Abu Dhabi expands tourism market

Rising arrivals are driving tourism infrastructure development in Abu Dhabi, as the emirate accelerates construction of hotels and other facilities in a bid to broaden its offering for both business and leisure travel.

New hotel development is continuing apace, particularly in the high-end segment, according to a recent report by real estate consultancy JLL. Room stocks are expected to reach 26,000 by 2017, with 2300 units coming on-line by the end of this year.

The forecasted increase in tourist arrivals is one of the primary driving factors of the accelerated building programme, with visitor numbers expected to rise over the medium term.

Arrival forecasts

The sector regulator, Abu Dhabi Tourism & Culture Authority (TCA Abu Dhabi), raised its 2015 visitor target in mid-June in response to a 20% year-on-year (y-o-y) increase in arrivals in the first four months of the year. The body is now predicting 3.9m visitors through to the end of 2015, up 11.4% over previous forecasts.

TCA Abu Dhabi’s half-year figures echo this positive outlook. There was a 17% y-o-y increase in hotel guests in the first six months of the year, with 1.98m visitor check-ins, and 11% y-o-y growth in guest nights, to 5.73m. Hotel earnings were up 8% at Dh3.35bn ($912.1m), driven by an 11% increase in room revenue.

Occupancy rates were stable, down one percentage point over the period at 76%, though the seasonal impact of the holy fasting month of Ramadan saw occupancy rates decrease by six percentage points, y-o-y, in June and food and beverage sales fall by 8%.

Be our guest

A sharp increase in tourists from India, Saudi Arabia and China was largely credited with the year-to-date growth in tourist arrivals, and was also a supporting factor for the promising half-year hospitality results.

India reclaimed its position as the top international source market for tourists, with arrivals rising 18% y-o-y in the first six months of the year to more than 127,000. Meanwhile, Saudi Arabia recorded the second-fastest growth rate of the top-10 source countries, with arrivals up 28% y-o-y to around 62,500. Chinese arrivals have been steadily increasing since travel restrictions to the UAE were relaxed in 2009, up 72% y-o-y at more than 100,000 in the first half of 2015.

In terms of hospitality figures, while China currently ranks fourth by number of hotel guests with a 5% share – behind the UAE (33%) and India (6%) and the UK (6%) – the country posted the strongest growth in the first six months of 2015, after a 166% increase in Chinese hotel guests last year, according to local media, due to an influx of incentive corporate travel.

This comes on the back of broader efforts by TCA Abu Dhabi to attract Chinese tourists to the emirate. In February more than 20 hotels, malls and tourist attractions in the emirate enrolled in the Welcome Chinese programme, an initiative by China’s state-backed tourism body, China Tourism Academy. The move has prompted a wider range of services for Chinese travellers, including Mandarin-speaking attendants at malls and payment services at hotels for China’s UnionPay bank cards.

While more sluggish economic growth in China could impact demand, the Chinese tourist market remains much sought after, with some 100m Chinese tourists spending a combined $164.8bn last year.

State support

State efforts to raise Abu Dhabi’s profile as a tourist destination and improve accessibility are providing additional impetus for infrastructure development.

Etihad Airways, Abu Dhabi’s flagship carrier, is looking to grow, seeking as much as $500m to finance its fleet expansion, according to international media reports, with the airline announcing plans to raise capital through a $1bn bond issue in partnership with five other airlines.

Meanwhile, construction of the Midfield Terminal Building at Abu Dhabi International Airport, set to open in the summer of 2017, will nearly triple passenger handling capacity to 45m per year, according to the Abu Dhabi Airports website. The terminal will include 700,000 sq metres of internal space and a 22-km baggage handling system capable of processing some 19,000 bags per hour.

According to Matthew Green, head of research and consultancy at property management company CBRE in Dubai, the airport expansion will be a boon for Abu Dhabi’s hotels. “The Abu Dhabi airport is yet to open, and when it does so in 2017, it is going to be a huge factor in achieving the future growth targets,” he told local media in late July.

To generate further tourist demand, the emirate will continue to host high-profile international events, such as the annual Formula One Abu Dhabi Grand Prix, which will remain the last race of the F1 season next year, as well as football’s 2019 Asian Cup, which was awarded to the UAE in March.

In addition, the emirate is seeking to bolster its leisure offering, with Louvre Abu Dhabi, Guggenheim Abu Dhabi and Zayed National Museum set to open in the coming years. Abu Dhabi is also working to develop a wider array of attractions to make Yas Island a global destination for theme parks and attractions. Located on the island, Ferrari World plans to open seven new rides in the next three years, including the world’s steepest roller coaster.

Oxford Business Group is now on Instagram. Follow us here for news and stunning imagery from the more than 30 markets we cover.

Read Next:

In UAE: Abu Dhabi

Abu Dhabi: Year in Review 2019

Abu Dhabi’s economy expanded steadily in 2019, thanks in part to oil sector growth and the ongoing rollout of publicly backed economic stimulus plans.

In Tourism

Papua New Guinea aims to broaden tourism appeal in Chinese and Asian...

Recent moves to ease visa restrictions for Chinese tour groups and expand air services to the Asia-Pacific region could help Papua New Guinea’s tourism industry expand its source markets and...

Latest

Myanmar: Year in Review 2019

Despite seeing solid growth, 2019 posed some challenges for Myanmar, as the country continued with plans to liberalise its economy.