Hotels in Fujairah and Sharjah are expected to feel the effects of new room supply and fewer Russian tourists this quarter, according to an industry report.
The revenue per available room (Revpar), a key industry measure of profitability, is expected to drop by 26 per cent to $120 this quarter in Fujairah and by 6 per cent to $81 in Sharjah, according to the consultancy Colliers International.
Comparative figures for the year earlier quarter were not available from Colliers.
The occupancy rates in Fujairah and Sharjah this quarter are forecast at 70 per cent and 86 per cent, and average room rates at $171 and $95, respectively.
Comparative figures for the year earlier quarter were not available from Colliers.
“The new properties that opened, started trading at promotional rates to gain market share and this has led to an overall market compression, resulting in hotels having to reduce rates to maintain volume levels,” said Filippo Sona, the director for the Middle East and North Africa at Colliers.
“In addition to the new supply, both markets have been suffering from an overall downturn in inbound business, as the wider [Arabian Gulf] is feeling the oil price effect and the European market is economically suffering.”
Olivier Hick, the vice president at Accor in the Arabian Gulf and Levant, expects a 40 per cent decline in Russian tourists to the UAE this year, affecting resorts in particular.
This could be a major setback for hotels, especially since Russia was the fifth-largest source market for the UAE last year, he said.
Coupled with the devaluation of the rouble, Russian tourists are heading to resorts such as Sharm El Sheikh in Egypt, which offer a better value for money proposition.
For Fujairah Rotana Resort & Spa, Russia’s economic woes are worrying as the market last year represented 35 per cent of its total business.
“The collapse of the Russian rouble and the plunging of Russia’s economy towards recession has put pressure on this market,” said Hossam Kamal, the general manager of the property located at Al Aqah Beach. “Hence the drop in the revenue per available room, and the reduction in outbound travel from the Russian market is expected.”
The hotel is now trying to tap other markets such as Germany, the UK and eastern Europe to compensate for the drop in Russian visitors.
The northern emirate has 18 hotels with 2,664 rooms and 20 serviced apartments accounting for 819 rooms. Last year, the French operator Accor opened Novotel with 182 rooms, Adagio Aparthotels with 72 apartments, and Ibis with 180 rooms.
This year, more properties are expected to come on stream, including the 194-room Fairmont Fujairah on Al Aqah beach, and the 221-room Millennium Hotel Fujairah connected to the Fujairah Mall.
Both the properties are rated five-star.
Next year, three more are expected to open, including an InterContinental and a Hues Fujairah Resort with up to 35 private villas.
In Sharjah, 1,002 hotel rooms are expected to come on stream this year along with 50 serviced apartments, according to Colliers.
The emirate has 51 hotels and 55 serviced apartments.
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