Destination Outlook

UAE hotels show signs of recovery from Covid-19 crisis

While hotels in the United Arab Emirates (UAE) reported their lowest figures for any year across its occupancy, ADR and RevPAR in 2020, performance toward the end of the year pulled closer to pre-pandemic levels. This can be attributed to, experts said, government support and initiatives to bolster demand, along with an increase in domestic tourism.

The government has been focused on assisting recovery efforts in its tourism sector. On 24 January 2021, the country set up a federal tourism council to strengthen its tourism portfolio. The Emirates Tourism Council suggests and revises policies and legislation that support the tourism sector and national tourism development plans and attract tourism investments. The council’s members include all the tourism authorities of each of the seven emirates – each of which has been implementing several initiatives to bolster hotel performance.

Raki Phillips, the CEO of Ras Al Khaimah Tourism Development Authority (RAKTDA), said it was vital to support the emirate’s hospitality stakeholders and businesses support and launched a series of initiatives in the past year to do so. He commented: “The initiatives included waivers on tourism licenses, tourism dirhams, licensing fees and fines, all within specific time frames. In addition to this is the dedicated Financial Incentives Package and complimentary participation in upcoming roadshows and events to boost awareness.” RAKTDA also ensured all mandated and best practice safety and hygiene measures were implemented at properties, in addition to hosting webinar trainings and offering free PCR testing for hospitality employees.

Phillips added: “These efforts provided our partners with peace of mind and the space to focus on enhancing their respective safety and hygiene measures for guests. Doing so laid the groundwork for the strong recovery process we are seeing now.”

STR data showed that the UAE’s December 2020 occupancy (67.4%) and RevPAR (AED 371.24) were the highest in the country since February. The country’s average occupancy in 2020 stood at 51.7% (-29.3%), while its ADR dropped 16.5% (AED 418.83) and RevPAR fell 41% (AED 216.45) compared to 2019.

Preliminary December 2020 data from STR also confirmed that Dubai’s hotel industry reported its highest performance levels since the start of the pandemic, with occupancy at 71% (-10%). The emirate opened its doors to international tourists on 7 July after nearly four months of total closure. Philip Wooller, area director Middle East & Africa – STR, said that Dubai has done “a fine job in generating domestic demand” and preparing the way for international guests to return. “That has moved the occupancy line in the right direction and showed the market’s resilience,” he added. Wooller continued: “In December, Dubai was the only market in the world with occupancy above 70% outside of China. Besides domestic demand, the market has benefitted from the return of international demand during the last month of the year.”

Wooller noted: “Other cities have also seen a rebound in occupancy. Domestic and Covid-19 quarantine demand have led to a sharp rebound in Abu Dhabi’s occupancy, for instance. In December, the market posted a 63.1% occupancy level, its highest level since February (77.3%).” Abu Dhabi reopened for international tourism on 24 December.

Wooller said: “While still far from ‘normal’, the United Arab Emirates continues to stand out in the recovery cycle. Occupancy in the country has risen steadily over the last few months with strong domestic demand and local carriers opening to more destinations.”

Hoteliers commended the government and tourism authorities for their role in generating demand. IHG’s head of operations, Middle East & Africa, David Todd said: “We believe that the overall return of consumer confidence is largely supported by UAE Government initiatives such implementation of strict Covid-19 regulations, introduction of consumer safety campaigns and the ongoing large-scale vaccination drive in the country. Furthermore, the surge in domestic leisure guests and international tourists can be attributed to several campaigns by the Government to promote domestic tourism, initiate travel corridors with several countries and the right rates and promotions that we have been bringing to our guests.”

Mark Willis, CEO India, Middle East & Africa for Accor, added: “Our properties located in the UAE saw positive signs in occupancy levels during last few months of 2020. This surge in demand can be attributed to a number of factors including the high levels of safety and security regulations which were implemented very early on by the UAE government, making it a safe destination for travellers to visit.”

Leisure tourism has been a key factor contributing to the surge in demand. Willis added: “The positive demand levels were mainly based around leisure travel, with some MICE demand in the form of weddings; however, it will still take some time for business travel demand levels to increase in the coming months.”

IHG’s Todd noted: “In the last quarter specifically, we have seen strong performance across our portfolio in the UAE with many IHG hotels such as InterContinental Dubai Marina, InterContinental Fujairah Resort, Crowne Plaza Dubai Marina and InterContinental Residences Dubai Festival City recording over 90% occupancy. Although the demand is mainly driven by leisure stays, we also saw a significant improvement in MICE bookings in the last quarter, especially across our hotels in Dubai.”

Events in the UAE have made a return, with Dubai hosting the Ai Everything x Restart Dubai Summer Conference on 16 July, followed by GITEX Technology Week in December 2020. Abu Dhabi’s Yas Island has already hosted three installments of UFC Fight Island where participants have been protected in a ‘safety bubble’ – in July and October 2020, and in January 2021. Tourism trade show Arabian Travel Market (ATM) is another event on the cards, scheduled for May 2021.

Meanwhile, the UAE’s Ministry of Health and Prevention revealed on January 26, 2021 that the country recorded 3,601 new coronavirus cases – noting 15 consecutive days of record-high daily new cases. The country marked 3,890 new recoveries on this day.