Five-star hotel luxury on a budget in Abu Dhabi

Hotel guests can now enjoy five-star luxury in Abu Dhabi for the cost of a budget room in Dubai as a price war drives rates down.

Tourists visiting the country will find that there is a huge disparity in hotel rates between Abu Dhabi and Dubai. Pawan Singh / The National

Hotel guests can now enjoy five-star luxury in Abu Dhabi for the cost of a budget room in Dubai.

An analysis of data from the Booking.com website reveals availability of at least three five star hotels in the capital for less than Dh450 (US$122) per night this Friday without any such available rooms in Dubai.

Holidaymakers visiting Booking.com on Tuesday were quoted almost the same price to reserve a stay at the luxury Yas Viceroy, the hotel that straddles the Formula One racetrack on Yas Island, as they were to book a double room at the three-star Premier Inn at Dubai International Airport this weekend.

A two-night break in a double room at the Premier Inn from today was Dh1,120.83, discounted from the original price of Dh1,658.32 on Booking.com, while a deluxe room on the same website at the five-star Yas Viceroy was just Dh1,250, down from the original rate of Dh2,200.

"We're competing with Dubai and the price point is attractive," said Bill Walshe, chief executive of Viceroy Hospitality Group. "To a degree I guess Abu Dhabi is the ultimate expression of the relationship between supply and demand. So if it's Formula One, certainly for a hotel like us, we're full and we're charging Dubai rates plus 20 per cent. There will be periods of the year where if there's nothing happening on Yas Island and it's the height of the summer then we will be offering some quite spectacular deals."

And they are not the only examples of a disparity in prices between hotels in the two emirates. A two-night stay in a superior double room at the four-star Novotel World Trade Centre hotel in Dubai on Booking.com was Dh1,329.18 on Tuesday - but should have been Dh4,308.36. But tourists could book a two-night stay in a deluxe room at the Grand Millennium Al Wahda on the same website for just Dh798, down from Dh1,148.

There are several reasons for the disparity in prices, according to industry specialists.

Dubai's hotel market operates at about 80 per cent capacity, which means for about 150 days a year visitors will struggle to find a room anywhere in the city, said Gabriel Matar, the head of hotels for the Middle East and Africa at the property and hospitality advisory firm Jones Lang LaSalle.

"In 2012 Dubai reached the 10 million tourists for the first time thanks to the efforts of DTCM [Dubai Department of Tourism and Commerce Marketing] and Emirates [Airline], which brings a lot of transit business.

"Obviously Dubai Shopping Festival and Summer Surprises helps a lot," said Oleg Kafarov, the director of public affairs at the Jumeirah Group, which operates hotels in both emirates.

"In Abu Dhabi you had a lot of new hotels opening up," he added.

The increased competition affected the occupancy rate of Abu Dhabi hotels, which is currently about 65 per cent, leading some hotels to become embroiled in a price war.

"We at Jumeirah tried not to engage in the rate war because in the longer term it is much more difficult to increase the rates to a normal, healthy position," said Mr Kafarov.

A further factor is that Abu Dhabi attracts more business-related travel than tourists, so hotels tend to reduce rates at off-peak times.

"This is why today you have hotels in Abu Dhabi which could be five- star still selling at a lower price," said Mr Matar.

* with reporting by Lucy Barrnard