Abu Dhabi National Hotels is investing more than Dh1 billion ($272 million) to develop a luxury resort on Ras Al Khaimah’s Al Marjan Island and is exploring international expansion opportunities in the region.
The Abu Dhabi-listed company will develop a 1,000-room resort on a 1 million square-foot site overlooking the Arabian Gulf, it said on Tuesday.
“Ras Al Khaimah is a growing destination and it has natural resources that appeal very clearly to diverse segments and to people from around the world,” chief executive Khalid Anib told The National on the sidelines of the Future Hospitality Summit on Tuesday.
“The infrastructure in Ras Al Khaimah today supports big projects … It's a part of the UAE and as a national company, we believe in the prospects of Ras Al Khaimah and we want to be a part of that growth.”
The UAE’s tourism sector continues to recover from Covid-19 on the back of government initiatives and effective measures to control the spread of the pandemic.
Revenue from the sector exceeded Dh19bn during the first half of this year and the total number of hotel guests during the period reached 12 million — an increase of 42 per cent, Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, said last week.
ADNH will finance its new project through a combination of loans from local conventional banks and its own liquidity, the chief executive said.
“We have the financial strength for a project of such rigour and we are confident that the financial model will create value for our shareholders,” Mr Anib said.
Construction on the project will begin in the first quarter of 2023 and is scheduled for completion by the fourth quarter of 2024 or the first quarter of 2025, he said.
The company expects about 8 per cent to 12 per cent yield from the project on its initial investment.
ADNH owns a number of hotels in Abu Dhabi and Dubai including the Radisson Blu hotel and Resort Abu Dhabi, The Ritz-Carlton Abu Dhabi Grand Canal, Le Meridien Abu Dhabi, Sofitel Dubai Jumeirah Beach and Address Dubai Mall.
The company reported about Dh110m in profit in the second quarter of 2022 compared with Dh34.3m during the same period last year on the back of higher revenue. It owns assets worth Dh9.6bn as of June 30, according to its financial statement.
ADNH expects “clear growth” in its net profit, consolidated revenue and Ebitda [earnings before interest, taxes, depreciation, and amortisation] for the full year of 2022, which is likely to exceed 2019 levels, Mr Anib said.
“We're looking at substantial growth in 2022,” he said. “It is very promising.”
The company is exploring expansion opportunities in Morocco, Mr Anib said.
It is also eyeing opportunities in Saudi Arabia, which has ambitions to grow its tourism sector, but is awaiting more clarity on regulation, taxation, incentives and the cost of borrowing, he said.
In terms of mergers and acquisitions, ADNH has been approached by several entities for partnerships to “create champions” in hotels, transportation and catering, and is “open to explore” these opportunities, he added.
Ras Al Khaimah “has strengthened its reputation as an investment, hospitality and tourism hub, attracting high-profile investments and featuring world-class assets”, Abdulla Al Abdooli, chief executive of Marjan, the developer behind the Al Marjan Island project, said.
“The investment by ADNH to develop a luxury resort in Al Marjan Island reflects its confidence in the potential of the destination and will catalyse additional investments.”
On Tuesday, Dubai Investments also announced that it is investing in a Dh1bn mixed-use beachfront project on Al Marjan Island that spans an area of about 90,000 square metres.
Danah Bay will include luxury townhouses and villas, residential waterfront apartments, a four-star hotel resort and retail.
“This region offers tremendous potential for the residential, hospitality and the tourism industry and after careful evaluation and in line with the market trends, we have announced this integrated beach community in Ras Al Khaimah, that will capitalise on the lucrative opportunities of the emirate, creating a benchmark in mixed-use development and providing a long-term value to the economy,” said Khalid Bin Kalban, vice chairman and chief executive of Dubai Investments.
Abu Dhabi’s biggest developer Aldar Properties is also boosting investments in Ras Al Khaimah.
In July, Aldar bought Ras Al Khaimah’s DoubleTree by Hilton Resort and Spa Marjan Island, as well as an adjacent beachfront development plot for Dh810m, as it expands its hospitality and leisure investment portfolio in the UAE.
The developer bought Al Hamra Mall in February and Rixos Bab Al Bahr in April, with the company's total investments in the emirate rising to Dh2bn.
Al Marjan Island has more than 3,000 hotel rooms, including Hampton by Hilton Marjan Island, Movenpick Resort Al Marjan Island, Rixos Bab Al Bahr Hotel, DoubleTree by Hilton Resort and Spa Marjan Island, and Marjan Island Resort and Spa.