UAE's Ras Al Khaimah plans hotel expansion as tourism drive pays off

One year ago, Ras Al Khaimah’s primary target was to put itself on the map for tourists. Now the challenge is to ensure supply keeps up with demand.

Tourism in the northern Arab emirate, one of the seven United Arab Emirates, is rapidly picking up momentum. Traditionally a destination for manufacturing FDI, with Ras Al Khaimah Free Trade Zone home to more than 8000 international companies, the government has shifted its focus to tourism development as an engine for job creation and growth.

Natural assets

Ranked one of the safest destinations in the world by the World Economic Forum and offering adventure and resort tourism along its kilometres of diverse terrain, from sandy beaches to rugged peaks, Ras Al Khaimah is making the most of its natural assets.

“The first target in our tourism strategy was 1 million visitors by the end of 2018,” says Haitham Mattar, CEO of the Ras Al Khaimah Tourism Development Authority.

The numbers are looking good. Already the emirate has clocked 10.5% year-on-year growth in visitor numbers, with a 45% growth in visitors from Europe alone. The UK is a major contributor to this, with a 28.5% increase in visitors despite the fall in sterling after the Brexit vote and other regional economic uncertainties.

“To contribute more to the economy and to GDP, we targeted increasing the length of stay by 20%,” says Mr Mattar. “So what we achieved is double-digit growth in tourist visitor numbers.”

Visitor numbers up

Ras Al Khaimah had welcomed just upwards of 650,000 tourists for 2016 by mid-November, and the Tourism Development Authority projects that the number will rise to 840,000 by the end of the year. “That’s an 11% growth year on year once we close the year. Last year, 2015, we had 760,000 visitors. This is a great leap in terms of tourism growth, and we’re well on track to achieve our targets.”

Part of Ras Al Khaimah’s growth strategy is its emphasis on international marketing. “What we’ve done differently is spend a huge amount of money within the UK, mainly toward dynamic marketing campaigns, both establishing a presence with our UK office and working more closely with the tour operators and travel agents on the ground,” says Mr Matter. Money spent on marketing in 2016 increased by about 85% on the previous year. 

With its growing number of high-end international hotels, pristine beaches, mountains and cultural sites offering competitive pricing just 45 minutes from Dubai, there can be little wonder the emirate is doing well. But now that tourist numbers have shot up, supply must keep pace.

“There have been hotel expansions. We have 500 to 600 more rooms in the market as new supply, but we’re still somewhat distant from our capacity goal,” says Mr Mattar.

“We’re now growing at about 10.5% in demand, whereas supply is growing by about 3% to 5%. We have about 4000 hotel rooms in the pipeline, and we need 10,000 rooms between now and 2018 to achieve the 1 million visitors target. So we have worked with the government and the developers to encourage more investments in hospitality and hotels.”

More hotels

Recent months have seen the signings of new Sheraton, Movenpick, Millennium and Residor Park hotels, as well as four new hotel signings on Al Marjan island, an investment area belonging to Ras Al Khaimah, whose masterplan includes 20 hotels, food and retail outlets and a marina.

“We encourage investors to put money in this sector given that we’re one of the fastest growing tourism destinations and hotels are seeing great returns, especially this year, from their 12% total revenue growth,” says Mr Mattar. The emirate has also seen RevPAR – revenue per available room – grow about 8.5%. “Investors are always keen to put money in destinations that have occupancies north of 70%,” Mr Mattar.

Ras Al Khaimah stood at 71% occupancy as of November 2016, and aims to close the year at 74% – a 13.5% growth year on year. If having more demand than supply is a problem, says Mr Mattar, it is a rather good problem to have.