Rotana keeps the momentum, defying odds

1.572972-32002699 — Image Credit: Silvia Baron

It's going to be yet another tough year for hotels, with occupancy rates and operating margins dependent on some factors that are beyond their control. For one, improvement will partly depend on the global economic recovery.

Within the Middle Eastern region, there is also the looming threat of intense competition building up between existing properties and an array of new-builds that have made it past their opening dates.

Expansion plans

But in the middle of all this turmoil, the Rotana Group is surging ahead on a singular path. Defying all odds, it has embarked on a whirlwind regional tour this year by opening around 20 properties. And there is a good reason for that, explains Omar Kaddouri, the senior vice-president for UAE operations.

"Most products were born years before the crisis and they are already half-way built," he says. "Investors have spent a lot of money and have to complete them on time."

In Dubai, the hotel group already counts 1,344 rooms along Shaikh Zayed Road alone, and is planning to open its 300-room Amwaj Rotana property in Jumeirah Beach Residence in April and the Centro Barsha with 245 rooms by next month. "We're strengthening our grip on Dubai," contends Kaddouri, who believes that the lower rates seen last year are actually healthy for the UAE's hospitality sector. "The rates are more realistic vis-à-vis those in the rest of the world."

The group, exuding rare confidence, is eager to get on with the full-scale opening of the Rose Rayhaan by Rotana, the world's tallest hotel and the latest addition to its portfolio along Shaikh Zayed Road. It went for a four-star classification with plans in place to achieve a five-star status.

"We have to modify some of the rooms and add another restaurant," Kaddouri explains. "Nothing complicated, but it will take around 6 to 12 months."

A Dh400-a-night soft-opening rate has been taken up enthusiastically. Guests eager to enjoy the views from the hotel are willing to pay more for a stay in the higher levels. Occupancies so far have reached 25 per cent, which Kaddouri reckons is very good for a hotel of this size. "We're not disappointed with occupancies, there is a lot of talk about Dubai reaching a saturation point, with so many hotels opening," he says.

"But there is not one where we would have no occupancy."

Hoteliers, in his view, have to become more creative when selling their hotels as these days all segments are vying for the others' guests. "There will always be ways to bring people in."

Variety in a hotel group's portfolio can prove immensely beneficial, especially in a tough operating environment. Rotana's Centro is an upper tier, economy brand, with the Barsha property charging an average rate of $100 a night.

Expected increase in occupancy

Having monitored the competition carefully over the last six months, healthy occupancies for the first year are expected to come in at 60 to 65 per cent. "A lot of people are looking at price and that helps us, the competition's occupancy is rather encouraging," Kaddouri adds.

Its major focus though must be Abu Dhabi, where he says rates tend to be higher than in Dubai. Occupancies, traditionally lower than in Dubai, are doing well and hovering in the high range of 70 to 80 per cent, the exception for now being its property on Yas Island.

"Occupancies there are a challenge this year, we expect around 40 per cent for our Centro property. But within nine months the Ferrari Park and Golf Club are set to open and this will turn Yas Island into a destination in itself."

Two more hotels have opened their doors in the Park Rotana Complex, neighbouring the airport and Khalifa Park, close to ADNEC. The Park Rotana and Park Arjaan by Rotana share a common lobby. Developed by TDIC and Al Mada Tourism Company, they feature 318 rooms and 172 serviced hotel apartments, respectively. Next to open in the capital in April is the Khalidiya Palace Rayhaan by Rotana. Later this year three hotels will open their doors in Capital Centre, while another Centro is due to open on Airport Road and the Arjaan at Marina Mall.

UAE hotels (Dubai and Abu Dhabi) to open by end of year