New hotels in the capital will not just be rated on the level of luxury of their facilities and attentiveness of their staff but also on their environmental friendliness under a plan aimed at boosting the industry's green credentials.
Abu Dhabi announced yesterday it had started piloting its green building guidelines for hotels on a five-star resort planned for the Dh3.2 billion (US$871.2 million) Al Ain Wildlife Park and Resort. The 900-hectare park is under development.
Under the system, which is being developed by the Abu Dhabi Tourism Authority (ADTA), hotels will be classified under a "pearl" rating system, running from one pearl, the minimum required to meet the standards, up to a maximum of five pearls.
"It means that, shortly, new hotels will have a green rating alongside their star ranking," said Sheikh Sultan bin Tahnoon Al Nahyan, the chairman of the ADTA, speaking at the World Green Tourism conference, which started in the capital yesterday.
But the developer of the Al Ain Wildlife resort said it was not aiming to achieve the maximum of five pearls. Instead, it is expecting to achieve a 4-pearl rating.
"We are not going for the 5 [pearl rating]", said Ghanim Mubarak al Hajeri, the director general of the Al Ain Wildlife Park and Resort. "It's above our budget. Also for it to be more realistic to deliver, we are going for a 4."
He estimated it cost up to 40 per cent more to develop a "green" hotel than a standard one.
"That's in terms of the building but in the long run you will save energy and power."
Analysts pointed out there was little capital available in the current economic environment for the outlay involved in making hotels more environmentally efficient.
But tourists are becoming more demanding in terms of reducing the environmental impact of their holidays.
A survey by YouGov in the UK and the Middle East found that two out of every five people interviewed were willing to spend more on an environmentally friendly holiday.
"There is a high-end market waiting for us to deliver," said Sheikh Sultan.
The tourism authority has also introduced an environment, health and safety management system for Abu Dhabi's tourism sector to reduce the environmental impact of existing hotels.
"The consumer already today, whether it be in the leisure segment, or whether it be multinational corporations in their bids for their corporate accounts, are already asking for your details of your green credentials," James Hogan, the chief executive of Etihad Airways, told the conference. "From a customer base, if they're going to preference you or work with you as an airline, green credentials are not just talk; it's about what you're actually doing."
But he also highlighted the cost involved in developing a more environmentally friendly fleet.
"At the same time you see many airlines working within industry on programmes to develop alternative fuels. We here in Abu Dhabi are working with Masdar to ensure that we can evaluate and seek alternatives as we move forwards."
Gerald Lawless, the executive chairman of Jumeirah Group, which manages 11 hotels in Dubai, New York and London, said the company had saved $870,000 on electricity and $151,405 on water in the past year by introducing measures to reduce consumption.
"As tourism develops, guests do actually want to continue to enjoy luxury, but they want to enjoy this luxury without feeling guilty," said Mr Lawless.
rbundhun@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.”
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