Walking into the Ritz-Carlton Grand Canal in Abu Dhabi, visitors will leave behind a picture-perfect view of the Sheikh Zayed Grand Mosque as they wander to the waterfront opposite the Shangri-La and Bab Al Bahr hotels.
Opening before the end of the year, the major hotel development is extravagantly decorated with Venetian-style architecture, multiple chandeliers and a grand piano.
The name, the setting and furnishings are all as grand as Abu Dhabi's plans for its tourism industry, with the capital hoping to attract 7.9 million visitors per year by 2030, up from 2.1 million last year.
"We are working with the other hotels to make Grand Canal a destination in itself," said Pep Lozano, the general manager at the Ritz-Carlton. "It's good to have competition next to you because it increases the image of the city."
The tourism industry is set to be a major pillar of growth for the economy, with huge investment already undertaken on Yas Island and the ongoing cultural developments on Saadiyat Island.
The cluster of hotels around the Grand Canal is also one of the key areas of tourism for the city.
But competition is on course to remain high for the next couple of years in Abu Dhabi, with three hotels scheduled to open this year and occupancy levels predicted to fall as supply outstrips the number of tourists flowing into the country at present. The St Regis at Nation Towers and the Centro at the Capital Centre could both join the Ritz-Carlton in opening this year as Abu Dhabi pursues its goal of becoming a major hub for free-spending tourists.
The Ritz-Carlton will have 354 rooms and 85 villas as well as 10 restaurants and bars. On site, there will also be a huge Venetian Village area with cafes, restaurants and an Italian-style piazza. On the Corniche, the St Regis is also set to be a luxury development, with 283 rooms.
"Abu Dhabi is still a destination in the making and the destination marketing body is putting in place a strategy to attract a number of visitors through the different segments of the market," said Chiheb Ben Mahmoud, the head of hotel advisory for the Middle East and Africa at Jones Lang LaSalle Hotels.
The number of visitors to the capital has grown at a rapid rate, with 980,000 guests checking into hotels in the first five months of this year. That equates to double-digit growth on the same period last year.
About 6,700 additional rooms are expected to enter the market by the end of 2014 to reach about 21,400 rooms, translating to an annual growth rate of 13.3 per cent.
In the second quarter of this year, the only hotel to open in Abu Dhabi was the Eastern Mangroves resort, run by the Thai operator Anantara.
Occupancy levels fell by 6 per cent in the first half of the year, reaching 61 per cent, while the average daily rate dropped 9 per cent to Dh575 (US$156).
The Abu Dhabi Tourism and Culture Authority announced this year it would be selective in issuing hotel licences for new projects because of oversupply in the capital.
Despite this competitive environment for hoteliers, many are confident they will enjoy bustling trade during Eid, even as temperatures remain high.
Hilton Hotels said it was almost hitting capacity for Eid bookings across its hotels in the UAE, including Abu Dhabi.
Essam Abouda, the vice president for the Arabian Peninsula at Hilton, said supply was high in Abu Dhabi but it was only a matter of time before the tourism industry was booming.
"I'm very, very optimistic for Abu Dhabi," said Mr Abouda. "It will complement the UAE tourism industry by having different products. I believe 100 per cent demand is going to catch up."
Travel and tourism's contribution to the county's economy is expected to increase by 4.2 per cent a year to Dh132.4 billion, or 7 per cent of GDP, by 2022, according to the World Travel and Tourism Council.
rjones@thenational.ae
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
