Abu Dhabi National Hotels Expects Profit Drop, CEO Riley Says
Abu Dhabi National Hotels PSC, the owner of properties managed by Hilton, Le Meridien and Sheraton properties in the United Arab Emirates, expects a decline in profit after an expansion in its asset base.
“The leisure market in Abu Dhabi is just not there yet,” said Richard Riley, chief executive officer of Abu Dhabi National Hotels. The company expects to post a 15 percent decline in profit this year as it accounts for depreciation costs of its latest developments.
“We’re growing in asset base,” said Riley in an interview in Abu Dhabi. “We will have limited profitability growth over the next couple of years.”
Earlier this year, it opened Sofitel Jumeirah Beach Hotel in Dubai and plans to open the Park Hyatt on Saadiyat Island and the Ritz Carlton in Abu Dhabi by June 2011.
After completing the two hotels next year, the company will shift its focus to redeveloping its existing hotels before expanding and bringing more hotels to the market by 2015.
“We have hotels coming on board, but we really haven’t grown the leisure side yet and that’s the issue.”
Abu Dhabi, home to more than 90 percent of the U.A.E’s oil reserves, has built a Formula One race track, and is working on theme parks with companies including Time Warner Inc., Ferrari SpA and MGM Mirage. The government has invested 100 billion dirham ($27.2 billion) for a cultural district on Saadiyat Island, including new branches of the Guggenheim and Louvre museums, expected to open in 2013.
Abu Dhabi National Hotels has no immediate plans to issue bonds. “If we had to do something in the near future that may be an option for us,” Riley said.
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