As one of the 12 strategic sectors identified in Abu Dhabi Economic Vision 2030, tourism plays a central role in the government’s plan to reduce the economy’s reliance on the hydrocarbons industry. To this end, Abu Dhabi has invested heavily in creating attractions to draw tourists, as well as building hotels and expanding the national airline to make it easier for international visitors to travel to the emirate. The government is also taking a multi-pronged approach when it comes to attracting tourists, reaching out to leisure travellers by emphasising a variety of Abu Dhabi’s assets – including culture, beaches, golf, nature and amusement parks – while at the same time making the emirate more amenable to business travellers.
MORE VISITORS: The tourism sector has steadily grown in recent years, as reflected in the consistent rise in the number of hotel guests. According to the Abu Dhabi Tourism & Culture Authority (TCA), the government entity that oversees the sector, the emirate’s hotels hosted some 2.1m people in 2011, up from 1.8m in 2010 and 1.5m in 2009. While this growth is impressive, these figures may underestimate the number of visitors to the emirate for two reasons. First, Abu Dhabi City is a short drive from Dubai, so some tourists see Abu Dhabi’s sights as a day trip. Second, according to the TCA, a significant number of visitors stay with friends and family rather than at hotels. Since it is difficult for officials to measure the size of either one of these groups, hotel guests remain for now the best proxy for the number of people who visit the emirate.
Looking ahead, the TCA has targeted further increases in the total number of hotel guests, aiming to reach 3.2m by 2015, equivalent to an average annual rise of more than 10%. Results for early 2012 indicate that the authority may not have much difficulty in achieving its target, at least in the short term. During the first six months of 2012, the number of hotel guests hit 1,189,995, a 14% improvement over the 1,041,804 recorded in the same period the prior year. The TCA is also aiming to increase the average length of stay (LOS) for hotel guests. Although the average LOS fell slightly between 2008 and 2009 (from 3.11 to 2.8 nights), this metric has steadily risen since then, reaching 2.83 in 2010 and 2.97 in 2011. The growth in 2011 has been attributed to marketing campaigns to raise awareness of Abu Dhabi, an uptick in the number of high-profile events staged in the emirate and the authority’s continued efforts to work with tour operators. The goal for 2012 is to reach an average LOS of three nights, a target that seems attainable in part because officials are working to increase the number of activities available to visitors, which will in turn encourage them to stay longer. “The local tourism industry needs to create additional awareness about Abu Dhabi’s offerings,” said Patrick Nayrolles, the general manager of the Monte Carlo Beach Club on Saadiyat Island. “There is a growing level of capacity in terms of hotel rooms and not enough people to fill the beds.”
CITY HIGHLIGHTS: While the emirate’s tourism offerings are by no means limited to Abu Dhabi City, the UAE capital is increasingly a draw thanks to the development of two nearby islands, Saadiyat and Yas. The former is being earmarked as a cultural centre, with plans to build at least three museums on the island, in addition to a number of leisure, tourism, retail and residential facilities. Meanwhile, Yas is already home to Ferrari World Abu Dhabi amusement park, Yas Waterworld Abu Dhabi, several hotels and the Yas Marina Circuit, which hosts a Formula 1 Grand Prix race every year. A major shopping centre, Yas Mall is also in development.
Located around 500 metres off the coast of Abu Dhabi, the 27-sq-km Saadiyat Island is expected to be completed by 2020, according to master planner Tourism Development & Investment Company (TDIC), a government-owned entity established in 2006. As envisaged, the island will also eventually be home to approximately 145,000 residents in addition to functioning as a centre for culture, hospitality and commerce.
In 2011, the first two of four five-star resorts to be located on the island opened, the Park Hyatt Abu Dhabi Hotel and Villas and the St. Regis Saadiyat Island Resort. The Park Hyatt, owned by Abu Dhabi National Hotels, is the first Hyatt-branded hotel in Abu Dhabi City. The St. Regis, operated by Starwood and owned by TDIC, has 377 rooms and suites. Next to the hotel is a separate St. Regis-branded residence with 259 apartments and 32 residential villas. Other international hotels due to open facilities on Saadiyat are Rotana Hotels & Resorts, Mandarin Oriental and the Shangri-la, owned by the Abu Dhabi-based Al Jaber Group.
All of the island’s hotels will be located along Saadiyat Beach, a tourist attraction in its own right, covering 5.28m sq metres and having 9 km of natural beach. The Saadiyat Beach Golf Course, designed by Gary Player, is located adjacent to the beach and next to the St. Regis, while various beach clubs will offer leisure facilities to visitors. The first such club – the Monte Carlo Beach Club – opened in 2011. These facilities are not only important for enticing leisure tourists, but also for business travellers attracted to Saadiyat thanks to the meetings and conference facilities already being operated by the Park Hyatt and the St. Regis.
Meanwhile, the island’s cultural district, which will cover 2.4m sq metres, will be home to at least three museums, as well as a performing arts centre, boutique hotels, a retail and commercial area, and luxury residences. The first of the museums scheduled to open, the Louvre Abu Dhabi, will start operations in 2015, followed by the Zayed National Museum in 2016 and the Guggenheim Abu Dhabi in 2017. All three facilities have been designed by Pritzker Prize-winning architects. The cultural district already features one centre, the Manarat Al Saadiyat, a purpose-built 15,400-sq-metre building with its own permanent galleries, in addition to space for hosting large-scale art exhibitions in its spacious events facilities and 250-seat theatre.
YAS ISLAND: Another key component in Abu Dhabi’s push into the tourism industry is the development of Yas Island. Occupying a total land area of 2500 ha, the island, like Saadiyat, will eventually offer a variety of touristic attractions in addition to hotels, retail facilities, food and beverage outlets, and residential areas, according to master developer Aldar Properties.
The island is already the location of some major touristic attractions, including Yas Marina Circuit, which hosts the Etihad Airways Abu Dhabi Grand Prix every year, a highly anticipated event since the inaugural race in 2009. The track has covered grandstands capable of seating 50,000 attendees and a hotel that straddles the track. During the remainder of the year, the circuit’s facilities are used for other racing events, as well as hosting corporate events and conferences. Visitors can also participate in motorsports-related activities year-round, including driving on the track, riding as a passenger in a modified two-seater F-1 racing car, and karting.
Adjacent to the Yas Marina Circuit is the Ferrari World Abu Dhabi theme park, which opened in November 2010. The largest indoor amusement park in the world, Ferrari World has the world’s fastest rollercoaster. Meanwhile, du Arena, formerly known as Yas Arena, is also located nearby and has already hosted a number of major international musical acts, including Elton John, Eric Clapton, Prince and Madonna. Hosting big-name artists can benefit the tourism sector by creating demand for hotel rooms and other local services, and raising global awareness of Abu Dhabi as a destination.
DIVERSITY: Other leisure options on Yas Island include a golf course (Yas Links), which also has conference and meeting room facilities that can be used for corporate events and weddings. A new attraction, set to open in late 2012, is Yas Waterworld Aqua Park, which is a $165m project being developed by Aldar. It is intended to highlight the emirate’s pearl diving heritage through its 43 rides, slides and other attractions.
Looking further ahead, Yas Mall is expected to be completed by the end of 2013, with contractors on site as of the first quarter of 2012. The retail complex, which will be the second-largest mall in the UAE after Dubai Mall, will have 230,000 sq metres of gross leasable area and will be home to a variety of brands. Yas Island is already the location of an IKEA outlet that opened in 2011, which was joined by a 5443-sq-metre Ace Hardware store in August 2012.
While Yas Island can be reached easily from downtown Abu Dhabi City as well as Dubai, visitors have the option to stay at one of the seven hotels on the island. All are owned by Aldar and run by global hotel operators, including IGH (Crowne Plaza and Staybridge Suites), Rezidor (Radisson Blu and Park Inn) and Rotana (Rotana and Centro). While these six properties are located in an area known as Yas Plaza (which is also near the circuit), the seventh sits astride the F1 track; this property is currently managed by the Viceroy Hotel Group.
OASIS CITY: To the east of Abu Dhabi City and close to the Omani border is Al Ain, the historical heartland of the emirate and birthplace of the late Sheikh Zayed bin Sultan Al Nahyan, the founder and first president of the UAE. As a holiday destination, Al Ain is popular with Emiratis as well as tourists from the other GCC countries. According to the TCA, some 266,000 hotel guests stayed in Al Ain in 2011, a figure that the authority would like to increase to 400,000 by 2013. Also known as Oasis City, Al Ain is taking an increasingly prominent role in the emirate’s overall tourism strategy.
Efforts to boost the profile of Al Ain have included a complete refurbishment of Ain Al Fayadha, which reopened in May 2012 after a three-year break and a $10m renovation. The 36-sq-km property, to be renamed One To One Hotel and Resort, includes luxury villas as well as a boutique 26-room four-star hotel. Facilities also include a racetrack that is open to guests.
The hotel is located close to Wadi Adventure, a water park opened in May 2012 and catering to kayakers, white water rafters and surfers. Other outdoors attractions nearby to the city include the Al Ain Zoo, which is being redeveloped as part of the 900-ha Al Ain Wildlife Park & Resort to include a wildlife-themed safari and a newly expanded Sheikh Zayed Desert Learning Centre, as well as a destination resort, retail facilities and a residential community. The Sheikh Zayed Desert Learning Centre will take visitors on a journey to showcase the natural and cultural history of deserts worldwide, honouring the late Sheikh Zayed and his commitment to the environment, wildlife and conservation.
While these varied attractions are important draws for visitors to Al Ain, the area is perhaps best known as a cultural centre and the location of several prominent historical sites, four of which were added to the UNESCO World Heritage List in 2011 (see analysis). The four sites – Hili, Hafit, Bidaa Bint Saud and the oases areas – feature important historical remnants such as circular stone tombs from 2500 BCE, a wide range of adobe constructions and one of the oldest examples of an aflaj irrigation system that dates back to the Iron Age. Visitors are currently able to access parts of Hili via the Hili Archaeological Park, which will benefit from a government-backed project to update and improve the ancient site. The Al Ain National Museum, which opened in 1971 and showcases items such as Bedouin jewellery and musical instruments, in addition to archaeological artefacts, will also be subject to a three-year renewal project headed by the government.
WESTERN REGION: Comprising 71% of the UAE’s total landmass, Al Gharbia, also known as the Western Region, is another important centre for tourism. Known for its natural beauty and vast desert expanses, a number of investments have been made in recent years to enhance the region’s attractions. Chief among these are two destination resorts, the Qasr Al Sarab Desert Resort and the Desert Islands Resort and Spa, both operated by the Thai hotelier Anantara.
Located in the Liwa Desert, the 206-room Qasr Al Sarab has become one of the emirate’s showcase tourism attractions. Activities include camel treks, desert walks or dune bashing for the more adventurous. Sir Bani Yas island is another staple component of Abu Dhabi’s tourism offering. Accessible by a 25-minute flight from Abu Dhabi’s Al Bateen Airport, the 87-sq-km island is home to several thousand indigenous animals and the Desert Islands Resort and Spa. The wildlife game drive is the most popular attraction, along with mountain biking, kayaking and snorkelling.
Al Gharbia also plays host to a number of festivals and other annual events such as the Al Dhafra Camel Festival, Al Gharbia Watersports Festival and the Liwa Date Festival, drawing visitors from the GCC and beyond.
BUSINESS TRAVELLERS: Officials are also keen to develop the meetings, incentives, conferences and exhibitions (MICE) segment, aiming to more than double its economic impact by 2020 (see analysis). At the centre of MICE activity is the Abu Dhabi National Exhibition Centre (ADNEC), opened in 2007 and owned and operated by Abu Dhabi National Exhibition Company, a government-owned entity. The list of events at ADNEC includes annual conferences, such as IDEX (one of the world’s largest annual defence exhibitions), the World Future Energy Summit and the Abu Dhabi International Petroleum Exhibition, which are supplemented by a growing number of one-off events. For example, in February 2012 ADNEC hosted the World Ophthalmology Congress, which brought some 12,000 delegates to the exhibition centre. Large conferences boost Abu Dhabi’s reputation in the global events planning market, providing it with a track record that will make it easier to win new business moving forward.
Organisers of more modest-sized business meetings and conferences have a variety of options when it comes to choosing a venue in Abu Dhabi. For example, the management at Yas Marina Circuit is now focused on building a MICE business and utilising its track, hotel and conference centre assets year-round. Meanwhile, rapid growth in the number of hotels in Abu Dhabi has created additional capacity in the MICE segment. But perhaps more importantly, this rise in hotel capacity has meant that the emirate – with its 20,000-plus rooms – is now capable of bidding for major conferences that can be held at ADNEC.
HOTELS: Although visitor rates have expanded over the past few years, the increase in supply has been faster and represents a significant shift from what is considered to have been an “under-hotelled” market as recently as 2008. Indeed, there were 12,727 rooms available in hotels and hotel apartments in that year, with an average occupancy rate of 84%, according to the TCA. By 2009 the number of rooms had jumped to 17,104, while the average occupancy rate had fallen to 72%. This trend continued in 2010, with rooms rising to 18,832 and occupancy hitting a low of 65%. Encouragingly, in 2011 occupancy was up to 69%, even as the number of rooms continued to increase, reaching 21,254.
However, this rise in occupancy may have come at a cost, with revenue per available room (REV par) falling from Dh366.90 ($99.90) in 2010 to Dh337.52 ($91.90) in 2011, according to the TCA. Anecdotal evidence also suggests that room rates are much lower than they were during the peak period in 2007 and 2008. “Hotels have had to make the proper adjustments in this tight market,” Philippe Harbe, the corporate director of operations at One to One Hotels, told OBG. “Among those adjustments is a stronger reliance on revenues from the food and beverage side of services. This area can be a useful way to compensate for drops in room rates.”
While Abu Dhabi’s hoteliers will wait a long time before seeing the prices that prevailed in 2008, room rates will rise again if and when demand catches up with supply, which seems more possible given the recent success of ADNEC and the new projects that are expected to open on Saadiyat and elsewhere. Alternatively, the government could limit the supply of hotels through reducing the number of licences that it grants to build new facilities, although it has yet to do so. At present, all developers of hotel projects are required to apply for a licence from the TCA, at which point the authority will inform them of the current market dynamics. They can then choose to apply for a licence, after which each application is reviewed on a case-by-case basis.
Some maintain that the emirate has not yet reached saturation, and as such, the substantial stock of highquality rooms may become a market draw in itself. According to Khalfan Al Shamsi, the director of marketing for hotels at Abu Dhabi National Hotels, there is room for more hotels in the emirate. “More businesspeople will continue to come to Abu Dhabi as industry expands,” he told OBG, adding that the tourism sector will be aided by Etihad Airways continuing to open additional routes to new corners of the globe.
FLYING HIGH: Indeed, as the national airline of the UAE, Etihad Airways plays a central role in Abu Dhabi’s tourism strategy, by making it easier to reach the emirate from a growing number of cities. In part it has done this via purchasing stakes in existing airlines and entering into code-sharing agreements. For example, Etihad announced in December 2011 that it was raising its stake in discount airline Air Berlin from 2.99% to 29.2% by buying 31.6m shares for about $95m, while at the same time providing financing for the purchase of new jets. The agreement includes a code-sharing deal that will help Etihad increase its business in European markets like Germany, Austria, Switzerland and Spain.
Perhaps not surprisingly, data from the TCA shows that the number of German hotel guests jumped sharply in the first half of 2012, rising from 154,606 to 216,317, an increase of 46%. This makes Germany the fifthlargest source of hotel guests in the emirate, following the UAE (813,010), the UK (298,969) and India (234,043 and the US (219,722) as of the first half of 2012. Etihad has also been busy promoting Abu Dhabi as a stopover destination, announcing in May 2012 that its passengers who travel through Abu Dhabi will get one free three-, four- or five-star hotel night for any stay of at least two nights through December 1, 2012. Discounts will also be available for desert safaris and city tours.
OUTLOOK: As Etihad expands its market operations, it creates more awareness of Abu Dhabi as a holiday destination and location for major business conferences. Meanwhile, the TCA is taking steps to put Abu Dhabi on the global tourist map by opening more offices, most recently in Saudi Arabia and the US. The latter involved a four-day event in New York City’s Times Square in May 2012, which kicked off with a video showcasing the attractions of Abu Dhabi, including the Sheikh Zayed Grand Mosque and traditional Bedouin life. A large white tent was also raised in the centre of Times Square, with service staff in traditional Emirati clothing giving visitors dates, coffee and traditional henna decorating on hands. While the cost of such an event may be high, the return is potentially enormous, with more than 500,000 people from around the world passing through Times Square every day. Indeed, with Abu Dhabi having invested significantly in developing the tourism sector, it may now make economic sense to increase promotion of the emirate on a global stage.
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