Strength of US dollar hurts Dubai hotels as tourists taper off

The strong dollar is squeezing the Dubai hotel sector with room rates and occupancy levels dipping again last month.

The completion of new hotels in the emirate is adding to the pressure on room rates as tourists seek cheaper destinations.

Occupancy levels decreased by 2.2 per cent to 85.7 per cent in March, while the average daily rate touched Dh978.69, a decline of 6.1 per cent year-on- year, according to consultancy STR Global.

The muted performance pulled down a key measure of the hotels’ profitability – revenue per available room – by 8.1 per cent to Dh838.69.

The strength of the US dollar, to which the UAE dirham is pegged, is hitting inbound tourists from the euro zone, while the collapse of the rouble has also dramatically reduced the number of visitors from Russia.

Increasingly, European travellers are seeking out cheaper alternatives such as Egypt and Turkey, according to according to Rashid Aboobacker, a senior consultant for TRI Consulting.

One euro can buy about Dh4 today compared to about Dh5 a year ago.

The Dubai economy has also slowed down because of lower oil prices and the subdued real estate market. Hilton’s Dubai properties in the UAE have reported a slowdown in the number of Russian travellers, while acknowledging it remains important for its luxury brands such as Waldorf Astoria as well as mid-market brands such as Hilton Garden Inn, two of which are expected to open in the fourth quarter in Dubai.

“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,” said Christian Grage, the vice president of operations for Arabian Peninsula at Hilton Worldwide.

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