Dubai hotel occupancy rises in June as regional travel picks up

Eid staycations and a rebound in travel resulted in a rise in hotel stays in the emirate

The exterior of the Wyndham Dubai Marina. Dubai hotels saw a surge in occupancy rates during June, STR data shows. Courtesy: Wyndham Dubai Marina

Hotels in Dubai recorded a surge in occupancy rates in June, boosted by Eid staycations, a pick-up in regional travel and hoteliers cutting prices to attract guests over the summer season.

The average occupancy rate rose to 61.9 per cent in June, jumping 139 per cent compared to the same month in 2020, when the UAE closed its borders to curb the spread of Covid-19, according to hospitality data and analytics specialist STR. June's performance was also an increase from occupancy rates of 58.5 per cent in May and 59.4 per cent in April.

"The improvement in hotel occupancy rates in June probably reflects Dubai attracting increasing numbers of tourists from neighbouring countries prior to any additional restrictions this month, as well as staycations for Eid holidays," Shady Elborno, head of macro strategy at Emirates NBD Research, said in a report on the tourism sector, on Wednesday.

Dubai hotels' June revenue per available room (RevPar) – a key performance metric calculated by multiplying a hotel’s average daily room rate by its occupancy rate – declined by 17 per cent month-on-month as hotel operators cut prices to attract customers during the hot summer months, the report said. However, RevPAR was up by close to 250 per cent year-on-year after travel restrictions to the UAE were removed.

Restrictions imposed by other countries on their residents travelling to the UAE pose the biggest headwind to the recovery of the tourism sector, according to the travel sector outlook by Dubai’s biggest lender.

The continued travel restrictions on flights from India that were put in place on April 25, 2021, in response to the surge in coronavirus cases there, have had an impact on Dubai’s travel and hospitality sector as India is the biggest source market of international visitors to Dubai, Mr Elborno said in the report.

"The situation with travel restrictions from neighbouring and other countries continues to be very dynamic with dates often changing over short periods of time as both the UAE and other countries continually take decisions respective to their assessment of travel risk conditions," Mr Elborno said.

Before the pandemic, Gulf countries accounted for 18 per cent of Dubai’s international visitors. Saudi Arabia was the second largest source market after India.

"The relaxation of those restrictions, especially from Saudi Arabia, over May and June would have improved those dynamics; however, the situation remains in flux as new restrictions re-imposed by Saudi Arabia in July have shown," the report said.

While the UK's decision to keep the Emirates on its red list may deter British holidaymakers from travelling to Dubai, despite the UAE's high vaccination rates, the quarantine requirements in most EU countries for the country are easing, the report said.

Vaccinated UAE travellers are now able to travel to many EU destinations and EU citizens’ visits to the UAE are subject to fewer restrictions, it said.

"Dubai’s tourism sector is gradually heading to normalisation, as global travel gradually picks up, and the technicalities of vaccination and health passports become more streamlined," Mr Elborno said.

"However, this global travel situation remains dependent on the domestic coronavirus situation in many countries, as well as the speed with which vaccines are rolled out."

The International Monetary Fund maintained its global economic forecast at six per cent but downgraded its growth outlook for emerging market and developing economies due to the uneven access to vaccines and the emergence of Covid-19 variants that are hindering the shape of recovery.