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Tue 22 May 2007 05:25 PM

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The easy future’s orange

ATN quizzes Istithmar CEO Joe Sita and easyGroup entrepreneur Stelios Haji-Ioannou, about the roll out of easyGroup products in the Middle East.

ATN: Now you have launched easyHotel in the Middle East do you plan to roll out other products, such as easyCruise, to the region?

Stelios:

The thought has crossed my mind and it's one of the things I need to research while I'm down here. I want to learn more about the islands around Abu Dhabi, or in the other direction, the fjords and bays around the Straits of Hormouz. easyCar is already in the business of creating demand and passing the bookings onto local companies. We're not in the business of owning cars in Dubai - it's not what we do - but we have formed an alliance with Budget [car hire company]. When you go to easyCar.com you will be allocated a car through Budget.

ATN: When will we see easyHolidays enter the market?

Stelios:

I think people are doing it already, but in a different way. The day of the package holiday is over. I think it was a phenomenon in the 60s and 70s in Britain when people were less confident about travelling overseas and they expected someone to put all the elements for them together. In this day and age with so much information available on the internet, people like to pick and choose the airline they fly with, which hotel they want to stay in, and how much money they want to spend on one or the other. People are not willing to be boxed into a concept - they would rather have choice.

People are not willing to be boxed into a concept — they would rather have choice.

ATN: Have you considered expanding the easyJet's reach to include a Middle East hub?

Stelios:

There are two issues here. The first is the political barriers. Not only do you need to be locally owned but even if you build one locally owned business, you can't expand in other countries. You are still stuck into this model of only flying in and out of your home. The second problem is that flying into Dubai, you have already an excess supply by the flag carrier.

ATN: What do you think about the developing low-cost carrier industry in the region?

Stelios:

Let's keep things into perspective. In Europe, after Ryanair and easyJet pioneered the concept, there have been quite a few [low cost carriers], about 50 of them, and not all of them have been as successful.

ATN: What is the current state of the budget hotel market in the Middle East?

Sita:

It's disorganised, inconsistent, unsafe and dirty. All of those things that make it very hard for people to want to stay there - we have addressed them all and we believe we will deliver a product people will be happy with.

ATN: What are the limitations on the expansion of the easyHotels brand?

Sita:

I would say that we could conceivably have 10 easyHotels in Dubai in the next five years. The only constraint we have is land. That is why we have developed this prototype where we can plug the ‘pods' into car parks. Everywhere you go there are multi-storey car parks. We could take a section of these car parks and plug the pods into the side and create a hotel.

ATN: What changes have you made to the marketing strategy for the Middle East?

Sita:

The fact it is orange is something we will play on. Clearly the branding is key and it's important that people get the recognition, but we will be careful with its use, particularly in the rooms. You will see a much more subdued use of it inside the room than there is outside.

ATN: What obstacles have you faced rolling out the brand in the UAE?

Sita:

There are certain things we are required to do by regulation. For example, we did not want the room to be as big as 15m
2

. We have been pushed by regulations to get to that sort of size and we have been pushed in other areas. We must have a telephone in every room, and in the bathroom, or a panic button. We believe that is unnecessary, particularly in this day and age because that adds significant cost to us. Who is going to come into a budget hotel and use a phone? It's just not going to happen.

The sales pitch

Dubai locations:

Dubai's first easyHotel will be located in Karama, but further properties are planned for Al Garhoud, Jebel Ali, Jumeirah Village South, and International City.

Other UAE locations:

easyHotels are planned for Abu Dhabi, Sharjah, Ras al Khaimah and Fujairah.

Other Middle East locations:

Properties planned for Bahrain, Doha, Lebanon, Saudi Arabia, and Egypt; Cairo in particular.

Developer:

Istithmar will build and manage all of the easyHotels in the Middle East.

Opening date:

The Al Karama property will open in early 2008. Work is expected to commence on properties in Al Garhoud and Jebel Ali by the end of this year, for a late 2008 opening.

Key easyHotel features:

• EasyHotels will provide more than 3800 rooms in 17 countries in the region over the next five years.

• Most of the hotels will have around 200 prefabricated 15m
2

‘pod' rooms, which are transported ready-made to the site, and stacked on top of each other.

• Beds will be fitted to a track so they can slide together and be locked in position, or separated for twin sharing occupancy.

• Everything except for basic amenities such as bed and bathroom facilities come at an added cost, including internet, TV, parking and other services.

• An average easyHotel will take around 20 weeks to build.

• Room rates: based on present market forces, Sita said rates were likely to lead in at AED 250-300 (US $68-81).

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