ABU DHABI’S TOURISM SECTOR SET FOR REMARKABLE GROWTH IN 2015-16

After receiving the “Best Airport in Middle East” awards in 2013, Abu Dhabi International Airport yet again achieved a new milestone by crossing the 2 million-passenger mark on 31stJuly 2015 (in a given month). The airport that currently overseas operation of 35+ international airlines (from 96 destinations and 54 different countries) has seen a tremendous growth in passenger volumes over the course of last decade.

During January to June (H1 – 2015) period alone, approximately 15% (11,111,577) growth was observed in total passengers that passed through Abu Dhabi International Airport, compared to 2014 (9,48,744). Similarly, Abu Dhabi International Airport received 20 million passengers in 2014, a 20% increase on 2013. The growth trend is likely to further increase in coming years as Abu Dhabi aims to reduce its dependency from oil based GDP to a non-oil based and diversify its economy in line with Economic Vision Plan 2030.

Growth in Revenues of Abu Dhabi’s Duty Free

From the increase in passenger volumes, Abu Dhabi Duty Free benefited the most, recording revenues of staggering DH 1 billion in 2014, with a growth of near around 10.5% from 2013 (DH 9 million). At present, Abu Dhabi Duty Free offers over 8,000 sq.m of retail space and host 119 retail and 24 food & beverage outlets in the airport.

Major Factors for Increasing Tourism in Abu Dhabi

Major factors for increasing number of passengers at Abu Dhabi International Airport could be attributed to the fact that Abu Dhabi focuses on aggressive destination marketing, which has led to global awareness about the Emirate. Abu Dhabi’s popularity is also credited to the filming of Fast & Furious 7, which increased the awareness of Abu Dhabi on a global scale. Major tourism destinations such as Sheikh Zayed Mosque, Ferrari World, Yas Island, Emirates Palace and Louvre Museum played crucial roles in increasing tourists’ inflow in Abu Dhabi as well.

Hospitality Sector on Rise in Abu Dhabi

The increase in passengers at Abu Dhabi International Airport had also positively influenced Emirate’s hospitality sector as a result of which 2,300 new hotel rooms will be added by the end of 2015, with a further 5,200 planned to be opened by 2017. Near around 70% of the new hotel room supply consist of 4 and 5 star categories that will cater to the increasing demand from the international, regional and local corporate circles as well as of the leisure tourism segments.

At present, Abu Dhabi has 128 hotels and hotel apartments with the total of 20,700 rooms, which will increase to 26,000 by 2017. Likewise, the average length of stay for guests is around 3 days with revenue per available room (RevPAR) is tentatively AED 300 (US$ 82), which reflects market competitiveness.

Like Dubai, Abu Dhabi’s strategy also involves around aggressive destination marketing and extension of its existing aviation, hospitality and tourism sectors to connect vigorously with new and existing places in India and Far East, followed by United Kingdom, Germany and other EU countries, all of which have recorded a significant rise in guest nights. Likewise, Abu Dhabi’s geo-strategic location enables it to be a connecting point between East and West as well as provides solid opportunity for Etihad Airways (National Carrier) to capitalize from such movements.

In addition to the growth of hospitality and tourism sectors, retail and real estate sectors has also benefited from the increase of tourist inflow as Abu Dhabi is improving its infrastructure at rapid pace to present excellent opportunities for investors to invest in the Abu Dhabi’s evolving economy.

The Way Forward

With the de-regularization of fuel prices in UAE, it can be stated that Abu Dhabi Government is taking prudent steps towards diversifying its economy and developing various sectors to lessen its dependence on energy exports. As a result of such initiatives, Abu Dhabi’s hospitality and tourism sectors have grown significantly and more investments have been seen in the Emirates.

In nutshell our research finding indicates that tourism in Abu Dhabi is all set to demonstrate remarkable growth. Along with hotels and resorts, there should plenty of opportunities for retail and food and beverage businesses to leverage on the extrapolated high tourism influx.

Reason to Invest in Abu Dhabi – UAE

  • Long-term political stability
  • Strategically located between Europe, Africa and Asia
  • 0% corporate tax, 0% income tax
  • Up to 100% foreign ownership in Free Zones
  • No minimum requirement for company set-up
  • 2014 Mercer Survey ranks Abu Dhabi and Dubai best cities in the Middle East

Key Economics Indicators

  • Nominal GDP (2013) – USD 259bn
  • Share of UAE’s GDP – 64%
  • Real GDP Growth (% Change YoY) – 5.0%
  • GDP per Capita – USD 103,000
  • Oil and Gas Share in GDP – 57%
  • Share of Proven Global Oil Reserves –  8% (92 bn barrels)
  • Long Term Credit Ratings – Stable (Fitch, S&P and Moody’s)

RESEARCH KONNECTION: THIS RESEARCH REPORT IS COMPILED BY TEAM RESEARCH KONNECTION; A DUBAI BASED MARKET RESEARCH AND BUSINESS CONSULTING FIRM THAT IS FOCUSED ON PROVIDING STRATEGIC ADVICE TO INVESTORS. IF YOU ARE LOOKING FOR MORE DETAILED ANALYSIS ON ABU DHABI’S HOSPITALITY AND TOURISM SECTORS OR WANT US TO PREPARE FEASIBILITY STUDY, THEN FEEL FREE TO CONTACT US ON INFO@RESEARCHKONNECTION.COM
Автор: RKonnect
The author is the Managing Director of Research Konnection, a Dubai based market research and consulting firm that helps local and international companies to identify emerging business opportunities and successfully expand in the Gulf region. The author can be reached at waqas@researchkonnection.com
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