As mature tourism markets in the West are starting to feel the pinch of the global economic slowdown, Abu Dhabi's sector remains resilient and even pushes forward with increasing room capacity.
Tourism in the United Arab Emirates (UAE) is in good shape. Visitor numbers grew at a healthy clip of 7.6% year-on-year, according to the latest figures from the UN's World Travel Organisation. Inward bound traffic to Europe, on the other hand, grew by only 2% during the first 8 months of the year. This figure slipped to 1% during the summer, when the financial crisis was at the forefront of traveler's minds.
The numbers, which are released bi-annually, are a welcome boost to Abu Dhabi's tourism and hospitality sector amid depressing economic statistics regionally and internationally.
Last week Sheikh Sultan bin Tahnoon, chairman of the Abu Dhabi Tourism Authority (ADTA), told the local press, "Eighty per cent of tourism in Abu Dhabi is business tourism and even at a time of economic slowdown, this segment does not get affected."
Room supply is a cornerstone of the emirate's expansion plan. ADTA announced last week that Abu Dhabi was looking to have some 26,000 hotel rooms by the end of 2012 compared to an estimated 10,000 in 2007. Last year, the capital city overshot its guest target by 5%, welcoming 1.45m tourists. According to the authority, hotel occupancy rates have risen steadily from 60% in 1998 up to 82.5% in 2007.
Policymakers are aiming to increase the number of visitors to 2.7m annually over the next five years. To this end, the emirate has pledged to allocate $33bn in 2007-12 to developing and promoting its tourism sector.
"The strategy is to become a hub for culture in the Middle East and to attract the high end of the market," Hans Olbertz, general manager of Emirates Palace, told OBG. "And, I know the government has put a lot of thought and energy into making Abu Dhabi a unique destination," he added.
To achieve this goal the government has not been afraid to take inspiration from abroad. In March 2007, Abu Dhabi and France began discussing a 30-year cultural agreement to establish the Louvre Abu Dhabi museum in the Saadiyat Island Cultural District. The subsequent agreement allowed the Musée du Louvre and other major French museums, such as the Musée du Quai Branly, Centre Georges Pompidou, Musée d'Orsay, Versailles, Guimet and Rodin to provide long-term loans from their collections to Abu Dhabi.
Additionally, the Guggenheim museum project in Abu Dhabi, also designed to attract aficionados of fine art, will be housed on the $27bn Saadiyat Island project. Under the terms of the agreement, the museum will be the only Guggenheim in the Middle East and North Africa. Covering 30,000sq metres, it will be the largest existing Guggenheim worldwide. Due to be completed within five years' time, the art house will form its own major collection of contemporary art, while also exhibiting classics from the Guggenheim Foundation's global collections.
Furthermore, the Formula 1 Etihad Airways Abu Dhabi Grand Prix, to be held on November 1, 2009 on Yas Island in the capital city, is another project that is expected to draw in the crowds. The facilities in and around the 5.5km circuit are expected to put the emirate on the sporting map. The grandstands, the north stands and the Yas Marina Hotel, which will be part of the track, are all currently under construction.
Projects such as these reflect the emirate's efforts to use tourism as a means to buoy and diversify its economy away from energy, generate new private sector opportunities, and lift the international standing of the UAE capital. Tourism Gross Domestic Product (GDP) has grown by 62% over the past five years and over 17% in the past two years, according to the Abu Dhabi Executive Council's Policy Agenda 2007-2008.
Although other markets are already feeling the ripple effects of the economic slowdown, Abu Dhabi is, at least for the foreseeable future, doing well.
"We are projecting tremendous bookings over the next few months and into the new year. And we will not see any difference during this timeframe. Perhaps in the longer term people will be a bit more reluctant about what they do with their money. But I'm not really sure it will affect Abu Dhabi," Olbertz told OBG.