x Abu Dhabi, UAEFriday 19 January 2018

Highflying UAE airlines will ensure there are enough guests to fill glut of hotel rooms

The Emirates ranked about fifth worldwide last year in terms of the number of new hotel openings behind the United States, India, China and the United Kingdom, which was staging the Olympic Games.

Richard Solomons, chief executive of Intercontinental Hotels Group, said things are starting to change - even if it is elsewhere in the region. Sammy Dallal / The National
Richard Solomons, chief executive of Intercontinental Hotels Group, said things are starting to change - even if it is elsewhere in the region. Sammy Dallal / The National

Highflying UAE airlines will ensure there are enough guests to fill a glut of hotel rooms coming on stream in the next few years.

The Emirates ranked about fifth worldwide last year in terms of the number of new hotel openings behind the United States, India, China and the United Kingdom, which was staging the Olympic Games.

And about 41,000 hotel rooms - more than 40 per cent of Middle East and North Africa's projected hotel pipeline - are to be built in the UAE, according to data compiled by STR Global and Christie + Co.

"If you look at the number of airlines like Emirates and the number of flights coming through here, with Etihad, there are real customers and there is real demand," said Adam Weissenberg, global travel, hospitality and leisure lead, Deloitte Touche Tohmatsu, at the World Travel and Tourism Council annual meeting in the capital yesterday.

"So I don't think at the moment, at least, it looks like the supply growth is outstripping demand."

The hotel and hospitality market is forecast to grow at more than 10 per cent over the next three years in the UAE, resulting in more hotel rooms being booked out.

Revenues from the hotel and hospitality market reached $4.9 billion in 2012, up from $4.5bn in 2011, and is forecast to grow to $7.5bn by 2016, according to an Alpen Capital's GCC industry report.

"The very good news is that long-term travel and tourism is on a growth trajectory," said Arthur de Haast, chairman of the Hotels and Hospitality Group, Jones Lang Lasalle.

Last year in Dubai, the number of hotels climbed from 575 to 599, but occupancy and room rates both rose, according to the Dubai's Department of Tourism and Commerce Marketing.

However, the picture was not as rosy in the capital.

Figures from Jones Lang LaSalle suggest there were 1,700 new hotel rooms added in Abu Dhabi last year, a 4 per cent fall in occupancy levels from the year to November, and a 7 per cent dip in daily room rates.

The industry measure on hotel profitability - revenue per available room - also fell, by 14 per cent.

Mr de Haast admitted Abu Dhabi is experiencing an oversupply issue "to a greater extent than Dubai," but it is not a concern long-term.

"Dubai has been through its periods where it has been significantly oversupplied as well and there are plenty of markets, China and other parts of the world which have experienced similar problems," added Mr de Haast.

However, the Abu Dhabi hotel market is lagging behind Dubai in one respect - choice.

"The interesting thing is that it feels very much like a luxury market. It is not nearly as stratified as most markets," said Tom Klein, president of Sabre Holdings.

"I'm not an expert on Abu Dhabi and Dubai growth but you just don't see as many of even the four star level here. At some point it has to stratify."

Richard Solomons, chief executive of Intercontinental Hotels Group, said things are starting to change - even if it is elsewhere in the region.

"There is no question that demand is starting to come through," he said. "If you look at Saudi, for example, which is a big market for us, that mid-market growth is going to be a very big piece of it."

Other panelists were not worried about the imbalance between demand and supply, saying such issues work themselves out long-term.

"I'm pretty bullish," said Darren Huston, chief executive of Booking.com.

"Air links are making a big difference. And it is a place which is considered to be very safe. We are seeing it in our numbers. This part of the world is becoming more popular with Europeans, with Asians, not just a business place but a place to bring families."

gduncan@thenational.ae