The Grand Canal hotel being built on the edge of Abu Dhabi Island carries a large sign proclaiming it as the next Ritz-Carlton, but the management company says it has not yet signed a contract.
The hotel, being built at the foot of Abu Dhabi island, in the style of an Italian palazzo, is being developed by Abu Dhabi National Hotels (ADNH). It is hoped to be open this year.
"The Ritz-Carlton Hotel Company is not yet confirmed to manage the Grand Canal hotel as the final agreement is not signed at the present time," Ritz-Carlton said in a statement.
A management agreement between the two parties should be in place before the owner starts using the Ritz-Carlton name on a hotel's marketing material, the operator says.
An agreement often takes some time to be signed for a variety of reasons, especially to ensure an operator's brand standards are met as the owner develops the property.
ADNH, which owns properties in the capital including Hilton, Sheraton and Le Meridien hotels, is pressing ahead with construction of the property, which has 447 rooms and 85 villas. The main building, including a ballroom, is almost complete.
For the past few months ADNH, a public company, has been promoting the hotel as a Ritz-Carlton property on its website and at international travel exhibitions.
The two parties signed a "memorandum of understanding" last year. Ritz-Carlton said it signed many such arrangements a year and many never become formal management agreements.
Analysts said it was "not frequent, but not unheard of" for owners or operators to announce a project when only a memorandum of understanding had been signed.
"It's a Ritz-Carlton," said Richard Riley, the chief executive of ADNH, in response to Ritz-Carlton's denial that it had been officially appointed as operator of the hotel.
The hotel was originally planned to be a JW Marriott property, a brand owned by the Marriott group that also owns Ritz-Carlton.
ADNH is also planning to open its Dh1 billion (US$272.2 million) Park Hyatt hotel on Saadiyat Island this year.
The company said at its annual meeting this week the cash flow generated from the new hotels when they opened would be used to service its debt.
But shareholders expressed concern about the market in the capital, as room rates and occupancy levels have come under pressure in the past 18 months because hotel rooms have been increasing in numbers faster than tourists.
ADNH saw its profits decline to Dh304.9m last year from Dh432.9m in 2009 because of this.
"What we're trying to do in these two properties is differentiate from the rest of the competition," said Mr Riley. "We've had a very good start this year. What we've done is taken one step up into a luxury style of accommodation.
"We've got to go back to our base of hotels, like the Hilton, Sheraton, and put money back into those … By the end of this year they [Grand Canal and Park Hyatt] will be starting to contribute and we will be definitely sitting in the very high echelons of rates in Abu Dhabi.
"We've already seen a major swing from Russian and German business that hasn't been coming to Abu Dhabi and has been pretty much settled in Dubai."
ADNH also operates a catering division through a joint venture with the UK Compass Group and owns and manages Al Ghazal Transport and Sunshine Tours.