A 90 per cent increase in visitors from Saudi Arabia helped boost Abu Dhabi's hotel guest numbers by 17 per cent last month compared with February last year.
Hoteliers attributed the rise in Saudi visitors to unrest in other countries around the region, while the visitor numbers were also lifted by a host of exhibitions.
Hotels in the emirate recorded 175,309 guests last month, according to figures released by the Abu Dhabi Tourism Authority (ADTA).
"The year-on-year February increase has been primarily driven by major events held in the emirate including the Idex international defence show, the Al Ain Aerobatic Show and Gourmet Abu Dhabi," said Lawrence Franklin, the strategy and policy director at the ADTA.
Hotel occupancy rose 16 per cent to 77 per cent in the period. Total revenue increased by 24 per cent to Dh440 million (US$120.5m), and the average length of stay increased 10 per cent to 2.99 nights.
"There is also some evidence of shifting demand resulting from regional issues, with hotel guests from Saudi Arabia rising by 90 per cent, while there has been a tailing off of hotel guests from Qatar and Oman," Mr Franklin said.
Last month, 6,950 visitors from Saudi Arabia stayed in Abu Dhabi hotels. Rotana, which has more hotels in the emirate than any other operator, noted a marked increase in the number of guests from the kingdom. Henning Fries, the general manager of the Fairmont Bab Al Bahrin Abu Dhabi, said although he had not noticed a "huge impact" from the kingdom at his hotel last month, there had been a noticeable increase in the number of guests from the GCC.
"GCC is definitely picking up overall," Mr Fries said.
Idex was an important factor in the growth, with many hotels enjoying full occupancy during the week of the exhibition, he said. "Even outside of Idex, you saw a good shift upwards in the market overall in February."
Some business might have been diverted to Abu Dhabi because of unrest in countries, Mr Fries said.
"Especially in the case of Bahrain and other areas, people have diverted some of their meetings," he said. "Dubai has enjoyed a last-minute shift of business over there, and we've had a little bit of that over here as well. March also looks quite promising."
Although growing from a relatively low level, the number of visitors from Russia also surged, rising 88 per cent to 1,561, the ADTA said.
Food and beverage revenue at the emirate's 115 hotels and hotel apartments increased by 20 per cent last month compared with February last year to Dh142.9m.
But some hoteliers in Abu Dhabi fearregional unrest might impair bookings from Europe as the peak travel season approaches.
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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.”
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