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The Middle East’s hotels are doing brisk trade, with more opening every week. Tim Burrowes looks at how the leading brands play the battle of the beds

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By  Tim Burrowes Published  August 21, 2005

Room service|~|Intercontinental-200.jpg|~|Checking in ... hotels around the Middle East are using an array of different tactics to market their brands|~|Two explosions less than four months apart hint at the opposing issues currently faced by those marketing the region’s hotels. In April came the spectacular demolition of the old Hilton hotel in Dubai’s Sheikh Zayed Road to make way for a new residential development. Along with the previous demolition of Chicago Beach Hotel, it indicated the passing of the first generation of the city’s hotels and the confirmation of the cult of the new. Then last month came the terrorist bombing of the Egyptian tourist destination of Sharm el-Sheikh, which has seen occupancy rates dwindle in the resort’s hotels. Across the Middle East, the growth rate of hotels is enormous, with near weekly new openings for at least the next couple of years. Dubai alone is expected to see 350 new openings, Abu Dhabi 80 and Qatar as many as 50. With levels of occupancy generally high, the challenge facing many of the region’s hoteliers is how to go on managing this success. As is so often the case in the region, the UAE has led the trend. The last few weeks alone have seen the Jumeirah group set out its ambitions — via a multi-million dollar rebranding and a stated desire to have a portfolio of 40 world class hotels around the world within five years — and the opening of Le Meridien’s Grosvenor House hotel in Dubai. Meanwhile, May saw the Queen Center Rotana Suites open in Damascus, along with the announcement of further Rotana hotels for Kuwait, Lebanon, Doha, Sudan and the UAE. Jumeirah, which will look to expand along Emirates routes, is following a well-trodden path. The Hilton chain had a similar strategy linking it to TWA half a decade ago, while Intercontinental and Pan Am did the same. While the hospitality sector may consist of less than 3% of the UAE’s gross domestic product, its strategic importance, and ability to put the region on the map, is far higher. It’s a fact that has not been overlooked by the rest of the region. Saudi Arabia, a vast consumer target market across the region — calculated as the third largest worldwide — is aiming to keep more of its tourist riyals within its borders. The Higher Tourist Authority has been created with the express aim of building a Saudi tourist market. The HTA is coordinating a range of tourism projects and investments with the aim of bringing in 45 million international and local tourists by 2010. The Kingdom is already a leading destination for religious tourists. Islam’s two most holy sites, the mosques at Medina and Mecca, draw vast numbers of pilgrims. The world’s biggest Hilton, with 1400 rooms, is at Mecca. It enjoys high levels of occupancy for much of the year, peaking during Ramadan and the Hajj. Guy Epsom, Hilton’s regional director for sales and marketing, says: “During periods like Ramadan and the Hajj we have very strong business but we are also successful in marketing outside those periods.” Yet much of Hilton’s KSA trade comes through business travellers. Epsom says: “In much of Saudi Arabia, it’s corporate. In Jeddah, business dominates. We’ve got a 2500-seater ballroom, so F&B (food and beverage) is massive. Other areas for corporate include Bahrain and Kuwait. Abu Dhabi is corporate and leisure, and so is Dubai. The chain’s Dubai Creek Hilton includes the destination restaurant of Gordon Ramsay’s Verre. The superchef is expected in Dubai for a few days next month. “In 2000 we had about eight hotels in the region. We’re now at 15 and we’re still planning new properties,” says Epsom. The chain has three key brands. At the top end is Conrad, a five-star deluxe property. The first in the UAE will be on the Sheik Zayed Road next door to the Fairmont and virtually opposite where the previous Hilton was demolished. At the moment the only Conrad in the region is at Sharm el-Sheikh. Next come the Hilton branded properties and down in the mid-range are the Scandic-branded properties for travellers on more of a budget. This brand will go up against the likes of Ibis and Holiday Inn. The extension of brands is also a strategy being adopted by the Intercontinental group. Denis Johnson, the group’s regional vice president for sales and marketing, currently has 75 hotels under his wing, but is planning more. At present the group’s brands are Intercontinetal at the top end, then Crowne Plaza and Holiday Inn. The Intercontinental is positioned as the group’s top end property. He says: “This is aimed at international business and leisure travelers who are looking for a premium product.” The mix between business and leisure depends on location. Within the Middle East, the Intercontinental on the Red Sea is 95% leisure, while the one at Dubai Creek’s mix is nearer 65% corporate, 35% leisure, depending on the time of year. The advertising is targeted accordingly. Johnson says: “Crowne Plaza is our youngest brand. We position this as mid-range upscale and the marketing position is as ‘the place to meet’. And Holiday Inn is for the mid-scale, price conscious traveler.” And the lower end is where Johnson believes the biggest growth will come as a new type of traveler is attracted to the region. The Holiday Inn Express brand — a stripped back version of Holiday Inn with limited facilities — has already been successfully introduced throughout the US and Europe with about 1600 properties in this mould. The first will be opened next year in Jeddah, Riyadh and Dubai, with plans to open 50 within five to seven years across the region. “Not everybody wants five star,” says Johnson. “There are some budget hotels, but only 2% are branded so you don’t get the consistency.” For the established brand, Johnson says the difficulty is standing out from rivals, which is where marketing comes in. “The challenge for us is to differentiate ourselves from the competition. For Holiday Inn, we stand for a good night’s sleep, a great breakfast and a good rewards programme. ||**||Room service|~||~||~|For Intercontinental it’s about making the stay hassle-free.” The locality of consumers has also changed for the group, he says. “Since 9/11 the market mix has changed dramatically. Thirty to 50% of customers are from within the Middle East now. People are looking for leisure travel within the region, to Lebanon, Jordan, the Red Sea. And the way we spend our marketing budget has changed in geographic terms. “Our biggest market by far is Saudi Arabia. Our Middle East reservation centre at head office has 50% of its calls from Saudi Arabia.” Middle East audiences are also of primary concern for the two major home grown brands — Rotana and Jumeirah. Both have re-thought their strategies — with Rotana dropping its emphasis on differentiating the “Hotel” “Suites” and “Resorts” sub brands, for the message of “There’s one for you” and Jumeirah International becoming simply Jumeirah. Daniel Hajjar, Rotana’s vice president of sales and marketing, says: “We’re different to most of the competition because our hotels are only within the Middle East and 90% of our efforts are focused on the Middle East.” He says that experiments with an agency handling all of the chain’s advertising was not a success. “It was extremely problematic. It was important to have rapport, but we ended up focusing on solving problems rather than the advertising.” So now the chain works with an agency — Intermarkets — centrally, but individual hotels are free to make their own arrangements with local agencies for advertising so long as they follow the marketing position of the company. The concentration of hotels in one place leads to a similar debate for Jumeirah. A spokesman says: “We are in a unique position having the majority of our hotels in one location, being Dubai, and the local audience is therefore key to us. They are reached through advertising — print, radio, online and outdoor — as well as through a PR programme that promotes brand messages as well as individual hotel news and promotions.” The region’s hotels tend to switch to tactical, price-based promotions to deal with the summer lull. Despite typically upbeat messages in local newspapers, this year has been tough, with occupancy down on the same period in the previous year. Marketing bosses point to a reaction to the increase in prices earlier in the year, particularly in Dubai, as a major factor. Media coverage in the UK and elsewhere about the amount of building work going on has also had an effect on leisure travel. Johnson says: “At the moment our central message is value-for-money for leisure travel. When you are giving messages to the corporate market it is much more about the brand and what it stands for.” The main media used by the group is newspapers, in-flight magazines and, to reach travel agents, trade magazines. He says: “We are also currently looking at lifestyle magazines.” The group uses agency Davinci for its main branding strategy and then does other work in-house. PR is done in-house and with the help of Impact Porter Novelli. The customer loyalty programme is another major tool. He said: “We have a huge database and we can pick and mix our messages.” It’s a theme seized upon by Sharad Agarwal, boss of CRM technology firm Cyber Gear, based in Dubai. He says: “In our portfolio of online clients, we find that the hospitality industry is using the e-CRM application to its fullest potential. “A typical guest’s database and campaign management system involves members registering online through a dedicated website and providing their demographics and special interests and requirements. These are then stored in the respective hotel’s database. An e-mail can be generated by the in-house marketing department within minutes, based on pre-defined templates in line with the corporate identity and then selectively mailed to the right audience. “Results can be seen instantly and the application is cost-effective and pays for itself.” Epsom also points to the value of CRM, with the Hilton Honors Club playing a major role. He says: “Thirty five per cent of our customer base are Hilton Honors members. It’s a very important factor.” CRM is also a major factor for Jumeirah, whose programme is called Sirius. A spokesman says: “The next step for us is to implement a strong CRM strategy for the company which will definitely see an increase in frequency, a change in tone of voice and a more targeted approach when it comes to audience and offers.” The company is evaluating CRM tools with the aim of implementing them before the end of the year. The other part of Jumeirah’s electronic strategy is paid search, where users of the internet will see the chain’s hotels given a higher priority by search engines when they look for key words. This has also included buying pay-per-click campaigns. And the fickle local audience for bars and restaurants is another issue to live with — PR is often used, particularly for launches. Next month, for instance, should see a major push for the opening of the Grosvenor House’s Buddha Bar. Johnson, whose Crowne Plaza venue Zinc has been popular for longer than most, says: “We understand we have to watch what we are doing. The crowd is a very young crowd and it comes down to the basics of listening to your audience and doing what they want if they are prepared to pay for it.” And, according to Epsom, PR is also key to new launches. He says: “It’s hard to say just how much it contributes, because it’s usually part of a wider campaign, but I’m a great believer that PR really works with launches.” The Starwood Group, which includes the Sheraton, Four Points Sheraton, and St Regis brands, also uses a lot of PR. Cindy Yoong, the company’s area director of PR, based at Sheraton Dubai Creek Hotel & Towers, says: “It’s a very dynamic market. Almost all the brands are here. How do you market a brand like Sheraton against the Burj Al Arab? How do we get our share of the market? There’s no one right answer. “In the end it’s the product. You can do a lot of marketing fluff but at the end of the day it’s about if you drive traffic through the front door and deliver what you promised. “F&B is about coming up with original promotional stuff. You have to feel new — new chefs, new menus. “We’ve always been activity based rather than advertisement based.” She also promises some PR stunts. She said: “Because Dubai is so dynamic we have to think outside the box.” But most marketers are currently trying to make hay while the sun shines. Rotana’s Hajjar says: “Wherever the market is good, we will have no obstacle we cannot overcome. We cannot be but optimistic.”||**||

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