The Yas Marina circuit was a favourite spot for Chinese delegates attending the Chinese Visitors Summit at Yas Island. Delores Johnson / The National
The Yas Marina circuit was a favourite spot for Chinese delegates attending the Chinese Visitors Summit at Yas Island. Delores Johnson / The National
The Yas Marina circuit was a favourite spot for Chinese delegates attending the Chinese Visitors Summit at Yas Island. Delores Johnson / The National
The Yas Marina circuit was a favourite spot for Chinese delegates attending the Chinese Visitors Summit at Yas Island. Delores Johnson / The National

Yas Island hotels benefit as Chinese tourist numbers soar


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Yas Island’s hotels have had a bumper six months on the back of growing Chinese interest in the UAE as a tourist destination.

Average occupancy at Yas Island's hotels rose in the first half of the year, hitting 84 per cent – up from around 70 per cent a year earlier, as a massive 14,000-person delegation from the direct sales company Nu Skin China in March swelled figures.

Occupancy rates are usually higher in the second half of the year, driven by demand for winter sun and the annual Abu Dhabi Grand Prix.

Overall hotel room occupancy in Abu Dhabi in the six months to June stood at 77 per cent, up from 69 per cent in the same period last year, according to data from the Abu Dhabi Tourism and Culture Authority.

Chinese tourists are Abu Dhabi’s fastest growing hospitality segment – with the total number of guest nights growing 115 per cent in the past six months, according to the ADTCA.

“The demand from China has grown at a staggering rate,” said Clive Dwyer, the director of Yas Island Destination Management.

A paper from the management consultancy BCG expects the value of Chinese outbound travel to grow at about 17 per cent per year up to 2020, as high economic growth rates fuel the country’s outbound tourism market.

Yas Island’s Rotana hotel is planning to introduce package holidays to cater to the Chinese market, as well as hiring a fluent Mandarin speaker to encourage new guests.

“We’re seeing noticeable interest from the Chinese markets, and we’re supporting that with a lot of new initiatives,” said Karim El Guanaini, a vice president at Yas Island destination management.

“The Chinese market has been identified as a market that needs a lot of awareness, business development and an on-the-ground presence,” he said.

“We’ve decided to boost in-market representation, and do a lot of public relations work” as well as launching a micro-site with Expedia to advertise the island, Mr El Guanaini added.

Islamic tourism from China presents a growth opportunity for Abu Dhabi. China is home to about 20 million Muslims.

“Islamic tourism in China is reasonably affluent. We’ve identified Islamic holiday tour operators to work with – it’s something we’re quite keen to consider, ” Mr El Guanaini said.

While Islamic tourism from China to Abu Dhabi “hasn’t yet taken off”, Mr El Guanaini continued, “with a bit more of a push from ourselves and from the tourism authorities, it could really take off”.

Vivian Xu, assistant to the chief executive at the Yue Club, a high-end Chinese tour operator, says that the UAE caters to Chinese tourists looking both for luxury brands and investment opportunities.

“What our clients want is luxury hotels, shopping, and designer brands,” she said.

“The UAE can cover all of this. It also provides our clients the chance to look at business opportunities to invest in.”

A number of travel operators from China visited Yas Island yesterday as part of the Chinese Visitor Summit, which aims to link Abu Dhabi’s tourism industry with Chinese tour operators.

But lack of follow-up by UAE companies and a shortage of fluent Mandarin speakers are both limiting the ability of UAE companies to cater to the Chinese market, said Robert Nicholas, the managing director of npimedia, which organised the conference.

“You need people who can speak [the] language,” he said.

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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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