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Wed 24 Mar 2010 04:00 AM

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The emirates' evolution

The economic downturn offered an opportunity for hoteliers in Fujairah, RAK and Sharjah. What will they do now?

The emirates' evolution
Al Hamra Residences offer 218 apartments which will benefit from the facilities at the luxury Palace Hotel, Ras Al Khaimah, opening this year.
The emirates' evolution
Radisson Blu Al Aqah Beach Resort, Fujairah.
The emirates' evolution
The Palace Ras Al Khaimah is scheduled to be completed in 2010.

The economic downturn offered an opportunity for hoteliers in Fujairah, RAK and Sharjah to ensure they were perceived as standalone destinations. How will they maintain this positioning?

Along with the inevitable challenges, all crises bring with them new opportunities. While the UAE’s number one destination, Dubai, has been struggling to adjust to changing corporate-spend trends and consumer expectations, the other emirates — specifically Fujairah, Ras Al Khaimah (RAK) and Sharjah — have experienced the chance to position themselves as individual destinations in the UAE.

Gradually, the travel trade and tourism market has realised that these emirates offer far more than the potential for an excursion during a Dubai-based holiday or a weekend break for UAE residents. And as well as coming into their own as leisure destinations, convention facilities under development in places like Ras Al Khaimah mean that corporate travellers — with their condensed budgets — have an alternative too.

With consumers latched onto this idea, hotel owners and operators have spread their wings outside of the UAE, with both exciting top-end projects — such as the recently opened Banyan Tree Al Wadi in Ras Al Khaimah — through to economy projects such as the planned Ibis Sharjah filtering through.

But as the UAE hotel industry strives for recovery out of the downturn, what do these emirates need to do to ensure their new positioning is not yet again overshadowed by big brothers Dubai and Abu Dhabi?

CBRE Hotels Middle East vice president Arnaud Andrieu says that firstly, the northern emirates need to assert their unique offering to prevent confusion among consumers.

“What we have noticed is there is some confusion among international tourists. Some operators in the UAE are selling emirates like Fujairah [as if it was] Dubai. For the tourist, the problem is that they are intending to travel to Dubai but [then find out] their hotel is located far away from their destination — at least one hour from Dubai,” says Andrieu.

He said he was not sure whether the blame for this sat with tour operators, travel agents or hoteliers, but urged the industry to target different groups for the particular locations.

“They [Dubai and the northern emirates] are targeting different people, especially those who are not able to afford more than AED 800 (US $218) a night. For them the alternative of staying in Fujairah or Ras Al Khaimah, is perhaps easier for the tour operators to sell.

“You can get cheap flights, even to Dubai airport, plus the transport. They don’t necessarily need to be near the first point of interest, which is the city of Dubai. They can just be in the city of Fujairah for instance, and go [to Dubai] by bus or special transfer organised by the hotel.

“I think it is also the responsibility of the hoteliers in Fujairah and RAK to structure attractive products and packages for their clients — to structure a different service and be flexible to the current environment to better compete with the hotels in Dubai,” says Andrieu.

At the same time, he says this will ultimately benefit Dubai and improve its reputation as a long-stay destination for tourists.

“I would say these emirates are taking a different direction and are offering something else that travellers don’t want in Dubai or offering something to those that cannot afford Dubai. I would say that at this time and for the full-term, or the mid-term, it will be a plus for Dubai. Now people are able to get a one-week package and will be able to stay in a beach resort, possibly spend one or two days in Dubai, or do some shopping in Dubai,” says Andrieu.

Price point

There are indeed substantial differences in pricing between Dubai and Fujairah for example, especially when to comes to beach resorts, something also observed by group general manager for City Seasons Group, Thomas Tapken.

“For European travellers looking for sun and beaches, the northern emirates will be appealing with competitive rates — and will then attract longer average stays rather than stop-over traffic. With fewer external entertainment opportunities, these guests tend to stay in house for food and beverage, making them a good investment,” says Tapken.

In addition, the hotels outside of Dubai and Abu Dhabi have been more flexible with their packages and Tapken expects summer packages to be in place in May this year rather than waiting until July.
For Christian Rainalter, general manager at Hotel JAL Fujairah Resort & Spa, all inclusive packages have attracted more guests.

“We are offering different board options; whether someone prefers to stay on bed and breakfast, half board, full board or all-inclusive, we have designed a suitable package for most travellers. Being a resort catering for families, we have seen in the past that more and more guests would like to book their holidays on an all-inclusive basis. That gives them the flexibility of budgeting their holidays back home with regards to their spending,” says Rainalter.

And in Ras Al Khaimah, The Palace, Ras Al Khaimah and Al Hamra Residences director of sales and marketing Adrian Hearn says that the pricing benefits appeal to both overseas visitors and residents looking for a weekend break — a market that should still be targeted.

“Through RAK International Airport we have a number of charter operations coming in that have been able to supply volume to fill a number of hotels in the region, and with the emirate as it is, with its lower cost for accommodation and lower costs attributed to the hotel, it means that we can be a little bit sharper and a little bit more competitive in being able to streamline our costs, to hand on that saving to the customer.

“Our pricing is less aggressive than Dubai, which means we can be a more attractive destination on paper or through an advertisement,” explains Hearn.

“RAK is only 40 minutes from Dubai and we are a new emerging emirate and some people are seeking desperately to go into that new tourism. We are, from a cost point of view, not faced with some of the higher charges that are attributed to hotels and hotel suppliers with the Dubai remit,” he continues.

“We have a lot of people who come across and holiday with us from within the GCC and key markets, including the German-speaking markets, the UK, the CIS markets, and even Italy itself; all are all very popular for us.

“From a weekend standpoint we have a tremendous amount of people who come up from Dubai, Abu Dhabi and Al Ain, to spend the weekend with us as a getaway or a treat.

“This happens weekend upon weekend,” asserts Hearn.

Corporate appeal

In addition to the leisure business, there has been growing interest in the northern emirates as corporate destinations, a trend The Rezidor Hotel Group is keen to harness.

“RAK has both a leisure and corporate profile. We have seen the development of new hotels in RAK and the plans to increase tourism to 2.5 million visitors by 2012; so RAK definitely will be a combination of both corporate and leisure,” says Rezidor area vice president Marko Hytönen. “We will be targeting the Gulf market, as well as the international markets for RAK.”

Rezidor has two hotels in the pipeline for the northern emirates, Radisson Blu Qurm Hotel Ras Al Khaimah opening in Q3 2011 and Radisson Blu Al Aqah Beach Resort, Fujairah opening at the end of 2012.

“[Corporate] is more of a long-term plan,” says Hytönen. “If we look at the structural plan for 2015, it includes a lot of development in that region and we believe that this will generate further corporate business for our hotel in RAK. On the other hand, there is the RAK free-trade zone, and we believe that there are still opportunities in that area. But for leisure — we haven’t gone in the segmentation fully, but we believe we will have 70% leisure and 30% corporate for RAK,” he says.

Hearn envisages a similar balance for Hamra Hotels & Resorts, which will open the luxury all-suite Palace hotel in Q4 2010, the Al Hamra Residences and a convention centre.

“We have the Hamra Convention Centre, which is also at the resort — it would knock your socks off. The convention centre has a huge meeting room downstairs which can accommodate about 1700 people with smaller private meeting rooms, all full service, upstairs. As a MICE destination we can cater for any major event, be it for a trade show or a convention,” says Hearn.
In terms of specifically competing with Dubai, he adds: “I think people are always seeking a price alternative, and with the recent recession people are becoming more price conscious and people are trying to create differences in the way they do business. I truly believe that yes, it will [be successful]”.

For Rezidor, Sharjah is the priority for developing corporate business. “We are definitely looking to develop more of the corporate offering in Sharjah,” says Hytönen.

“During the peak years Sharjah somehow seemed to be the destination of the overflow for Dubai and it benefited a lot from being so close to Dubai and a lot of business came directly from Dubai.

“I really believe that in the future we need to focus much more on the corporate segment. Leisure will still be very important, but the corporate segment will be increasingly important for Sharjah.”

Rotana is also focused on Sharjah, with the opening of the 300-room Centro Sharjah Airport in August 2010 reflecting the gradual diversification of the market.

“The property, which will include both rooms and suites, will provide comfort and convenience for travellers passing through one of the region’s fastest-growing airports as well as for visitors to the emirate,” says Rotana CEO and president Selim El Zyr.

Fujairah is also a focus for corporate business, hence the planned opening of Fujairah Arjaan in 2010.

Rotana Hotels director of sales travel trade UAE Ganesh Kamath says: “If we look at Fujairah as a destination you have the beach resorts which are 45km away from Fujairah city, they are all in Al Aqah. There is potential in the city for the corporate, for long stays, so that’s why we are also opening a hotel in the city.

“And there are massive development plans on the board for Fujairah as well in the city, you have malls coming up in the next maybe two or three or four years. We need to be there before developments really happen,” adds Kamath.

Where next?

Currently, CBRE’s Andrieu says he thinks Sharjah is performing the best of the emirates outside of Dubai and Abu Dhabi because of its proximity to the city and its leisure and business offer. “Then I would say Fujairah and RAK; they are in the same position, because of the product offering,” he says. “RAK is not yet an established market, but none of them are in terms of hotel offering. There are still gaps in the market – these will be filled, but this will take time.”

Hytönen agrees that Fujairah and Ras Al Khaimah are the two “hot emirates” that Rezidor will focus on going forward.

“I think this is the direction to go. We know that there are lots of developments in Abu Dhabi, but we can see, especially in Fujairah, that leisure developing will be very interesting. And when we look at these two emerging markets, with limited supply, yes it is an opportunity for international brands to be there,” he says.

Tapken adds: “The northern emirates still have room to grow in many areas, and have the opportunity to attract more charter tourism — this means fewer luxury hotels and more economical or value for money properties and a different type of guest”.

There are also opportunities in Ajman and Umm Al Quwain, which “are lagging behind” right now, says Andrieu, “not because the destination is not interesting, but because the offering or the international notorious [well-known] players cover other places in the UAE.”

“Currently, we don’t have any plans in Ajman or Umm Al Quwain, but if there’s anything coming up we will definitely take a look at it,” responds Hytönen.

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