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.
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“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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