Abu Dhabi races ahead with tourism plans

The capital of the UAE has long taken a back seat to Dubai on the tourist map, preferring to take a more low-key approach and focusing on business tourism rather than the leisure market.

However, in the wake of the global financial crisis the two emirates have seen the fortunes of their tourism industries go in opposite directions.

Dubai's high-flying hotel sector, like much of the rest of the world, witnessed declines in occupancy and revenues throughout the downturn, while Abu Dhabi has risen to new heights.

In the first half of 2009, average daily room rates in Dubai fell 24% while rates in Abu Dhabi rose 5% from the same period the year before, said a report by Hogg Robinson. And with room rates averaging $275 a night in the first half of the year, Abu Dhabi replaced Dubai as the most expensive major destination in the world, according to Hotels.com's hotel price index.

Detailed strategy

Abu Dhabi's rise as a tourist destination is the by-product of a carefully thought-out strategy by the government that involves billions of dollars of investment in infrastructure, marketing, and tourism developments.

In the immediate future, the emirate is expecting to receive a large influx of visitors for two high-profile events: the Abu Dhabi Grand Prix - the UAE's first-ever Formula One race - which will take place in the first week of November on Yas Island, and the FIFA Club World Cup UAE 2009, which will be held the following month.

In addition to attracting race fans, the F1 event will also serve as a showcase for the $36bn island development, whose offerings when completed will include high-end resorts, golf courses, and a Ferrari theme park.

Seven new hotels will open this month on the island in time for the race, including the 500-room Yas Hotel from real estate developer Aldar, two Rotana-managed properties, two IHG hotels, a Radisson Blu by Rezidor, and the UAE's first Park Inn.

Diversified growth

In addition to hosting the upcoming sporting events, the capital is also hoping to gain a reputation as a cultural hub with the development of Saadiyat Island, which will be home to the Guggenheim and Louvre museums.

The emirate's tourism efforts are being aided by the rapid growth of Abu Dhabi International Airport, which is now directly linked with 69 destinations and served by 32 airlines. Passenger traffic at the airport has grown significantly over the past five years, almost doubling from five million a year to nine million.

Abu Dhabi is on target to receive 1.5 million hotel guests in 2009, which would be on par with last year's performance, Ahmed Hussein, Deputy Director General, Abu Dhabi Tourism Authority (ADTA) told AMEInfo.com. 'Next year we are looking for a 10% increase with a 15% increase slated each for 2011 and 2012, so that by the end of 2012 we will reach our goal of receiving 2.3 million hotel guests,' he noted.

To help meet these ambitious targets, approximately 10,000 rooms are under construction in the emirate to be delivered in the remainder of this year and through 2010, with a further 7,000 to come on line in 2011. Overall, the emirate hopes to have 24,000 available rooms by 2012.

Infrastructure milestone

Last week Abu Dhabi achieved a milestone in its infrastructure with the opening of a bridge that links Saadiyat Island with the city for the first time. The city also opened a 27km expressway which stretches from Port Zayed on the Abu Dhabi mainland to the Shahama District, passing through Saadiyat and Yas islands.

Abu Dhabi also recently launched a new hotel rating system aimed at raising hospitality standards in the emirate and providing accurate and consistent information for tourists. All hotels and hotel apartments in the emirate will have to display their rating by the end of October.

Two years in the making, the rating system will also give tour operators 'increasing confidence in selling the destination and being able to recommend suitable accommodation to their clients', Hussein said. 'Everyone will now know what to expect from hotels with specific star ratings - it gives us added product integrity.'

Oversupply risk

Currently Abu Dhabi is very much undersupplied, hence the steep rise in price of its hotel rooms, said John Podaras, associate director at TRI Hospitality Consulting. 'Whereas a year ago people doing business in Dubai were staying in Abu Dhabi where hotels were cheaper, now the reverse is true,' he said.

With so much supply coming on board, there is a risk that the emirate will be temporarily oversupplied, but since most of these projects are geared around major government initiatives, they should generate their own demand, he noted.

'Their master plans maps out a strategy for the future that is quite comprehensive and is very much vested in the development of Abu Dhabi as a capital city, with these various other developments all working with each other to provide a demand synergy which is not only targeting tourism but also the complete industrial and social framework of Abu Dhabi,' Podaras said.

Hotel room supply is rising much more rapidly in Dubai, where inventory is expected to reach 54,000 in 2010, up 40% from 2008. With so much being invested in the tourism industries in Abu Dhabi and Dubai, is it realistic to expect that both emirates, which are just one hour's drive apart, can sustain this growth?

Podaras believes the answer is yes. 'Dubai and Abu Dhabi co-exist well because Dubai has chosen a different path. They are more focused on foreign investment and bringing private developers in to develop what it is going to actually be. And they are looking at a bigger market.'

'Abu Dhabi is looking at a much tighter integration between each of the districts they are developing across the whole of the emirate. It is a different strategy and the positioning is different, so they should complement each other very well,' he said.