Revenue maker

Revenue managers at hotels in Dubai are rubbing their hands as they look forward to what should be the emirate’s most prosperous year to date, as demand for rooms continues to outstrip supply

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By  Sarah Campbell Published  February 20, 2006

|~|Grosvenor-House-Hotel-L.jpg|~|Development on the Palm Jumeirah is continuing at speed.|~|The year 2006 looks set to be the year hotel managers in Dubai have been dreaming of. With only a handful of new properties set to open, and occupancy figures looking set to continue to climb, it could easily be said that running a five-star hotel in the city is tantamount to having a licence to print money. Dubai’s fast-expanding portfolio of hotels and hotel apartments reported the highest occupancy rates ever, in January-September 2005, competing and wresting the initiative from other tourist destinations in the world. Deloitte and Smith Travel Research put Dubai on top with an 85.9% average hotel occupancy rate, followed by New York with 82.7% and Singapore at 80%. Dubai hotels and hotel apartments have also been ranked the first in the world in terms of generating the highest revenue per available room (RevPar) between January and September 2005, followed by New York and Paris, according to Global Lodging Review, a publication of Deloitte and Smith Travel Research. The publication highlighted that Dubai hotels’ RevPar is the highest at US $175.47 while New York comes second with $163.32 and Paris third with $169.53. There has been a significant 42.3% increase from the RevPar generated by Dubai’s hotels in 2004. “The excellent figures recorded by Dubai hotel and hotel apartments during January-September 2005 is a reflection of the Department of Tourism and Commerce Marketing’s (DTCM) aggressive promotional campaign to position Dubai as the world’s leading tourism and retail hub. It is also the fruit of an inspirational public-private sector partnership and government’s unwavering determination to be a model business and leisure destination,” says Khalid bin Sulayem, director general of the DTCM. While the DTCM’s intense marketing has most certainly been instrumental in the success of the emirate, the quality and service standards of many hotels have been equally instrumental in ensuring a continued flow of return guests to Dubai. At present, Dubai has 383 hotels and hotel apartments with a total room capacity of 35,396, an increase of 5.9% from 2004. While it would seem like a large enough number for any other market, demand is still outstripping supply, and it has been predicted that a total of 140 luxury hotels and resorts, containing more than 34,000 rooms, are set to be built in the emirates in the next three years. New openings The year 2005 was a relatively quiet one when it came to hotel openings. The first notable one of the year was the Courtyard by Marriott Green Community, a four-star deluxe business hotel that opened to relative success in the Green Community, in February. Grosvenor House West Marina Beach by Le Meridien opened in June, bringing in a new level of luxury to the Dubai Marina project. The 45-storey hotel offers 217 sea-facing rooms, 205 apartments, 12 restaurants and a dedicated spa and leisure floor. Meanwhile, regional chains also notched up a number of new openings. Sharjah-based Coral International opened several new properties in Dubai, while Rotana continued to expand, as both the Al Murooj Rotana and Villa Rotana opened their doors on Sheikh Zayed Road. Al Murooj Rotana Hotel & Suites is a five-star property offering 253 hotel rooms, 137 serviced apartments, and featuring 10 food and beverage venues, including three signature fine dining restaurants. The latest developments in the hotel were the opening of Waterside Seafood Restaurant & Terrace, followed by the launch of the Latino House Restaurant. “Located in the heart of Dubai’s business area, Al Murooj Rotana Hotel & Suites is primarily a corporate property. However, the unique design, landscaping and significant leisure facilities makes it attractive to the majority of markets comings to Dubai,” says Hussein Hachem, hotel general manager. In terms of geographical origin, the key markets for Al Murooj Rotana Hotel will be: UAE local corporate accounts; leisure and corporate — Saudi Arabia, Kuwait, Qatar, Turkey, India, Pakistan, Egypt, Jordan, Syria and Lebanon; and leisure — UK, Germany, Russia, France and the Far East. Already, the hotel is enjoying success, and Hachem is more than happy with its progress so far. “The Al Murooj Rotana Suites went into operation July 15 and the hotel opened only on September 1. However, during this short period the property has enjoyed excellent occupancy levels and very healthy average room rate.” The last few months of 2005 were also very significant for parent company Rotana Hotels, Suites & Resorts, and marked the growth of company’s portfolio. The new 118-studio-suite Villa Rotana Suites opened its doors on Sheikh Zayed Road and Rotana Hotels signed a new management contract with Burjuman Shopping Mall for the Burjuman Rotana Suites, planned to open in mid-2006. The property will comprise 144 fully serviced one-bedroom suites, three duplex townhouses and a penthouse. In December, Rotana Hotels announced details of the launch of their new brand of hotels, Centro. Centro is a contemporary concept specifically designed to cater to rapidly expanding market of business travel and accommodation for the budget conscious executives. Rotana has a five-year plan to open 25 of the three-star properties across the Middle East, and has already secured agreements for three properties to open in the UAE – two in Dubai and one in Abu Dhabi. The first hotel will open in 2007 under the name Centro by Rotana, Satwa, Dubai, with 360 rooms. The second, Centro by Rotana, Al Barsha, Dubai, with 264 rooms, will open mid 2008. Openings for Rotana in 2006 include the 300-room Amwaj Rotana Resort in Jumeirah and the 482-key Rose Rotana Suites, currently under construction on Sheikh Zayed. Also in Dubai, Rotana Hotels will open in mid 2007 the Media City Rotana Hotel with 467 rooms and suites, a wide variety of food and beverage venues, ballrooms and flexible meeting rooms, business services and recreation facilities. While the year is still in its early stages, the first hotel opening cut the ribbon in January, with The Montgomerie Dubai opening its all suite property at the golf course. A total of 19 boutique guest suites are available in The Montgomerie, Dubai Clubhouse, offering personalised butler service, in-room technology including 32” LCD televisions that offer CD and DVD capabilities, and business centre services Infrastructure growth Dubai’s internal infrastructure, and most notably its transport and road links, has suffered under the strain of keeping pace with the burgeoning hotel sector. According to HVS International, the emirate has now earmarked US $4 billion for airport development. Of this, $1 billion will be spent on the creation of a third terminal and a second concourse, able to accommodate the Airbus A380 ‘super jumbo’, which will result in the airport being opened up to budget airlines. This expansion will increase the airport’s capacity to 70 million passengers a year. The development of a third bridge over the Dubai Creek, the Ras Khor Bridge at Dubai Festival City, is set to open in 2007, and will provide a direct route to the airport’s new third terminal. Meanwhile, the first phase of a 77-km metro line network started in October and is set to open in 2009. One line will run from Al Ittihad Square to Rashidiya bus station via the airport and Deira city centre, while the second line will be built between Salahuddin Road and the American university in Dubai, via Sheikh Zayed Road. Hoteliers are already eyeing the much-anticipated new transport links as a welcome addition to the city. The Al Sondos Suites by Le Meridien, an all-suites boutique hotel that caters primarily to business travellers, will be directly across the street from the central station. “Dubai’s metro system is expected to increase both tourism and investment in the city and the addition of the station directly across from the Al Sondos is going to be extremely beneficial for our guests and clients,” says Amal Benzari, general manager, Al Sondos Suites “We’ve designed the hotel with the business client in mind and having the central station at our doorstep will be a great advantage to our guests.” One of the few all-suites hotels in Dubai, the Al Sondos offers wi-fi technology, business facilities and two restaurants and a five-star staff. The hotel recorded an average year-round occupancy rate of 82% for 2005 and Benzari expects to surpass this number and reach record levels going into the future. Future plans With most of the new infrastructure set to be in place by 2007-2008, it is little surprise that this also coincides with the next influx of hotel openings. Ritz-Carlton broke ground on a second property in Dubai at the end of April. The luxury hotel chain is set to develop a 330-room business property in the heart of the Dubai International Financial Centre (DIFC), an onshore capital market designated as a financial free zone located parallel to Dubai’s Sheikh Zayed Road. The Ritz-Carlton, DIFC will boast 121 serviced apartments, a selection of restaurants and bars, a speciality restaurant, cigar bar and lobby lounge. The new property, scheduled to open at the end of 2007, will also provide extensive meeting facilities. “With the opening of The Ritz-Carlton, Dubai International Financial Centre we will also offer Ritz-Carlton customers around the world a complementary business hotel. This is crucial as the demand for a Ritz-Carlton room in Dubai increases,” says Allison Sitch, regional director of public relations, The Ritz-Carlton Hotels of the Middle East. The new property will complement the group’s existing hotel, The Ritz-Carlton, Dubai, located on Jumeirah beach. The Ritz-Carlton, Dubai is a resort hotel targeting the leisure market, while the DIFC property will focus solely on business travellers. Naturally, some synergies will exist between the two hotels for purchasing and human resources. “Dubai has a large presence as a destination worldwide and will continue to draw many nationalities of leisure travellers. We have always enjoyed great business levels from the UK and German markets, but have most recently experienced a definite increase in business from the GCC and Japan,” Sitch explains. “Our company wide objective is to maintain quality and consistency in our levels of service. We believe that we are able to engage our customers through our fine service and outstanding product. By maintaining our standards and energising our core values in this way, we will always maintain loyal customers and sustain premium rates,” she adds. Offshore, and the construction of The Palm Jumeirah is progressing at a steady pace. Developers, Nakheel, announced details of hotel developments on its signature development in October. More than 25 of the top international hotel brands will be located on the development, providing a wide variety of beachfront resorts and greatly enhancing Dubai’s tourism offer. Confirmed hotels include Mövenpick, Anantara, Fairmont, Radisson SAS, Hilton, Metropolitan, Shangri La, One and Only, and Atlantis, who will be creating a water-theme park hotel resort at the centre of the Crescent. Other key brands currently in serious discussions with Nakheel to locate on the development include Starwood, Marriott, Oberoi, Chedi, Taj and Dusit. “We have attracted many of the most respected hotel brands in the world, ensuring that The Palm, Jumeirah will be one of the world’s finest tourism destinations, a mega-resort and landmark attraction. These hotels will attract hundreds of thousands of visitors a year, playing a key role in Dubai’s tourism offer,” says James Wilson, chief executive officer, Nakheel. “One of Dubai’s key attractions is its natural assets of year-round sun and beautiful beaches. “However, due to our small amount of natural beachfront, there are currently only approximately 20 hotels with beach access. The Palm, Jumeirah will add approximately 30 such hotels. There will be more than 12,000 hotel rooms and 2,500 serviced apartments situated on the island in a wide range of hospitality types from elite luxury resorts to family resorts and health and spa resorts,” he adds. Construction will commence on all hotels shortly. “We are implementing strict development timetables and will be ensuring all hotel developers on The Palm, Jumeirah commence construction within six months to ensure that all construction works are minimised on the island when residents move into their villas and apartments at the end of 2006,” he confirms. While The Palm may seem like a mammoth hotel development opportunity, it has been outdone in the hotel steaks by Dubai Land, the $5 billion inland tourism project, which will house a total of 50 hotel projects. For unusual, and the much talked about under water hotel, Hydropolis, is said to begin construction early this year. The $500 million under water shallow water hotel will be shaped as a bowl and will be positioned on the sea ground, while a deep-water version will float in the sea with anchors on the ground. The bowl will be constructed externally and then positioned on the location. It will then be emptied of the water and equipped with huge aquariums as an attraction for the guests. It is rumoured that room rates for this aquatic project will reach $3000 per night, although official rates have not yet been announced. For the meantime, such projects only compete with Dubai’s current hotels in the publicity steaks, and hoteliers in the city remain confident that 2006, at least, will bring success.||**||

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