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Hotels in the UAE Prepare for Tough Times

Hotels in the United Arab Emirates are soon to have tough times as a challenging period becomes closer and closer. With the holy month of Ramadan and summer approaching, it will be harder for hotels in the region to maintain their revenue levels.

Managers of hotels in the region are well-aware of the fact that their business has a seasonal character. In summer, it becomes increasingly difficult to run business due to weakened demand that inevitably results in lower occupancy and cheaper rates. The data provided by TRI Consulting shows that the estimated RevPAR in 2018 may be as much as 7% lower than a year ago. The results of Q1 2018 were not promising with hotels in Dubai and Abu Dhabi suffering from a decrease in RevPAR of 2.6% and 4% respectively.

If we take a hotel with 250 rooms, an average daily rate of AED 750, and occupancy of 80%, it can lose as much as AED 3.8 million within just a year. This sum includes only room related revenues and doesn’t take into consideration other aspects of the hotel business, such as food and beverage departments. According to TRI, hotels need to make savings to protect their business during hard times and continue offering high-quality service to less numerous guests.

Here comes the question how hotels in Abu Dhabi or Dubai can protect their business. Waste management is one solution to that. Hotels in the UAE generate approximately 1,200 tons of waste. As a rule, a half of this waste is food related. That is significantly more than in Europe – UAE hotels generate roughly 8.5 kilograms of waste per guest, while European hotels generate only 1.2 kilograms of waste. Dubai hotels are particularly interested in reducing their generated waste as Dubai Municipality has introduced new fees per ton of general waste, which are quite expensive. During Ramadan, the waste per guest increases even more – by 50% at some hotels, and much of that waste is uneaten food. Together with lower occupancy and cheaper hotel rates, this adds another burden to local hotels.

Even though fewer guests visit the Emirates in summer, energy and water consumption only grow due to the heat and humidity. Guests take showers more often and use air conditioning to cool down their rooms. For hotels that means higher water and electricity bills. Therefore, optimizing their energy and water usage is another possible way of saving. At the moment, the annual utility bill of a high-class hotel in Dubai is AED 7.5 million on average. LED lights, aerators, and A/C modules could help reduce the bill.

05.05.2018

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