By Claire Ferris Lay
Higher rates charged because of expenses incurred operating in 'hardship country'.
Abu Dhabi hotel chain Rotana will be forced to pass on its high operating costs to its customers in Iraq, where it is up to 30 percent more expensive, its CEO has told Arabian Business.
"[Operating costs in Iraq] will be 20-30 percent more. In hardship countries the rates are higher because you incur expenses that you would not incur in other places," Selim El Zyr said.
"The cost is going to be higher but [the final cost] will depend on the market dynamics," he continued. "I think that our starting rates will not be less than $250 per room which is still acceptable. Those who come are happy to pay the price because these are businessmen coming to find opportunities.
"They know that being in a hardship country you have to pay the price."
The group plans to deploy up to 200 of its current staff to operate the hotels until it can take on employees from the local Iraqi community said El Zyr. " There will be a lot of challenges; human resources, supply and maintenance challenges. We're going to bring in a very big task force from all over."
Rotana signed an agreement to operate a 5-star property in Baghdad, which is due to open in 2012, last year. Another hotel in Erbil, in the Kurdistan region, is scheduled to open in 2010.
The firm has continued to grow the brand despite the economic downturn, increasing the number of hotels in the UAE by nine this year. El Zyr said he planned to increase the number of properties by 10-12 a year until 2013-2014. "We used to sign between 10-15 agreements per year," he said.
"Now its slowing down to 7-8 annually. We'll soon become 100 in the next 2-3 years."
In the next five years, he also plans to expand the brand outside of the MENA region. "Three to five years from now we will have to [expand outside of the MENA region]. There will be no more space for us. I think the closest to the region would be the sub-continent, India, Pakistan, Iran and Central Europe."
amazing how come the CEO of rotana accept the fact that unforseen expenses could occur and without taking any provision in the budget.if the project cost was $25m USD now it will become around $33m USD,is this acceptable?