Capital's hotels feel strain

Abu Dhabi's hotels start to feel the strain of the global financial crisis and weaker tourism demand.

Abu Dhabi needs more high-quality rooms, says Rob O'Hanlon.

Abu Dhabi's hotels are starting to feel the strain of the global financial crisis and weaker tourism demand, with last month's room revenues falling for the first time in more than a year, according to data. Figures from STR Global show revenue per available room (RevPAR) in the capital declined by 6.9 per cent to $249.43 last month, down from $267.90 in April last year. Occupancy levels also fell to 80.3 per cent, down from 88 per cent in April last year. But average room rates in Abu Dhabi were up 2 per cent to $310.56.

"The feeder markets really have absolutely slowed right down," said Rob O'Hanlon, a partner at Deloitte Tourism, Hospitality and Leisure. "The majority of markets are actually feeling that and Abu Dhabi is getting its share." But Mr O'Hanlon said the capital's decline was relatively modest compared with other international destinations because of Abu Dhabi's limited hotel stock. "There isn't great enough volumes of high-quality hotel rooms," he said, adding that this would help the market to make a quick recovery when global demand returned.

Dubai's hotels continued their negative trend last month, posting a 30 per cent fall in RevPAR to $205.06 compared with $291.96 in April last year, as room rates and occupancy levels declined. Occupancy rates fell to 72.6 per cent from 84 per cent. While Dubai's hotels have been hit hard in recent months, with RevPAR falling 41 per cent in March, Abu Dhabi hotels have managed to remain flat on the year to March, posting a positive performance in the first quarter of this year.

"One would expect Dubai to remain under pressure for some time because of the general state of the global economy and the local economy, but also because of the significant number of rooms which are scheduled to come on board in 2009 and 2010," said Mr O'Hanlon. Jalil Mekouar, the executive vice president for MENA at Jones Lang LaSalle Hotels, agreed that Abu Dhabi was also starting to feel the strain of the global downturn.

"Abu Dhabi is not completely insulated from the global downward trend," Mr Mekouar said. He said people were generally travelling for shorter periods and spending less, which would affect all destinations. This week the Abu Dhabi Tourism Authority (ADTA) cut its tourism growth forecast for the emirate because of the global economic climate. Sheikh Sultan bin Tahnoon, the chairman of the ADTA, said the capital's tourism sector would still experience more than 50 per cent growth to reach 2.3 million hotel guests by 2012. The authority previously issued a forecast of 2.7 million visitors.

Abu Dhabi hosted about 1.5 million guests last year and Sheikh Sultan said he expected the same number of visitors this year. @Email:[e-mail]