Market Update: UAE Northern Emirates

With more than 5000 rooms in the pipeline and growing visitor numbers each year, the UAE’s northern emirates are inching closer to completion on major projects — from manmade islands to heritage hotels. We take a look at how the key emirates of Sharjah, Ras Al Khaimah, and Fujairah are carving their own niche to compete with Dubai and Abu Dhabi

RAS AL KHAIMAH
Ras Al Khaimah has benefited from increasing tourist arrivals in recent months; in 2012, visitor numbers reached 1.1 million and in the first six months of 2013, the city hosted 628,805 guests — making it likely that the emirate will meet its target of 1.2 million visitors by the end of the year.

The rise in the number of guests has also seen profits surge, with hotels in the emirate reporting US $90.847 million in revenues in the first seven months of 2013.

While it’s clear that Ras Al Khaimah has emerged as one of the UAE’s hottest destinations, the Ras Al Khaimah Tourism Development Authority, which markets and promotes Ras Al Khaimah’s tourism destinations, is confident the luxury projects in the pipeline will add to the emirate’s appeal.

There are currently 16 four- and five-star hotels and resorts in the emirate with a combined room inventory of 3293 keys, including the Waldorf Astoria, which marked the entry of the luxury brand by Hilton Worldwide in the UAE.

“Tourism in Ras Al Khaimah is booming and has experienced significant growth over the past three years with the development of new hotels by international hotel brands including Hilton Worldwide as well as leisure activities such as golf, sailing and horse riding, and stand-alone fine dining restaurants,” says Ras Al Khaimah Tourism Development Authority director Khalid Motik.

“We’ve seen visitor numbers grow year on year and aim to attract 1.2 million visitors to the emirate in 2013. Occupancy levels in the first half of 2013 averaged at 70% at the Ras Al Khaimah hotels,” he adds.

The emirate’s growing tourism and hospitality offerings include two championship golf courses, water sports, sailing yachts, standalone fine dining restaurants such as Pesto, and a  corniche, which “all provide a complementary experience to entice visitors to Ras Al Khaimah and guests to hotels,” believes Motik.

“The Ras Al Khaimah government has invested heavily in developing the emirate’s infrastructure to support Ras Al Khaimah’s growing hospitality industry, making the emirate an accessible and attractive holiday destination,” he says.

“Our key selling points for Ras Al Khaimah are premium luxury, leisure and outdoor adventure.  Part of our marketing concept hinges on Ras Al Khaimah as ‘the rising emirate’ — an exciting and up-and-coming place to visit, offering a diversity of landscapes and a variety of relaxation facilities, including exclusive hotels and resorts, international cuisines and world-class spas. There is also the heritage and culture side of the emirate as well as a number of historical sites throughout the emirate,” adds Motik.

New projects
Work is currently underway on Al Marjan Island, the first man-made island project developed within Ras Al Khaimah. The US $1.8 billion project comprises a cluster of five coral-shaped islands spread over 2.7 million m2 and will house hotels, resorts, waterfront homes and commercial areas.

Confirmed properties due to open on the island in 2013 and 2014 include the 657-key Rixos Bab Al Bahr Resort, Bin Majid Group’s 265-room Santorini Hotel, a second DoubleTree Resort & Spa in Ras Al Khaimah by Hilton, and the 442-key Crowne Plaza Ras Al Khaimah — all expected to be “a major draw for domestic and international tourists” according to Motik.

Ras Al Khaimah has also benefited from partnering with other emirates to increase its appeal among tourists.

“We are seeing an increasing number of tour operators cater for tourists who want to split their stay across several emirates. When promoting Ras Al Khaimah, we do not compete with other emirates, but rather complement them as every emirate is exclusive in its own way.
Here, the traveller is offered a complete UAE experience when travelling to the UAE,” explains Motik.

The emirate is also exploring options to develop the MICE market, with resorts such as Banyan Tree Al Wadi and the Hilton Ras Al Khaimah Resort and Spa already facilitating this segment.

“Several of Ras Al Khaimah’s hotels, including Waldorf Astoria, Hilton Ras Al Khaimah Resort & Spa and Banyan Tree Al Wadi, have fantastic business facilities which are especially well suited for executive planning meetings, conferences and team building events,” says Motik.

“Ras Al Khaimah’s many outdoors activities, utilising the emirate’s unique combination of coast, desert and mountains, make the emirate an ideal destination for corporate team building and incentives and our close proximity to Dubai (45 minutes from Dubai International Airport) means that Ras Al Khaimah is well positioned to support Dubai’s MICE offering with these outdoor venues and activities,” adds Motik.

In an effort to build on the emirate’s current momentum, the Ras Al Khaimah TDA has participated at various travel trade shows including ITB Berlin, the World Travel Market in London, the Riyadh Travel Fair in Saudi Arabia and the Annual Resort Development & Hospitality Conference in China, to promote the destination.

And while the emirate is aggressively marketing itself to overseas tourists, the UAE remains Ras Al Khaimah’s top source market, with 23% of total visitors in the first seven months of 2013 being local UAE residents.

Germany and Russia also make up for a large chunk of the tourist market, followed by Ukraine, Italy, France, Switzerland, UK, Czech Republic and India. “India marks a new entry for 2013, following on from our participation in a road show to India in October 2012 under the umbrella of the UAE National Council of Tourism Antiquities,” Motik discloses.

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SHARJAH
Often overlooked as Dubai’s less glamorous, more crowded neighbour, Sharjah’s tourism market is slowly beginning to come into its own by establishing itself as a centre for arts and culture in the northern emirates.

“The tourism sector in Sharjah has grown steadily in the past two decades or so, keeping pace with the dramatic changes seen in the emirate’s economy and other sectors of growth. The tourism industry in Sharjah and the UAE is one of the fastest growing in the region.

We are constantly reaching out to new tourism markets by showcasing Sharjah in international trade fairs and exhibitions,” says Sharjah Commerce and Tourism Development Authority chairman HE Mohamed Ali Al Noman.

SCTDA’s efforts are reflected in the growing number of tourists visiting the emirate — in 2012, Sharjah welcomed 1.7 million visitors, and the authority is expecting the number to be even higher in 2013, with 951,592 guest arrivals already reported for the first half of the year.

To keep up with the increasing tourist numbers, the emirate is also encouraging more hotels to set up operations. “We need more hotels across the emirate to cater to the growing tourism clientele in years ahead. This is why the Sharjah government is offering all possible encouragement in this area,” says Al Noman.

The emirate currently comprises 48 hotels and 55 hotel apartments with a combined total of 9093 rooms, reporting average occupancies of 71% in the first half of 2013, compared to 66% last year. Several new hotels, including three Starwood properties – the 220-key Four Points by Sheraton, the Sheraton Sharjah Hotel & Resort with 343 ocean front rooms and 48 suites, and Aloft Sharjah — are set to come online over the next two years.

“We have a pipeline of three hotels in Sharjah. Already a major travel destination for Middle Eastern and European families, Sharjah offers culture and tradition as well as sunshine, beaches and shopping,” says Starwood Hotels & Resorts’ senior vice president and regional director — Middle East, Guido de Wilde.

Al Noman says: “We have been encouraging investments in the hospitality sector in view of the growing number of international tourists every year and in the next three years the number of hotel rooms in the emirate is likely to reach 12,000. Several upcoming projects across the emirate are set to transform the hotel industry in Sharjah.”

Judging by the raft of new projects in the pipeline, Al Noman certainly isn’t overstating facts. GHM Hotels has signed up with Sharjah Investment and Development Authority (Shurooq) to operate the ambitious AED 100 million (US $27.2 million) Al Bait hotel project, which will be located in the emirate’s heritage district, the Heart of Sharjah.

The five-star hotel will be spread over 10,000m2 and will comprise 54 guest rooms. The hotel will consist of several houses and buildings, five of which are heritage houses such as Bait Ibrahim Al Midfa, Bait Eissa Al Midfa, Bait Abdul Rahman Al Midfa, Bait Abdullah Al Mahmoud, and Al Midfa Majlis, and are currently under renovation.

Luxury hotel brand The Chedi will open its first property in the UAE with The Chedi Khorfakkan Resort in Sharjah in 2015. The AED 350 million ($95.3 million) hotel will be GHM’s second partnership with Shurooq and will include 170 suites, restaurants, spa, gym, business facilities and will comprise three components — the fort, the hilltown, and town square.

Shurooq is also busy planning ecotourism projects in the emirate, including Sir Bu Nair Island, which is being developed at a cost of AED 500 million ($136 million) and will be the first integrated tourism project within the islands in Sharjah.

To be completed in 2017, the island will host a luxury five-star hotel and resort, hotel apartments and villas, a camping village, retail shops, a souk, dedicated family areas, an amphitheatre, a museum, a mosque, an education centre, a harbour and an airport.

A second project — the Kalba Eco-tourism Project — will be developed over six years, and will include the development of natural reserves in Kalba, the establishment of a centre within the reserve for visitors, restoration of archaeological sites within the project, development of Kalba Creek and the construction of a commercial complex, development of a number of islands in the creek as well as rehabilitation to revive their natural marine and bird life, and eco-friendly hotels and chalets overlooking the Gulf of Oman.

With more tourists pouring into the emirate and all the new developments in the pipeline, Sharjah is looking optimistically to the future.

“The half-yearly statistics results put great responsibility on us to work with the public and private sectors to expand tourism activities that boost the emirate’s economy by enhancing the coordination between different tourism sector players in the emirate. The hospitality and tourism industry in Sharjah has to make the most of this tremendous growth potential and unfolding exciting opportunities,” says Al Noman.

“We are looking to reach out to new tourism markets around the world. In recent years, we have touched many new markets in Asia and Europe and with our upcoming road show in the US, we hope to reach out to another massive tourism market,” he adds.

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FUJAIRAH
With more than 2777 operational rooms across 20 hotels, and 698 hotel apartments, Fujairah has always drawn local and international tourists with its beaches and small town feel. However, that is all about to change, as the emirate gears up to add an additional 1700 units by the end of the year.

There are at least five new hotels and resorts by international groups at various stages of development in Fujairah, including the Ibis Fujairah Town Centre, the Novotel Fujairah Town Centre, the Fairmont Fujairah, the InterContinental Fujairah Resort, and the Adagio Fujairah Town Centre.

“Fujairah, as an emirate, is growing and the tourism and hospitality industry is enjoying its fair share,” says Patrick Antaki, complex general manager of Le Meridien Al Aqah Beach Resort in Fujairah, and Al Maha, A Luxury Collection Desert Resort and Spa in Dubai.

“A report showed that in the first quarter of 2013, tourist influx in Fujairah was already 17% higher than the same quarter in 2012. One of the reasons for this is the growing popularity of Fujairah as a destination in general, for beach holidays specifically,” he explains.

“The growth is seeing more and more foreign investment in the emirate, resulting in many more hotels to be added in the near future,” he adds.

Among Fujairah’s key selling points is its coastline, which extends 90km along the Gulf of Oman and it is the only emirate to be situated on the Indian Ocean. This makes for some unique offerings like diving along the coast with a variety of natural coral reefs, some which are indigenous to the region.

The emirate also enjoys the highest rainfall in the country, making it an ideal weekend destination for local tourists all year round due to its comparatively pleasant weather, which promotes outdoor activities like water sports and mountain and wadi treks.

The Fujairah Tourism & Antiquities Authority (FTAA) has been hard at work promoting the destination — the result of which has been a staggering 60% increase in tourist numbers from 2011 to 2012.

“In 2011 there were an estimated 750,000 tourists in the emirate and then 2012 saw a 60% increase due to increased efforts of the FTAA, to 1.2 million overnight tourists in the emirate. This, year Fujairah’s hotels have witnessed at least a 15% increase in occupancy as well as an increase in the average daily rate,” says Antaki.

For now, the emirate’s key tourism markets are Asia, Russia, the UK and USA, with the coastal city attracting families to its various beach resorts. “70% of the guests welcomed at the beach front properties are foreigners, whereas in the city hotels, the foreign guest ratio is 30%,” says Antaki.

Noticing the trend of more families choosing to holiday in the emirate, new and existing hotels are making sure their development or refurbishment plans include the family and events segment.

For instance, Iberotel Miramar Al Aqah Beach Resort announced it would be adding a water park and convention centre to the property, both of which should be in operation in 2014. The convention centre, which will replace the small facility already at the resort, will be used for banqueting and meetings. 

“We believe that there is a lot of demand on that part which we are missing now. What we have now is a meeting room that takes 150 people, so we are looking to build a bigger facility to serve such segments of the market,” says general manager Ashraf Helmy.

The sentiment is echoed by Al Hayat’s Ahmed Aldous, who reveals the group is developing a 270-key five-star property on Fujairah’s coastline.

“The Al Hayat Resort and Spa will feature the largest ballroom on the East Coast with a capacity of 800, to cater for the wedding market in the emirate,” reveals Aldous, adding that the resort is due to open by Eid Al Fitr the following year.

Similarly, the Le Meridien Al Aqah Beach Resort, which recently completed 10 years of operation, is undergoing an AED 25 million (US $6.8 million) refurbishment to keep up with the competition.

“This refurbishment will include a complete overhaul of the bedrooms, including a complete re-design, encompassing the new Le Meridien brand design concepts and our great local touches, making them the newest and of the highest quality in the area.

In the past year, Le Meridien Al Aqah has seen a great response to our efforts. Our occupancy reached as high as 92%, which was the highest in the region,” says Antaki.

With all the developments underway, the FTAA is confident of the emirate’s growth, but Antaki realises that while a good weekend destination, Fujairah is still not as sought after a destination as some other emirates.

“The key challenge we [operators] face on an international scale is exposure. Fujairah, as a destination by itself is absolutely superb, but in the international market, Fujairah’s exposure is not as great as say Dubai or Abu Dhabi,” Antaki admits.

“That said, there are steps being taken and in the pipeline to increase Fujairah’s international exposure. The FTAA is working on innovative strategies to make Fujairah an unrivalled destination on its own.

We started a joint initiative, back in 2011 to encourage French investment opportunities in the tourism and cultural development of Fujairah and we should be able to see the fruits of the successful ventures soon,” he states optimistically.