Published on : Thursday, June 14, 2018
This will make a fall in room rates and boost occupancy levels as the UAE’s Dh150 billion hospitality sectors attracts more local and regional tourists.
These measures will have a short-term positive impact for both owners and consumers. For the owners, there will be less expenses and, therefore, they will be able to provide a more competitive pricing for the consumer, which will stimulate the domestic and regional [tourist] markets.
Abu Dhabi reduced the 6 per cent tourism fee currently applied to hotel rooms and outlets to 3.5 per cent, halved municipality fees to 2 per cent, and lowered the per room per night hotel fee to Dh10 from Dh15. The emirate didn’t say how long these cuts will remain in place.
The UAE is undertaking a series of measures to propel growth, attract more foreign direct investment, lower the cost of doing business and create jobs.
Abu Dhabi announced a three-year Dh50 billion stimulus package accompanied by 10 initiatives that include creating at least 10,000 jobs for Emiratis.
The industry ended 2017 with 767 hotels and more than 147,000 rooms, according to data provider STR Global. Last year, revenue per available room (RevPar) fell 3.3 per cent, the fourth consecutive year of declines due to lower average daily rates. ADRs are down by 20 per cent over the last four years.
There were over 38,000 rooms under construction, at the end of December. If all that inventory comes to the market within the next 24 months, average annual supply growth would exceed 13 per cent, putting further pressure on occupancy and ADR growth.
The rate of occupancy in Abu Dhabi rose 2.7 per cent to 80 per cent in April, according to STR. However, ADR fell 3.3 per cent to Dh432.12 and RevPar dipped 0.7 per cent to Dh345.88.
Some analysts have argued that the governments should have made deeper cuts into the fees to attract more international tourists.
Separately, Dubai plans to slash the municipality fee on sales at hotels and hotel restaurants to 7 percent from 10 per cent. Dubai didn’t stay how long this measure will last.