Hotels are big business in Abu Dhabi. According to Abu Dhabi Tourism Authority (Adta), the emirate needs 13,000 hotel rooms by 2012. To meet this demand, billions of dollars worth of projects are being developed.

The new target was set as part of a strategic plan prepared by Adta to take into account the sector’s strong performance in 2007, when the emirate exceeded its hotel guest target by 5 per cent, receiving 1.45 million occupants. By 2012, Adta expects to attract 2.7 million hotel guests.

The situation is very different from September 2004 when Adta was established to promote the emirate’s tourism industry. At first, the decision appeared to be a strange one as the emirate was not popular with tourists.

Unlike Dubai, which began developing itself as a tourism destination in the 1990s, Abu Dhabi is oil rich and has traditionally relied on the hydrocarbons sector at the expense of others. As a result, the vast majority of hotels in the capital have historically catered to a steady trade of visiting workers and businessmen servicing the oil and gas fields.

However, this all changed when Sheikh Khalifa bin Zayed bin Sultan al-Nahyan assumed power in November 2004 and led a focus on diversification away from the hydrocarbons sector, identifying tourism as a key driver for economic growth.

Business opportunities

“Global tourism will grow from an $8 trillion to a $15 trillion industry in the next decade and will account for 10.5 per cent of world GDP [gross domestic product] by 2018,” says Sheikh Sultan bin Tahnoon al-Nahyan, chairman of Adta. “The World Tourism Congress has identified the Middle East as one of the most attractive areas in the world and expects it to grow at 5-10 per cent a year. If you consider these aspects, Abu Dhabi could be ideal for cultural and business tourism opportunities.”

The challenge for Adta and the government is to ensure that these strides forward do not clash with the traditional Abu Dhabi culture.

“As our economy evolves, we have an opportunity to become an internationally recognised business and leisure destination,” says Sheikh Sultan. “However, along with this comes a responsibility to ensure that we develop a tourism strategy that respects our culture, values and heritage, and supports other government initiatives, including the attraction of inward investment.”

To make sure these sensitivities are take into account, Adta commissioned a study to identify which segments of the tourism industry are most appropriate for Abu Dhabi. It concluded that Abu Dhabi should aim for high-income travellers that will be more sensitive to local culture and build resorts to accommodate them.

“Brand Abu Dhabi was created by a study commissioned by Adta in 2004 that was executed by Booz Allen Hamilton,” says Lee Tabler, chief executive officer (CEO) of the Tourism Development & Investment Company (TDIC). “From the study, Abu Dhabi has targeted the high-end tourism market and set a goal of 17,000 new hotel rooms by 2012. That target has now been revised to 25,000 new rooms after the authority found the initial numbers were conservative.”

Promoting culture

As the largest of the seven emirates and accounting for 80 per cent of the federation’s land area, Abu Dhabi has a lot to offer tourists. Like the rest of the Gulf, it enjoys almost year-round sunshine and, together with vast stretches of undeveloped beaches and natural islands, the emirate is being promoting as an ideal location for beach resorts.

In the city, Abu Dhabi also plans to capitalise on its position as an oil and gas hub, and business centre, by developing itself as a conference and exhibitions destination. It also plans to promote cultural tourism with new museums, concert halls and exhibits.

“We started after many others did in the region,” says Mubarak al-Muhairi, director general of Adta. “This gave us the chance to look at what was being offered and what we could do to complement it. Like the others, we have sun and sand, but what sets us apart is our environment and culture.”

Tourism has several positive side effects. By thrusting the emirate onto the world stage, Abu Dhabi has been forced to adapt at a rapid pace. It has become more open to the outside world and has pressed ahead with projects that are critical to the success of the tourism industry, such as the formation of Etihad Airways, the expansion of the international airport and attracting international events such as Formula 1 and concerts by leading musical acts.

With a limited number of resorts and hotels, tourism also means construction. To help deliver the hotels and resorts it requires, Adta has formed its TDIC subsidiary to help manage real estate assets granted to Adta by the government. TDIC does this in three ways: either as a developer that builds projects itself; as a masterplan developer that sells plots to third-party investors on its developments; or in joint venture with local or international partners.

TDIC’s largest project is the $27bn Saadiyat island, on which it is acting as master developer, while at the same time developing large sections of the island itself. Its other projects include the Desert Islands and Qasr al-Sarab in the Western Region, along with the Lagoon Hotel & Offices, Emirates Pearl, Al-Bateen Wharf and the Eastern Mangrove resort on Abu Dhabi island.

Developing resorts

TDIC is not acting alone. Other local developers such as Aldar Properties are also critical. Aldar is building one of the emirate’s leading tourism attractions for the future, the Formula 1 racetrack on its Yas island development, and is responsible for developing several hotel properties that will serve the event. The developer is also building hotels at its Al-Raha beach development and resorts at its Al-Gurm and Coconut island developments off Abu Dhabi island.

These projects all form part of the Plan Abu Dhabi 2030 urban masterplan, and have been formulated to complement rather than contradict one another. “The leadership of Abu Dhabi is very involved in tourism developments,” says Tabler. “So developers like TDIC and Aldar are pursuing projects in a co-ordinated way.”

Another major player in developing the capital’s physical tourism infrastructure is Abu Dhabi National Exhibitions Company (Adnec), which is also headed by Adta chairman Sheikh Sultan. Adnec plans to develop the emirate as a major exhibition centre with its projects on Abu Dhabi island and Al-Ain.

In Abu Dhabi, it has completed the first-phase expansion of the exhibition halls and is working on two subsequent phases that will add even more exhibition space and a hotel. The halls will be at the centre of a new development promoted by Adnec called Capital Centre, which will transform the area into a new commercial district based on the exhibitions business.

But projects do not deliver success in isolation. The 2004 study that created a brand for Abu Dhabi as a tourism destination was the starting point. “Two years ago, when you called operators no one knew what Abu Dhabi was,” says Tabler. “But as a result of brand Abu Dhabi, operators now come to us.”

To boost its image even further, Adta plans to open representative offices in seven new markets by the end of 2012, with Australia, China and Italy the first three. They will join existing offices in the UK, Germany and France.

Other planned initiatives include a new classification system for hotels in Abu Dhabi. The scheme starts in June when inspectors will begin visiting the 49 hotels and 49 hotel apartments operating in Abu Dhabi emirate. By the end of 2008, all will be classified, with hotels being rated from one to five stars and hotel apartments being allocated deluxe, superior or standard ratings.

Neighbouring Dubai has shown that the Gulf is a viable tourism destination and with support from Etihad Airways, Abu Dhabi expects tourism to be a catalyst for growth in the non-hydrocarbons economy in the coming years.

“It is a three-pronged approach,” says Paul Bell, managing director of Aldar Hotels & Hospitality. “Etihad has to bring in people because the vast majority travel by air, Adta lets people know about Abu Dhabi, and we need to provide the service so people come back.”