Abu Dhabi to counter downturn in Western tourists

Luring tourists from the Middle East will ease the impact of the financial crisis, an official says.

United Arab Emirates - Abu Dhabi - July 22 - 2008: Males-only section of the Abu Dhabi public beach. (Manuel Salazar/The National)
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Abu Dhabi needs to attract tourists from the Middle East to shield itself from a likely downturn in western visitors caused by the global financial crisis, a senior tourism official said yesterday. Lawrence Franklin, the director of strategy and policy at Abu Dhabi Tourism Authority, said there was "no doubt" the country would experience a decline in visitors from major markets including Britain, the US and Germany.

The cancellation of winter holidays is a typical consumer reaction during periods of economic hardship. However, despite signs of a weakening tourism market, Mr Franklin said Abu Dhabi would continue to experience rising visitor numbers so long as the countries in the region remained economically sound. Business tourism would also follow areas where economies were "still fresh", he said. "A lot of the demand for tourism products and services in Abu Dhabi is generated within the region, so as the region remains strong, that demand will remain strong," he told delegates to the Abu Dhabi Conference, an event organised by MEED Middle East Business Intelligence.

"I think this year the growth rate will slow, however we'll still be significantly in the black in terms of tourist growth. "Overall, we are still absolutely positive about 2009," Mr Franklin said. In a sign of the increasingly difficult economic climate, Emirates Airline yesterday reported a sharply reduced net profit for the six months to Sept 30, one of the most challenging periods in aviation history.

Its Dh284 million (US$77m) profit for the period was 88 per cent down on the bumper result of Dh2.36bn for the same six months of 2007. Senior officials from the Abu Dhabi Tourism Authority and the Dubai Department of Commerce, Tourism and Marketing are attending the World Travel Market in London this week to showcase the UAE and compete with holiday destinations around the world. Abu Dhabi aims to attract three million tourists a year by 2013. Visitor numbers by the end of this year are expected to reach between one million and 1.5 million.

With hotel accommodation in limited supply - many hotels in the capital experience average occupancy rates above 85 per cent - the construction of new accommodation is a critical component of Abu Dhabi's tourism plans. But with the global banking system in disarray and overseas credit increasingly hard to obtain there is concern that major hospitality projects will not get off the ground. "There is a lot of talk and hotel developers are doing their own investigations to see what the short-term future holds," Mr Franklin said. However, he added that Abu Dhabi would be able to achieve its tourism targets even if there was "slippage" in proposed capacity.

There are currently about 13,000 hotel and hotel apartment rooms in the emirate of Abu Dhabi. This is due to increase by up to 8,000 rooms in 2009 and to hit a total of 30,000 rooms by 2013. Asked how Abu Dhabi's visitor numbers would be affected as the financial crisis continues, Paul Macpherson, the director of the Jumeirah Group, said: "Being realistic about it, there will be a slowing of projects and a reduction in the number of hotels that come on stream, but there will be this continued growth.

"Major players will continue to be able to fund their projects, but maybe to slow down those at design phase. The smaller projects will be easier to fund at a time when the best of the banks are frozen in their path of providing credit." Ivor McBurney, Hilton Hotels' Middle East vice president for development, said it was "above and beyond reasonable expectations" for Abu Dhabi's tourism industry to maintain its current growth rate.

Operators have indicated that their short-term expansion plans will not be affected and that planned hotels have not been cancelled, due partly to the fact that hospitality projects typically include residential and commercial space that are more attractive to lenders. Abu Dhabi-based Rotana Hotels, which runs four hotels in the emirate, will open at several here next year, on Yas Island, opposite Emirates Palace hotel and near Khalifa Park. The developments would double its number of rooms to 2,400, said Aman Sachdev, the vice president of development.

Hilton Hotels, which runs three hotels in Abu Dhabi, is building another under its Conrad brand on the Corniche, The luxury operator Jumeirah Group is building its first project in Abu Dhabi, a six-tower, mixed-use project on the Corniche near Emirates Palace hotel. It will bring 400 hotel rooms and 200 serviced apartments on to the market in about two years. The company will also run a beach resort on Saadiyat Island.

Examining other challenges facing the hospitality sector, industry insiders said hotel operators might struggle to attract staff in sufficient numbers to man new openings. "We can't just go over to South Asia and take another 5,000 people. They're becoming increasingly difficult to find," said Mr Macpherson. Among the major projects expected to draw people to the emirate is the Formula One Grand Prix, to be held for the first time in the capital on Nov 1 next year. Construction of the Yas Marina Circuit is about 20 per cent complete.

"We believe that the progress is not too bad," said Philippe Gurdjian, the chief executive of Abu Dhabi Motorsports Management. He said there was still 80 per cent of the project left to be built. Mr Gurdjian said more than 4,000 people were working on the site. The grandstands, a 500-room five-star hotel, and the media centre are all taking shape, and the marina will be flooded with water in May 2009.

"We spent many months to find the right design, the right spirit and essence for this project because there will be a lot of television and photographers and we're going to show to the world something really unique. "It was the reason we had to spend more time on the design and the concept before we started it." rditcham@thenational.ae