Economic Update

Abu Dhabi’s tourism sector marked a significant milestone earlier this month, with the official opening of its landmark cultural project, the Louvre Abu Dhabi, on November 11.

The museum, which took 10 years to complete and represents an investment of around £1bn, is the result of an agreement made in 2007 for the use of the Louvre brand and loan of artworks from French museums. Designed by architect Jean Nouvel, the 64,000-sq-metre space houses 24 galleries and 620 items in its permanent collection, which consists of art from the Middle East and around the world.

Located in the developing cultural and arts district on Saadiyat Island, the museum is expected to be a major draw for the emirate, which is targeting 4.9m visitors by the end of the year, Saif Saeed Ghobash, director-general of the Abu Dhabi Tourism and Culture Authority (TCA Abu Dhabi), said in a statement to local press.

In particular, the emirate hopes the museum will attract higher numbers of visitors from China, a market with high growth potential.

“The opening of the Louvre in Abu Dhabi will have a big influence on Chinese tourists to visit the emirate,” Li Lingbing, China’s consul general in Dubai, said in September. “Chinese people love culture.”

The anticipated success of the Louvre Abu Dhabi in attracting high numbers of visitors could also provide impetus for another multibillion-dollar cultural project on the island – Guggenheim Abu Dhabi. Dedicated to Islamic and Middle Eastern culture and developed in partnership with the Soloman R Guggenheim Foundation in New York, the museum was conceived in 2008 and is currently at the planning stage.   

It also comes on the back of efforts to expand the cultural tourism segment more generally, with the signing last August of a memorandum of understanding between TCA Abu Dhabi and the Emirates Heritage Club. The two agencies agreed to work together to promote heritage and cultural activities and identify investment opportunities, with the aim of strengthening Abu Dhabi’s position as an international cultural tourism destination.

New incentives draw visitors from China, Russia

In addition to expanding its cultural offering the emirate is also offering incentives to encourage travel from China. In September last year it took the decision to introduce visas on arrival for Chinese tourists, a move which led the country to overtake India as the number one source market for international tourists, according to data from the Department of Culture and Tourism.

Arrivals from China totalled 724,835 for the period August 2016 to July 2017, compared to 681,922 from India.

The figures were underscored by a report on the hospitality sector by TCA Abu Dhabi, which recorded 60% year-on-year (y-o-y) growth in guests from China for the period January-August – the fastest growth rate for the period.

Other markets are also being targeted, with similar visa privileges extended to Russian tourists at the beginning of the year. A total of 48,000 visitors entered Abu Dhabi from Russia in the first quarter of 2017, according to media reports, up 41% y-o-y.

Growth in hotel stays from other markets

In addition to receiving higher numbers of visitors from China and Russia, the emirate is also seeing positive growth in the number of hotel stays among visitors from some other key source markets, with 11% y-o-y growth recorded for US travellers, 9.8% for those from India and 7.8% for Saudi Arabians. Cumulative guest arrivals for the period exceeded 3.1m – a 7% y-o-y increase.

In spite of increases in guest stays, hotels are witnessing a sustained downturn in length of stay and revenues. According to TCA Abu Dhabi, occupancy declined four percentage points y-o-y in January-August, while average length of stay and overall hotel revenues contracted by 8% and 11%, respectively. This is a continuation of the muted performance seen in 2016, widely attributed to oversupply and a slowdown in the global economy.