Affordable luxury: The tourism sector works to distinguish itself from the competition

Ras Al Khaimah boasts one of the fastest-growing tourism sectors in the UAE and the wider GCC region. While the sector still accounts for only a fraction of the emirate’s total GDP, ambitious plans to develop new tourism facilities, build additional infrastructure and implement a cohesive tourism strategy seek to boost the economy and to establish the emirate as a viable tourist destination.

The UAE is currently the largest market for RAK’s tourism industry, followed by Europe, with a substantial number of local tourists coming from Dubai, Abu Dhabi, Sharjah and the other emirates. RAK’s natural beauty, amenable weather and strategic location provide an ideal setting for a variety of tourism activities. However, competition from neighbouring Gulf markets and the ongoing financial tremors in Europe may prove to be challenges going forward.

Performance Indicators

The number of hotel visitors to RAK has almost doubled over the last two years, growing from approximately 600,000 guests in 2010 to 1.1m in December 2012, according to the RAK Tourism Development Authority (RAK TDA).

The main visitor source markets for the tourism sector in 2012 were the UAE, Germany, Russia, the Czech Republic and Ukraine. The UAE topped the list with a total of 302,516 visitors in 2012, followed by Germany with 295,926 and Russia with 165,594. In the first four months of 2013, the emirate attracted a total of 414,123 visitors, with the breakdown varying slightly from full-year 2012: the UAE continued to lead the pack with 104,270 visitors, followed by Russia with 100,395 and Germany with 85,876, while Ukraine and Italy rounded out the top five source markets, according to the RAK TDA.

An analysis of hotel stays suggests that, while there are a greater number of tourists from within the UAE and the GCC, foreign tourists typically stay for more nights in RAK. According to government figures, UAE and GCC nationals spend an average of two nights in RAK, compared to five nights for European visitors. This is likely because RAK is a weekend getaway for local and regional tourists.

The total number of hotel rooms serving this increase in tourists has also grown from 744 in 2002 to almost 3000 in 2012. Government reports indicate a total of 15 hotels currently operate in RAK, up from 11 in 2010. These are categorised into six city hotels with 1130 rooms and nine beach and resort hotels with a total of 1893 rooms. Encouraged by occupancy rates of almost 78% in 2012, RAK is embarking on an ambitious plan of adding an additional 7500 rooms in order to allow the emirate to cater to more than 2.5m hotel guests by 2020.

Hotel Revenues

Total hotel revenues grew by 50% between 2011 and 2012, reaching $160m in 2012, according to the RAK TDA. Tourists from the UAE spent almost $30m on hotels in that year, followed closely by German travellers with $23m.

Beach and resort hotels performed remarkably well, with annual occupancy rates increasing by 2.9% to 73.7% in 2012. The jump in demand allowed hotels to raise prices, with average daily rates climbing by 17.59% between 2011 and 2012 to $156. Revenue per available room (RevPAR) also rose by 22.32% to $115 during the same period. The strong performance continued into 2013, with hotel revenues equal to $50.63m in the first four months of the year. During this same period, the average occupancy rate was 83.39% for beach hotels and resorts, which had an average daily rate of $172.92 and RevPAR of $147.53.

The emirate’s beach and resort hotels include the following locations: the Al Hamra Fort Hotel and Passengers at RAK Int’l Airport, 2010-12 Beach Resort (266 rooms), the Banyan Tree Al Wadi Resort (101 rooms), the Banyan Tree Ras Al Khaimah Beach Resort (32 rooms), the Bin Majid Beach Hotel (136 rooms), the Bin Majid Beach Resort (173 rooms), the Waldorf Astoria (346 rooms), the Al Hamra Village Golf and Beach Resort (219 rooms), the Golden Tulip Khatt Springs Resort and Spa (130 rooms), the Cove Rotana Resort (346 rooms), and the Hilton Ras Al Khaimah Resort and Spa (475 rooms).

Occupancy in city hotels fell by 3.78%, but an increase in the average daily rate of 11.24% helped cushion the drop for operators. RevPAR correspondingly increased by 4.76% from $43 in 2011 to $45 in 2012 and total room revenues rose by 24.21% from $14.4m in 2011 to $17.8m in 2012. In the first four months of 2013, city hotels had an average occupancy rate of 66.32% and an average daily rate of $75.72, translating into RevPAR of $50.22 and total revenues of $11.43m. RAK’s city hotels include the Acacia Hotel (373 rooms), the RAK Hotel (92 rooms), the DoubleTree by Hilton Hotel Ras Al Khaimah (126 rooms), the Mangrove Hotel (186 rooms) and the Hilton Hotel Ras Al Khaimah (227 rooms).

Despite rapid growth in the sector, tourism still contributes only a modest 2% to RAK’s GDP, according to the RAK TDA. However, the government is aiming to boost this to an estimated 15% by 2020.

Managing Growth

Much of the growth in RAK’s tourism sector can be attributed to the RAK TDA and the RAK Hospitality Group (RAK HG). Both entities were established in 2011 to help manage and develop RAK’s tourism sector. The RAK TDA coordinates and oversees the development of tourism infrastructure, and is also charged with promoting the emirate in the UAE and internationally.

According to the RAK TDA, its mission is to “position Ras Al Khaimah as a global affordable luxury destination for leisure, adventure and business travel at the local, regional and international levels”. The authority has established specific goals and targets that include boosting total visitors to 1.2m in 2013. These targets are backed by government investments of over $500m to help build and expand existing infrastructure and room capacity.

RAK HG was set up as a management company to oversee government-owned hotels and hospitality and tourism assets. The company is currently leading significant upgrades to existing local facilities, such as the Banyan Tree Al Wadi resort. In addition to hotels, the company plays a key role in regulating food and beverage outlets with the ultimate goal of expanding the dining options available to tourists in RAK. The group recently celebrated the first anniversary of Pesto, RAK’s first standalone Italian restaurant. According to RAK HG, Pesto has generated revenues of more than Dh2.2m ($598,840) since its launch in February 2012. Building on this success, there are currently plans to establish a second branch in Al Hamra Village.

The RAK Investment Authority (RAKIA) and RAK Investment and Development Office (RAK IDO) are two other key government entities that actively support the tourism industry. RAKIA is heavily involved in every large-scale real estate development project in RAK, while RAK IDO is responsible for the overall promotion of investment in the emirate.

Central Strategy

The RAK TDA is keen to ensure the emirate continues complementing rather than competing with tourist facilities in Dubai and Abu Dhabi. The marketing material promotes RAK as a destination for “affordable luxury”.

To this end, the government of RAK has prepared a 10-year development strategy to help guide sector growth, and a central part of this strategy is leveraging the private sector. To this end, the government is actively partnering with private operators to help promote tourism and is developing a reputation for managing public-private partnerships in the sector. The RAK TDA launched the “Ras Al Khaimah Investors’ Guide” at the Arabian Investment Conference in 2012 to advertise key opportunities for private investment in the emirate and to share the results of studies assessing the feasibility of hotels Forecast for visitors from top 5 source markets, 2014-20 in RAK. The guide provides detailed analysis of the hotel industry, including benchmarked comparisons against similar destinations. The guide also provides key data on the sector, including data on hotel occupancy and RevPAR, and highlights RAK’s “A” credit rating from Fitch and Standard & Poor’s.

Major Developments

The RAK TDA’s investors’ guide outlines the government’s vision for the tourism sector, highlighting the major developments that will shape the emirate’s tourism industry for the next decade, including Al Marjan Island, Mina Al Arab and Al Hamra Village.

The Al Marjan Island will be the emirate’s first man-made island. It is being developed in a phased approach; some sections are slated to open in 2013 and final completion is due by 2019. The island will include a variety of developments such as hotels, resorts, apartments and commercial spaces.

The Mina Al Arab project is a similarly ambitious new development that will be spread over some 3.25m sq metres of land. The waterfront community is set to add another 5000-7000 hotel rooms to RAK’s inventory and will also include residential units.

Another sizeable mixed-use project is the Al Hamra Village development, which houses resorts, golf courses and residential areas. These include the Al Hamra Village Golf and Beach Resort and the Al Hamra Fort Hotel and Beach Resort, among others.

Hilton Worldwide is a significant player in RAK and currently owns two city hotels and one beach resort. The group also expects to add three new hotels to its inventory in the near future. Existing hotels include the DoubleTree by Hilton Hotel Ras Al Khaimah, the Hilton Ras Al Khaimah Hotel, and the Hilton Ras Al Khaimah Resort and Spa. Additionally, the Al Hamra Fort Hotel and Beach Resort is being transferred to Hilton management in 2013.

Hilton Worldwide also signed a management contract with Mohamed Ruqait Real Estate in January 2012 to add a second DoubleTree hotel on Marjan Island and introduced a new “super-luxury” development with 346 rooms under its Waldorf Astoria brand in 2013. The Waldorf Astoria’s “soft” opening was held in August (see analysis). In addition, the Hilton Ras Al Khaimah will also be upgraded to a five-star property in 2013.

Other large hotel projects under development include the Rixos Bab Al Bahr Hotel, managed by the Turkish hospitality group Rixos; the Santorini by Bin Majid; and the Marjan Island Resort and Spa.

Mice Segment

The Banyan Tree Al Wadi, a luxury development set in 100 ha of protected desert, caters to a slightly different market. In addition to attracting tourist visitors, the property is also built to meet the needs of the meetings, incentives, conferences and exhibitions (MICE) segment. RAK’s proximity to Dubai makes it a popular destination for corporate functions. According to management at the Banyan Tree, MICE clients, which account for much of their workweek business, generate at least 20% of their overall revenue.


The airports in Dubai and Abu Dhabi currently serve as the main gateways for RAK. In addition, Emirates and Etihad Airways have helped make the UAE a popular destination in the Middle East and, in doing so, have provided critical support to RAK’s tourism sector. While these two airports are likely to remain the major conduits for travellers from across Europe, North America and Asia, RAK International Airport, which currently acts as a hub for a number of charter flights from the most popular source markets for tourists, is also growing in popularity (see Transport chapter).

The emirate’s local airline, RAK Airways, currently serves key markets in the Middle East, Asia and North Africa as well. In July 2013, the carrier announced plans to increase its fleet size and extend service to 40 new destinations by 2015, and the following month it launched new routes to Amman and Islamabad. The airline carried around 300,000 passengers in 2012, and according to the company, figures for the first half of 2013 are up 40% compared to the same period the previous year.

The RAK TDA recently also signed an agreement with a Russian tour operator, Natalie Tours, to launch two 156-passenger flights a week between Moscow and RAK during the peak tourist months. This comes on the heels of an agreement with a German tour operator, Reise Service Deutschland, for charter flights to major cities in Germany.

RAK’s airport has seen dramatic growth in passenger numbers in recent years, with overall passenger traffic increasing nearly five-fold from 84,768 in 2010 to 406,651 in 2012, according to official data. Arrivals grew from 23,257 in 2010 to 200,229 in 2012. Similarly, departures increased from 29,482 in 2010 to 139,750 in 2012. The number of transit passengers has also doubled from 32,029 to 66,672 in the same period. Finally, the airport handled nearly 8400 planes in 2012 compared to 2800 in 2010.

To further improve connectivity, RAK is also investing in developing highway and rail connections to other emirates in the UAE, and is working to enhance public utilities including water and electricity. A 32-km road is being constructed around RAK at a cost of Dh398m ($108.3m). Slated for completion in 2014, the ring road is expected to improve traffic around the city and strengthen links with Dubai. The federal government is also investing in constructing another 300 km of roads to connect rural residential areas in RAK. Longer-term plans include the development of an integrated rail network throughout the UAE. The connection to RAK will take some years to develop, but the initiative is likely to boost local tourism and support RAK’s efforts to increase its profile in the region (see Transport chapter).

Medical Tourism

RAK is one of many markets in the UAE and the GCC region working to position itself as a medical tourism destination. The emirate’s comparative advantage lies in linking an affordable luxury destination with high-quality medical services. Because the emirate’s relatively small population provides a limited customer base for health care facilities, this has naturally prompted the emirate’s service providers to seek out new markets elsewhere. Average hotel prices in RAK are considerably cheaper than comparable properties in Dubai, and this will help as RAK continues to work to establish itself as a viable choice for medical tourists (see Health chapter). Located nearby the international airport in Dubai, and with its own local airport as well, RAK is well positioned to serve health tourism markets in the region and further afield.

RAK Hospital, a private facility managed by Arabian Healthcare, is one major local player with an explicit strategy of tapping into international markets for patients. The hospital prepares package deals with nearby hotels and offers a number of unique treatments that include a spa, a salon and obesity management programmes, in addition to standard medical services.

Arabian Healthcare has plans for expansion, both within the emirate and across the wider UAE. Locally, it is currently in the process of setting up a new eye-care facility in conjunction with the LV Prasad Eye Institute of India, while domestically, it intends to build a chain of speciality health centres over the next few years. Two new facilities dedicated to diabetes treatment and research are also planned.

Taking Advantage

In line with its tourism development strategy, RAK is investing in preserving its cultural heritage and natural environment. While there are currently relatively few cultural offerings for tourists, the RAK TDA has been keen to leverage RAK’s history and natural surroundings to help establish it as a cultural centre in the UAE.

Existing historical attractions are already a draw for visitors. Located in an 18th-century fort, the National Museum houses an important collection of artefacts, and provides visitors with a glimpse of the emirate’s diverse history. As new archaeological sites are discovered, the government regularly partners with foreign experts to effectively assess and excavate or preserve the locations.

One preserved historical attraction is the Dhayah Fort, which dates from the 16th century and is the last remaining hilltop fort in the UAE. Situated 15 minutes outside of downtown RAK, the fort was restored in 2001 and can be accessed via a paved road.

The centuries-old ghost town of Jazirat Al Hamra is another site that has proven popular with foreign tourists. Fully abandoned in 1968 due to the decline in the pearl trade – on which the village depended economically – and relocation efforts by the local government, the town remains as a snapshot of Emirati life from before the country’s hydrocarbon boom.

Potential For Development

Looking ahead, potential areas for development include cruise ship tourism and ecotourism. Although the development of cruise ship tourism is more of a long-term goal Aircraft arrivals at RAK International Airport, 2010-12 given the need to build relationships with cruise lines and get them to incorporate calls to local ports into their schedules, this segment should benefit from Khor Port’s new passenger terminal. This facility is able to handle UAE visa applications and can provide immigration clearance for arriving and departing visitors. Ecotourism is a natural fit as well, given the emirate’s diverse geography and natural beauty. According to the RAK TDA, “RAK should leverage the local look and feel to establish itself as a niche destination. RAK’s beaches, desert and mountains uniquely position the emirate for ecotourism and other similar ventures.” Providing this focus will help encourage relevant investments.

As well as focusing on specific niches, the emirate is also targeting new source markets, including neighbouring Gulf states like Saudi Arabia. RAK TDA officials, alongside local hotel representatives, attended the Riyadh Travel Fair 2013 in April, and announced plans to increase Saudi arrivals by 70% in 2013.

Key Challenges

The RAK TDA and the RAK Department of Economic Development have identified several challenges to maintaining growth in the tourism sector. A promotion strategy to stimulate demand from tourists will require a parallel effort to build and manage facilities to cater to additional visitors. While there is an ongoing effort to expand the number of hotel rooms in the emirate, financial tremors across Europe and the GCC could make it harder to fund these projects. Similarly, tightening fiscal conditions could also reduce demand from Europe, RAK’s second-biggest source market.

Employee training, a significant issue for the hospitality and tourism sectors in Dubai and other regional markets, will also require specific attention going forward. RAK has a limited number of large-scale tour operators, which leads to a fragmented marketing strategy and at times poor service quality. The RAK TDA is addressing this shortfall with the launch of a tourism training scheme in 2013 aimed at improving services in the sector. The programme will include four specialised courses – tour guiding, food and beverage operations, reception and concierge, and lifeguard training – as well as a certified guest service professional (CGSP) course. The first CGSP course, which took place in January 2013, attracted 25 students from a number of operators.


RAK’s tourism industry is growing at a rapid pace and is poised to continue developing over the next decade. Hotel occupancy and average daily rates are strong and are likely to improve as the government rolls out its promotion strategy. The RAK TDA is leading development in the sector, and has already established a data collection and analysis unit that will help to inform and anchor future investments. Although there may be bumps along the way given the economic uncertainty in some key source markets, with strong federal support and a host of new high-end projects in the works, RAK’s tourism sector seems to be well on track to meeting the government’s ambitious targets for wider development.


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