Dubai Hotel Rates Fall Due to Supply Rise

The average room rates of Dubai hotels dropped due to an increase in supply, hitting a 14-year low during the month of July.

According to statistics provided by STR, a leading hotel data company, the average daily rate fell 9.7% to Dh423.63 ($115.33) while demand expanded by 7.2% and supply grew by 6.3%. Occupancy levels rose 0.9% to 66%, Albawaba reported.

"Although growth in demand was significant, performance levels remained low due to pressure from increased supply. The average daily rate level would be the lowest for any month in the market since August 2004," STR said.

Analysts believe that lower room rates will continue to attract more tourists to the emirate.

During the first half of this year, more than 2,600 keys were added to Dubai's hospitality sector, with the opening of 10 high-end properties. Dubai Tourism earlier said in its H1 2018 report that the number of four-star properties increased from 114 to 138, representing 25% of the rooms' inventory. Occupied room nights were also up year on year with a total of 14.97 million compared to 14.53 million during the same period in 2017.

In H1 2018, the number of visitors to the region's most visited city reached 8.1 million and is on track to surpass its last year's figures of 15.79 million. The emirate is also on track to achieve its target of 20 million visitors by 2020.