The UAE’s booming hospitality industry has been listed among the top five countries in the world with regard to the new infrastructure and development in the field. The country has been donning a notable track record for its constantly high occupancy rates and persistent growth. Emirates has entered a new phase of exponential growth making it one of the most desired destinations for all the travel enthusiasts across the globe.
According to Alpen Capital’s October 2012 GCC Hospitality Industry Report, the UAE’s hospitality market is likely to reach US$7.5 billion by 2016, up from US$4.5 billion (67 percent increase) in 2011 as visitor demand gains traction and new hotel supply enhances the existing tourism products. However the occupancy level in Abu Dhabi was significantly higher at 73.5 percent than the estimates made for 2014. According to pwc.com, the authorities are aggressively marketing Abu Dhabi – the capital of the UAE as a high-quality but lower-cost substitute to Dubai. Also the city hotels have flung exciting offers on rooms and airlines, with new routes from Saudi Arabia, India, Switzerland, US, and Australia.
“The GCC economies are well on their way to recovery from the global economic crisis. With the recent wins in mega events like the Qatar FIFA World Cup 2022 and the Dubai World Expo 2020, the region is gearing up for an increase in tourist arrivals,”said Sameena Ahmed, managing director, Alpen Capital.
“Due to the forecasted increase in demand, the sector is going through capacity expansion as well as increasing investment into infrastructure. The industry is expected to sustain this growth momentum supported by the regional governments’ initiatives to grow the sector, international tourist arrivals, especially those from the Asian region, and growth in the MICE segment among other factors,” Ahmed said.
World’s largest airport in making
A gigantic expansion programme of the Dubai Airports was announced with the investment of US$7.8 billion (AED28.8 billion). The airport is suggested to be one of the largest airports in the world. This expansion project would definitely boost the capacity of 60 million to 90 million passengers per year by 2018. The report recently published by JLL (Jones Lang LaSalle Incorporated) for The Hotel Show Dubai 2015 divulges that the Abu Dhabi hotel industry is experiencing positive growth with 5,200 rooms in the pipeline for 2017. Considering the consistent growth of the industry, Abu Dhabi Tourism and Culture Authority (TCA) also reported a 20 percent increase in hotel guests in the first quarter of 2015 compared to Q1 figures from 2014.
Another revelation made by JLL at The Hotel Show Dubai was that 45 percent of current supplies are 5-star properties. The openings include the luxury Bab Al Qasr Hotel near Presidential Palace, set to boast 677 rooms and a private beach. Also the figures published by Business Monitor International, positions UAE tourism sector growth at 6.5 percent annually from 2011 to 2021.
Due to the escalating capacity the industry has been catering to the employment growth prospects, according to the reports the forecast suggest annual real growth rate of around 4.1 percent.
The estimated tourist arrival is suggested to grow at a CAGR of 5.3 percent between 2012 and 2022, along with the increase in the hotel supply is also expected to upturn from the current 96,992 hotel rooms in Dubai and Abu Dhabi, to a total of 125,383 hotel rooms in 2016.
James Wilson, General Manager, Millennium Corniche Hotel Abu Dhabi, said, “We see next year equally challenging as 2015. Our budget does show a growth in room revenue and we see this primarily through European and Asian markets. We do see stronger demand in 2016 with perhaps some conservative spending.”
Good growth in ADR and occupancy
The visitors from Asian Sub continent and Europe play a crucial role in contributing to the economy of this industry.
According to pwc.com, it is being expected that in 2016, all major cities would witness positive growth. Abu Dhabi is anticipated to attain good growth in both Average Daily Rate (ADR) and occupancy, driven by infrastructure spend, moderate supply increases, and the increase in tourist numbers that will result from government promotional
The statistics suggest there are 763 hotels totaling 191,047 rooms ‘Under Contract’ in the Middle East/Africa region, as reported by STR Global Construction Pipeline Report in September 2015. Comparing the stats there has been a 26.3 percent increase in the rooms that were under construction in September 2014. However, the ‘Under Contract’ data only comprised of the projects that are in construction or final planning stages, this data does not include the projects that are at unconfirmed stage.
In comparison to the other hotels, beachfront hotels in Dubai endure to entice the highest percentage of occupancy rate. According to the Ernst & Young Middle East Hotel Benchmark Survey, the hospitality industry in the UAE in particular has been seeing a positive growth. Since 2013, Dubai achieved an overall increase in average occupancy of 2 percent, along with growth in average daily rate (ADR) from US$267 to US$284.
Among the region’s prime markets, Dubai, is been reported having the largest number of rooms under construction with 19,719 rooms in 67 hotels. Other than that three other key markets in the MENA region are: Makkah, Saudi Arabia (16,153 rooms in 11 hotels); Doha, Qatar (7,315 rooms in 30 hotels); and Riyadh, Saudi Arabia (6,131 rooms in 25 hotels).
Talking about the local initiatives for tourism promotion, Wilson, added, “We look forward to support TCA Abu Dhabi initiatives through local promotions, international trade fairs and missions. We see better growth from Europe, GCC and Asia which will be our primary leisure focus. We also see better growth from government bodies. With the hotel now recipient of five international quality accreditations we should see better corporate demand in 2016.”
UAE alone in GCC has huge leisure attraction projects in the pipeline, the construction and pre-opening stages attractions include Dubai Parks and Resorts by 2016, Guggenheim Museum Abu Dhabi by 2017 and Dream Island, Ras al Khaimah by 2018.