Fairmont checking in for expansion in Abu Dhabi

Chain sees capital's potential for growth despite decline in hotel occupancy rates.

Fairmont is developing a new hotel on the Corniche. It would join the Fairmont Bab Al Bahr.

The Middle East has become the focal point of Fairmont Hotels and Resorts's development plans, and the operator is looking for more opportunities in Abu Dhabi despite a decline in occupancy in the emirate's hotels, an executive says. The Fairmont Bab Al Bahr opened in Abu Dhabi in October and another Fairmont hotel is under development on the Corniche.

"We are looking at a few opportunities in Abu Dhabi," said Kent Cooper, the vice president of regional sales in the Middle East and Africa. "The Middle East is our primary focus for development. I think with our strategic partnership now with Qatari Diar, I think it's a natural." Kingdom Holding said last week an affiliate of Qatari Diar had taken a 40 per cent stake in Fairmont Raffles Hotels International, reducing its interest in the Canadian-based company to 35 per cent from 58 per cent.

A series of agreements with Qatari Diar were worth US$847 million (Dh3.11 billion), Kingdom Holding said. Fairmont, which is one of the three luxury brands of Fairmont Raffles, has 14 projects in the region that will open within the next five years, Mr Cooper said. Fairmont is confident there is further room for growth in Abu Dhabi despite the depressed occupancy levels in the capital's hotels. "What's clouding the picture is the new supply," Mr Cooper said. "We build new hotels and the overall occupancy drops. We're one of the new hotels in Abu Dhabi. We're causing the problem in Abu Dhabi."

But the market is fundamentally strong and the authorities are working hard to drive business to the capital, he said. Data from STR Global showed a 31.2 per cent decline in occupancy levels to 58.9 per cent in February, while average daily rates dropped 39.9 per cent to $233.03 and revenue per available room fell 58.7 per cent to $137.28. The Abu Dhabi Tourism Authority has said these declines were part of the process of building a tourism destination.

Abu Dhabi is aiming to attract 2.3 million hotel guests by 2012, up from about 1.5 million guest last year. The number of hotel rooms in Abu Dhabi increased to 17,500 by the end of last year from 12,800 at the start of the year. Another 5,000 rooms are to open in the capital by the end of this year, according to the Abu Dhabi Tourism Authority. Fairmont is set to open its Fairmont Fujairah next year. Its Fairmont Palm Jumeirah hotel was facing severe delays because the developer, IFA Hotels and Resorts, had faced difficulties with funding, Fairmont said.

Saudi Arabia is also a growth area for the company. "It has the largest critical mass, it has a huge influx of travellers, it helps support our partnership with our shareholders," Mr Cooper said. The 858-room Makkah Clock Royal Tower is due to open at the end of July, said Mohammed al Arkobi, the hotel's vice president and general manager. The luxury hotel is designed to help accommodate the millions of pilgrims who visit Mecca each year amid a severe shortage of hotel rooms. The hotel is hiring some 2,600 Muslim male staff members from 27 countries, Mr al Arkobi said.

The 76-storey hotel will feature a 40-metre clock, more than five times larger than Big Ben in London. The hotel is part of the seven-tower Abraj Al Bait complex, located next to the Masjid al Haram, Mecca's Grand Mosque, at the centre of which stands the Kaaba. The Savoy hotel in London, which is managed by Fairmont, is expected to open in the third quarter of this year after a £100 million (Dh563.8m) renovation.

@Email:[e-mail]