Dubai room rates drop for the third consecutive month

Last month, Dubai's occupancy was down for the ninth month in a row, reaching an average of 86.2 percent. This was in stark contrast with numbers posted by the emirate in 2014, and unfortunately sour news is still on the way.

According to Emirates 24/7, room rates in Dubai dropped for the third consecutive month in March, since December 2014 when rates fell below $272.25. Recent data from STR Global shows average room rates in Dubai have now dropped to $266.45, compared to $296.94 during the same period last year. This is in addition to a 6.2 percent increase in supply over the last 15 months, and Dubai continues to lead the Middle East in new hotel room supply as of the end of last month.

"This new supply is critical for the ongoing success of the city. Additionally, despite the 2.2 per cent drop in occupancy, levels continued to exceed 85 percent in March for the sixth consecutive month," said Elizabeth Winkle, managing director of STR Global.

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Revenue per available room in Dubai also fell by 8.1 percent over the same period last year, reaching $228.33. According to the National, the stronger U.S. dollar is affecting tourism from Europe as travelers are increasingly seeking out cheaper destinations in Egypt and Turkey.

"We remain cautiously optimistic for the year ahead, especially given increasing levels of leisure and business travel to Dubai from countries such as the UK, Germany and the US – as well as China, an emerging market,” Christian Grage, the VP of operations for Arabian Peninsula at Hilton Worldwide, told The National.

Dubai welcomed an estimated 11.95 million overnight visitors in 2014, and tourism in the emirate is expected to increase between 7 percent and 9 percent over the next five years and account for almost 30 percent of Dubai's gross domestic product.