Abu Dhabi tourism sector boosted by growing leisure segment

18th Feb 2016
Abu Dhabi tourism sector boosted by growing leisure segment

Knight Frank has released the winter 2016 edition of the Abu Dhabi Hospitality Report.

While Abu Dhabi’s hospitality market saw subdued performance in the years leading up to 2013, the market has since gone from strength to strength, with three consecutive years of RevPAR growth.

Growth in 2015 was particularly impressive not only in light of global economic factors, but also relative to other hospitality markets in the GCC, in which many markets experienced declining performance.

Ali Manzoor, associate partner at Knight Frank, commented: “While Abu Dhabi has historically been driven by corporate and MICE visitation, leisure tourism has seen a boost over the past few years supported by the development of leisure demand generators including Saadiyat Island, Yas Waterworld, Yas Mall, and the Du Arena.

“This trend is expected to continue as future demand generators such as the upcoming Cultural District are completed.

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“As a result, the more diversified demand base should be less susceptible to external forces.’’

The declining oil price has had an impact on visitation in the capital, with many hotel operators indicating that there was a softening of corporate demand particularly in terms of oil and government related visitation.

With oil prices forecast to fall further in 2016, this trend is likely to continue - however this is anticipated to be counterbalanced to some degree by increasing leisure demand.

“The luxury hotel sector in Abu Dhabi has undergone rapid transformation since 2011,” noted Manzoor. 

“With a compound annual growth rate of 16 per cent in luxury hotel rooms between 2011 and 2015, the market has seen the introduction of several luxury hotel developments including two St. Regis properties, the Sofitel, the Ritz Carlton, the Anantara and the Rosewood, which has made the luxury sector a fiercely competitive one.

“Luxury hotels which do not have clear differentiators are finding themselves in an increasingly precarious position, and the anticipated future supply poses a further risk.”

The delivery of the Grand Hyatt, Four Seasons, Edition, Fairmont, Biltmore and Hard Rock Hotel over the next 24 months will have direct implications for the future performance of Abu Dhabi’s luxury sector - however this will only be an issue if the projects are delivered on schedule.

The hotel supply in Abu Dhabi is often delayed, and as such, it is unlikely that the pipeline in its current state will materialise in its entirety as anticipated.

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