New supply and a weaker business climate will reportedly prove to be detrimental to United Arab Emirates hotels in 2017. The National, citing hospitality-related analysts, writes that hotels in the UAE should also ready themselves for room-rate drops next due to the stronger U.S. dollar.
It writes: "A steady stream of new hotels across the mid-market, luxury segments and holiday homes, coupled with a weak business climate on the back of lower oil prices, have led hotels to slash room rates this year across the UAE."
According to JLL, rates in Dubai have dropped by 10.5 percent in the first 10 months of this year, compared with same period last year. In Abu Dhabi, the average rate decline was 9.9 percent.
Room rates are expected to plunge next year, according to hotel analysts and as reported by The National.
"In a market where there is considerable competition due to additions to the hotel inventory, coupled with poor financial performance across most of the UAE’s source markets, it is unlikely that demand markets would stomach this apparent increase in cost and therefore hotels and other suppliers would have to absorb this increase in dollar value," John Podaras, a partner at the hospitality consultancy Hotel Development Resources, in Dubai, told The National.
Not encouraging, and it comes along at a time when 59 hotels are expected to open in the UAE next year. Dubai alone, which has approximately 100,000 hotel rooms already, has invested heavily in improving infrastructure and launched a financial incentive to develop more mid-range hotels ahead of the upcoming 2020 Expo. The emirate reportedly has 138 hotel projects currently in the pipeline with 10,000 new rooms slated to open by the end of 2016.