Middle East unrest to boost Abu Dhabi hotels

Yas Waterworld and other Abu Dhabi destinations and hotels are expecting a bumper Eid with the peak season just around the corner. Pawan Singh / The National

The capital's tourism destinations and hotels expect an increase in the number of regional visitors as Abu Dhabi prepares for a positive tourism outlook for the rest of the year, according to analysts.

Currently, domestic tourists outnumber foreign guests at the capital's hotels and hotel apartments.

The increase in overseas tourists during the second half of this year will be directed by unrest in the Levant region.

"We expect roughly 15 per cent growth in arrivals during [the second half of] this year, which will be primarily triggered by the increased instability in the Levant region, diverting more Gulf and international visitors to safer destinations such as Dubai and Abu Dhabi," said Rashid Aboobacker, a senior consultant at TRI Hospitality Consulting. "The arrivals are expected to pick up during the Eid Al Fitr holidays and surge in October during the Eid Al Adha holidays."

About 1.3 million guests checked into Abu Dhabi hotels during the first six months of the year.

The peak season in Abu Dhabi is typically October and November, but demand stays strong until March and April before slowing down into the summer months, Mr Aboobacker said.

Some of the hotels on Yas Island are expecting to be fully booked during the Eid break.

"We expect significant growth from the Gulf market with coming mall openings and the growing popularity of the existing island attractions," said Sayed Tayoun, the area director of sales and marketing for the Crowne Plaza and Staybridge Suites Abu Dhabi Yas Island. "We will be focusing on emerging markets such as Russia, India and China."

The InterContinental Hotels Group operates five properties in Abu Dhabi.

Its two hotels on Yas Island are also experiencing a shift towards leisure tourists as more attractions on the island open. The UAE is the hotel group's key market for its Abu Dhabi properties followed by the Arabian Gulf, Germany, the United Kingdom and the United States.

Hotels catering more to corporate clientele, however, do not expect a change in guest demographics.

"We cater more to the business clientele and corporate entities and have minimum impact from the political scenario in the Gulf," said Shaun Parsons, the general manager at Le Royal Meridien Abu Dhabi. "There is a trend upwards in traffic from Asian and European countries."

The Gulf, UK, US and Germany are the hotel's top markets.

Source markets for Abu Dhabi's tourist arrivals have continued to change over the past five years.

While European arrivals dominated in 2007 and 2008, the domestic market now rules, Mr Aboobacker said. The Gulf and other Arab markets have also increased their presence in Abu Dhabi.

About 57 per cent of the total guests in 2011 were Arab nationals from the Gulf and Africa, compared with 37 per cent in 2008, he said.

"In Abu Dhabi, the growth this year is likely to be stronger in regional visitation than international tourists," Mr Aboobacker said.

Despite the positive outlook, analysts expect the pipeline of hotels under construction and in planning will continue to affect room rates in the capital.

"Hotel projects take a number of years from inception to delivery and consequently markets such as Abu Dhabi, which are going through an expansion phase, will be impacted by peaks and troughs in demand as the opening of each new property injects its own quantum of additional supply into the market," said John Podaras, an independent analyst based in Dubai. "Consequently the pipeline of new supply will continue to impact overall market performance for the foreseeable future."

Abu Dhabi's Tourism and Culture Authority reported a 3 per cent drop in hotel rates during the first six months of the year.

"New properties in particular will take up to three years of operation to build up sufficient market presence to be able to yield rates sufficiently and this factor alone will have had some effect on the market-wide average," Mr Podaras said.

The average room rate in Abu Dhabi was US$115.12 for June, a decline of 7.7 per cent year-to-date, according to TRI Hospitality Consulting. Revenue per available room, however, increased 8.3 per cent and there was a 2.9 per cent growth in gross operating profit per available room to $29.57 for the hotels.

The year-to-date occupancy rate in Abu Dhabi was 75 per cent, an increase of 13 per cent.

Destinations such as Yas Marina also forecast a healthy half-year ahead.

A 40 per cent increase in annual berth contracts is expected this year.

"In terms of visiting boats, we receive on average 20 visiting boats per month to the marina - mainly domestic - and expect to see a 50 per cent increase in this number by the end of the year," says Cedric Le Rest, the general manager of Yas Marina.