Dubai’s Emaar Hospitality CEO on why global expansion is the way ahead

Dubai’s hospitality industry has remained fairly resilient despite the slump in the wider region caused by the impact of a variety of factors ranging from low oil prices to currency fluctuations, experts ascertain.

The buoyancy of the sector has been attributed to Dubai’s strong travel and tourism industry, which has continued to grow and attract more visitors to the emirate with new offerings.

As one of the newest hoteliers on the block, Emaar Hospitality Group – part of Dubai-based Emaar Properties – benefitted strongly from its focus on the
emirate, says newly appointed CEO Olivier Harnisch.

The 10-year-old company enjoyed a good 2016, recording average occupancy of 85 per cent – higher than the industry average. Revenues also grew 14 per cent year-on-year despite the on-going renovation work at the Address Downtown Dubai – which was damaged in a fire on New Year’s Eve in 2015. The hotel is slated to reopen this year.

Emaar, which operates the Address Hotels and Resorts, Vida Hotels and Resorts and Rove Hotels brands, has 10 operational hotels and three serviced residences in Dubai.

“This is where our advantage of being focussed on Dubai comes to play,” says Harnisch.

But the CEO is quick to add that it is important for hotel operators to diversify geographically to avoid being exposed to higher risks.

“I think it’s always important in the hotel business to look long term because short term volatility will always be there. This is where it is advantageous to be present in various markets because it balances out between the stronger and weaker regions,” he explains.

Harnisch is currently spearheading Emaar Hospitality’s massive expansion – both locally and internationally. While all of its Dubai properties are owned and operated by the brand, it is now also looking to sign more management agreements with developers.

The company has a pipeline of 26 upcoming projects in Dubai, Abu Dhabi and Egypt and has already expanded with hotel management contracts in Saudi Arabia and Bahrain for its Vida brand. Under its Address Hotels and Resorts brand, the group is undertaking projects in Dubai, Fujairah, Bahrain and Turkey.

Emaar Hospitality also plans to expand its footprint to markets such as India and China across its three brands.

“We see quite of bit of synergy with those markets from a source destination perspective,” explains Harnisch.

“Among customers that come to our hotels from Asia, a big proportion are from India and China – and their numbers are growing. So we already have some brand recognition and brand presence there. Besides, they are also the biggest markets in Asia and we will have a head start by developing hotels there,” he adds.

China’s travel and tourism industry is booming, with total contribution of the sector standing at $1 trillion or 9 per cent of its GDP in 2016 and forecast to grow by 7.1 per cent in 2017, according to the World Travel and Tourism Council (WTTC).

The sector’s contribution is further predicted to rise by 7.2 per cent per annum to reach over $2.15 trillion or 11 per cent of China’s GDP in 2027.

In India as well, the travel and tourism sector contributes heavily to the economy, generating $208.9bn in 2016 – equivalent to 9.6 per cent of the country’s GDP, the WTTC said in a recent report.

The organisation also said that India is aggressively looking to grow its international visitor numbers, and has “started to address this gap and made significant changes to visa facilitation, which will help to boost international arrivals”.

But with both countries already boasting big international hotel chains as well as local brands, will Emaar struggle to find a footing?

“Market saturation is different market by market. But in my view it’s not only about the number of rooms or number of hotels in the market but also about the quality and how unique the guest experience and value proposition is,” says Harnisch.

“I believe with our brands, even in markets that already have good number of hotels, we can succeed by providing a different and more unique experience,” he asserts.

So far, the company has not decided on any precise date of launch and development in the Asian countries but the CEO says it will be in the near future.

Looking ahead, Harnisch acknowledges that the market is facing disruption from players like Airbnb.

“Airbnb brings more rooms to the business and the market so it certainly has an impact on the business. But at the same time it provides a very different kind of experience – in no way comparable to the experiences we provide,” he argues.

Also, with new technologies penetrating the hospitality industry, hotels can up the level of their services and offerings.

“With technology we can go much further compared to what the industry is currently providing,” he says.

“So we will see trends like Internet of Things (IoT) going into rooms where pieces of equipment in the rooms will be connected to guest databases and truly adapt to the behaviour of the guest.

“For example, when you are a regular traveller repetitive things can be eliminated with technology. So once you set up your shower preferences, every time you come into a room, the shower preferences will be automatically set in terms of temperature etc. When you go to the gym, the equipment will be set according to your preferences.

“These are the kinds of things that we will see going forward,” he says.

So when can guests expect to begin using such technologies?

Harnisch is reluctant to provide a timeline, but opines that it will be sooner in the smaller hotel companies than in the bigger ones.

“A small size helps because if we decide to implement a new technology, it’s easier to do it with 10 or 11 hotels than it is with 4,000 hotels.

“We are very digitally savvy and have a huge affinity towards technology so we will surprise you going forward,” he adds.