India move a Rotana Hotels milestone

A move into India by Rotana Hotels would be a milestone for the Abu Dhabi operator. As yet, the company manages hotels only in the Middle East and North Africa.

Selim El Zyr, the president and chief executive of Rotana Hotels. Delores Johnson / The National.
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A move into India by Rotana Hotels would be a milestone for the Abu Dhabi operator.

As yet, the company manages hotels only in the Middle East and North Africa, with properties spanning across the Gulf region, and countries including Iraq, Sudan, and Egypt.

"We have signed up agreements in almost every major city of the Middle East," said Selim El Zyr, the president and chief executive of Rotana Hotels. "We are almost everywhere in North Africa. So it is natural to keep on expanding. We cannot stop there. We cannot grow any more if we don't look outside of where we are."

India, where Rotana hopes to be managing 20 hotels within a decade, is a logical step for a number of reasons, he said. It is a market on the doorstep of the UAE that is in need of more hotels as travel within and to the country booms, and because of the close ties and large Indian expatriate community here. Travel and tourism directly contributed 1.68trillion rupees (Dh120.43 billion) to India's economy last year, and that is forecast to rise by 7.6 per cent this year, and to reach 3.8tn rupees in 2022, according to figures from the World Travel and Tourism Council.

"India is not a foreign country to us," said Mr El Zyr. "We are so close, we know the culture, we know many people. We have a huge amount of staff that are with us that would like to relocate to India."

There are other areas where the operator is hoping to open hotels, he said. "India, we have taken the step and we have somebody there. We are looking at many other markets. We are looking at Africa, CIS [Commonwealth of Independent States] countries in Central Europe, Turkey," Mr El Zyr said.

Iran is another country in which it would like to operate, despite that country's tense relations with the international community.

"Iran has got tremendous potential. We are waiting and hoping that very, very soon this tension between Iran and the world will ease up," Mr El Zyr said. Rotana would eventually like to have hotels in China, too.

These expansion plans follow what Rotana's chief executive called "a challenging year" for the company. The Arab Spring took its toll on many of the company's hotels and projects.

"In Libya, we had signed a management agreement, and all of a sudden it went off the radar, so we didn't know what the future was," Mr El Zyr said.

"I went to Libya maybe a week before it all started, and we were also in negotiations to bring up a couple more brands. The effect of Libya on us was a loss of opportunity. But the effect of Egypt and Syria was a lot more direct. In Egypt, we have got our hotels and about 1,500 staff members. We had our worries, to keep them, to maintain the brand image at a time when business almost collapsed. But luckily, with the support of four owners, we were able to stand against the hurricane. We are OK now. Our business is not where it should be, but we are not in the red any more."

Rotana has a resort in Syria and a hotel in the capital, Damascus. "The revenue generated from these hotels was insignificant, whereas we had anticipated for Syria a lot of return. We had four hotels under construction in Syria at the time when it all started. They have all been put on hold." But these setbacks were largely compensated for by the performance of Rotana's hotels in the GCC, which benefited as travel flows were diverted from troubled countries to the UAE in particular.

These effects meant the company fell 5 to 10 per cent behind its budgeted performance for last year, Mr El Zyr said. "In the end result, there has been an improvement over 2010 because we opened a few hotels in 2011, but we were slightly behind budget."

Some of the company's hotels scheduled to open last year in the UAE are also taking longer than expected.

Rotana now hopes to open its Centro hotel at the Abu Dhabi National Exhibition Centre this year, with two more properties at the complex not expected to be completed until next year, the chief executive said. "Delays happen in construction. It is natural that, at the time when there is a surplus in the market, developers and contractors tend to delay projects," he said.

Its resort on Saadiyat Island in Abu Dhabi is even more severely delayed.

"Saadiyat we are still waiting to get financing," said Mr El Zyr. "For many reasons, it's better to delay projects of this nature. Two hotels just opened on Saadiyat. And for the whole market, to bring in so many hotels at the same time is not healthy."

As the company ventures into India, Mr El Zyr acknowledges that the country is likely to present its own challenges.

"This is a country of tremendous opportunities. But this doesn't mean that there are low-hanging fruits," Mr El Zyr said.

"There are opportunities; but it's challenging. It's not easy, otherwise everybody would go to India tomorrow."

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