Abu Dhabi facing hotel supply challenge

Abu Dhabi hotel rates will remain under pressure as the supply of new properties outstrips demand in the UAE capital, an industry expert has said. Jalil Mekouar, managing director, Middle East and Africa for Jones Lang LaSalle Hotels, said the growing hotel supply in the city is likely to impact performance. In comments published by Hotelnewsnow.com, he said: "The supply is, we believe, much stronger than (the market) can absorb. “Hotel development is coming faster than the infrastructure allows.” He added: "This is not going to help hotel performance at all." The market will more than double its base of 13,000 rooms by 2014, according to Mekouar who is leaving the Middle East to become chief operating officer - Americas, based in Chicago. In March, Abu Dhabi reported the largest occupancy decrease in the Middle East/Africa region, falling 6.9 percent to 66.2 percent, according to STR Global. Abu Dhabi also reported the only double-digit RevPAR decrease, falling 11.5 percent to $109.02. Last month, Abu Dhabi said it will be more selective in the number of new hotel licences it issues. "We have not completely stopped issuing licences. We still receive applications and are studying them on a case-by-case basis," Naser al-Riyami, director, tourism standards division at the Abu Dhabi Authority for Tourism & Culture said. Abu Dhabi saw record tourism numbers in 2011 with 2.11 million people checking into its hotels, beating its target of attracting two million guests by more than 110,000. The UAE has an existing supply of 474 properties comprising 88,622 rooms as of March, according to data from STR Global, with another 44,886 rooms in the total pipeline. There were 311 hotels comprising 58,743 properties in Dubai and 82 properties in Abu Dhabi, comprising 17,672 rooms. Abu Dhabi’s 4,770 rooms under construction are second in the Middle East/Africa region to Dubai’s 12,863 rooms, according to STR Global.