Abu Dhabi room rates drop 25%

Dubai sees slower decline as recovery begins

Published Wednesday, March 02, 2011

Abu Dhabi has been overtaken by Riyadh as the most expensive city for room rates in 2010. (AGENCIES)

The Middle East experienced the greatest regional decrease in average room rates in 2010 due to economic problems with Abu Dhabi, which last year was ranked second in the highest room rates, dropping to 19th with a rate decrease of 25 per cent, according to a Hogg Robinson Group (HRG) survey.

Room rate in Abu Dhabi fell to £167.8 in 2010 compared to £222.6 in the previous year – the highest drop in the world.

Abu Dhabi hotel room rates have been under pressure despite improving occupancy rate due to increased supply. Last year, Abu Dhabi hotels hosted 1.81 million guests - 18 per cent more than the previous year and eight per cent above their set target.

In February, Abu Dhabi Tourism Authority stretched target for 2011 hotel guests to two million, following a promising performance by the emirate’s 116 hotels and hotel apartments last year.

Abu Dhabi has been overtaken by Riyadh as the most expensive city for room rates in 2010.

All the Middle Eastern cities recorded decline in room rates but Riyadh.

The survey revealed that Riyadh hotels are the most expensive in the Middle East with a single room costing £175.8 per night. Globally, Moscow tops with £258.67, followed by New York (£211.9), Geneva (£203.4), Paris (£201) and Zurich (£198.6).

The data, which covers the entire year of 2010, shows that much of the increase in hotel rates occurred in the Asia Pacific - an indicator that the region may have fully recovered from the global recession.

Room rates in Dubai – the financial hub of Middle East – dropped five per cent to £162.4 per night from £170.5 in 2009 due to the slower recovery and reduced demand from the financial sector, HRG said.

“In the Middle East and West Africa, room rates declined across 2010 as a whole.

However, more recent data has pointed to recovery.

For example in the final quarter of 2010, room rates in Dubai were up by 9.5 per cent year-on-year.

This compares to a 20 per cent annual decline in the first quarter. Economic growth in the region is expected to surpass typical advanced economy growth in 2011 and 2012,” said Margaret Bowler of HRG.