More guests check in to capital hotels

The Park Hyatt hotel under construction on Saadiyat Island.

The number of guests who checked into Abu Dhabi hotels in April rose 12 per cent compared with the same month last year, but a sharp rise in the number of rooms kept hotel profits under pressure. Big hotel brands have added thousands of rooms to the market in the past 12 months, drawn by some of the highest room rates in the world. But the new rooms have affected occupancy levels, bringing rates into line with other regions.

Occupancy in April fell by almost a quarter to 60.7 per cent compared with April last year, while average daily rates were off by almost a third at US$208 (Dh764), according to data from the London-based research company STR Global. Separate data from Abu Dhabi Tourism Authority showed the number of guests from the UK and Saudi Arabia in the same month rose by 23 per cent and 24 per cent respectively in April from a year earlier.

"These movements are a result of shifts in supply and demand dynamics and the subsequent rebalancing, with the upside being that Abu Dhabi is now much more competitive," said Mubarak al Muhairi, the director general of the Abu Dhabi Tourism Authority (ADTA). "We are working hard to ramp up the demand side of the equation with this week's launch of a global marketing campaign, with advertising in international print, broadcast and online mediums."

Revenues for Abu Dhabi hotels in April fell by 5 per cent on last year to Dh362 million because of the lower room rates. "Abu Dhabi as a destination is still in a transition phase," said Chiheb Ben Mahmoud, the senior vice president at Jones Lang LaSalle Hotels in the MENA region. "The new competitive hospitality environment will require hotels to be more creative, more efficient and more strategy-driven." There were 17,240 available rooms in the capital in April, up from 12,470 in the same month last year, representing a 38 per cent increase, the ADTA showed. By the end of this year, the Rocco Forte hotel, the 595-room Grand Canal resort and the Hyatt Capital Centre are among properties planning to open their doors in the capital. Rotana Hotels is preparing to open its 443-room Khalidiya Palace Rayhaan in July.

Meanwhile, the Grand Millennium Al Wahda hotel, which is adjacent to the mall and due to open over the summer, will add 588 rooms and 262 apartments to the capital's supply. "It is going to be hard at the beginning," said Abel Damergi, the general manager of the Grand Millennium. But Mr Damergi was upbeat about the long-term prospects for the property. "The hotel is not built for today or tomorrow. There is demand and the business is going to improve," he said. Lawrence Franklin, the strategy and policy director at the ADTA, said most of the new supply of hotel rooms would come on to the market towards the end of the year.

"The bulk of anticipated rooms are still scheduled for delivery in the third and fourth quarters of the year ? as these valuable assets near completion it is logical that investors and owners would seek to start generating income as soon as possible," Mr Franklin said. Hotels in Abu Dhabi in April saw a 48.5 per cent drop in revenue per available room, a key indicator of industry performance, to $126 compared with April last year, the STR Global data showed. Another 8,687 rooms are due to open next year, according to the ADTA, which would represent an increase of about 40 per cent on the number of rooms the authority estimates will be available by the end of this year. But construction delays could mean that fewer than 4,000 of the 4,145 rooms scheduled to open this year will materialise. Executives from Moevenpick said the opening of its 445-room property on Al Reem island had been delayed until 2013. [e-mail]