The Abu Dhabi hotel market continues to gain momentum with
four to five star hotels reporting positive gains in performance levels for the
month of September compared to last year, according to the latest HotStats
report by TRI Consulting. Abu Dhabi has been having challenges over last couple
of years because of the increase in new supply which had an impact on the average
room rates.
However, in the last two to three months the average room rates
have started to increase and bottom out. The September data from HotStats reports shows that YTD performance
for Abu Dhabi hotels is actually increasing; the Average Room Rate (ARR) increased
by 4.2% to US$128.96 while occupancy grew by 6.6 percent points to 76.6%,
resulting in revenue per available room (RevPAR) rising 14% to US $98.76.
There is a marginal increase compared to 2013 which is great news for Abu Dhabi because the city is attracting a lot more visitors which in turn has resulted in very strong occupancy levels and it has helped the hoteliers to turn that corner and start yielding more effectively when it comes to room rates.
The hotel profitability is relatively strong in Abu Dhabi but the rates are still comparatively lower than the hotels in Dubai, Fujairah and Ras Al Khaimah. This difference in rate is because of huge influx of supply and a weak demand for a last couple of years. So, the hoteliers resorted to drop their rates to get people into their bedrooms but now that the demand has shifted and a lot of people have started coming through, the rates have started coming up. In fact it is projected that in the next couple of years the Abu Dhabi hotel rates will be on par with Dubai.
The biggest source market for Abu Dhabi is India. The Secondary market is with the UK and US but surprisingly Abu Dhabi doesn’t attract a large proportion of Saudi Arabian visitors. Saudi Arabia is the largest source market in Dubai yet it doesn’t register in the top 5 markets in Abu Dhabi.
A lot of new real estate, retail, leisure and entertainment projects are in the pipeline to cater to the growing needs of the visitors. In fact, Macy’s and Bloomingdales, two of the biggest departmental stores in the US, are planning to set up shop at the capitals Al Maryah Island and with Yas mall opening in November Abu Dhabi will attract more regional visitors because it has a greater retail offering. Retail drives the people and if you look at the Saudi visitors, their biggest motivation is leisure and shopping.
Abu Dhabi is also building up the level of demand to attract large groups of 90+ but they don’t have the infrastructure. ADNEC has the capability to cater to large groups but they don’t have the driving force. Abu Dhabi is trying to position itself as a destination to attract international visitors but Dubai is still leading the way.
Having said that, the hotel occupancy will continue to grow in Abu Dhabi as it gears up for world class events like Formula 1 Abu Dhabi Grand Prix and opening of retail space in the near future.
However, in the last two to three months the average room rates
have started to increase and bottom out. The September data from HotStats reports shows that YTD performance
for Abu Dhabi hotels is actually increasing; the Average Room Rate (ARR) increased
by 4.2% to US$128.96 while occupancy grew by 6.6 percent points to 76.6%,
resulting in revenue per available room (RevPAR) rising 14% to US $98.76.There is a marginal increase compared to 2013 which is great news for Abu Dhabi because the city is attracting a lot more visitors which in turn has resulted in very strong occupancy levels and it has helped the hoteliers to turn that corner and start yielding more effectively when it comes to room rates.
The hotel profitability is relatively strong in Abu Dhabi but the rates are still comparatively lower than the hotels in Dubai, Fujairah and Ras Al Khaimah. This difference in rate is because of huge influx of supply and a weak demand for a last couple of years. So, the hoteliers resorted to drop their rates to get people into their bedrooms but now that the demand has shifted and a lot of people have started coming through, the rates have started coming up. In fact it is projected that in the next couple of years the Abu Dhabi hotel rates will be on par with Dubai.
The biggest source market for Abu Dhabi is India. The Secondary market is with the UK and US but surprisingly Abu Dhabi doesn’t attract a large proportion of Saudi Arabian visitors. Saudi Arabia is the largest source market in Dubai yet it doesn’t register in the top 5 markets in Abu Dhabi.
A lot of new real estate, retail, leisure and entertainment projects are in the pipeline to cater to the growing needs of the visitors. In fact, Macy’s and Bloomingdales, two of the biggest departmental stores in the US, are planning to set up shop at the capitals Al Maryah Island and with Yas mall opening in November Abu Dhabi will attract more regional visitors because it has a greater retail offering. Retail drives the people and if you look at the Saudi visitors, their biggest motivation is leisure and shopping.
Abu Dhabi is also building up the level of demand to attract large groups of 90+ but they don’t have the infrastructure. ADNEC has the capability to cater to large groups but they don’t have the driving force. Abu Dhabi is trying to position itself as a destination to attract international visitors but Dubai is still leading the way.
Having said that, the hotel occupancy will continue to grow in Abu Dhabi as it gears up for world class events like Formula 1 Abu Dhabi Grand Prix and opening of retail space in the near future.
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