Abu Dhabi opened the first phase of its ambitious $40bn Yas Island tourist development on 1 November, transforming the previously uninhabited land into one of the emirate’s major leisure zones.

After a frenzied period of construction activity, seven hotels – five five-star, one four-star and one three-star – opened within days of each other in October.

The centrepiece of the first phase of the Yas Island project, and the reason every hotel had to be delivered to such a strict deadline, was the emirate’s staging of its first Formula One Grand Prix on 1 November.

Abu Dhabitourism chiefs hope the event, to be held annually at the 5.5-kilometre Yas Marina racetrack, will help increase hotel guests in Abu Dhabi to 2.3 million by 2013, about a 50 per cent increase on current numbers. In the longer term, Abu Dhabi hopes the Yas Island development can help meet an ambitious goal of having 7.9 million visitors staying in 80,000 hotel rooms by 2030.

A series of major masterplanned communities in the 25-square-kilometre complex are scheduled to be built, with the potential to house 100,000 permanent residents and a day-time population of about 250,000 people.

Tourism growth

With Saadiyat Island, the emirate’s cultural precinct, expected to have a permanent population of 150,000, the geographic spread of the emirate’s population will increasingly shift to the northeast of Abu Dhabi’s mainland.

In the short term, however, much of the emphasis is on sustaining emerging interest in the emirate’s tourism sector. With the Formula One race televised in more than 180 countries and reaching 600 million viewers, the hosting of the event has catapulted Abu Dhabi into
the spotlight.

“It is a very large investment on behalf of Abu Dhabi but something with the status of Formula One brings big interest,” says Stephen Banks, director of sales and marketing at Aldar Hotels & Hospitality, a division of Aldar Properties, which has the mandate to manage all of Yas Island’s developments.

“A lot of people come out to a city’s first grand prix with VIPs, organising committees and drivers, and that means we had a full complement for the race. The total number of rooms we have now at Yas Island is 2,260 and all seven hotels are full.”

Banks says Aldar worked closely with Etihad Airways to target tourists from the GCC to attend the Formula One event.

“There are a lot of people close by to Abu Dhabi who are interested in attending, so that is an important market for us and in the
summer we also get a lot of business from GCC countries,” says Banks.

While Abu Dhabi will only host a Formula One race once a year, Banks says Aldar is looking to capitalise with its partners on strong
corporate interest in using the racetrack for events. The Abu Dhabi track is currently divided into two sections. The first 3 kilometres will also be open to general traffic, while the second section of 2.5 kilometres will be reserved exclusively for Formula One.

“Abu Dhabi Motorsport Management [a joint venture of the government of Abu Dhabi and Aldar] is planning to use the track for up to 300 days a year including concerts and track test days,” says Banks. “And on the track there are very large conference facilities.”

Adjacent to the race track, the Yas Marina will have 143 berths able to accommodate the largest yachts, while the Yas Cays Marina will have 900 berths with associated hotels, shops and residential piers. The Northern Marina, located to the northeast of Yas Island, will also house residential facilities.

“The marina will bring a whole new business element to Abu Dhabi,” says Banks. “There is a shortage of berthing space so the larger southern marina [Yas Cays] will help to address that.”

Private hotel developers have committed to large hospitality investments. The local Rotana opened two hotels at Yas Island in October
and says it backs the Abu Dhabi Tourism Authority’s (Adta’s) strategy of targeting the leisure and conference sectors.

“With Yas Island and Saadiyat there is a lot of potential for Abu Dhabi to become a prime player in the regional tourism market,” says Selim el-Zyr, chief executive officer of Rotana.

“Abu Dhabi will be the upmarket Mice [meetings, incentives, conferencing, exhibitions] family destination and events like Formula One will attract a lot of goodwill.”

Aldar has teamed up with Dubai-based Zabeel Investments to develop a links golf course, scheduled to open in mid 2010, on the western shore of the island.

“The golf course at Yas Island makes it a different attraction than somewhere like [Dubai’s] Jumeirah beach,” says Rotana’s El-Zyr. “They are similar but they complement each other.”

More hotels are planned to cater for an expected surge in demand, including a 500-room Moevenpick scheduled to open in 2010, the Oberoi villa development in 2013 and a deal with French firm Accor for the Novotel Yas Island and Ibis Yas Island.

Banks says Aldar aims for modest hotel occupancy in its first full year of operation. “It is difficult to forecast something so new and business throughout the year is very seasonal, but as we open up we are targeting 50-60 per cent [occupancy] in the first year, and then we see the rate climbing after that,” says Banks.

Building attractions

The creation of the racetrack is the first of three phases, with the overall Yas Island development due to be completed by 2018.

The second phase, launched in early November 2009 following the Grand Prix event, consists of the Ferrari World theme park and Yas Mall. The third phase covers the Yas Island water park and Warner Brothers leisure complex, taking the total capital spending budget to about $40bn.

Banks says the Ferrari development will be the world’s largest indoor theme park when it opens in 2010, covering an area of about 200,000 square metres.

Aldar says Warner Brothers is creatively involved in the development and design of the theme park and associated hotel, but the company has yet to issue a completion date.

“I believe it is going ahead but there is no news on timing,” says Banks.

Lawrence Franklin, head of strategy at Adta, says Yas Island will become a “centre of gravity” in terms of regional tourism.

“When you are talking about Ferrari World, the water park and Warner Brothers World, you are looking at a new generation of major theme park attraction, which we have not had before,” says Franklin.

One Dubai-based hotel consultant warns that it will be difficult for Abu Dhabi to quickly establish itself as a destination in its own right.

“In terms of international tourists, most are going to choose either Dubai or Abu Dhabi, but not both, and I think in that regard Abu Dhabi has a big job convincing people to come there as a primary destination,” says the consultant. “In the UAE, Dubai has that kind of pull but there is still a question mark over Abu Dhabi.”

But Franklin maintains the authority does not compare the emirate with Dubai. “We do not see ourselves competing with Dubai and we do not design things around what is happening with Dubai,” says Franklin. “We are different markets and targeting different people, although there is obviously a relationship between the two markets that influences both of our performances.”

Part of the reason for Aldar’s ability to deliver its Yas Island developments on schedule is a series of new procurement methods.

In January 2008, Aldar formed a joint venture with Belgium’s Besix for a host of shopping and entertainment projects, including the -Ferrari theme park infrastructure and related hotels on the Yas Island development.

Aldar signed a similar memorandum of understanding with Bahrain’s Cebarco in August 2008 that led to the two companies forming a contracting joint venture for construction projects including Yas Island.

The joint venture carried out work on the Formula One track and plans to work on projects at Yas Island including the Warner Brothers theme park, a water park, hotels and other support facilities.

One contracting source at Aldar says its joint venture arrangements have been central to developing its strong reputation for delivery.

“You cannot hope to deliver a development this big on your own, so we have been very pleased with the emphasis on using expertise from other specialist companies to help us meet our targets,” says the source.

John Podaras, associate director at Dubai-based TRI Hospitality Consulting, says Yas Island has benefited from having a well structured masterplan for its major developments.

“Once Adta was formed in 2004 and the 2030 vision was formalised, Abu Dhabi has realised that doing the infrastructure first and all the other bits after is a well thought-out approach,” says Podaras.

He adds that with developments like Yas Island being government-led through operating companies like Aldar, there should be little slippage in its major projects.

“Dubai has sometimes come unstuck with private developers,” says Podaras.

With the Formula One race marking the success of the first phase of Yas Island, Aldar is eager to move forward with its remaining two phases of development.

“We are a very entrepreneurial company and look forward to cementing the island as a business and tourism destination,” says Banks.