Dubai Tourism: Hotel occupancy up in June

Shady Elborno - Head of Macro Strategy
Published Date: 28 July 2021

 

Hotel occupancy in Dubai rose to 61.9% in June from 58.5% in May 2021 and 59.4% in April.  Revenue per available room (RevPAR) declined -17% m/m in June, the second monthly decline following May’s -13% drop, as hotel operators cut prices to attract back customers in the summer season. This is a sign that the market is gradually clocking back to normalization, as more expats chose to travel for vacation and hotel operators look at attracting international visitors through more attractive pricing in summer. The y/y metrics look much better as last June international borders were closed. Hotel occupancy was thus 36pp higher y/y in June 2021 while RevPAR was up by close to 250% y/y. 

The improvement in hotel occupancy rates in June probably reflects Dubai attracting increasing number of tourists from neighbouring countries prior to any additional restrictions this month, as well as staycations for Eid holidays. The continued travel restrictions on flights from India that where put in place on 25 April 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 largest source of international visitors to Dubai. New restrictions in July on travel of Saudi nationals to the UAE will impact inbound tourist dynamics from that market.  The situations 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.

We continue to see restrictions that have been imposed by other countries on their residents travelling to the UAE as the biggest headwind to the recovery of the tourism sector.  Pre-Covid, the GCC countries accounted for 18% of Dubai’s international visitors, with Saudi Arabia being 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 situations remains in flux as new restrictions re-imposed by Saudi Arabia in July have shown.  

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