The UAE’s hospitality market remained subdued in 2016 on the back of weaker macroeconomic conditions, further strengthening of the USD, and a strong supply pipeline, said an industry expert.

According to leading real estate industry expert Knight Frank, hotel occupancy rates in Dubai maintained their stability on an annual basis registering 77 per cent year-to-date November 2016 - the highest rate amongst its regional peers.

Meanwhile, average daily rates (ADR) dropped 12 per cent year-to-date November 2016 compared to the same period last year. This resulted in a 12 per cent decline in revenue per available room (RevPAR).

In Abu Dhabi occupancy rates dropped 4 per cent on an annual basis, recording 71 per cent year-to-date November 2016. Given the emirate’s dependence on corporate tourism, the sector suffered from low demand on the back of softening global economic conditions. In turn ADR and RevPAR declined 11 per cent and 14 per cent respectively over the same period.

Knight Frank's short term outlook for the hospitality market in the UAE remains clouded by the continued appreciation of the USD and prevalent economic uncertainties. However, the delivery of Dubai’s theme park complex along with the Opera District and other demand generators is expected to drive demand for Dubai’s hospitality market in the next 12 months.

Meanwhile in Abu Dhabi, the delivery of more cultural and entertainment facilities is expected to stimulate visitation.

Looking ahead, and amid a strong supply pipeline, hotel operators need to diversify their products to offer more budget accommodation to cater for diverse travellers. This is particularly true as 2016 year-end figures reveal a growing percentage of visitation from non-traditional source markets. Introducing more affordable options will not only balance the hotel supply, which is currently skewed towards the luxury market, but will continue to broaden the country’s tourist base and ensure the UAE remains a competitive tourist destination, it said. - TradeArabia News Service