Rotana expects faster return to pre-pandemic growth levels by year-end, CEO says

Abu Dhabi-based hotel operator Rotana expects a faster return to pre-pandemic business levels by the end of this year, based on an earlier forecast for 2023, driven by a growth in tourist numbers, the return of business meetings and the FIFA World Cup Qatar, its said President and Chief Executive.

The hospitality group expects “nothing less” than a 20-25 percent increase in sales this year compared to 2021 and a further 15-20 percent year-on-year increase in 2023, Guy Hutchinson said The National on the sidelines of the Future Hospitality Summit in Dubai.

Supported by strong investor appetite for hospitality development, Rotana plans to open seven more hotels by the end of this year, Mr Hutchinson said. Seven more property openings are planned for 2023, although these could double by the end of next year due to ongoing discussions.

“We don’t talk about recovery anymore, we don’t use that language regularly anymore,” Hutchinson said.

“We’re talking about growth, expansion, restoring the industry’s strongest fundamentals, reinvesting in real estate, expanding the portfolio. We launched our new Edge brand and are expanding our franchise business.”

Dubai hosted 8.1 million international visitors in the first seven months of 2022, a nearly triple year-on-year increase and surpassing the total for 2021. The emirate, whose tourism sector has recovered significantly in the post-Covid era, hosted 7.28 million visitors in 2021.

Project pipeline from Benin to Luxor

Rotana currently manages a portfolio of more than 100 properties in the Middle East, Africa, Eastern Europe and Turkey with an aggressive expansion plan.

The hotel management company signed an initial pact for a five-star resort in West Africa’s Benin, Mr Hutchinson said.

It also signed a deal for its new Edge hotel brand in Istanbul and a deal for The Residences by Rotana to offer villa accommodation in the port city of Bodrum, on Turkey’s southwest coast on the Aegean Sea.

The first Edge Hotel is scheduled to open on October 1 in Jaddaf, Dubai.

Next year, Rotana will enter the Algerian market with the opening of Azure Rotana Resort & Spa in the port city of Oran. The opening of the object is planned for March.

The new hotel in Muscat’s Al Mouj development is scheduled to open in the first quarter of next year.

The hotel operator will launch the Luxor Rotana in late 2023 in Egypt’s historic city famous for its ancient monuments. Luxor Rotana is one of six new hotels set to open in Egypt, with hotels in New Cairo and the north coast also planned in 2024.

“Egypt is one of the most developing markets we’ve seen,” Mr Hutchinson said.

“I was there three weeks ago and the last time I saw physical construction of this scale was in China.”

The upcoming hotel openings, slated for this year and next, come as investment in hotel construction has accelerated in the wake of the pandemic, Hutchinson said.

“We’re seeing a pace of hotel development and construction that we didn’t anticipate,” he said.

“Investors have noticed some resilience in the industry during the pandemic. They’ve had a strong recovery and maybe they’ve had an opportunity to negotiate good deals.”

At the end of the third quarter, Rotana was “spot on” with its performance guidance for the three-month period, Mr. Hutchinson said.

“We haven’t seen a slowdown anywhere,” he said. However, there was a “small outlier” with an outflow of GCC travel to Europe, but countries like Jordan and Beirut “will do stronger next year”.

The company just completed its financial planning cycle for next year and will be budgeting for “very strong growth across the region,” Hutchinson said.

He said Rotana expects the current trend of strong performance in the Middle East to continue into 2023.

“The region has done so well in breaking into new markets and new business and there has been so much support from governments and airlines,” Mr Hutchinson said. “All of this underpins the very strong growth momentum.”

Fifa World Cup buzz

Rotana’s hotels in Doha and Dubai, the Middle East’s tourism hub, are reporting strong bookings in the fourth quarter during Qatar’s four-week mega soccer tournament, which begins in mid-November, Mr Hutchinson said.

His five-star properties in downtown Doha are at full capacity, while occupancy rates at his other properties will hit the “high 90s,” he said.

Rotana is also preparing to open two new properties in Doha on November 1 to capitalize on the Fifa World Cup boom.

The group’s hotels in Dubai are seeing “significant demand” for bookings in November and December, with occupancy expected to reach “mid to high 90s” as dozens of daily shuttle flights between the emirate and Doha during the event keep fans busy, said Mr Hutchinson.

He added that higher inflation and fuel costs “have the potential” to impact the business if average daily hotel room rates fall, but the effect will be offset by growing occupancy and source market diversity.

Visitors from traditional markets like Saudi Arabia and the UK have rebounded sharply, while demand from existing markets like France has doubled, Hutchinson said.

Travelers from new Latin American markets such as Brazil and Mexico are also contributing to Rotana’s growth.

“We haven’t seen a reopening in China yet, but if we do, it will add another layer of growth to where we are now,” Hutchinson said.

Updated September 19, 2022 4:11 am