Dubai, UAE, hotels
Source: Agoda

Dubai's hotel sector witnessed a critical drop in occupancy rates during the first week of March, dipping almost 30 percent compared to the same period last year. According to global data and analytics company STR, the emirate's hotel sector's performance is continuously declining amid coronavirus (COVID-19) concerns.

STR's report, published March 17, shows that between March 1-8, the occupancy levels for Dubai hotels dropped 28.2 percent, putting them at 60.6 percent. The sector's average daily rate (ADR) - the average rental income per paid occupied room in a given time period - fell 20.4 percent, reaching 498.13 dirhams ($135.62), while the revenue per available room (RevPAR) plummeted by 42.9 percent, hitting 301.68 dirhams ($82.13).

However, STR analysts made sure to highlight the division's notable "ability to sell six of every 10 rooms on average during the first week of March."

Source: STR

Prior to the first week of March, the fall had began during the last two weeks of January and continued throughout the month of February. Significant slips appeared on Jan. 26 and have since plunged staggeringly.

The beginning of January saw incredibly positive results. In fact, occupancy levels were up by 16.9 percent (standing at 86 percent) compared to the same time in 2019. As for ADR and RevPAR, the former rose by 0.8 percent, reaching $191.40, and the latter by 8.7 percent, hitting $165.80. 

However, with the COVID-19 outbreak, things took a steep turn.

"Things changed very very quickly, like they did with the oil crash in 2014, it was almost instantaneous. We started to see things decline quite quickly from January 20," STR's area director of Middle East and Africa Philip Wooller told Arabian Business.

By February, Dubai's hotel district had already suffered a 9.4-percent loss in occupancy levels, reaching 77.1 percent. The division's ADR fell 14.4 percent to $154.54 and the RevPAR went all the way down to $119.09 — a decrease of 22.5 percent.

According to managing director at STR Robin Rossmann, it is highly possible that these numbers will continue to "look even worse in the coming weeks" with the current travel bans in place.

Source: STR

What are UAE hotels doing to combat this crisis?

Hotels across the UAE are taking as many measures as possible to reduce costs and combat the financial effects lower occupancy rates will have on the sector.

Hoteliers initially moved to sanction unpaid leaves for middle-level managers and asked employees to take whatever outstanding unpaid leaves they have pending. Other hotels are changing their food and beverage suppliers to more cost-effective ones.

Five-star hotels have slashed their prices to 300 dirhams per night ($81.68) and started offering staycation packages to UAE residents in an attempt to prompt more visitors.

Dubai's Emaar Hospitality Group suspended any further bookings at three of its hotels in the emirate: Address Fountain Views, Vida Creek Harbour, and Vida Emirates Hills.

These measures do not aid the occupancy levels that have dropped significantly over the last 37 days. They do, however, reduce the costs for hotels, which slightly balance matters out.