F1 and Adipec vie for hotel rooms

Organisers of the capital's largest business conference say they are "losing sleep" over an expected lack of hotel rooms because their event is set to coincide next year with the Formula One Grand Prix.

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ABU DHABI // Organisers of the capital's largest business conference say they are "losing sleep" over an expected lack of hotel rooms because their event is set to coincide next year with the Formula One Grand Prix. Abu Dhabi will host the penultimate race of the F1 season on October 31, 2010, while the Abu Dhabi International Petroleum Exhibition and Conference (Adipec) will run between November 1 and 4.

Up to 60,000 people are expected to go to the Grand Prix and another 40,000 to attend Adipec, but only 23,000 hotel rooms are expected to be available in the capital by that time. "Not only are we worried about it, we are losing sleep," said Hifazat Ahmad, the event director of Adipec. "Going by our previous experience, there is a very good chance hotels are going to put up prices significantly once again."

Last year, the conference worked with the Government and the Abu Dhabi Tourism Authority (ADTA) to enforce price caps on hotel rooms during the popular event. Those caps brought the price of hotel rooms down to between US$400 (Dh1,470) and $500 per night, from a rate of $800 to $1,200. "We did get a royal decree to fix the problem, but only a month before," Mr Ahmad said. "By then most people had already booked."

Next year, the pressure and price gauge may be even higher. "The fact that Formula One is in the same week changes the whole dynamic," he said. Price increases in the capital have traditionally plagued major business conferences and sporting events. The mark-ups are exacerbated by high demand and too few rooms. According to a survey released this year by the consulting firm Deloitte, Abu Dhabi has one of the highest occupancy rates in the world, generating revenue per room on a par with Moscow, Geneva, Dubai, Paris and New York. It has some of the world's most expensive hotel rooms, with an average rate of $283 per night.

According to the report, Abu Dhabi is expected to increase its stock of hotel rooms from the current 13,000 to 23,000 by 2012, many of which will become available on Yas Island, which will eventually house 20 hotels. A spokesman for the Abu Dhabi National Exhibition Centre (Adnec), where the Adipec conference is being held, said these new hotels would help to ease the burden. "This additional capacity will help ease the demand for accommodation in the city and specifically at these two important sites. Adnec is optimistic that the two events will run together extremely well and will help reinforce the capital's growing reputation as a world centre for major live events," he said in a statement.

Lawrence Franklin, the director of strategy and policy at the ADTA, noted that "not everybody who attends this event requires accommodation". "We will have a significant accommodation stock by 2010," he said. "And certainly other areas within the region have significant accommodation stock which could handle any overflow." However, as event organisers wait for the new projects to begin accepting guests, they worry that business tourism is being affected by the high hotel rates, especially in the middle of a global recession.

Even with the rent cap, hotel rooms during Adipec are "still above the price of other similar-sized events in other parts of the world", Mr Ahmad said. "We have evidence from our clients. Most international oil companies halved their delegations last year." Overall, he said, the conference received between 15 and 20 per cent fewer attendees this year because of both the recession and the increasing costs of hotel rooms. Most of the decline came from the approximately 15,000 people who attended Adipec from outside the GCC.

The hotel prices were hurting the conference, which was an opportunity for Abu Dhabi to market its position as a leading exporter of oil and petroleum products, he said. F1 may provide an opportunity for the conference, Mr Ahmad said, adding that he hoped to create cross-promotional packages and to work with the race's organisers. "It's a great opportunity for people to come, do business and catch a race," he said. "But the hotel rooms are a concern for us."