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Consultants Cavendish Maxwell have stated that the occupancy rates needed to break-even in the Dubai hospitality market have lowered. In its UAE Property Market Report, it found that a range of cost-cutting measures introduced by hoteliers last year amid the pandemic have caused a market shift.
It explained: “Some others have used the pandemic as opportunity to revisit and cut operating costs thereby improving margins not only for 2020 but beyond. As a result, they have successfully brought down the occupancy rate required to break-even, which is lower than the typical 40 percent.”
Cavendish Maxwell also labelled 2020 as the ‘Year of Staycations’ for the hospitality market in Dubai. In its multi-industry report published in the fourth quarter of last year, Cavendish Maxwell gave an overview of the emirates hospitality market, as well as predictions moving into 2021.
It said: “2020 was the year of staycations as hotels looked to ramp up domestic tourism in the absence of overseas visitors. Hotels launched innovative campaigns at attractive prices including offering rates that included dining, free upgrades and free cancellations.”
In December last year, authorities in the emirate announced that Dubai had reached a landmark high number of domestic visitors. Between May and October 2020 room nights sold to domestic guests went from 2.74 million in 2019 to 5.68 million in 2020. During this period, Dubai’s domestic tourism sector was mostly driven by UAE nationals (40 percent), Indian expats (11 percent), Filipino expats (7 percent), Egyptian expats (5 percent) and British expats (3 percent).
Despite the positive spin by the consultants, it warned that smaller hotels may face difficulties this year if they don’t diversify operations: “Going ahead, we expect small and mid-tier hotels to face difficulties if they continue to solely rely on room revenues without expanding their revenue streams. Also, with the increased upcoming supply amid a slow revival in demand, ADR and occupancy levels will likely move lower in 2021,” said the report.
This article was originally published in Hotelier Middle East
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BA (Hons) DipM
Head of Marketing
Sarah-Jane joined Cavendish Maxwell in January 2020 as Head of Marketing and is responsible for the development of the marketing strategy and execution across the Middle East region. An energetic and results driven marketer, Sarah-Jane possesses a wealth of multi-channel marketing experience, within both B2B and B2C environments which she has gained over a 25 year career. Prior to joining Cavendish Maxwell, Sarah-Jane held senior marketing positions for major developers in Dubai including Emaar, Dubai Properties and Dubai Sports City. She also worked for IWG as the Regional Marketing Director responsible for the MEA and APAC regions. Before relocating to the UAE in 2005, Sarah-Jane held various management roles in public and private sector companies in the UK including ten years at Royal Mail and seven years at the Bank of America.
Sarah-Jane is a member of the Chartered Institute of Marketing and has a BA(Hons) Degree in Business and Marketing