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Mon 4 Feb 2008 04:00 AM

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Matching the brand to the land

Aldar Hotels and Hospitality managing director Paul Bell explains the company's strategy to match world-class destinations with the best hotel operators to provide a full gamut of services.

Matching the brand to the land
BELL: world class locations need a full spectrum of brands.

Aldar Hotels and Hospitality managing director Paul Bell explains the company's strategy to match world-class destinations with the best hotel operators to provide a full gamut of services.

How are hotel assets perceived as part of a property portfolio?

I think in the last five years there has been a lot of structural change in the way developers and owners look at hotel assets.

Hotel management contracts are long term things, so you need an objective and strategic fit between the objectives of the operator and the objectives of the owner and developer.

I think historically the hotel element of a mixed use scheme has been the element that has received the least attention, and I don't mean that in a derogatory way.

But I think as owners understand more about the hotel asset-class, and as tourism starts to play a more important role in the region, I think the hospitality based assets have received a lot more attention.

They have started to look at what they have to do with the asset, and looking closer at what asset to develop, and the costs involved.

From Aldar's perspective, is the focus on hotels new, or has it always had the hospitality division?

It's a relatively new division, but then again Aldar is a new company that is only three years old. It's been a fairly rapid ascent.

From a hotel and hospitality perspective, I came in a year ago, and my brief was to create the hotel division as a standalone operating business and investment business for Aldar, which is what we have tried to do.

Obviously the first thing to do was to establish the hospitality objectives of Aldar as an organisation, and some of those were already formed and others weren't.

And so what we have done is position that, and created a development masterplan for our assets, which is aligned to our strategic objective which is to match world class brands with phenomenal locations.

It's not just the hospitality division which does that, it is all of Aldar - Aldar's objective is to bring in the best business model, whether that is operator, brand, or just a manager, together with what we believe are some of the best locations in this part of the world.

If you look at some of the developments like Al Raha Beach and Yas Island, these are unrivalled developments anywhere in the world, so while we are developing those we want to bring in world-class operators to raise the bar.

Whether that is by product or service, or any other way, we see that as our overall objective.

What are the big ticket projects from Aldar, from a hospitality perspective?

Depending on whom you speak to, and depending on when you speak to them, Aldar Hotels and Hospitality is generally described as developing anywhere between 30 and 45 hotels here in Abu Dhabi.

We are working on a whole series of projects which certainly puts the figure north of 40, however some of the projects may not come to be hotels in the end.

Of Aldar's major projects - and we are essentially developing the hotel components of Aldar's large mixed use developments - certainly Yas Island will be the largest, and it is a phenomenal leisure destination.

It is a huge area, 6500 acres with around 35km of waterfront. There are three marinas, two golf courses, two large theme parks, one of which is the Ferrari experience, which is the only attraction of its kind in the world, and the other one is going to be a staggering new Warner Bros theme park, which will have a fabulous hotel as part of that.

We also have a large waterpark on Yas Island, and we obviously have the race track which will house the Formula 1 Grand Prix. It's a leisure destination which is effectively a group of brands, and the hotels will be no different to that - they will be a mixture of brands, and a mixture of sectors in the industry.

We are going to have an upscale beach resort, and we will have theme park hotels, and golf hotels, and there will be mid-scale hotels in there as well so we do cater for all the market segments.

Al Raha Beach is a spectacular project. It has 9km of waterfront developments, nine precincts in all with mixed use, residential, commercial and hotels - we will have 10 hotels there when it is finished.

That is a great development where we have some really interesting products. There is going to be an Oberoi and an InterContinental there, so there will be some world class products as part of that development.

The other developments we are doing in Abu Dhabi at the moment are the Banyan Tree at Al Gurm, we have a project at Coconut Island which is a resort development, and we have a project called Central Market which is in the centre of town and includes two hotels.

It's a large-scale redevelopment of a site that was the former souk in Abu Dhabi, which includes three very large towers which will have residential, commercial and a hotel.

So will Aldar operate these hotels as well, or appoint operators?

We will have an operating company, but the operating company will really focus on the mid-scale and extended stay properties, and we will asset manage all of the other properties.

Our plan certainly at the moment is not to manage boutique beach resorts; our plan is to concentrate on the mid-scale and extended stay properties.

What operators have been signed up so far? What are the key things you look for in an operator?

We have Accor, Rotana, Mövenpick, Oberoi, InterContinental and there will be another announcement very soon, and we hope several more in the first quarter.

Hotel management contracts are long term things, so you need an objective and strategic fit between the objectives of the operator and the objectives of the owner and developer.

I think we also look for the ability to deliver into this market. If you look at IHG as a classic example, they have 50 or 60 hotels here already, they have a large team here and a sales office in this area, they have got support services that will assist us as an owner to deliver the products, and they have got the scale of people in the organisation that will allow them to bring in the best people to manage our asset.

So we look for that. We also look for a relationship, effectively, something that is not tremendously high maintenance, and something we can build a positive relationship from.

And we also look for a longer term relationship rather than a single hotel deal - we look for a scale relationship which will mean that we are an important customer and an important client to the brands that we work with.

If you are developing 30 hotels, you have a choice. You can either work with the larger brand owners who have brands that cover the segments you are looking at, or you can go out and build 30 different relationships, and obviously that option is hugely labour intensive and difficult to manage.

We felt it was appropriate to try and create meaningful relationships, in terms of scale, with some of the largest brand owners internationally.

So if you look at Accor and IHG, for example, they are two of the top five global brand owners, so there is opportunity to cover most of the segments we are looking at.

Looking at the properties you have to offer, are any of them a harder sell than others? What sort of properties is popular from an operator's perspective?

It's quite interesting. I think Abu Dhabi is a market that historically has not had a lot of hotel developments. It has had hotels, but new hotels have been pretty rare.

Other than the Shangri-La there have not really been any other openings in the past five years.

Over the next ten years there will be stratospherically more than there have been in the past ten years, but then again with the growth in tourism and the growth in this market and a shortage of accommodation of all kinds, we feel very confident that the scale of development we are talking about is justifiable and supportable in Abu Dhabi.

I think the hot topic for now is beach front developments, which seem to be desirable from an operator perspective - a lot of them want to have a beach resort or a resort spa.

I think mid-scale is something a lot of the brands are trying to develop, whether it is Accor with Novotel and Ibis, IHG with Holiday Inn or Rotana with Centro, all of which we are working with, that seems to be an area with a lot of interest.

And the area that we have a lot of interest in, and a lot of the brands do as well, are in extended stay and serviced and branded residential developments, which is something we are investigating.

What percentage of your developments has already been signed to management contracts?

We have signed 16 or 17 agreements, so I would guess we are 40-45% of the way through identifying and signing agreements of our current known developments.

Our hotel developments are phased and I would say we are a substantial way through phase one, and we are starting to look a lot more at what we are doing during phase two and phase three.

It's really a five to 10 year programme, because there are no conversions, these are all being built literally from the ground up.

In our view, you can't do all the hotels with well-known international brands, there have to be some niche and boutique brands that come in for the locations calling for those products.

There will be relationships where we will only sign a deal for one hotel, but that will be because that is the one brand that fits, or there is only ever going to be one of those hotels in that market.

What are going to be the first hotels to come online for Aldar?

The first hotel we are opening is actually a Rotana, which will be opening later this year - it is a serviced apartment building here in Abu Dhabi.

But the majority of our phase one properties are going to open in 2009 and 2010.

We have a series of hotels which we are striving to get open prior to the Formula 1 Grand Prix in 2009 on Yas Island, obviously we want to accommodate as many people as we can for that, and then we will have another series of hotels opening in 2010 which are linked to the area they are near - if it is near a theme park then its opening will be linked to the theme park.

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