ABU DHABI FOCUS: Grand Ambitions
Abu Dhabi is putting its best foot forward with new infrastructure and the 2030 vision, but how are hotels faring in 2011? Harriet Sinclair investigates.
Abu Dhabi is making a lot of noise. Until recently, the UAE’s capital had played second fiddle to neighbouring Dubai. But with big plans to make Abu Dhabi a tourist hot spot, the emirate is reportedly on the up.
According to data from global information publisher Euromonitor International, arrivals in Abu Dhabi are predicted to hit three million — an increase of two million since 2004 — while recent statistics from Abu Dhabi Tourism Authority (ADTA) showed a 10% rise in hotel guests during the first quarter of 2011 — with 510,114 guests staying in the emirate’s hotels — a positive sign for hoteliers who have surely been balking at the amount of new supply coming online this year alone.
2030 vision
The positive numbers for the beginning of the year have been welcomed by ADTA director of tourism standards, Nasser Al Reyami, who says that they reflect the growth of the city as a tourism destination — though he does concede that the Arab Spring has been responsible for shunting additional tourism to the emirate.
“Abu Dhabi has a 2030 Vision — which in terms of tourism is for us to have 7.9 million visitors staying in 80,000 rooms — and we are on our way to that because we have almost 20,000 rooms at the moment, then by the end of this year we are planning to add another 4000 rooms so we are reaching that number,” he says.
ADTA’s development of the 2030 Vision, as well as its marketing and promotion strategy, has been praised by hoteliers.
The Yas Hotel sales and marketing director Russell Loughland explains: “The vision of the future from the government and the drive towards showcasing Abu Dhabi is a gift — it is an extraordinary opportunity for the city to rise.
“We are developing the destination and this cannot be sustained unless we work together. We have the Guggenheim, the Louvre — all these components are coming to Abu Dhabi and it’s really quite alive,” he adds.
The fact that there is so much infrastructure being built in the destination is a comfort for businesses, since they know that visitor numbers are expected to increase in line with all of the new projects, agrees Al Forsan International Sports Resort director of sales and marketing Tania Taylor.
“We all know that ADTA is committed to developing the destination, there are so many plans to build the city up, and everyone is on board with that — there is a real sense of synchronicity,” she says.
“The fact that there is a clear plan is important because we know what the destination will be like in the future and it is an exciting time to be here,” she adds.
Occupancy
Despite assurances that the sheer volume of new projects being built in Abu Dhabi will attract more tourists, the fear remains that although business may be booming in 10-15 years, hotels may struggle now with low occupancy rates and RevPAR.
This has been the case for Rotana’s hotels in the city, says its chief operating officer Omer Kaddouri.
“We already have been experiencing drops in occupancy, RevPAR and ADR — and we have been experiencing these drops for the past couple of years, due to the rapid increase of inventory,” he explains.
“However, this was expected and I think that it will get worse before it gets better because there is a lot more inventory coming into Abu Dhabi in the next few years, and so we are prepared for that.
“Abu Dhabi is a major destination in the building; it is in progress and all of these hotels are one day going to be full for the majority of the year but Abu Dhabi has to develop to get the that level — and it is in the process of doing so,” he adds.
The initial decrease in occupancy, RevPAR and ADR hasn’t dissuaded Rotana, or in fact any other hotel company, from continuing to open hotels in the city — Rotana has a property which is slated to open during the last quarter of 2011, and a number of other big players are planning to open in the emirate.
One hotel which is soon to open is the highly anticipated Jumeirah at Etihad Towers — the hotel company’s first project in Abu Dhabi.
Jumeirah at Etihad Towers general manager Doris Greif says the destination was an important one for the company.
“Abu Dhabi is the capital of the UAE and it was important for Jumeirah to have a presence there. In terms of the number of new hotels coming onto the market, I think that the more luxury operators there are, the better for the destination — we have international names coming to Abu Dhabi and this will benefit the city,” she explains.
Despite her enthusiasm for opening in Abu Dhabi, Greif says that pricing in the emirate does differ from that of neighbouring Dubai.
“We need to differentiate between pricing something like Dubai beachfront hotels and city hotels [in Abu Dhabi],” she says.
“Abu Dhabi is a completely different ball game altogether. Pricing is definitely below Dubai, so we will be pricing ourselves within the Abu Dhabi competitive set, in line with the top luxury hotels.
Now that some bigger hotels have opened I think we will see a switch in pricing upwards, because the more luxury brands you have in Abu Dhabi, the better it is to get price levels up,” she adds.
Jones Lang LaSalle Jalil Mekouar, managing director, MEA explains “In markets like Abu Dhabi where there has been a lot of supply, the demand hasn’t grown as much as the supply. There is an attitude of build it and they will come — which is a lot like what happened with Dubai.
“Abu Dhabi’s story is interesting because it has huge potential and huge growth potential specifically, but again it’s a matter of time and growth is an equation between growth, supply and demand,” he says.
“There is a lot of supply coming in to the market and the infrastructure which is there and which is planned to be there hasn’t always matched the supply of hotels rooms, and this hasn’t always matched the demand.
“There has always been too much or not enough in the cycle over the next 10-15 years so they are in a phase where they are trying to find stability. It comes in peaks and troughs so I think this will last for 10 years or more and you will get to a certain level of stability where the big variations will not make much difference,” he adds.
Developments
The amount of new infrastructure being built in the destination is undoubtedly one of the most important factors in increasing the amount of visitors to Abu Dhabi — and, in particular, in increasing the length of visitors’ stays in the emirate.
In line with ADTA’s vision for the future, developments such as Al Reem Island, Yas Island, Saadiyat Island, the F1 circuit, and Ferrari World have made headlines and, says ADTA’s Al Reyami, have already attracted the all important leisure visitors — who are likely to spend longer in Abu Dhabi than their business counterparts — to the emirate.
“I think Abu Dhabi has taken the right approach to tourism, because they are expanding in all areas — cultural, heritage, hotels, and attractions,” agrees Al Forsan’s Taylor.
The development of Yas, Saadiyat, and Sir Bani Yas Island have demonstrated Abu Dhabi’s commitment to broadening the destination, says Hyatt director of worldwide sales South West Asia Thierry Bertin — who admits that he originally thought that Saadiyat Island would operate as a destination in itself, but concludes that it now plays an important role in tourism in Abu Dhabi.
“You can’t market Saadiyat Island alone like you would the Maldives for example, you have to market it as part of Abu Dhabi,” he explains.
“We are very optimistic with Abu Dhabi because we hear good things from a lot of people. All of the developments are bringing something new, it will complement Dubai — I don’t think it will really compete with Dubai but it is bringing the UAE another step forward,” he adds.
The importance of the big leisure developments such as Saadiyat and Yas Island should not be underestimated in driving longer-stay guests.
St. Regis Saadiyat general manager John Pelling says: “I think inevitably in a resort environment such as that, the length of stay is a little bit longer than what perhaps Abu Dhabi has traditionally enjoyed. So yes I think that’s one of the reasons for Saaidyat’s development I’m sure.”
It isn’t just the increase of leisure guests that will push up the length of stay in the emirate, says Yas Hotel’s Loughland, but the increase in activities for business guests.
“Through luxury hotels to eclectic spa experiences to Championship golf at Yas Links, the driving experiences of the Yas Marina Circuit and the fastest rollercoaster in the world at Ferrari World Abu Dhabi, we are seeing substantial growth in the leisure market and a definite tendency for corporate guests to stay an extra few days to enjoy these unique opportunities after their business trip or conference is over”.
The number of big name hotels to come to Abu Dhabi — The Westin Abu Dhabi, Hyatt Capital Gate, Jumeirah at Etihad Towers, to name but a few — are another important step for Abu Dhabi’s tourism market; there may be golf courses and theme parks aplenty, but if there is nowhere nice to stay, visitors won’t come back.
“The competition will be quite intense, but this is a good thing because these hotels will be raising the profile of the destination,” says Westin Abu Dhabi general manager Klaus Niefer.
“It is the future landscape of Abu Dhabi that makes the city so attractive to hoteliers,” he adds.
Sofitel is another company planning to open a hotel in Abu Dhabi during 2011, and Sami Nasser, Sofitel Middle East, Africa and Indian Ocean vice president insists that there is still a big draw for brands to come to Abu Dhabi, despite the amount of new supply on the market.
“Abu Dhabi still needs good hotels, and there is a big opportunity there, that is why so many people are coming in at the moment. For us, we will be based on the Corniche and it will be our first hotel in the city — we want to cater to that need for good hotels,” he explains.
It is not just developments in the leisure and entertainment sector which purport to be contributing to Abu Dhabi’s future success — the airport’s estimated US $6.8 million expansion programme will reportedly allow 20 million passengers a year to pass through its doors; setting the emirate up to be a hub for international, as well as domestic, travel.
Emerging Markets
Promoting the destination abroad is an important part of the strategy of both ADTA and the hotels operating in the city — both of whom say that emerging markets such as India and China will play a vital role in the future success of Abu Dhabi as a tourism destination.
“We are focusing on the GCC countries and we try to have a couple of offices there, we also have an office in China and a few in Asia — so we are really trying to be connected to other emerging markets,” explains ADTA’s Al Reyami.
“We will focus on Asia, China and India —the big emerging markets for tourism to the Middle East — and we will continue working on getting visitors from Europe as well,” he says.
“Germany and the UK are big feeder markets for us,” says Jumeirah’s Greif, “Russia is also coming more and more into Abu Dhabi, and China is on the way as well so it is a bit of everything.”
Working with ADTA to attract visitors, or working with hotels on promotions is an important part of doing business in Abu Dhabi, says Ferrari World sales director Fabien Laurent.
“We have initially concentrated on the Middle East,” says Laurent, “But of course eventually we will be marketing Ferrari World Abu Dhabi beyond that and looking to attract visitors from European cities such as London. We are another good reason to visit Abu Dhabi.”
Being able to provide so many leisure activities will certainly encourage visitors to stay longer in Abu Dhabi, and, with so many different projects planned to attract people, the emirate has a long term strategy which is likely to yield positive results for properties.
What is yet to be determined is how long it will take for the market in Abu Dhabi to absorb the massive supply of new hotels, and how business will fare in the short term — either way, hoteliers are not being dissuaded from developing in what is becoming a very exciting destination indeed.
Most anticipated openings of 2011
Park Hyatt — 2011
Set on Saadiyat Island, the property will be the first of the Park Hyatt branded hotels to come to Abu Dhabi. The hotel offers views over the Gulf on one side and overlooks the golf course on the other. Park Hyatt is in the immediate vicinity of the soon-to-open cultural district.
Rocco Forte — 2011
The Rocco Forte Collection will soon open a new property in Abu Dhabi, part of its expansion into the Middle East. Located in the district which is said to become the new commercial centre for the city, the 281-room five-star hotel will be within easy reach of downtown Abu Dhabi and the international airport.
St. Regis Saadiyat Island Resort — 2011
The St Regis is making its first venture in to Abu Dhabi with this five star resort set on the ever-popular Saadiyat Island — shortly followed by its second property in the Emirate, the St Regis Abu Dhabi, which will be opening in 2012.
Jumeirah at Etihad Towers — 2011
Another company opening its first property in Abu Dhabi this year — Jumeirah at Etihad Towers is set to be an exciting one. Boasting access to a conference centre, as well as shopping floors, F&B outlets and luxury rooms — this is a well thought out move by Jumeirah Group.
The Westin Abu Dhabi Golf Resort & Spa — 2011
Located in Khalifa City — one of the few big openings this year not taking place on Saadiyat Island — this resort is the brand’s first foray in to the emirate. Situated next to Abu Dhabi Golf Course, visitors to this property will no doubt make good use of its location.