Abu Dhabi hotel room rates rise 24 per cent in emirate's tourism drive

UAE capital aims to attract more than 24 million visitors by the end of 2023

Abu Dhabi hotels recorded 24 per cent growth in average room rates to nearly Dh500 ($136) in January to August. Photo: Department of Culture and Tourism-Abu Dhabi.

Abu Dhabi hotels are benefiting from an increase in room rates this year, according to hospitality data analytics company STR.

The emirate's hotels recorded 24 per cent growth in average room rates to nearly Dh500 ($136) in January to August, compared to the same period last year, Philip Wooller, area director for the Middle East and Africa at STR, said.

Average room rates in the year to August are 17 per cent ahead of 2019 levels, after the hotels' room inventory fully recovered in October 2022 from the Covid-19 pandemic

Revenue per available room (RevPar), a key hotel industry metric, is at around $100 during the January-to-August period this year.

Hotel occupancy rates reached 70 per cent in the eight-month period, up three per cent on the same period last year and only two per cent below 2019 levels, Mr Wooller said at STR's 6th Annual Abu Dhabi Breakfast Briefing on Thursday.

“If you take into consideration the summer months, that is a very, very respectable occupancy rate,” Mr Wooller told The National on sidelines of the gathering of hotel executives.

“In 2023, hotels have been fully in charge of the inventory, they've priced the market accordingly and we've seen some growth … things are certainly heading in the right direction.”

Holidaymakers and business travellers are driving much of this growth, given Abu Dhabi's initiatives to draw visitors with new attractions and corporate events, he said.

This comes as Abu Dhabi seeks to diversify non-oil sectors – as part of wider plans to reduce the economy's reliance on oil – with a focus on developing strategic industries including travel, tourism, cargo and logistics.

The UAE capital is “on track” to meet its target of attracting 24 million visitors this year, up from 18 million last year, according to the emirate's Department of Culture and Tourism.

The city is also gearing up to open a new airport terminal next month that will increase its capacity, spurring further growth in international visitors and trade flows, according to industry analysts.

Abu Dhabi International Airport's long-awaited Midfield terminal building is scheduled to begin operations in early November, bolstering the emirate's position as a major centre for business and tourism.

In the fourth quarter of this year, hotels in Abu Dhabi and Dubai are expected to be busy.

In Abu Dhabi, 30 per cent of the emirate's hotel rooms are already sold for Christmas and New Year's Eve, according to Mr Wooller.

In neighbouring Dubai, which is hosting the Cop28 climate summit at the end of November, 35 per cent of its hotel rooms have already been pre-booked and confirmed ahead of the United Nations event.

Looking ahead, London-based STR's forecast for Abu Dhabi hotels expects a long-term average of 2.6 per cent growth in RevPar between 2024 and 2027, according to Kelsey Fenerty, analytics manager at STR.

The growth will be driven by continued strong leisure and business travel demand, Ms Fenerty said in a presentation on Thursday.

Long-term average occupancy rate during the 2024-2027 period is expected to range between 74 per cent to 75 per cent, she said.