No alcohol in some hotels and hip bars in others – this is the contradictory mix that the Middle East’s biggest home-grown hotel chain, Rotana, has dreamt up as it develops sub-brands to cater to different market niches. Senior vice president for UAE operations Omer Kaddouri tells Kevin Rozario about the thinking behind the differentiation and wider expansion plans.
eTN: Rotana has said it wants to step up its building program in the coming years in order to add to its estate. What is the exact scale of this ambition, and is it realistic in the current conditions?
Omer Kaddouri: There is still plenty of scope for expansion in the Middle East, and we are being pretty aggressive in the United Arab Emirates, because it is our home turf, and we understand the market. The UAE currently has 27 properties, which account for 75 percent of Rotana’s portfolio, but by the end of this year there will be 37, and by next year we should have 47. We plan to open 10 new properties every year for the next four years across the region and mostly in the UAE, and these will be predominantly green field new-builds.
eTN: That would add a lot of new hotel rooms at a time when average occupancies have slipped in the UAE. Can the market support this kind of expansion?
Kaddouri: When it comes to occupancies – which are a key barometer of success – we’re still achieving 80 percent in Dubai and slightly less in Abu Dhabi. The average daily room rate is down by between 5-10 percent, but this has been affected right across the UAE, and some hotels have seen it decrease by 45 percent. It does not mean that the market can’t handle more rooms but that there is now more differentiation in the market, with some new hotels in Dubai becoming more affordable. It has also thrown up some new possibilities such as the budget niche, which we identified about 4-5 years ago.
eTN: What kind of differentiation are you referring to, and which niches are being targeted?
Kaddouri: We needed to introduce a differentiated offer in response to what customers have asked for. On the budget side – which is a new market for us – we have created Centro, and we have two hotels under this brand: one in Abu Dhabi and one in Dubai. This is essentially a three-star brand, but it is also a trendy and hip design-style hotel that should appeal to a more sophisticated younger clientele. We like to think of it as the five-star of the three-stars. In December, we also opened the Rose Rayhaan, our second hotel under the Rayhaan brand, which is for customers who want to stay in a hotel that does not sell alcohol. The first was the Al Marwa Rayhaan in Makkah, Saudia Arabia, which opened in July 2009, and another is planned for Abu Dhabi in June 2010. These hotels are not Shariah compliant and have been developed, because there is a demand for this kind of offer. Arjaan, our four-star brand, completes the offer.
eTN: So with these new brands in place, why is so much expansion planned for the UAE and not elsewhere?
Kaddouri: We’re a Middle Eastern company and one of the top three players in this region. As I said we know the UAE well, but while we have most of our hotel rooms there, we are keen to broaden our horizons. For example, we believe Saudi Arabia will be a big market for us, and we are also looking at Jordan, Syria, where we have two hotels already, and other places. By July, we will have opened in Doha in Qatar and in September in Iraq, so new markets are a focus for us in strategic, if not volume, terms.