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Abu Dhabi Government Will Limit The Growth of Guestrooms

News It’s no secret that Abu Dhabi is one of the most profitable locations of the region, so there’s no wonder why more and more hoteliers want to open new accommodations there. However, soon it will be more complicated for them to do this as the Abu Dhabi Tourism Authority will be more selective while issuing licenses for new hotels.

Previously almost all the enquiries were accepted. Now the authority says they are not freezing all licenses, but they will review them on one-by-one basis.

The Gulf News report that now all potential investors will have to attend special sessions, in which they will get a full explanation of their investment scenarios in order to increase the investment awareness. Only after this they will be allowed to continue with their investment projects.

The reason for such decision is very simple – the emirate has too many guestrooms. First reports of the oversupply of Abu Dhabi’s hotel industry have appeared long ago. Nowadays 5,200 more guestrooms are expected to open in the nearest future. That is definitely too much for the emirate.

According to the data provided by the local tourism authority, 2011 was quite a successful year for hotels in Abu Dhabi – their occupancy was 69% throughout the year, which is 7% more than in 2010. However, ADR level fell for the same period fell by 14% and estimated 490 dirhams (approx. US$133). This year ADR is expected to fell by another 10%. Oversupply is the main reason for such performance.

The government of Abu Dhabi has stakes in many popular hotels of the region, so it’s clear that it is interested in maintaining occupancy and profit levels at a high level. Of course, such limitation is unlikely to have any significant impact in the short period, but its effect in medium to long term period is obvious.


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