Best of 2012: Jumeirah Group interview

Africa, Asia, India, the US and Saudi Arabia are all on Jumeirah Group’s hotlist for this year as it aims to have 30 hotels under management by 2016
By Shane McGinley
Sun 16 Sep 2012 09:03 AM

Walking down the infamous Las Vegas strip you don’t need to travel far to see uncanny replicas of some of the world’s most iconic structures. You can have breakfast staring up at the Egyptian Pyramids and the Sphinx, lunch in the shade of the Statue of Liberty or the Empire State Building, go shopping by some Venetian canals and finish with a midnight dinner at the Eiffel Tower.

A little-known fact is that if it hadn’t been for the global recession and the subsequent slump in US property values, it is likely plans for a replica of the Burj Al Arab — Dubai’s famous sail-shaped showcase hotel — would have joined this roll call of architectural trophy pieces.

“We have often had [approaches],” Gerard Lawless, Jumeirah Group president and CEO, recalls as we sit down for a catch-up chat after the long summer recess.

“We own the design rights and architectural design rights to the Burj Al Arab. So you can’t just go out and build one… Prior to the financial crisis, yes there was talk about doing something… [However] there was also a body of opinion that we should keep the Burj Al Arab unique.”

While fanciful developers may have had to shelf their plans for a Burj Al Arab-inspired project, the Dubai hotel group is certainly not resting on its laurels and has seen client numbers, profits and development plans trending in the right direction.

“2012 has been very good, especially in Dubai. Dubai has been really strong and steaming along,” he says confidently. “Overall, on revenue, we are up about ten percent on last year and we expect to have quite a multiple of that by the end of the year.

“Occupancy and average room rates have had healthy growth on last year,” he adds.

In fact, figures from Jumeirah show that between January and August 2012, average hotel occupancy was at 74.4 percent, up 5.8 percent compared to the same period in 2011. At the same time, revenue per available room (RevPAR) — the standard performance measure in the hospitality industry — was at AED1,421 ($386), up 13.4 percent compared to the same period last year.

Some of Jumeirah’s biggest source markets are still the UK and Germany, but Lawless says that the ongoing difficulties in the eurozone have not hurt client arrivals to the group’s hotels. At the same time, the heightening tensions surrounding military action against Iran and the impact from the Arab Spring political demonstrations have also had little influence, he believes.

“This particular situation in the region is not affecting at all the attitude of our tourists. We have good business. The number one comes still from the UK. Russia has come up to number two and certainly we don’t hear any concern about the region. Quite the opposite, they see the UAE and Dubai as somewhere to come and be a haven of peace without any concerns… We have seen crisis come and crisis go. The situation that prevails in the region is not affecting us at all.”

While Jumeirah is perceived as a Dubai hotelier, its scale and scope has moved far beyond the emirate and it is now a truly international player. At this year’s Arabian Travel Market (ATM) exhibition in Dubai, one of the biggest talking points was the growth in the Saudi market.

Travel and tourism in the kingdom is estimated to grow to SR55.8bn ($14.88bn) this year, compared to SR38.9bn ($10.37bn) recorded in 2009, according to the World Board of Travel and Tourism.

In total guest numbers, Saudi Arabia is expected to reach 15.8 million by 2014, up from around 13 million in 2010, the latest figures from international industry consultant Business Monitor International (BMI) predicted earlier this year.

As a result, Lawless’ development team is currently scouting out properties in the kingdom and he has big plans for the market.

“We are focusing on places like Saudi Arabia. We don’t have anything signed up but there are some very real possibilities. Location-wise, we would very much aspire to be in Makkah, Medina, Jeddah, Riyadh and Khobar. They are the main centres and I think that there is a very strong possibility that Jumeirah will achieve its goals there very rapidly,” he says.

As part of this growth, Lawless says the group, which is a division of the government-owned Dubai Holding, is aiming to have more than 30 hotels in operation within the next four years.

“At the moment we are operating 22 hotels and really we have gone from ten or eleven hotels in about eighteen months… It is hard to give a number but in four years time… opened and under operation, we should be well into the 30s.”

Within the Gulf region, Saudi Arabia is not the only market on Lawless’ horizon. “We would also like to be in Doha and Qatar. We have projects that are coming up in Muscat that will take another two years. Kuwait will open very soon, we are still waiting on final information on that from the developer but I would hope that during the next eight months [it will open].”

In Dubai, Lawless reveals he is also investing “a lot” refurbishing some of Jumeirah’s major trophy assets.

“We have always thought that we need to keep our properties at a high level… We have just finished a refurbishment programme of nearly all the rooms at Jumeirah Emirates Towers.

“At Jumeirah Beach Hotel, we have a three-year phased programme. We have 200 rooms being totally refurbished. At the Burj Al Arab, we have a zero tolerance as far as maintenance is concerned. We don’t allow anything to get old or to look like it is getting old. An integral part of the characteristic of the Burj Al Arab is that it is a historic hotel.”

Lawless is also interested in expanding the luxury brand across the rest of the UAE. “If there is a property that is the right standard and right profile we would be happy to consider it and there is no reason why we wouldn’t consider having a Jumeirah hotel in the other emirates other than Abu Dhabi and Dubai.”

Jumeirah previously operated the Bab Al Shams Desert Resort and Spa, which was switched to Meydan in December 2010, but Lawless says he is still interested in adding a similar desert-style resort to the group’s Dubai portfolio if the right offer came along: “It would be nice to have a desert property… If the opportunity was to come forward we would seriously consider it.”

Elsewhere around the world, Asia, Africa, Russia and India are also all on Lawless’ agenda. “All the opportunities are there… We are still trying to get a deeper understanding on how to approach the African market.

“We also already have five projects under development in China... so we look forward to a big presence there within the next eighteen to 24 months.

With a large expat Indian community already living in the Gulf, India is another target market for Jumeirah and tourism is a fast-growing sector. Earlier this summer, the UAE and India signed an agreement to double the flow of tourists between the two countries.

Around 6.29 million tourists from the Gulf visited India last year and India’s tourism minister says he is looking to increase the share of foreign visitors from 0.6 percent to one percent by 2016.

While visiting the UAE, an Indian ministerial delegation said India currently needs another 230,000 new hotel rooms, which it said will require private investment of around INR400bn ($7.23bn).

A spokesperson for Jumeirah told Arabian Business in July the “India is a sector of strategic importance” for the group and it is “in discussions with a number of potential partners for development projects, including developers in India who are interested in bringing Jumeirah to Delhi, Mumbai and other key destinations.”

Lawless reveals that he hopes to see progress on these talks in the near future.

 “I would hope we will be able to report some movement in [India] in the next four to five weeks. We are very active in India at the moment and very close to finalising, but, like everything, it takes time.”

In the US, Dubai Holding completed the sale of Jumeirah Essex House hotel on 7 September, but Lawless said the region remained a priority for the group.

“The US is a very important source of outbound traffic for us… We are bolstering our sales and marketing presence within the US and we have offices in Los Angeles, Chicago and New York. We will make sure we keep a high profile there.

“We have a good opportunity to source another suitable hotel within New York and if it comes, it will be great, but it will be on more of an opportunist basis. It will take some time and we don’t have any immediate plans at the moment.

As part of the sale of Essex House, the hotel will change operator, but Lawless declines to confirm whether or not the Dubai group will be compensated for the loss of the New York property.

“It is not unusual that if an asset is sold the new investor wants to change the operator. Marriott came on, in what I assume is an agreement with the investor,” he says.

With this global agenda now increasingly part of his duties, Dubai Holding last month named Lawless as the hospitality firm’s new CEO and president as part of a wider board reshuffle.

A statement said the appointment would provide Lawless with “a more focused executive management role at this important stage of Jumeirah’s international growth strategy”.

As part of the changes in Jumeirah’s board, ex-Virgin Group CEO Stephen Murphy was brought in as a non-executive chairman and Ghaith Al Ghaith, CEO of no-frills airline flydubai, and former Hilton Group CEO David Michels also became board members.

“It is very much the right thing to do. As you are expanding the company and growing on an annual basis, as we have, it is also very difficult to have the proper corporate governance and have the combination of the role of chief executive and chairman.

“I agreed very strongly with the division of these roles and it makes a lot of sense. We worked very well over the last four years but it has always been a challenge as when a proposition or proposal would come before the board it would usually have had my approval through my own committee within the organisation and operations.

“And yet, I am supposed to sit as chairman and adjudicate about whether or not it was a good idea, so it really does make sense. Personally, it doesn’t make a huge difference in my day-to-day duties but it is great to have an independent chairman that has a background in running big businesses and a background in travel through Virgin Atlantic and we are really looking forward to it.”

With projects from Saudi to India to the US to keep a watchful eye on, the Irishman will certainly welcome some advice and help as he continues to mastermind Jumeirah’s next phase of global development.

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