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Abu Dhabi Unlikely to Enforce Rent Caps for Hotel Rooms

The authority had implemented rate ceilings in the run up to and during certain major events last year taking into account of the shortage of rooms. “Accommodation inventory shifts in the market has created a better room supply and demand balance in the emirate and this has led to a more competitive rate environment,” Nasser Al Reyami, Director, Tourism Standards, ADTA, said in a statement on Sunday.

“Market forces are by themselves producing a more competitive environment making it easier for major meetings and events producers to satisfy demand from participants and visitors,” Al Reyami explained,

“We now have some 17,000 hotel rooms in 111 hotels or hotels apartments throughout the emirate — this is a much improved scenario since this time last year when it was genuinely difficult to secure a room in Abu Dhabi. Over the past 12 months we have seen 4,500 rooms in 11 new hotels join our inventory with 2,250 of them in seven properties on Yas Island. In 2010 we anticipate a further 5,000 rooms coming on line,’’ the ADTA official said. “This new hospitality landscape has changed the entire demand/supply equation and competition is increasing with the obvious impact on rate structures. This makes the need for rate caps virtually redundant,” he added.

Industry sources had also said that the prospects of a rise inavailability of hotel rooms will lead to stabilisation of rent rates at “rational levels” in Abu Dhabi this year. “But this will not lead to any glut in the market as the demand for rooms is expected to go up in the emirate in the coming years,”Tarek Elsherif, Regional Director, Sales and Marketing, Middle East and North Africa (MENA), of the Millennium Hotel Group, headquartered in the UK, told a Press conference recently.

· ramavarman@khaleejtimes.com