COUNTRY FOCUS: United Arab Emirates
Hotelier Middle East looks at hotel performance and development in the Emirates for what is likely to be a very promising 2012 for all and considers the future beyond that
Dubai
So far, 2012 has been an extremely positive year for Dubai’s hospitality industry and, with a number of high-profile openings scheduled by the year-end, the excitment only looks set to continue.
The latest HotStats data from TRI Hospitality Consulting (see chart) shows that Dubai hotels have had an excellent year to date due to strong demand from corporate, conference and leisure markets.
“RevPAR levels reached a three-year high in April as a result of strong average daily rates from the corporate and conference segments,” Christopher Hewett, a consultant at TRI Hospitality Consulting tells Hotelier Middle East.
“A number of Dubai’s annual events, including the Dubai World Cup, the Duty Free Tennis Championship and the Arabian Travel Market, recorded increased attendees in 2012, helping to drive hotel demand,” continues Hewett.
There were a total of 386 hotels comprising 53,839 rooms in Dubai at the end of May (excluding hotel apartment buildings) according to data obtained from Dubai Tourism and Commerce Marketing (DTCM). This is set to significantly increase as the year draws to a close.
Notable openings scheduled for the fourth quarter of 2012 include tower one of the JW Marriott Marquis Dubai, adding 804 keys to the market; the 381-key Fairmont The Palm Dubai and 552-room Conrad Dubai.
Future focus
This year has also welcomed several exciting announcements for Dubai. Just last month, Four Seasons Jumeirah Beach Resort was launched — scheduled to open in 2014. The luxury operator previously had a property planned for the Festival City area, but this was called off in the midst of the downturn in 2009.
Its new property will add 237 rooms to the market, and be located in an 11 acre site. “Being the Middle East’s biggest tourism hub with a highly mature hospitality industry, it was important for us to be in Dubai with a strong product that can serve as one of the company flagships in this region,” Four Seasons Hotels and Resorts president and CEO Kathleen Taylor said.
One of the most-read stories on HotelierMiddleEast.com this year so far is Al Habtoor Group’s unveiling of a $1.33 billion Dubai hotel and theatre complex being built on the site of the old Metropolitan hotel. Shortly after the announcement, news broke that the appointed operator, Starwood, would open St. Regis, W and Westin there in 2017.
This complex will add 1675 keys to the emirate in total, as well as a 1100-seat theatre, shopping arcade and sports academy.
With Dubai’s high hotel performance being largely attributed to its reputation as a peaceful option for domestic travellers amid regional unrest, the question is whether it can sustain this as more than 20 hotels come online between now and the end of 2013.
Included in this total is a number from regional hotel groups which know the market very well, and believe that the emirate is far from hitting its potential.
Bin Majid Group, which currently has three hotels open in Ras Al Khaimah, in April announced that it is to open a Dubai property in early 2013 to add to its collection.
International brands are also continuing to expand, with Sofitel planning to open hotels on both Palm Jumeirah and Sheikh Zayed Road.
Hewett believes the emirate can maintain its momentum: “Dubai’s appeal to regional tourists will continue to drive demand throughout the remainder of 2012, especially in light of the ongoing regional problems in Syria, Lebanon along with the political fragility in Egypt.
“We believe Dubai will continue to perform well throughout the rest of 2012 and into 2013 as it cements its position as the leading corporate, financial and tourism destination in the region,” he concludes.
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Abu Dhabi and Al Ain
The momentum that led to a flurry of Abu Dhabi hotel openings at the end of 2011 has continued through to 2012 with a negative impact on revenue.
Latest data from Abu Dhabi Tourism and Culture Authority (ADTCA) obtained by Hotelier Middle East reveals that there are currently 80 operating hotels and 48 hotel apartments comprising a total of 21,870 keys.
This figure is set to significantly grow before the end of 2012, with St. Regis Abu Dhabi Corniche and The Ritz-Carlton Grand Canal, among others, still to come online.
In April it was widely reported that the authority had stopped issuing new hotel licenses in the short-term in an attempt to control rooms supply, which it thought was growing too quickly. However, Nasser Al Reyami, tourism standards director, ADTCA, tells Hotelier Middle East this was taken out of context.
“We have, due to prevailing demand and supply equations, put in place a system where we do not automatically issue licenses. Instead, once we receive an application, the applicant is invited to join us for a presentation on the prevailing circumstances so that they can go away and think carefully whether their proposed project will be viable in the short-to-medium terms,” he explains.
Performance
The occupancy levels in Abu Dhabi have remained stable this year, with a 14% increase in hotel guests absorbing the 13% increase in available room nights, according to research by TRI Hospitality Consulting.
“The reduction in the ADR and RevPAR in Abu Dhabi hotels is a direct result of the increased competition from new entrants to the market. With six major hotels already opened in 2012 undercutting rates to grab market share, existing hotels are forced to drop rates in order to maintain market share,” says consultant Christopher Hewett.
“The corporate segment is the dominant demand driver in the city and the average daily rate for this segment has fallen 21% this year to US $154 due to the increased competition. This reduction is expected to continue as the new and existing hotels compete to maintain or grow corporate demand,” he adds.
Attraction troubles
While the tourism authority is working to drive demand to the emirate to keep up with supply, financial troubles have led to delays among some of Abu Dhabi’s key tourism projects such as Tourism Development and Investment Company’s (TDIC) flagship development Saadiyat Island.
The future of The Louvre Abu Dhabi proposed for Saadiyat Island was called into question last October when TDIC scrapped a major construction contract.
TDIC said in January The Louvre would now open in 2015 while a branch of New York’s Guggenheim has been pushed back to 2017. According to TDIC, the Zayed National Museum — also planned for Saadiyat Island — is expected to open in 2016. All three museums were originally scheduled to open between 2013 and 2014.
Park Hyatt Saadiyat Island and St. Regis Saadiyat Island opened in quarter four of 2011. But additional supply on the island has been put on the back burner alongside the attractions, with Saadiyat Rotana Resort and Shangri-La Saadiyat Island delayed until 2015 according to ADTCA data.
TDIC’s Desert Islands project continues to develop. Anantara, operator of Desert Islands Abu Dhabi Resort & Spa, opened Sir Bani Yas Stables, a water-sports facility and a conference centre earlier this year. However, in April, Hotelier Middle East reported that the opening of two luxury lodges, an extension of Anantara’s resort comprising 81 villas, had been delayed until 2013 by TDIC.
Another of Abu Dhabi’s key developers, Aldar, has also been forced to delay large projects amid financial strains. However, two prominent Yas Island developments are back on track to open in the foreseeable future; Emirati-themed Yas Waterworld Abu Dhabi is on schedule to open in quarter four while Yas Mall is expected to launch towards the end of 2013.
Al Ain happenings
Forming part of Abu Dhabi’s diversification agenda is Al Ain, which has seen a number of recent hotel and tourism developments. According to ADTCA, total hotel guest arrivals to Al Ain in 2011 was 266,000 — a figure the authority expects to swell to 400,000 by 2013.
One of Abu Dhabi’s longest-running properties, Al Ain Fayadha, is undergoing a major US $10 million renovation since management of the 30-year-old family resort, owned by Al Qudra, was taken over from National Hotels Company in December 2011 by local operator One to One Hotels and resorts.
Furthermore, May brought the opening of Wadi Adventure water sports facility just across the way and developer Tamouh Investments told Hotelier last month it was considering adding a hotel to the project (see page nine) to take advantage of an anticipated increase in demand.
Future focus
The future supply in the emirate is expected to keep the market under pressure for the remainder of 2012 and throughout 2013, according to TRI Hospitality’s research, but the influx of supply is expected to ease slightly in 2014.
However, as there are more than 17,000 rooms in the total pipeline for Abu Dhabi in total, the pressure could just as easily continue, as previously announced projects recommence and new projects are announced.
“The performance of the market is hinged upon the Abu Dhabi government continuing to fund large-scale projects on the Saadiyat, Yas, Reem and Sorouh Islands,” says Hewett.
“These projects will not only increase business activity and sentiment, but it will also develop key tourist attractions and facilities which are fundamental for attracting an increased level of leisure tourism. The recommencement of the museum developments on Saadiyat Island is a positive sign and it will assist the emirate with providing a diversified range of tourist attractions,” he concludes.
Operator View
“I personally believe that we shouldn’t look at hotel supply in the short term. Abu Dhabi has many medium- and long-term projects that gather all the ingredients for success. Unique concepts such as Saadiyat’s cultural district and Masdar city launching a new concept of sustainability will surely bring demand to a next level over the coming years.”
Oliver Key, general manager, The St. Regis Abu Dhabi Corniche
“It’s a very competitive market now. There have been numerous openings and all very prestigious brands so it will be very challenging over the next few years. It’s good because it challenges the hoteliers to be good and different to the others. It’s challenging from a revenue perspective because the easiest thing is to launch promotions and lower the rates.”
Jean-Philippe Bittencourt, general manager, Sofitel Abu Dhabi Corniche
“There are a lot of hotels in Dubai at the moment and I think this is part of a new development phase in Abu Dhabi and it’s nice to be part of that, but I think it will take a couple of years for demand to catch up with supply.”
Sir Rocco Forte, Rocco Forte Hotels
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Sharjah
In the past, hoteliers have attributed the success of hotels in Sharjah to their scarcity but, with a growing project pipeline, that could soon be set to change.
Today, Sharjah’s room count stands at 9016, split among 47 hotels and 53 hotel apartment buildings.
“The total number of hotel rooms in Sharjah is 5191, where as the number of hotel apartments is put at 3825,” Sharjah Commerce and Tourism Development Authority chairman HE Mohammed Ali Al Noman tells Hotelier Middle East.
The number of guests to the emirate rose 11% in the first quarter of 2012 on the same period in 2011 — from 421,516 guests to 466,218 guests. In anticipation of continued growth, various hospitality developments have been unveiled for the region over the past 12 months.
“Several new projects are coming up in Sharjah’s fast-growing hospitality sector. The recently-announced Kalba eco-tourism project by Shurooq [Sharjah Investment and Development Authority] on the East Coast of the emirate is easily the most ambitious project of its kind in the UAE,” says Al Noman.
The project in Khor Kalba — 15km south of Fujairah city on the UAE-Oman border — will be implemented in three phases. The first phase will see the development of natural reserves in Kalba (Hafiya and Al Qurm nature reserves), and the establishment of a centre within the reserve for visitors, as well as the restoration of archaeological sites within the project itself.
The second phase of the project comprises the development of Kalba Creek and the construction of a commercial complex which will feature shops and restaurants, as well as the development of a number of islands in the creek. Phase three will add 300 rooms and chalets overlooking the Gulf of Oman, Shurooq CEO Marwan bin Jassim Al Sarkal said upon the project’s launch in May.
This particular project, however, is not expected to be launched until 2018. In the meantime, a number of hotel projects have been earmarked for the emirate.
Following the entry of Hilton into Sharjah in 2011, Starwood is set to open its first hotel there, Sheraton Sharjah, at the beginning of 2013. The US-based operator also announced in May that it would bring its Aloft brand to the emirate in 2015 through a deal with UAE businessman Amer Eisa Moussa Al Amri.
Another newcomer will be the luxury Chedi Hotel brand from GHM. Already operating one hotel in Oman, Chedi will open its first Sharjah hotel in 2015 it announced in May.
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Ras Al Khaimah
Ras Al Khaimah has seen a significant increase in the number of tourists visiting in 2012, according to data released last month by the tourism development authority.
The emirate reached its half-year target of 500,000 visitors in May, with 523,568 people visiting Ras Al Khaimah between January and May 2012, compared with 835,200 visitors during the whole of 2011.
During the period, city hotels saw an increase in daily average rates of more than 20% and a 32% increase in RevPAR, with occupancy seeing a 6% jump to 73%.
Beach hotels witnessed the same level of results, with average occupancy up 6% to 82%, and 23% and 32% jumps in average daily rates and RevPAR, respectively, on the same period last year.
Victor Louis, chief operating officer, Ras Al Khaimah Tourism Development Authority describes the emirate as “ripe for further tourism investment” as it gains popularity among local and international tourists as an “affordable luxury” destination offering leisure and adventure experiences.
“In the coming months we are working on a series of new tourism projects with a budget of US $500 million that was assigned by the Government of Ras Al Khaimah until end of 2013. We are also tapping into new source markets and looking into expanding and developing charter flights direct to Ras Al Khaimah from European cities after the success of the charter flights from Germany, Austria and Sweden that we introduced in 2011, bringing more than 55,000 visitors to the emirate,” he continues.
Popular with Europeans for its all-inclusive beach holidays, Germany was the main source market with 172,700 visitors in the first five months, followed by domestic tourists from the UAE totalling 114,000.
The authority’s target for 2013 is to welcome 1.2 million visitors, and is looking to have an inventory of 10,000 rooms by 2016.
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Ajman
Ageneral manager of a well-established Ajman hotel and a pre-opening general manager both share their views on the emirate: “This year we continue to see an increase in guests from the Russian and CIS markets, as well as a noticeable increase in guests from the GCC. As Ajman continues to grow we’ve also seen a rise in corporate visitors.
Ajman’s hotel industry is developing rapidly, with more than 1000 rooms expected to come online in the next two years, including some luxury brands. This is a positive indicator for the emirate.” — Ulrich Eckhardt, Kempinski Hotel Ajman general manager and regional president for Kempinski.
“Fairmont Ajman will open in 2013 prominently situated on the corniche. Ajman has aptly been described as an emerging emirate, and as such there has been increasing demand for travel to the emirate — which will result in further hotel development and infrastructure to support this need. — Henny Schaeffer, general manager, Fairmont Ajman.
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Fujairah
An at-a-glance guide to Fujairah developments in the last 12 months:
1. Fujairah hotel to build waterpark and new facilities
Iberotel Miramar Al Aqah Beach Resort, in Fujairah, announced it will introduce two new attractions for guests — a water park and new convention centre, both due to be in operation in 2014.
2. Mina Al Fajer pushes ahead with Fujairah Fairmont
Mina Al Fajer Real Estate LLC is pushing ahead with the development of its Fairmont-managed hotel in Dibba, Fujairah, which is now scheduled to be completed by the end of 2014.
3. Red tape delays launch of Fujairah airline
When it launches, budget passenger airline Eastern Express will operate out of Fujairah International Airport offering flights to Abu Dhabi.
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