14 March, 2019

Abu Dhabi's Rotana charts expansion plans up to 2020

New properties to be opened in the Middle East, Africa, and Eastern Europe

Rendering of Slemani Rotana in Iraq, which is scheduled to open in Q4 2019.

Rendering of Slemani Rotana in Iraq, which is scheduled to open in Q4 2019.

TRACCS PR/Handout via Thomson Reuters Projects

14 March 2019
Abu Dhabi-headquartered hotel operator Rotana will open 13 new properties in the next 18-20 months, the company's acting CEO has said.

Guy Hutchinson told a media round table in Abu Dhabi on Tuesday that the company would be opening new hotels in the UAE, Saudi Arabia, Tanzania and Bosnia and Herzegovina between now and 2020.

According to a company press statement issued on Tuesday, Middle East hotel openings scheduled for 2019 include the 285-key Dana Rayhaan in Dammam in the second quarter, the 338-key Al Jaddaf Rotana in Dubai and 240-key Slemani Rotana in Iraq, both scheduled for the fourth quarter.


Hotels expected to open in 2020 include the 197-key Centro Amman, Amman; the 329-key Cayan Cantara Arjaan and the 489-key Cayan Cantara Residences in Dubai, all in the second quarter of 2020.

Outside the Middle East, the Rotana will open one property each in Dar Es Salaam and Sarajevo this year. The 256-key, five-star Johari Rotana in Dar Es Salaam, which is scheduled to open in the second quarter of 2019, is "expected to be among the top three hotels in East Africa," said Hutchinson, adding that 130-key Bosmal Arjaan in Sarajevo will open in July 2019.

Commenting on the company's home markets in the UAE, he said the properties in Abu Dhabi did well in the first two months of this year thanks to events like the Asian Football Cup and the 2019 International Defence Exhibition & Conference (IDEX), while the Special Olympics World Games in March is expected to sustain the momentum.

He said the Dubai market did well despite general misgivings about oversupply.

"Dubai is among the top 10 destinations in the world irrespective of what people may say about declining RevPAR (revenue per available room)," he said, noting that although Dubai's RevPAR dropped 15 points in January, the emirate's hospitality sector had a higher RevPar than its global peers like New York.

Data from consultancy firm STR showed that RevPar for Dubai in January fell 15.3 percent to 587.30 United Arab Emirates dirhams ($144.53) per night, as occupancy rates dropped five percent to 82 percent on the back of the rising stock.

Beyond the UAE

Hutchinson said Saudi Arabia remains a significant "growth" market for Rotana with four properties scheduled to open by 2020.

In addition to Dana Rayhaan in Damman, Rotana is scheduled to open Centro Corniche, Al Khobar in the second quarter of 2019, followed by Salama Arjaan by Rotana, Jeddah, and Centro Medina, Medina, in the second quarter of 2020, the operator had said in a press statement last month.

Hutchinson described Saudi Arabia as an "under-served" market, arguing that a little over half out of the approximately 65,000 rooms in the Kingdom are located in one place - Makkah.

With Saudi Arabia focussing on increasing domestic tourism, hotel operators have started looking beyond hub cities, he observed.

"We see some of the regional cities start to appear. For example, in the south, we are starting to see some of the port cities appear, and there are existing commercial hubs in the Kingdom that are underserved," he said.

Iraq is also emerging as a key Middle East market for Rotana with the operator opening its fourth property in the country last month. The 284-key, five-star Babylon Rotana Baghdad joined the company's existing three hotels in Iraq, namely Erbil Rotana, Erbil Arjaan by Rotana, and Karbala Rayhaan by Rotana, taking its total hospitality inventory in the country to 838 operating keys.

"Babylon Rotana is a project in itself because there is a large master plan around that hotel," he said, adding that the company is also looking at prospects in the oil-rich Basra province.

In response to a question from Thomson Reuters Projects, Hutchinson confirmed that Rotana would add a second hotel to its Egypt portfolio. The company currently operates the Grand Rotana Resort & Spa in Sharm El Sheikh on the Red Sea coast.

"We have a project signed in New Cairo that is under construction," he disclosed. He also added that the company had "something quite large in North Africa" in the pipeline but didn't elaborate.

He pointed out that "a lot of the Red Sea destinations in Egypt" were performing quite well.

The press statement on Tuesday had noted that the Sharm El Sheikh property's ADR and RevPAR had soared 24.8 percent and 9.8 percent respectively during the January-February period.

Expansion philosophy

Hutchinson said he doesn't subscribe to the "grow or die model," observing that "expansion is an important part of what we need to do but servicing our existing stakeholders is just as important."

"The biggest focus for us is mapping the expansion strategy without forgetting our roots," he said. "It is about staying engaged with existing investors without trading properties, supporting our partners through evolution in markets like Dubai, and through growth and expansion in markets like Saudi Arabia."

In the press statement, the acting CEO had painted a challenging scenario in the Gulf in 2019 as operators struggle to maintain their profit margins in the face of intense competition from the influx of additional 58,000 keys in 2019, mainly in Dubai, Makkah, and Riyadh.

During the round table, he pointed out that a mature UAE hospitality market would continue to offer growth opportunities that would be "selective".

"Looking specifically at Dubai, the market has become segmented into seven or eight sub-markets with their dynamics, so we have to be selective, in the right space with the right product. We see room for growth with our Centro product in the mid-market space," he said.

He pointed out that traditional feeder markets like Saudi Arabia, Germany, and the UK are "still fundamental to the performance of the UAE," even as customer segmentation becomes broader.

"Before it was very much focused on the luxury space, but now we see from those same markets more mid-market, short-break vacations, so your products need to be altered a bit," he explained.

While the ongoing reforms aimed at easing visa regulations are expected to make way for new source markets, he cautioned against over-expectations.

"When people talk about China, the numbers might be big but in the context of China they are tiny, and if you look at how those markets are moving, the core customers for businesses like ours aren't coming in yet. The high to mid-end Chinese customer is just discovering New York, Paris, Tokyo, London, and their numbers are much smaller in the UAE," he said.

Responding to a question by Thomson Reuters Projects on the performance of the business traveller segment in the UAE in context of current uptick in oil prices, Hutchinson said the hospitality business in the region has always enjoyed a healthy segmentation of business, leisure, and MICE (Meetings, Incentives, Conferencing, Exhibitions).

"The strength of destinations in this part of the world has always been this focus on developing a multi-segment strategy. Two to three years ago, Abu Dhabi went through some issues due to weakening oil prices, but in the last six months, we have seen the business travel sector rebound," he said.

Business travel constitutes 25-30 percent of the company's overall business, he added.

(Reporting by Anoop Menon; Editing by Michael Fahy)


Our Standards: The Thomson Reuters Trust Principles

Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here.

For more data, analytics, tools and news on projects in the Middle East visit the Thomson Reuters Projects portal

© Thomson Reuters Projects News 2019