features: latest magazine features: Top End or Top Heavy?
Top End or Top Heavy?
The Gulf presents a completely unique hotel landscape compared to the rest of the world in that it is dominated by five-star properties. Typically around 75 percent of hotels in the region are classed as ‘top-end’ (four- and five-star) and as a result, the majority of venues available for meetings and conferences fall into this category given that hotels are ‘the’ place to meet and do business in the Middle East.
In recent years the major hotel groups, as well as some savvy independents, have clocked on to the benefits of introducing mid-range, or as some hoteliers prefer to term them, “limited-service” properties. It has certainly made congress organisers take more notice of destinations like Dubai, which in the past, was considered a no-go zone due to the limited range of hotel options available.
But despite the hotel industry making attempts to broaden its horizons and mix-up the offering with properties spanning all categories, investors and operators still can’t help themselves when it comes to opening the biggest, the best and the most luxurious.
Five-star and five-star deluxe hotels continue to flood the market, with Abu Dhabi perhaps witnessing the biggest influx in this category over the next 12 to 18 months. In the fourth quarter of 2011, the emirate has witnessed the opening of St. Regis Saadiyat Island Resort, Abu Dhabi and Park Hyatt Abu Dhabi Hotel and Villas, both on Saadiyat Island, as well as city properties Rocco Forte Abu Dhabi, Westin Abu Dhabi Golf Resort & Spa and Jumeirah Etihad Towers, to name but a few. With this trend towards upscale property openings set to continue, the impact on the meetings sector cannot be ignored in terms of how the Gulf is perceived by planners and organisers globally.
On the plus side, the GCC could be deemed a high-quality meeting destinations to which both corporates and planners aspire. On the downside, in an age where the ‘AIG effect’ is still fresh in the minds of many, leaving little room for lavish spending, the five-star nature of the Gulf could be a turn-off.
Quality in quantity
Jeff Strachan, vice president - sales & marketing, Middle East and Africa continent for Marriott International, argues that “five-star hotels have done a spectacular job of putting the Gulf hospitality sector on the map”. With this in mind, he notes how Marriott’s Middle East portfolio features a number of brands but is “firmly loaded in the quality tier full-service area”. This strategy, he says, satisfies the lodging requirements of travellers and is “much more about what type of brand a specific location can take than about balancing our portfolio”.
Christian Pertl, vice president of sales and marketing, Dubai, at Jumeirah, says all of the hotel group’s properties are in the luxury five-star sphere – a formula he believes pulls in the punters. “The more five-star hotels we manage, the better it is for the destination, because it builds the robustness of that destination and makes it more attractive in terms of winning international meeting and incentive business,” he suggests. But he does concede that “there might be some challenges, especially after the global downturn, as organisations are more sensitive when it comes to spending money and organising major events.”
Both Pertl and Strachan say the Gulf countries are still deemed new and exciting destinations by corporates and planners alike and have a good reputation for providing quality hotels, venues and services. “There are still massive developments and a lot of opportunities in the pipeline, especially in the tourism sector,” says Pertl. “For example, Dubai benefits from world-class infrastructure, ranging from the quality and size of its airports to the efficiency of its young metro system. It continues to attract visitors from all over the world and the expansion of Dubai International Airport, coupled with the continued success of Emirates airline, has made the emirate both a global gateway and a global destination. Dubai is a highly sought-after destination for group business, with its year-round sunshine, exceptional facilities, high levels of service and hospitality, and an exciting calendar of high-profile sporting and entertainment events. It has seen tremendous growth in recent years and is now regarded as a very attractive, safe and exciting year-round destination.”
Pertl also stresses how Dubai continues to “bring new and exciting products to the market” to entice meeting planners and that includes Jumeirah’s hotel offerings, including the new Ottoman-inspired Jumeirah Zabeel Saray on the West Crescent of Palm Jumeirah. He acknowledges that the hotel market, particularly in the five-star category, is very competitive but says this keeps up the pressure on hotel groups such as Jumeirah to “deliver the best and most innovative service”.
Strachan stresses that the Gulf hotel market is “at a very different point in its evolution compared to the more established cities of Paris, London, New York and Tokyo”.
Therefore cities such as Doha, Abu Dhabi and Dubai are very new and still have room for growth across all hotel star categories, he says. “The Gulf is still a very healthy hotel market; one where new hotels are still being constructed and where brands not already present, still want representation,” he adds.
Ahmed Baki, regional director of sales & marketing - Middle East, at Starwood Hotels & Resorts, says the majority of its Middle East development is focused on the “luxury and upper-upscale segment” with the St Regis and Luxury Collection brands about to make their mark. “Luxury brands are enjoying the strongest RevPAR gains of any segment and fortunately, we have the largest base of luxury hotels in the world,” he says.
A balancing act
But according to Yigit Sezgin, global director of sales & marketing at the Rezidor Group, “there is only a certain amount of the five-star market to go around; those consumers who will always search out a five-star property. Once you’ve targeted all of that market you are forced to create a sub-category of upperend four-star users,” he says.
Sezgin notes that the hotel operator has recently witnessed a “shift” in the market with consumers who traditionally stay at a five-star property booking into a four-star brand “as long as it’s clean, efficient, service- led, and has a brand name behind it”. “Currently there are more four-star hotels in development than there are five-stars,” he adds, and for some, the opening of the mid-scale brands can’t come soon enough given that the economic downturn has impacted the five-star market more than the four-star category.
In the meantime, Sezgin notes that the only way for some five-star properties to fill rooms – and venues – is to reduce rates to four-star prices. This is good news for corporates and planners, but not so great for the hoteliers. “This means your return on investment will depreciate for your owners, or you begin to squeeze your service offering in order to reduce costs; it’s a risk to compromise your brand and your investment,” he says.
Sezgin says the meetings industry still “appreciates deluxe service and luxury entertainment” but stresses that there is still more infrastructure required to support the upmarket hotel sector when it comes to luring large-scale business to the region. “Most GCC countries do not have the right congress centres in place to hold city-wide congresses,” he says. “I really believe that the local authorities should build a proper congress centre with adequate break-out space; this would be a huge revenue generator.”
He claims the Middle East is still deemed a “risky location” by most congress organisers and “most GCC cities simply do not have the inventory to hold worldwide events”. “For example Dubai doesn’t have 20,000 rooms available for events on a large scale,” he says. Abu Dhabi, he adds, is in a “very challenging position” and in desperate need of new venues to attract a greater number of visitors. “In the next 18 months Abu Dhabi will increase its inventory by approximately 7,000 rooms,” he notes. “The emirate should not only build a congress centre, but reconsider visa regulations for potential source markets such as Russia and China.”
Doha is another market undergoing an inventory boom - in 2011 alone, more than 25 hotels and 10 apartments equating to 6,369 extra hotel rooms were expected to come online. This compares to 2010 when a similar number of properties opened their doors adding 4,842 rooms to the inventory, while in 2012, at least 40 new hotels and residences are on track to open their doors. But Sezgin says the brand new 40,000-square-metre Qatar National Convention Centre (QNCC), boasting the largest exhibition space in Qatar and one of the largest in the region, will help fill these new rooms and so too will mega soccer tournament the Qatar 2022 FIFA World Cup.
Room for everyone
Baki says the most savvy hotel operators such as Starwood have realised the “great scope for the select service and mid-market sector in the GCC” and have mapped out their expansion plans accordingly. “While the Gulf has been known as a five-star destination, the region also caters to the midmarket segment, which is witnessing great growth, and this is why we are aggressively expanding the portfolio of our Aloft and Four Points brands,” he says. “The Middle East will soon be the first region outside of North America to offer all nine of Starwood’s brands, illustrating how integral this market is to our growth strategy.”
And it’s not only the mid-market brands making their presence felt – so too are the so-called budget or value brands and they are proving popular with the ever value-conscious meetings planner, according to Darroch Crawford, managing director, Premier Inn Hotels Middle East & Africa. “Premier Inn and the other internationally branded value hotel brands have added a new dimension to Dubai's hotel market,” he says. “And as a result, the emirate is now able to attract a wide range of meeting and incentive business that it could simply not compete for as little as four years ago. “At that time Dubai was simply unaffordable for the major conventions, but the arrival of brands like Premier Inn is really helping to put the city on the circuit and attract massive events such as the World Diabetes Congress being held in Dubai this December.”
Crawford stresses that value hotel brands have added 4,000 rooms to the Dubai market “giving the emirate the edge over most other cities in the region that remain dominated by five-star offerings”. “Any city with aspirations to hit high visitor numbers needs to offer a range of accommodation options,” he says. “Budget hotels are great for Dubai and great for the airlines that serve the city, particularly those in the low-cost sector.”
Crawford says as far as brands go, Premier Inn is the “Coca Cola of the hotel industry” – “trusted, consistent, reliable, safe, clean and affordable and no nasty surprises, but many nice ones”. The chain already boasts three hotels in Dubai – at Dubai International Airport, Dubai Investment Park and Dubai Silicon Oasis – and recently opened its first property in Abu Dhabi.
The Premier Inn Abu Dhabi Capital Centre, strategically located next to Abu Dhabi National Exhibition Centre (ADNEC), is the first internationally-branded budget hotel to open on Abu Dhabi island and marks the start of the emirate playing “catch up” in terms of its hotel offering, according to Crawford. “At the time of the opening of phase one of Abu Dhabi National Exhibition Centre, we were approached by ADNEC and asked to bring Premier Inn to the city,” he says. “The centre management knew it needed to provide good quality affordable accommodation in the immediate vicinity if it were to attract the kind of events that were on its target list.” Premier Inn Capital Centre opened in October.
Abu Dhabi’s second Premier Inn will open at Abu Dhabi International Airport at the end of 2012 and Qatar’s first Premier Inn will open at the QNCC in Academic City, Doha, in early 2013. Crawford says Dubai’s three Premier Inns attract “a wide range of sporting groups, ranging from international rugby and cricket teams to school parties and golfing buddies”.
“We are also very popular with incentive groups, particularly those who plan to spend most of their time enjoying activities around the city,” he continues. “National delegations are another important sector for us, where an embassy will bring a group of business men and women to build and improve trade relations.” Groups are increasingly opting for budget brands because “value for money is vital to all such parties and that is our stock in trade”, he says. “We expect the pattern to be very similar in Abu Dhabi and elsewhere.”
Strategies for survival
The five-star players agree that offering value for money is essential in today’s age of austerity and they have plenty of tricks up their sleeves to ensure they continue to fill their rooms with meetings delegates seeking topend accommodation and facilities. “We’re not dreamers and our first strategy is to ensure we cover any potential meeting and incentive market within a close distance,” says Rezidor’s Sezgin. “We partner with several DMCs and meeting and event organisers to develop demand for our need periods such as weekends. We also work with local authorities, airlines, global sales organisations and
congress centres so we can offer meeting and events organisations with a 360-degree solution.”
Starwood’s Baki says the hotel group is looking further afield to boost sales from meetings, incentives, conferences and exhibitions. “We are focusing on many new emerging markets such as China, Brazil and some of the CIS countries where Emirates, Etihad and Qatar Airways have been pioneers in gaining access with their daily flights,” he says. “Year to date 2011 we witnessed double-digit growth from these markets in the conference and incentive segments and we are very positive that these percentages will grow even more in the coming years.”
Both Marriott’s Strachan and Jumeirah’s Pertl say their strategies for growing meetings business to their luxury properties is to have a flexible approach based on individual client needs. “Once we understand the customer’s objectives and parameters for their meeting or conference then we can build the appropriate proposal to assist them in meeting those goals,” says Strachan.
Pertl adds: “The meeting and incentive market is a key target for Jumeirah and we are always developing new and exciting offers across our properties, in line with Jumeirah’s brand philosophy to ‘Stay Different’ as well as addressing the needs of our clients, who are always looking at unique ways in which to engage their delegates, culturally connect with the destination and inspire productivity well beyond the meeting or conference. “We have started to maximise meeting and incentive service supply by further collaborating with sister properties such as the “beach cluster” of Jumeirah Beach Hotel, Madinat Jumeirah, Jumeirah Zabeel Saray and Burj Al Arab, or our “city cluster” with Jumeirah Emirates Towers, Jumeirah Living World Trade Centre Residence and the soonto- open Jumeirah Creekside Hotel, so we now can offer countless facilities for business, dining, socialising/ networking, teambuilding as well as relaxation and leisure.” Pertl concludes: “Going forward our focus at Jumeirah will remain on flexibility and innovation and to look at new ways of doing business.”
