Abu Dhabi has become increasingly competitive as a regional and international destination in recent years. This has been most clearly visible in a growing events schedule, higher arrivals numbers, and new additions in terms of dining, shopping and theme park attractions. With the highest hotel occupancy rates on record in 2015, the emirate is proving itself capable of drawing in local, regional and international visitors in spite of some challenging political and economic circumstances in key source markets. According to data from the World Travel & Tourism Council (WTTC), at the national level the total contribution of travel and tourism to the UAE’s GDP was Dh126.7bn ($34.5bn) in 2014, with a growth forecast of 5.1% over 2015 to Dh133.2bn ($36.3bn), or 8.6% of GDP. The sector generated a total of 307,000 jobs directly, which amounted to 5.4% of total employment. The WTTC forecasts that this will grow by 5.4% to 324,000 jobs, or 5.6% of total employment in the country.
In Figures
Guest numbers for Abu Dhabi in 2015 were in line with growth targets, a trend that has continued over from 2014. In 2015 arrivals surpassed 4.1m, equalling an 18% increase over 2014, when 3.5m people visited. Those 12.2m guest nights represented an increase of 17% over the previous year, and resulted in a 12% increase in room nights for hotels and other rental facilities in the emirate, with total room revenues reaching Dh3.49bn ($950m), according to figures calculated by Abu Dhabi Tourism & Culture Authority (TCA Abu Dhabi). This further translated into room revenue growth of 7%, although food and beverage profits did decline by 1%. Revenue generated from associated hotel services, including business events and venue hire, increased by 19% to Dh813.8m ($221.5m), according to TCA Abu Dhabi.
Profitability and arrival numbers both rose for 2015, indicating progress in the emirate’s drive for long-term, diversified and sustainable growth. This was despite the summer including one of the hottest months in the season, where occupancy in July still reached a record 60.8%, over the 50.3% the year before. These visitor growth figures also reflect the success that the emirate has had in marketing its expanding portfolio of attractions.
Profitability in Abu Dhabi for 2015 in terms of gross operating profit per available room was an average earning of Dh438 ($119.22), which was down 1% from 2014 at Dh442 ($120.31). Revenue per available room (RevPAR) was basically flat at Dh330 ($89.83) in 2015, compared with Dh331 ($90.10) in 2014. PwC has forecast RevPAR for 2016 to grow in Abu Dhabi at 8.3%, with the emirate leading the way in terms of regional RevPAR growth. According to PwC’s estimates, most of the growth forecast for 2015 will come from greater occupancy. Yet in 2016 it is expected that these growth rates will be derived from both increased occupancy figures as well as higher average daily rates, which will be “driven by infrastructure spend, moderate supply increases and the increase in tourist numbers” that are partly the result of coordinated private sector and government efforts to increase the number of both leisure and business visitors (see analysis).
Growth Trend
These numbers are part of a positive growth pattern over time. In 2014 the 3.5m tourists who visited the emirate already represented a 25% increase in arrivals over 2013, topping the 2013 target by almost 400,000. The rise in 2014 numbers was in part thanks to a growth in leisure travel, chiefly from China and India. In 2015 India was “again the largest foreign source market (as in 2014) with a total of 280,020 guests, or 21% more than in 2014, checking into hotels”, according to TCA Abu Dhabi. India was followed by the UK and China (which saw the fastest growth in tourist numbers) and the US. Guests from other emirates amounted to 1.4m of the total number of visitors, representing a rise of 20% over 2014. Within the GCC region, Saudi Arabia was the largest source market for visitors to Abu Dhabi.
One of the main factors underlying this growth was domestic tourism, accounting for 34% of the hotel arrival numbers. Another noteworthy factor was the opening of the Yas Mall in late 2014, as well as increased flights by Etihad Airways, which inaugurated a series of new routes in 2015 together with its global partners. This supported a rise in the number of passengers passing through Abu Dhabi International Airport (AUH), which logged a total of 23.3m passengers in 2015.
Hotel Stays & Rooms
According to TCA Abu Dhabi, the total number of hotel establishments in 2015 was 168, with a total of 29,760 hotel rooms. The occupancy rate for 2015 was 75.4%, up from 74.9% in 2014 and 69.6% in 2013. There was also a 0.3% drop in average length of stay, which was down from 2.99 nights in 2014 to 2.98 in 2015.
Growth in the number of hotel rooms in Abu Dhabi is expected to continue. In February 2015 TCA Abu Dhabi announced that of the 8000 new rooms to be available by 2018, 3000 of these had already come on the market. According to a report by the real estate company JLL released as part of the Hotel Show Dubai 2015, four- and five-star hotels account for more than 70% of the overall hotel room supply for Abu Dhabi and Dubai, with a higher proportion in Abu Dhabi. “This positioning structure is in line with the historical phase of destination building, driven by international and local corporate demand, as well as corporate-related leisure tourism, more than domestic and regional business,” the real estate company notes. Abu Dhabi is now making a concerted effort to expand its range of offerings and options for visitors, and this is reflected in these growth figures.
Destination Awareness
While arrivals from some source markets were in decline – in the case of European markets, this was mainly due to a weaker euro – the period was marked by a significant rise in the number of arrivals from China, which has become an increasingly key market for both leisure and business travel. The 47% rise in Chinese visitors over 2014 was a trend that continued throughout 2015. In 2015, 177,198 Chinese visitors stayed in Abu Dhabi hotels, making China the third-largest overseas market for the emirate. Arrivals from Saudi Arabia were up 21%, placing it in seventh position, behind India, the UK, China, the US, the Philippines and Germany.
Pre-clearance of Etihad Airways passengers inbound from US airports entering Abu Dhabi currently exists at Chicago, Dallas-Fort Worth, Los Angeles, New York JFK, San Francisco and Washington DC airports. Growth is expected to increase from the US market thanks in large part to increasing airline capacity, and the pre-entry US Customs clearance facility in Abu Dhabi. This enables all US-bound passengers departing from AUH Terminal III to complete their Customs and immigration, as well as agricultural procedures, before they depart from Abu Dhabi.
In an important partnership deal signed in November 2015, Etihad Airways, TCA Abu Dhabi and Miral Asset Management, a major destination developer and asset manager on Yas Island, joined to promote both destination and stopover tourism to Abu Dhabi. The partners are collaborating on a number of strategic activities including co-branded marketing and communications, market intelligence, data exchange, loyalty programmes, and business and leisure events within the emirate. Etihad Airways has also announced it will coordinate more closely with TCA Abu Dhabi across a wide range of undertakings which will include a series of targeted business-to-business and business-to-consumer programmes, as well as continuing to develop the already established and highly successful “Essential Abu Dhabi”, “Abu Dhabi Now” and “Access Abu Dhabi” trade and consumer programmes.
Island Giant
Abu Dhabi’s festival and events offerings are also helping to boost visitor numbers. The emirate’s premier entertainment and leisure destination is Yas Island, a major project developed by Aldar Properties and Miral Asset Management. First announced in 2006 and opened in 2009, it hosted the first Formula 1 Etihad Airways Abu Dhabi Grand Prix in November 2009, winning the “Leading Tourism Project” from World Travel Awards in that same year. In the year following the opening of Yas Mall in November 2014, Yas Island received over 32m visitors. New events are frequently being added to the calendar. For example, the 2015 Taste of Abu Dhabi event drew a gathering of 15,000-20,000 people, up from 14,000 in 2014, with a pre-event estimate of 8000 attendees. Overall it is estimated that 2015 has witnessed a 70% increase in the total number of events taking place on Yas Island.
Mohamed Al Zaabi, CEO of Miral Asset Management, explains that the ultimate goal is to evolve Yas Island’s offerings to compete with iconic destinations like Orlando. In Al Zaabi’s view, Abu Dhabi has a unique opportunity in the region to create itself as an “ultra destination”. Substantial expansions are also under way on Yas Island that attest to this spirit of growth and innovation. According to Al Zaabi, there is a growing recognition that Abu Dhabi is home to a “visitor economy” – one where master-planned development is approached considering the overall quality of experience from the visitor’s point of view. Examples range from the expansion of the number of rides in the second phase of development at Ferrari World Abu Dhabi, to the creation of a holistic programme of signage and way finding across the emirate, improving awareness of where attractions are located and how visitors can reach them faster so that they enjoy more time at the destination.
With a 2500-ha plot designed by the architecture and planning firm Benoy, Yas Island also has 32 km of beachfront shoreline. The 86,000-sq-metre Ferrari World Abu Dhabi is the world’s first for the Ferrari brand. In 2013 Ferrari World Abu Dhabi moved to 365-days-a-year operations, which was prompted by the growing entertainment demand on the island. The theme park has announced plans to open seven more rides over the next three years, which they project will increase the capacity of the theme park by 40%.
Announcing its plans for major expansion in 2016, Ferrari World Abu Dhabi has proposed that the centrepiece of this expansion will be the opening of the “Flying Aces” roller coaster early in the year. It will have the worlds’ largest loop and steepest incline, and will be the first of five major attractions to be delivered over the course of 2016. Additional centrepiece attractions include Yas Links; one of the world’s leading golf courses, also built by Aldar Properties; Yas Waterworld, a Dh900m ($245m) entertainment project which opened in 2013 and is spread out over 15 ha containing 43 rides, slides and attractions; and a Warner Bros. theme park, set to open in 2018.
Hotels & Retail
Yas Island’s 85,000-sq-metre, 500-room Yas Viceroy Hotel and a total of six other hotels located around the Yas Plaza provide more than 2000 rooms. The seven hotels range from three to five stars and include substantial meetings and conference facilities capable of accommodating up to 2000 people. Revenues for Yas Island hotels in the first six months of 2014 rose 13.1% year-on-year to reach Dh283m ($77m), reflecting a substantial increase in leisure and corporate visitors to the island. In 2014 Yas Island’s hotels had a bumper six months on the back of growing Chinese interest in the UAE as a tourist destination. Chinese tourists are Abu Dhabi’s fastest growing hospitality segment – with the total number of guest nights growing 115% in 2014, according to TCA Abu Dhabi. Hotels are taking action to capitalise on this trend. For example, Yas Island’s Rotana Hotel is planning to introduce package holidays to cater specifically to the Chinese market, as well as hire a fluent Mandarin speaker to encourage these new guests.
Yas Island’s retail sector also features strongly as an attraction. The Yas Mall covers 235,000 sq metres and has parking space for 12,000 cars. In 2012 the Urban Planning Council approved the master plan for a new community development, with 680 ha of space designed for 55,000 residents. The 232,258-sq-metre shopping centre, which was developed by Aldar Properties, provides its visitors with a range of local, regional and international retail brands and entertainment attractions. It includes more than 370 stores, 60 of which are international restaurants. Yas Mall was designed to achieve a Two Pearl Estidama rating under Abu Dhabi’s sustainable framework for design, construction and operation. It integrates a series of green strategies including the use of regionally sourced and durable materials.
Other Attractions
For visitors interested in boating and water activities, Yas Marina’s capacity has grown from 143 berths to 227, including space for yachts of up to 150 metres in length. The marina is currently being enhanced in line with other developments that are linking up to grow Yas Island into the leading tourist destination in the GCC region. This wider plan includes new additions of licensed food and beverage outlets and a 230-metre pedestrianised waterfront promenade, plus children’s play areas and other features. Plans were announced in 2013 to build a second marina on the island, with the contract awarded to Greek construction company J&P AVAX, but the project remains in the development stages.
The meetings, incentives, conferences and events (MICE) segment is also serving as an important driver in building the emirate as a destination of choice. This growth is related in part to the significant increase in large-scale conference and exhibition events that are hosted by the Abu Dhabi National Exhibition Company (see analysis), which is the emirate’s premiere venue development and management enterprise.
Saadiyat Island
With big name museum venues currently under development, the master-planned 27-km Saadiyat Island combines commercial and residential spaces, together with a planned cultural district, marina, beach, promenade and lagoons. In the coming years, three major museums are due to open on the island: Louvre Abu Dhabi, Zayed National Museum and Guggenheim Abu Dhabi, Its cultural district is set to hold both temporary exhibitions and permanent collections, along with performances, festivals and other cultural activities.
The construction of Louvre Abu Dhabi is planned to be finished in 2016, a full year later than previously announced and almost a decade after the original agreement to develop the museum was signed between the government of Abu Dhabi and France. Although global economic uncertainties had led to past delays, the project has witnessed renewed enthusiasm in 2016 as it nears completion. “With the delivery of the Louvre Abu Dhabi it will provide a significant boost for the tourism industry and drive future developments on the Island,” Sufian Hasan Al Marzooqi, CEO of the Tourism Development & Investment Company (TDIC), told OBG. In 2011, the annual Abu Dhabi Art fair was relocated to Manarat Al Saadiyat (which was opened in 2009 and inaugurated in 2011), and drew some 17,000 visitors over four days. The cultural centre has a total land area of 3.05m sq metres, and hosts a number of retail and commercial developments and hotels, as well as educational institutions such as the Cranleigh Abu Dhabi school, which opened in 2014 and is the largest school campus in the emirate. Higher education is represented on Saadiyat as well, with NYU Abu Dhabi opening the first university campus in 2010.
Saadiyat Island has been divided into six separate districts. The Saadiyat Beach District is currently the most advanced, containing the majority of the island’s properties. Mamsha Al Saadiyat is a 1.4-km beachfront mixed-use project that will offer residents a luxury-inspired lifestyle setting. Real estate developer Bloom Holding has also launched its Park View project, a mixed-use development on Saadiyat Island. Located in the centre of the Saadiyat Marina District, Park View will comprise a residential and a hotel apartment building. Bloom, which is a national holding company, plans the development to include a total of 234 units ranging from studios to two-bedroom apartments. The development will also comprise a wide range of commercial and leisure facilities including retail outlets and restaurants, and amenities such as an infinity pool that is 30 metres above ground level and a health and fitness centre.
The global Hilton brand began the construction of its Saadiyat Island resort in 2015 with a planned opening in 2018, when most of the island’s major museum projects are expected to be complete. Hilton is developing the 366-room property spread over a 91,000-sq-metre area owned by the Bin Otaiba Investment Group, at an estimated cost of Dh800m ($217.8m). The final completion and opening of the museums is expected to increase citywide hotel occupancy. The Saadiyat Rotana Resort is also set to begin operations in the Saadiyat Beach District, and will consist of 354 rooms and suites in addition to 13 private beach villas, with a variety of food and beverage outlets as well as space for meeting and conference facilities; additional attractions include a full-service spa at Rotana and a fully equipped fitness club. The Jumeirah Group is also set to open a luxury Jumeirah resort on the island. Expected to open in 2017, the hotel will comprise 294 guest rooms and is the second Jumeirah hotel in the emirate following the 2012 opening of Jumeirah at Etihad Towers.
Shopping is also a focus, with The District, a premier retail destination, which has been planned for development in partnership between L Real Estate and the TDIC, a leading state-owned developer from the emirate. A 30-ha mixed-use project, The District will eventually host more than 550 units allocated for luxury and fashion brands, dining outlets, high-end department stores, home furnishing chains, art galleries, family entertainment venues and various other services. Centrally positioned between the Louvre Abu Dhabi, Guggenheim Abu Dhabi and Zayed National Museum, the project will form a linking area between the three museums, and offer both indoor and outdoor retail options. It is comprised of 270,000 sq metres of gross leasable area of retail space, and over 460,000 sq metres of development overall, including planned residential and hotel units.
Sir Bani Yas Island
Sir Bani Yas Island is one of the eight that make up the Desert Islands in Al Gharbia, or the Western Region. A nature-based destination with abundant wildlife and adventure-based activities, it also boasts a five-star boutique hotel, luxury villas, state-of-the-art stables and historical sites. Recently awarded the “World’s Leading Sustainable Tourism Destination” for the second year in a row at the 2015 World Travel Awards, more than half of the island is devoted to the Arabian Wildlife Park, one of the region’s largest wildlife reserves. The park is home to more than 10,000 free-roaming animals including gazelles, giraffes, hyenas, cheetahs and the endangered Arabian Oryx. The purpose-built stables also offer a variety of equestrian activities and riding lessons, each tailored to meet individual abilities. Sir Bani Yas Island is also home to the remains of the UAE’s only discovered Christian monastery. Estimated by archaeologists to have been built around 600 AD and abandoned in 750 AD, the monastery was initially discovered during excavations in 1992.
The island also caters to visitors seeking a quiet and luxurious travel experience. There are three different Anantara brand hotel retreats on the island, offering a range of leisure experiences for guests. Visitors can enjoy five-star accommodation, beachfront seclusion on the eastern shores of the island, or experience the island’s natural beauty and its wide range offering of activities for adventure seekers. The three resorts include the Desert Islands Resort & Spa by Anantara, the Anantara Sir Bani Yas Island Al Yamm Villa Resort and the Anantara Sir Bani Yas Island Al Sahel Villa Resort, set in the heart of the Arabian Wildlife Park. The island is becoming an increasingly popular travel destination, partly due to improved transport links. “Sir Bani Yas Island has become much more accessible in recent years with direct flights from both Abu Dhabi and Dubai now available. Currently there are also plans to develop an international airport on the island as well as increasing capacity to accommodate large cruise ships,” TDIC’s Al Marzooqi told OBG.
Viewed as a whole, Abu Dhabi’s islands offer an integrated and comprehensive package of attractions for visitors. The different islands provide distinctive yet complementary experiences, with Yas Island offering entertainment and shopping, Saadiyat providing a host of cultural offerings and Sir Bani Yas Island containing a range of adventure, wildlife and scenic attractions. The islands have been developed as a set of experiences that can be enjoyed individually or as a whole, and are designed to appeal to a variety of tastes.
Cruise Segment
Abu Dhabi’s cruise ship segment is on course to increase its number of Abu Dhabi-based departures, while also bringing wider economic and brand awareness benefits to the emirate and the UAE more broadly. The decision by some major international cruise companies to home port in Abu Dhabi – basing a ship locally before departing on a voyage and after the journey ends – in 2015 and 2016 means higher numbers of arrivals at the newly opened permanent Abu Dhabi Cruise Terminal and greater exposure for travellers to what the emirate has to offer as a destination. The expectation is that additional guest nights will result, as passengers opt for a local visit prior to setting sail. Recent development of port facilities and agreements with top players in global cruise tourism to home port at Abu Dhabi look set to change the domestic cruise segment significantly in the coming years (see analysis).
Digital Expansion
With the majority of travellers today using the internet to do their holiday planning, reservation-making and purchasing process, TCA Abu Dhabi has established a digital department, in what Mouza Al Shamsi, TCA Abu Dhabi’s acting marketing and communications executive director, told OBG was a significant shift.
It is also very much in line with the goals of the Abu Dhabi government’s smart city programme. This digital approach seeks to go beyond branding and following through with engagement, bringing in an interactive experience with potential guests up to and at the point of arrival. This plan includes contact before a visit, during a tourist’s stay, and after they have returned home. Support can be provided for anything from travel-related questions posed over social media channels about visas or local transportation to local maps that can be used on mobile devices. TCA Abu Dhabi’s “mobile first” approach means that anything online needs to function on mobile devices as well.
Key partnerships and marketing achievements in 2015-16 include deals with Google, Booking. com and Expedia group, incorporating advice and research into travel patterns and the shopping behaviour of consumers. The Google partnership has added value in training to elevate the agency’s know-how, while a test-run project with Booking. com has meant that Abu Dhabi was one of the first destinations on the site’s trial advertising platform. The success of this exercise, measured in terms of increased sales on hotel bookings in Abu Dhabi, resulted in the partnership being renewed for 2016. The online travel agent experience provides direct data and insights into booking habits, and means TCA Abu Dhabi can obtain precise data and exact measurements of value.
There is, however, a continuing need for existing tour operators and traditional agents, Al Shamsi told OBG. Package deals remain important for the sector, with flights and hotel offers still requiring multiple partnerships.
With solid network infrastructure and evolving smart-government programmes, TCA Abu Dhabi is taking full advantage of technology and social media to help spread the message of the emirate as a destination. Its digital platform and numerous social media channels enable greater scope for promoting the emirate’s events calendar.
Going Green
Due to the various ways in which tourism and tourist infrastructure development can impact wildlife and marine habitats, coordination between environmental agencies and tourism stakeholders has been identified as particularly beneficial. As such, a new Pearl Building Rating System for Abu Dhabi hotels is being put into place by TCA Abu Dhabi, building on the Pearl Rating System initiated together with Estidama – Abu Dhabi’s sustainability rating framework – in 2010. According to Nasser Al Reyami, director of standards, regulations and licensing at TCA Abu Dhabi, the new rating system “will be applied at concept and design stage” and will be targeted specifically to the hospitality sector. The assessment system will take into consideration essentials like water and energy efficiency, as well as other parameters.
Outlook
Abu Dhabi’s strong showing in terms of sector growth across a number of indicators in 2015 underscores the evolution of the emirate’s tourism industry ahead of the launch of forthcoming major attractions, including the much-anticipated Guggenheim Abu Dhabi, Louvre Abu Dhabi and Zayed National Museum. The united effort across agencies and the deployment of innovative marketing and digital methods bodes well for maintaining current growth, which is expected to swell further when these internationally renowned museum sites open in the coming years.
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