Abu Dhabi hoteliers wary of new rivals

Good choice for tourists in the capital as the abundance of rooms to put more pressure on existing charges.

The opening of several high-profile luxury hotels in Abu Dhabi next year is likely to put further pressure on room rates in the capital, analysts and hoteliers say.

Abu Dhabi's Tourism Development and Investment Company (TDIC) plans to add 1,600 rooms and residences within six hotels next year. These include the Eastern Mangroves Angsana Resort and Spa and two new lodges at Sir Bani Yas Island.

A St Regis hotel - part of Starwood Hotels and Resorts - is also opening on Saadiyat Island.

Beyond these, Abu Dhabi National Hotels plans to open a Park Hyatt hotel on Saadiyat Island and a Ritz-Carlton hotel in the Between the Bridges area. There is also a Hyatt hotel opening in the leaning Capital Gate building.

Rates and occupancy levels in the emirate have already fallen sharply because of new supply. The Abu Dhabi Tourism Authority said yesterday that it is expecting an increase of 15 per cent in hotel guest numbers next year, to 1.9 million from an anticipated 1.65 million this year. In the first eight months of this year there was a 15 per cent increase in the number of hotel guests compared with the same period last year.

"In the short term there will be an impact," said Chiheb ben Mahmoud, the senior vice president at Jones Lang LaSalle Hotels MENA, referring to downward pressure on rates and occupancy levels. "But hotel investment is never a short-term view."

Mr ben Mahmoud said that ideally these new hotels would generate their own business, rather than taking customers away from other properties.

"The idea is not to share the same cake," he said. "Saadiyat is going to offer a beach resort proposition that does not really exist in Abu Dhabi. With all the products that Abu Dhabi is developing, we see no reason why we will not see the emergence of this incremental demand."

As well as offering more choice, the increase in supply gives visiting tourists the chance of finding better deals.

But some hoteliers are concerned about the interim period where supply will continue to outstrip demand.

"It's the last thing Abu Dhabi needs right now," said one Abu Dhabi hotelier.

"Most of the projects are still uncompleted," he said, referring to developments such as the Louvre and Guggenheim museums. "Abu Dhabi is still not recognised as a leisure destination."

A Rocco Forte property was scheduled to open this year but construction has taken longer than anticipated.

"There is a pacing-out of some developments, allowing more time for the market to absorb the supply," said Mr ben Mahmoud.