Abu Dhabi: Tourism achieving targets

Abu Dhabi has surpassed 1m hotel guests for the first half of the year and seems likely to achieve its tourism aims for 2011, although increased competition could eat into margins in the longer term.

The Abu Dhabi Tourism Authority (ADTA) released its report on the industry’s first-half year performance at the end of July, showing that the emirate’s hotels hosted more than 1m guests during the first six months of the year, an increase of 11% over the same period in 2010.

There was also a 26% jump in the number of room occupancy nights, exceeding the 3m mark, with rates for Abu Dhabi’s hotels running at 70%, up by 10% on the first six months of last year. ADTA has set the goal of 2m hotel guests for 2011, which seems achievable given the year’s performance to date. Breaking the 2m barrier would be a significant increase given that the figure for 2009 was 1.54m.

One percentage that did not rise quite so sharply was revenue, which climbed 6% to reach a total of Dh2.26bn ($615.4m). This slower rate of growth, despite the steep increase in visitor numbers, was due to reducing reduction of room tariffs in order to boost bookings, noted by ADTA’s chairman, Sheikh Sultan bin Tahnoon Al Nahyan.

“Results have been assisted by the destination’s heightened competitiveness, with average room rates falling by 15% in the first half compared to last year, making Abu Dhabi a more affordable upscale option than Sydney, Paris, New York or Tokyo,” Al Nahyan told local media.

Some industry figures, although welcoming higher guest traffic, fear that the pressure on hotels to lower prices in order to maintain occupancy rates will only increase next year, as there are at least 10 new luxury hotels nearing completion, which will add approximately 4000 new rooms to the existing stock of more than 20,000 by the end of 2012.

Following the ADTA data release, Kamal Fakhouri, the chief operating officer at Cristal Hotel Abu Dhabi, said that room rates had fallen due to competition between hotels and would continue this trend in 2012, although he said it would be difficult to determine how great the reduction will be.

Paul Simmons, the director of sales at the Millennium Hotel Abu Dhabi, was somewhat more optimistic. He acknowledged that increased competition in 2011 has pushed down room rates but said he did not expect tariffs to fall to the same degree in 2012.

“I don’t think we will see the impact we’ve already seen this year,” he said in an interview with Gulf News. “Although there are going to be new hotels in the market, they’re not going to hit the ground running with full occupancies.”

In its blueprint for the future, laid out in the Abu Dhabi Economic Vision 2030, the government identified tourism as one of the key sectors that could help diversify the economy away from its dependence on hydrocarbons. Launched in 2008, Vision 2030 set a timetable for the tourism sector that foresees visitor numbers rising to 3.3m by 2013, 4.9m by 2020 and 7.9m by 2030.

To accommodate this rising tide of tourists, the plan envisions an increase in room numbers to 74,000 by 2030, with intermediate levels of 21,000 rooms by 2013 and 49,000 by 2020.

To compliment this the Abu Dhabi government has embarked on a series of building projects aimed at increasing the emirate’s appeal as a holiday destination that include a number of world-class museums, art galleries, performance art centres and international-standard sporting facilities and theme parks.

This should mean that there are a commensurate number of complimentary attractions being developed alongside the increase in hotel capacity. This is set to enhance the emirate’s overall tourism offering, which will all aid in the long term goal of developing a sustainable tourism industry with the capacity to contribute significantly to the broader economy.