Abu Dhabi used to be one of the most expensive destinations in the world. A year ago, you would have struggled to find a hotel room in the capital for much less than Dh1,000 (US$272) a night.
But a combination of new hotels opening in the emirate and the approaching summer season means you can now book a room in some hotels for less than Dh350. Rotana Hotels, which has 10 properties in Abu Dhabi, has launched a range of offers with rates starting at Dh299. Emirates Palace, the premium offering in the city, has reduced rates to Dh900 per night for a two night stay, and even a Dh600 per night stay for GCC residents who book a five night stay.
"The rates are cheaper than last year," says Adrian Deegan, the Rotana director of sales for Abu Dhabi and Al Ain. "There's no doubt that this is because of the additional hotels in town compared to last year." As a result, Mr Deegan says, the capital is becoming much more attractive as a tourist destination. With a range of new hotels to choose from at rates that are about 40 per cent cheaper than last year, Abu Dhabi is now more competitive with numerous other destination cities.
"But the summer is obviously still a low season." With Abu Dhabi seeking to attract 2.3 million visitors a year to the city by 2012, up from about 1.5 million last year, the capital is building up its hotel supply before its attractions. There were 17,600 rooms in the first quarter of this year, up from just under 13,000 in the same period last year - a 35 per cent increase. The Abu Dhabi Tourism Authority (ADTA) says more flexible room rates are essential to driving demand. "In a value-conscious tourism marketplace, affordability is critical to building demand," says Mubarak al Muhairi, the director general of the ADTA.
The ADTA aims to attract more tourists to Abu Dhabi and narrow the gap between business and leisure guests. At the moment, business travellers account for 80 per cent of hotel trade. "When these extra visitors, who are predominantly leisure-focused, are taken into account, the business-leisure tourism split could look more like 60-40. ADTA's target is to move this proportion closer to 50-50 by 2012," Mr al Muhairi says.
The additional supply means that hotels are competing more fiercely for guests and this will bring the room rates down in the short term. Abu Dhabi has room to make adjustments during the slow summer season when demand from business travellers falls off. Last year, a survey by Expedia's Hotels.com reported the capital had the world's highest hotel rates in the first half of the year. On one level, analysts note, operators may have decided that lower daily rates are better than empty rooms.
But hoteliers are also banking on an increase in demand, with the continued expansion of Etihad Airways and the expected opening of star attractions such as the Ferrari World theme park this year. Once the demand is there, prices are expected to stabilise, they say. "All this will turn Abu Dhabi into a major tourist attraction and a hub for business and leisure travellers," says Simon Stamper, the area general manager of InterContinental Abu Dhabi and Al Ain.
The ADTA's main goal has always been to attract business guests and tourists from high-income groups with cultural attractions. Still, Ian Michael, a professor of marketing at Zayed University in Dubai, says it is risky for luxury hotels to cut their rates aggressively. Dr Michael says it will be difficult for a city destination to depend solely on the top end of the market, explaining that only much smaller destinations such as Monte Carlo can realistically achieve this.
"If the Abu Dhabi Tourism Authority's strategy is to increase its number of tourists visiting the city, it surely has to begin expanding its product supply to include affordable accommodation," he says. "Museums are fairly affordable. It's not so much the exclusively rich person they're targeting." In the meantime, guests sampling the luxury style at the capital's five-star hotels for four-star prices should enjoy it while it lasts.
"Abu Dhabi probably felt the recession some time after Dubai and is to some extent still feeling it," says Thomas Tapken, the group general manager of City Seasons Group of Hotels. "But on the positive side, what this has done is dictated a much needed rate adjustment. No city can sustain high rates year round. "I believe strongly in the Abu Dhabi tourism product and feel that the city has so much to offer the holidaymaker."
rbundhun@thenational.ae