Abu Dhabi hotel rates to decrease

Checking into a five-star hotel in Abu Dhabi is likely to become cheaper in the coming months as greater competition forces hotels to cut rates in order to fill rooms. In the past year about 4,000 hotel rooms have come on to the market; the latest being the 318 rooms in the five-star Park Rotana, near Khalifa Park, which opened yesterday.

"Yes, we will see rates coming down," said Omer Z Kaddouri, the senior vice president of UAE operations for the hotel management company Rotana, based in Abu Dhabi. "When competition arises, hotels have to put business into their hotels. So therefore you get - I don't like to say the words - price wars." Mr Kaddouri said the fall in rates would vary depending on the hotel but he expected to see a decrease of between 5 per cent and 10 per cent in average room rates over the next year.

"There are so many hotels opening at the same time that it's obviously going to affect the occupancy," he said. Those that have opened in Abu Dhabi in the past few months include a new Holiday Inn and seven hotels on Yas Island. The sector has already shown some signs of strain. In October, occupancy levels in Abu Dhabi were down 11.3 per cent to 80.1 per cent and average daily rates were down 3.9 per cent to Dh1,206 (US$328), compared with the same month last year, figures from STR Global show.

The capital still boasts one of the highest average room rates in the world and its number and range of hotels remain relatively small. Dubai has about four times more rooms than Abu Dhabi. The new Rotana hotel is part of the Rotana Park complex, which will also have a Park Arjaan hotel apartment development opening this month. The Park Rotana plans to open the Amador restaurant, in conjunction with Juan Amador, the Michelin 3-star German chef, next year.

Abu Dhabi's Tourism Development and Investment Company (TDIC), which has developed the new Park Rotana complex in partnership with Al Mada Tourism Investment, has added 1,200 rooms to the capital this year and plans to deliver 7,000 rooms by 2012. Its recent openings include the Qasr Al Sarab luxury resort in the Liwa desert region. The capital is also rapidly expanding the attractions it has on offer, with the Links golf course and the Ferrari World theme park due to open next year.

Abu Dhabi is aiming to attract 2.3 million hotel guests by 2012, up from 1.5 million last year. "All of these [hotel] openings are in preparation for what's to come in Abu Dhabi," Mr Kaddouri said. "These are all very well planned to absorb all of the business that is going to be coming in the near future." In Dubai, rates have already fallen, partly because of an increase in hotel openings. Rotana is opening its four-star Rose Rayhaan hotel in Dubai in two weeks, which will become the world's tallest hotel, with promotional rates of Dh400 a night.

Next month, Rotana will open a three-star Centro hotel in Barsha, Dubai, offering rates of Dh365 compared with between Dh450 and Dh500 at its Abu Dhabi Centro hotel on Yas Island, which opened in October. "That is a sign of the times," said Mr Kaddouri. "In Dubai these rates are coming down because there are thousands of rooms open and thousands more to open. "Today in Dubai you will see prices that you have never seen before. This is the market maturing. These are realistic rates that should have been there before, but because of the lack of supply and over-demand, the rates went up."

Premier Inn, the UK hotel brand that has three-star hotels at Dubai Investment Park and Dubai Silicon Oasis, said yesterday it had responded to market trends by reducing daily room rates by 40 per cent, to Dh295 from Dh495. @Email:[e-mail]