Rotana chief expects Abu Dhabi hotel rates to remain flat

Abu Dhabi still needs to absorb all the new inventory that has come in since 2010 and 2011, says Omer Kaddouri, the president and chief executive Rotana Hotel Management Corporation.

Rotana Hotel, left, and Centro Hotel at Yas Island. Rotana operates 11 properties across Abu Dhabi in midscale to luxury segments. Delores Johnson / The National

Room rates in the capital are expected to remain flat for the next two years according to one of the UAE’s biggest hotel chains.

There has been a steady supply of new rooms, especially in the five-star segment over the past six years, which has kept prices competitive.

Abu Dhabi has 22,320 rooms across 92 hotels, according to STR Global.

“The room rates in Abu Dhabi last year came a little bit lower than the 2013 [levels]. We might see them around the same level in 2015 and start seeing an increase of the average room rates by 2017,” said Omer Kaddouri, the president and chief executive of Abu Dhabi-based Rotana Hotel Management Corporation. “Abu Dhabi still needs to absorb all the new inventory that has come in since 2010 and 2011. We are still seeing a lot of new hotels opening.”

Rotana operates 11 properties across the emirate in midscale to luxury segments. It expects to open two properties in Abu Dhabi this year — Capital Centre Arjaan with 258 rooms and Capital Centre Rotana with 315 rooms.

Zaya Nurai Island yesterday opened its 32-villa resort near Saadiyat Island in Abu Dhabi. Promotional nightly rates this week for one-bedroom villas started at Dh3,290. The Dubai-based Zaya Hospitality will manage the villas.

Next year, Starwood expects to open W Abu Dhabi and InterContinental Hotels Group will open InterContinental Abu Dhabi — Grand Marina.

The five-star, 318-room Park Rotana Abu Dhabi Hotel opened in 2010, while the 189-room Hyatt Capital Gate Abu Dhabi and the 306-room Park Hyatt Abu Dhabi Hotel and Villas on Saadiyat Island opened their doors in 2011.

The average room rate for Abu Dhabi for the first 11 months of 2014 was Dh437, compared with Dh448 for the same period in 2013, according to official data.

Some analysts are more upbeat on hotel room demand in Abu Dhabi this year.

“Considering the growth in demand and a relatively limited addition to supply expected during the year at roughly 2,000 rooms, the fundamentals appear to be positive and we expect the room rates to show a gradual growth this year,” said Rashid Aboobacker, a senior consultant with TRI Hospitality Consultancy, Middle East.

Abu Dhabi’s Tourism and Culture Authority is targeting 3.5 million guests, up from 3.1 million last year.

In a reflection of demand for mid-range hotels in Abu Dhabi and Dubai, where about 60 per cent of the supply is limited to the upscale segments, Rotana’s fastest growing brand is Centro. Launched six years ago, the company has five Centros in the UAE and 15 in the development pipeline.

Abu Dhabi’s rates remain high compared with its neighbour.

In December, Dubai hotels increased their room rates by 1.7 per cent to an average price of Dh1,024.23 year-on-year but had occupancy dip by 1.4 per cent to 79.3 per cent, according to STR Global.

The last month of the year brings a steep rise in room rates in Dubai during the festive rush. This year was no exception, with rates typically between Dh1,000 and Dh2,000 at some upmarket hotels.

“Despite the continuous strong supply growth, average daily rates managed to increase in one of the busier months for the market, achieving the highest levels of any December since 2008,” said Elizabeth Winkle, the managing director of STR Global.

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