Abu Dhabi is doing much to develop its hotel and tourism industry. City planning under the Comprehensive Development Plan for Abu Dhabi, redevelopment of Lulu Island and the Corniche, Abu Dhabi International Airport and other infrastructure, huge expansion of Etihad airline, establishment of the ADTA, new hotels, encouragement of private sector investment in tourism projects, promotion of tourism through international offices, trade fairs and a large marketing budget, establishment of real estate development companies — the list goes on. In a nutshell, Abu Dhabi is serious about tourism.

Khaleej Times spoke to Gavin Samson, Associate Director at TRI Consulting Middle East Ltd., international experts in hotels, tourism and leisure, based in Dubai, to know what is happening in the hotel industry.

Following are excerpts from the interview.

KT: What is the latest on the hotel scene in Abu Dhabi?  What is the situation at the moment?  Is it fair to say that Abu

Dhabi’s ambitions, in terms of tourism infrastructure. are quite achievable or are they unrealistic?

G.S.: The hotel industry in Abu Dhabi has traditionally catered to the corporate and government sectors and its current capacity reflects this. Up until 2004, there was never any real appetite to develop the city into a magnet for tourists, in fact the international tourism sector in Abu Dhabi developed more by default than by design. However, real change is on the horizon and the expansion of the tourism sector is reflected in the 2004 performance data for four and five-star hotels and in the first half of 2005.

Just as Dubai’s hotels have experienced phenomenal growth in occupancy in 2004, occupancy at Abu Dhabi hotels have risen above 80 per cent. However, the city has not seen the kind of aggressive rate increases seen in Dubai, again a reflection of the corporate market dynamic. Most hotel managers in Abu Dhabi will agree that with the current occupancy rates, the city is likely to run out of rooms and already suffers from an acute shortage during events like IDEX.

Expansion of hotels in Abu Dhabi has been slow in recent years with few hotels coming on stream. All the emirates are collectively benefiting from the overspill of the leisure market from Dubai which is becoming very expensive. Coupled with this, travel operators seem to have an insatiable desire for new beach resorts.

In terms of Abu Dhabi’s ambitions, I don’t feel that they need to compete with Dubai because the pace of development will be more measured and focused, hopefully on different tourism concepts like eco-tourism, heritage and culture. Of course they have hundreds of kilometres of coastline which will no doubt be exploited at some stage. However, I think that Abu Dhabi no longer wishes to play second fiddle to Dubai and a new leadership and vision is now focusing on tourism, aviation, real estate and privatisation to put the capital firmly on the world tourism map.

Although I feel that ultimately Abu Dhabi may develop a superior tourism product compared to Dubai, its path to achieve this will follow Dubai’s development example.

The creation of Etihad, the ADTA, Aldar Real Estate, Al Reem Real Estate and Sarouh Real Estate Company, the announcement of tourism targets, the opening up of representative offices around the world, attendance at world travel fairs, huge infrastructure projects, a $30 million marketing budget — all this follows Dubai’s example, which has proved what you can achieve with well coordinated and well funded marketing campaigns. Let us not forget that in terms of revenues Abu Dhabi dwarfs Dubai, so logic says that if they are committed and have the right approach, then what Abu Dhabi is projecting is achievable and realistic.

KT: What is the current demand and supply situation in different categories of hotels: six-star, five star; four star and residencies. There is an impression that the emirate is already in an oversupply situation. Is this true?

G.S.:  Hotel development has been very slow over the past few years with around 1,200 rooms entering the market in the city. Just as Dubai is currently suffering an acute shortage of rooms, so is Abu Dhabi. I believe, for the first six months of 2005, occupancies are approaching 90 per cent in the four/five star sector.

The ADTA is talking about 10 new hotels by 2010 and 17,000 rooms in the next decade with around 45 per cent built as five star. The problem that is facing Abu Dhabi is that the launch of Etihad has already proved successful in attracting international tourists to the city and because hotel development has traditionally been slow in the emirate, supply may take some time to catch up with potential demand. We have believed for some time that Abu Dhabi is a sleeping giant in terms of its capability to develop a dedicated tourism market and as a company TRI is being approached more and more to conduct feasibility studies for new hotel and leisure developments in Abu Dhabi.

KT: Can you tell us what number of hotel projects are in final stage of being launched or are in the pipeline?

G.S.: According to TRI research into confirmed new hotel supply: Al Diar Hotel - 100 rooms – five-star; Royal Regency International – 180 rooms – four-star; Fairmont Resort – 265 rooms – five-star deluxe; Khalidya Palace Rotana – 180 rooms – five-star; Four Seasons – 300 rooms – five-star deluxe.

KT: What is the total amount of investment involved in these projects?

G.S.: In terms of  investment in the above hotels, we do not have this information to hand but overall the ADTC wants to encourage $11 billion in tourism projects by 2015.

KT: Do we know what brand names or franchises are coming to Abu Dhabi?

G.S.: Three brands that we know are coming are Fairmont, Four Seasons, Rotana and possibly Movenpick and Sofitel although these two brands we understand are in negotiations. The National Corporation for Tourism and Hotels (NCTH) has recently established its new Danat Hotels and Resort brand and they are talking about three new hotels.

What is clear is that many of the well-known international brands are not represented in Abu Dhabi, in particular those with a leisure and resort orientation. Brands such as Grand Hyatt, Ritz Carlton, JW Marriott, Shangri-la and One & Only would be attractive to the city as it develops.

KT: With the current rate of GDP growth of 18 per cent, what supply and demand situation do you foresee for the coming years?

G.S.: Currently there is a room undersupply situation which will probably continue for the next couple of years until supply catches up. Abu Dhabi will not  face a situation like Dubai which is facing a sudden glut of new hotels entering the market at once (in 2008) which will likely have an immediate effect on hotel occupancy and ADR levels.

KT: Abu Dhabi has set ambitious targets to attract tourists. By 2010 Abu Dhabi wants to raise the number of arrivals to 3.3 million from current level of 8,25,000, what growth do you expect from this huge numbers?

G.S.: These are ambitious growth targets, but the building blocks for expansion are being put in place. Etihad and the redevelopment of the Abu Dhabi International Airport are key. The city will need to develop the necessary infrastructure to cope and not be caught out like Dubai, which is struggling.