR) through March 2009 declined 35.9 percent in Dubai, driven mainly by falls in average daily rate (ADR); RevPAR decline for the entire region was only 13.0 percent.

The sample of hotels in the Jumeirah beach area comprises 22 resort-orientated properties representing 7,400 guestrooms mainly in the luxury and upper upscale categories. By contrast, there are 82 hotels and more than 18,400 guestrooms in the rest of Dubai, the majority of which are in the upscale segment. 

Both areas of the city matched each other in terms of RevPAR year-on-year percentage change since 2004 as seen in the graph below.  The greater volatility in the RevPAR change for the rest of Dubai was driven mainly by changes in ADR.  However, the peak in RevPAR in early 2004 was due to comparative improvements in occupancy compared to the previous year when the Second Gulf War began.





There has always been a significant difference between the actual RevPAR for the resort properties and those in the rest of Dubai, as the graph below illustrates--a difference that peaked at almost AED1,300 as recently as March 2008.  The higher category resort-based properties are able to charge a premium for their sea-views.

"The hotels in the Jumeirah beach area have a strong sense of their unique positioning and have largely avoided discounting," explained James Chappell, managing director of STR Global, of the inequality.  However, a rationalization of the market is taking place, and this differential has fallen dramatically and is now around AED500, a difference last seen in 2004.

---