A home-grown Middle Eastern hotel chain is more than holding its own against the global players as Rotana plans to open seven more properties this year.
Rotana to open seven hotels
Rotana will open seven new hotels in the UAE and Qatar this year, underlining its status as the fastest-growing hospitality brand in the region.
The hotel management company, based in Abu Dhabi, is expanding after what has been a challenging time for the global hospitality industry.
"Opportunities are presented across the Middle East," said Omer Kaddouri, the chief operating officer of Rotana. "We believe the Middle East, and in particular the GCC region, has great potential to maintain the economy in a much healthier status than other parts of the world."
The privately-owned company, which manages 41 hotels across the region, is to open six hotels in three emirates of the UAE and one in the Qatar capital Doha this year - a total of 2,500 rooms. Rotana has more properties planned, including hotels in Oman, Syria, Bahrain and Jordan.
After sharp falls in hotel profitability in the UAE, triggered by the global economic crisis and an increase in the number of hotels in the market, Rotana opened several new properties last year, including the luxury Amwaj Rotana at Jumeirah Beach Residence, its alcohol-free Khalidiya Palace Rayhaan hotel in Abu Dhabi, a budget Centro hotel in Dubai, and its second hotel in Fujairah.
The company says it manages more properties in the UAE than any other operator, with 10 hotels in Abu Dhabi and 13 in Dubai.
This has taken it ahead of the big global brands in the country, including InterContinental Hotels Group and Hilton, in terms of the number of properties it operates. Rotana plans to have 70 properties by the end of next year.
Mr Kaddouri identified the UAE, Qatar and Iraq as providing some of the best opportunities for hospitality development.
"Furthermore, we will be entering new markets, which we will be announcing in due course," he said.
Three of the openings this year will be properties under Rotana's budget Centro brand. One of these is being developed at Sharjah Airport and the other two will be in Abu Dhabi.
It also plans to open its Capital Centre hotel in Abu Dhabi this year, as well as a 621-room property in Dubai under its alcohol-free Rayhaan brand, and a hotel in Al Ain.
In the first half of 2009, the limited number of hotels in the capital meant they were able to command higher rates amid a shortage of rooms.
But rates and occupancy levels in the capital have fallen as new hotels have opened.
Data from STR Global show occupancy in Abu Dhabi hotels was at 56.3 per cent in the first seven months of last year, down from 76 per cent during the same period the previous year.
Revenue per available room was halved to US$114.96 (Dh422.26) in the same period compared with $228.55 in the first seven months of the previous year.
But Rotana's strategy is underpinned by the Abu Dhabi Government's determination for tourism to play a key role in its economic diversification strategy.
To this end, the emirate is developing the multibillion-dollar Saadiyat Island, which is planned to be home to branches of the Louvre and the Guggenheim museums, while last year it opened the Ferrari World Abu Dhabi theme park, the largest indoor theme park in the world and featuring the planet's fastest roller coaster.
Abu Dhabi is aiming to attract 1.9 million hotel guests this year, contributing 11.1 per cent to the emirate's overall non-oil GDP.
The Abu Dhabi Tourism Authority has said that would mean a 15 per cent increase on last year's hotel guest target, an increase of more than 5,000 hotels rooms and a 0.4 per cent increase in overall non-oil GDP contribution.
Although average spending is down, the emirate has managed to boost tourist numbers, as Etihad Airways expands and awareness of the destination increases because of marketing efforts and high-profile events such as the Formula One Grand Prix.
Other hotel openings in the emirate planned for this year include Ritz-Carlton, Rocco Forte, Park Hyatt and Jumeirah. Hoteliers and analysts say that is likely to put further pressure on rates and occupancy in the short term.
Most of the major hotel groups are expanding across the region, although a number of projects were delayed or cancelled after the global downturn and as financing conditions deteriorated. Dubai and Abu Dhabi account for 33 per cent of the total planned Middle East hotel projects and 64 per cent of all rooms currently under construction in the region, according to the US research firm Lodging Econometrics.
Abu Dhabi will this year continue to improve its position as a leisure destination, Rotana said.
"With more than 200 natural islands, year-round sunshine and fabulous beaches, we are a strong contender for the 'sun and sand' tourism sector," Mr Kaddouri said.
The group operates a Rayhaan Rotana hotel in Mecca and is developing two properties in Jeddah, two in Riyadh and one in Al Khobar.
Last month, Rotana launched a property in Erbil in Iraqi Kurdistan and also has a hotel under development in Baghdad.
"Iraq is in the process of rebuilding its infrastructure, and hotels play an important role in this due to the number of international firms involved [there] that have accommodation needs," said Mr Kaddouri. "Based on our research and market study, we believe these markets are emerging and there is a tremendous need for development. With the number of contractors, engineers, architects and so on, Rotana is well positioned to cater to these needs."