Hotel price cap to protect capital's business tourism

Abu Dhabi // Hotel room prices are to be capped during one of the city's biggest conferences over concerns that rising costs are hitting business tourism. The Abu Dhabi Tourism Authority (ADTA) has been given the power to limit hotel rates during the first week of next month to coincide with the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC). The cap will not extend beyond the week of the conference.

Hotel room prices often soar during the staging of major events in the city, as the pressure of shortages and increased demand combine. When it was provisionally announced in June that Abu Dhabi would host its inaugural Formula One race on Nov 15 2009 at least one five-star hotel doubled its rates for that period even though the event was still a year away. The ADTA has not said what the cap on the room prices would be, but some hotel operators have suggested they would be determined according to each hotel's average rate.

Most of the tourists who visit Abu Dhabi are business travellers attending meetings or major conferences. The ADTA wants to double the number of visitors to the capital to 2.7 million by 2012, an increase expected to be fuelled by growth in business travel. Conference organisers praised the cap, saying hotel prices were starting to hit growth in the sector. David Drake, of DMG World Media, which organises ADIPEC, said: "This is fantastic. We have been campaigning [for] this for some time and this is a great step for Abu Dhabi."

Rooms for the period of the conference were going for up to US$1,000 (Dh3670) a night and some hotels were insisting upon minimum stays of four to five nights during the event, he said. "People weren't prepared to pay those prices. There's no doubt that the prices would have had an effect on the conference." The increases had become noticeable in the past two years as the size of the conference doubled.

Mr Drake said the biggest fear was that companies would stop attending. "Where companies used to send four or five people to a conference, now they'll send one or two." ADIPEC, which runs Nov 3-6, is one of the region's larger petroleum conferences, with an expected attendance of about 40,000 people. Mr Drake said his company would become wary of attending a conference if hotel room prices reached $500 a night. "Above that, then we would need to question whether we need to go."

Abu Dhabi is investing billions of dirhams to develop conference infrastructure and entice business tourists. The first phase of the Abu Dhabi National Exhibition Centre was completed in 2007. The adjacent Capital Centre is under construction at a cost of Dh8 billion. However, the city is also suffering a lack of hotel rooms; ADTA now believes 30,000 hotel rooms will be required by 2013, compared to the current 13,000.

Because of the shortage, Abu Dhabi has some of the highest average room prices in the region at about $291 per night, according to Deloitte. That figure is surpassed only by Dubai. @Email:jgerson@thenational.ae