Abu Dhabi hotel managers worry about oversupply

With several hotels due to open before summer, existing big brands balance check-in numbers against need to avoid an aggressive price war.

Alex Schneider, manager of the Emirates Palace hotel, says destinations attract tourists, not big-brand hotels.

ABU DHABI // With several hotels to open in Abu Dhabi in the next few months, existing hoteliers face a quandary: how to keep up occupancy rates without resorting to aggressive price competition.

Some hotel chains are opting to boost their numbers by offering discounts through websites such as Cobone and Groupon, but this is frowned on by industry leaders.

Alexander Schneider, manager of the Emirates Palace hotel, regards such offers "with a certain worry, in our eyes.

"It's not about losing market share but as a hotel, you can only do as well as your destination does.

"With an oversupply of hotels, a lot of the bigger brands get nervous about occupancy. So everyone is starting to do weird things to gain [occupancy], like Groupon."

Mr Schneider was recently offered a free room in a hotel on Yas Island after spending a certain amount in one of its outlets.

"It can send a terrible message," he said. "The lower your rates get, the more you are likely to move into a layer of your clientele that's going to harm the destination."

While big-brand hotels raise a city's profile, Mr Schneider says hotels by themselves do not bring more tourists.

"Whatever comes into the market now has a good chance to prevail, to a certain extent," he said. "We see growing visitor numbers and of course rising interest in Abu Dhabi as a destination.

"But hotels don't attract tourism, the destination attracts tourism, and it's important we move along with all the projects like the Louvre and the Guggenheim."

Shaun Parsons, general manager at Le Royal Meridien in Abu Dhabi, agrees.

Mr Parsons said the loyalty scheme at his business, which is one of the capital's oldest hotels, ensured that clientele would return.

"These other hotels using the likes of Cobone may not have that strength of loyalty," he said.

"[Loyalty] can drive up daily occupancy by 10 to 15 per cent. You can never underestimate the importance of these programmes."

While the hotel does offer vouchers for its bars and restaurants, Mr Parsons said five-star hotels would be better off avoiding them for accommodation.

With several hotels opening between now and summer, he admitted there were tough months ahead but hoped the hotel's expansion, and new hotels from its parent company Starwood, would help it to maintain the group's position in the market.

"We're in a great position and have the luxury of being one of the most established hotels here," Mr Parsons said. "I'd rather be in our position than a new one entering the market.

"There are good [hotels] that have been open a while but are still struggling."

He said those included some of the big-name hotels on Yas Island, which regularly offer room deals and packages through voucher sites.

Nasser Al Reyami, head of hotel licensing at the Abu Dhabi Tourism and Culture Authority, said the flurry of vouchers was a reflection of the market, with hotels needing to meet occupancy targets.

Mr Al Reyami said the authority was now giving the go-ahead only to new hotels that were either unique in some way or filled a need in a particular area.

Last week the authority approved the emirate's first green hotel, in Masdar City, where there is a shortage of rooms.

"We don't welcome more hotels," Mr Al Reyami said. "Inside Abu Dhabi there are too many."

The authority has been aware of the risk of over-supply since at least 2010.

"In 2010 there were some complaints from hoteliers that there were a lot of hotels coming and there were a lot of hotels already, so we decided to slow down," Mr Al Reyami said.

But since then several approved hotel projects have been cancelled.

Mr Al Reyami agreed that new attractions such as Yas Waterworld would eventually be a big boost to the emirate.

"We have heard this already in the past year and the season has only really just begun," he said. "In the summer it will bring a lot more people to Abu Dhabi."

Hotels on Yas Island, nearly all of which offer voucher deals, will in the long term be boosted by the attraction, enabling them to offer packages for the hotel and waterpark.

"It will help them a lot," Mr Al Reyami said.

Offers this month have included:

Cobone

* A night for two people without breakfast at the 4-star Sheraton Khalidiya for Dh299. Normal price: Dh335 on http://www.hotels.com

* A night at the 5-star Sofitel with breakfast, plus two tickets to either Yas Waterworld or Ferrari World, for Dh809. Normal price: Rooms with breakfast cost Dh1,312 on the hotel's website; tickets for Waterworld or Ferrari World are Dh325 per person.

* A night at the 5-star Hyatt Capital Gate Hotel, with breakfast and tickets to either Yas Waterworld, Ferrari World or a desert safari: Dh1,099. Normal price: rates on their website start at 1,102 for bed and breakfast plus tickets to the parks.

Groupon

* A night at the five-star Al Raha Beach Hotel with two tickets to both Yas Waterworld and Ferrari World: Dh599. Normal price: The hotel's website has rates starting at Dh640 a night without breakfast or tickets.