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UAE hotels likely to see record occupancy and room rates in Q4

Atlantis Palm
The Atlantis hotel on Palm Jumeirah has become one of Dubai's landmarks
  • World Cup will boost visits and hotel stays
  • Dubai expects to add 6,000 keys to its 146,000 rooms in Q4
  • UAE targets tourism GDP of $122bn by 2031

Hotel occupancy and room rates across Dubai and Abu Dhabi are likely to hit record levels in the remainder of 2022. And the UAE is setting its sights on attracting an extra AED 100 billion ($27.23 billion) in tourism investments by 2031.

Key performance indicators continue to show resilient levels, despite total hotel visits still remaining below pre-pandemic levels, according to analysts.

Experts at both JLL and CBRE have highlighted increasing hotel occupancy rates in the UAE in their latest real estate reports, while S&P Global predicts that Dubai will be one of the major beneficiaries of the World Cup in Qatar when its hotels will be “close to full capacity”.

According to JLL, Dubai’s hotel occupancy levels reached 70 percent between January and August 2022, a 12 percent jump compared to the same period in 2021. Abu Dhabi occupancy levels reached 68 percent compared to 63 percent.

CBRE said that in the year to September, the average occupancy rate in the UAE increased by 7.9 percent.

Analysts added that over the remaining three months of the year, they expect visits to the UAE to see a marked increase, underpinned by what is traditionally the start of the high season and high profile sporting events, which is “likely to push hotel occupancy and rates to record levels.”

The figures come as Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and ruler of Dubai, launched the UAE Tourism Strategy 2031, which aims to strengthen the position of the UAE as one of the best destinations in the world.

“Our goal is to boost our competitiveness by attracting AED 100 billion in additional tourism investments and welcome 40 million hotel guests in 2031,” he said.

He added: “Tourism is key to diversifying our economy and boosting UAE’s global competitiveness. Our goal is for the tourism sector’s contribution to be AED 450 billion of GDP in 2031.”

An underwater suite at Atlantis in Dubai

The strategy, in partnership with various federal and local tourism authorities, national airlines, and international institutions and companies, includes 25 initiatives and policies to support the development of the tourism sector in the country. 

It is based on four key directions: strengthening the unified national tourism identity; developing and diversifying specialised tourism products; building tourism capabilities; encouraging the contribution of national cadres in the tourism sector; and increasing investments in all tourism sectors.

S&P Global Ratings credit analyst Trevor Cullinan said that as a result of Expo 2020 Dubai, hotel room prices soared by 43 percent year-on-year from January to August, and occupancy rates improved to 71 percent, up 10 percent on the same period in 2021.

“We expect occupancy to remain high in the second half of 2022 and particularly during the World Cup, when we expect Dubai’s hotels to be close to full capacity. This will see room prices climb further still, even if only for a few weeks,” he said in a research note.

In its latest UAE report, JLL said hotels are likely to continue to perform well in the coming months, benefitting from upcoming events such as Formula 1, NBA Games and UFC 280, as well as the World Cup.

Dubai gained 1,000 keys in the third quarter of 2022, pushing up the city’s total hotel stock to 146,000 rooms. It is anticipated that the last quarter of the year will see the addition of 6,000 keys. 

No new hotel room stock was added in the third quarter in Abu Dhabi but an additional 600 keys are expected to come on stream in the UAE capital by the end of the year.

Although summer is the low season for tourism in the UAE, latest figures from Dubai’s Department of Economy and Tourism suggest the emirate received around 2.95 million overnight visitors between June and August – a significant jump compared to the 1.17 million recorded for the same period last year. 

Abu Dhabi witnessed a 24 percent increase in overnight visitors to 910,000 in the same period, according to DCT Abu Dhabi.

Dubai’s average daily rate (ADR) reached $181 and revenue per available room (RevPAR) surged to $127, while in Abu Dhabi ADR and RevPAR rose to $105 and $71, respectively, according to JLL.

CBRE added that in the year to date to September, ADR increased by 34.6 percent across the UAE while the average RevPAR increased by 52 percent. Average RevPAR across the UAE now sits 15.7 percent above 2019 levels.

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