AHIC 2021: Abu Dhabi's Rotana expects faster rebound in fourth quarter, CEO says

Hotel group re-hired 650 employees this year from the 800 workers it let go in 2020

Abu Dhabi, United Arab Emirates - Guy Hutchinson, acting CEO of Rotana Hotel Management at Saadiyat Rotana Resort & Villas. Khushnum Bhandari for The National
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Abu Dhabi-based hotel operator Rotana expects an accelerated rebound in its key revenue metric this year from the Covid-19 pandemic as demand picks up, its president and chief executive said.

The group has rehired most of the employees it let go in 2020 because of the global crisis, Guy Hutchinson told The National on Monday. Revenue per available room (RevPar) – an industry performance measure calculated by multiplying a hotel’s average daily room rate by its occupancy rate – will reach 80 to 90 per cent of pre-pandemic levels across its UAE properties by the fourth quarter of 2021, he said.

The domestic recovery will be driven by Abu Dhabi removing the requirement to quarantine on arrival for vaccinated travellers from all international destinations, which will open key international markets like the UK and Germany. The six-month Expo 2020 starting in Dubai in October will also accelerate demand, Mr Hutchinson said, speaking on the sidelines of the Arabian and African Hospitality Investment Conference (AHIC) in Dubai.

RevPar for Rotana's properties across the Middle East and Africa will also grow between 75 to 80 per cent of pre-pandemic levels by the fourth quarter of this year, driven by high vaccination rates, the return of leisure and business events, and governments' engagement with the tourism sector, he said.

"In the fourth quarter there's a very significant acceleration," Mr Hutchinson said. "The fundamentals, for the UAE in particular, is outstanding. From October, we expect to be close to 80 to 90 per cent of 2019 RevPar."

Rotana, which manages properties across the Middle East and Africa under its Arjaan, Rayhaan, Centro and The Residences brands, currently generates about 50 per cent of group revenue from the UAE market, where it has 36 properties with 10,012 rooms.

Saudi Arabia and other markets in the Gulf, Turkey, Africa and the Middle East account for the rest of the business.

Across its UAE properties in the year to date, Rotana's RevPar currently stands at about 25 per cent below the pre-pandemic levels of 2019, the executive said.

"It's been beyond our expectations. Our path to recovery or rebuilding back to 2019 levels has definitely accelerated quicker than we expected and that is common across the region," Mr Hutchinson said.

"Abu Dhabi has been quite solid, Dubai has gone from strength to strength as international markets re-open, Saudi Arabia has domestically been very strong, then Qatar, Bahrain, Jordan and across the region was a very solid performance."

Rotana, which let go 800 people or 5 per cent of the group's total workforce last year because of the pandemic, began to re-hire them at the beginning of 2021.

So far this year, the company has rehired 650 people out of the 800 employees it let go. The remainder were not able to return to the company for other reasons, such as changing career paths, Mr Hutchinson said. The group's current workforce is 12,000-strong.

"As we return to pre-pandemic business levels, we need to match that with pre-pandemic service, productivity and quality," he said.

The recovery will be further supported by Expo, which is expected to drive bookings in Dubai, and the UAE's three main source markets of the UK, Germany and Saudi Arabia that have eased travel restrictions, Mr Hutchinson said.

"It's the opportunity we've been waiting for," he said. "It will drive great occupancy."

Rotana expects its Dubai-based hotels' occupancy to be in the "high 80s", with rates similar to those in 2019, as Expo begins in October, Mr Hutchinson added.

The growth boost to bookings from Expo is expected to be "absolutely sustainable" through the six months of the event's duration, he said.

Rotana, which targeted a full recovery of its portfolio to pre-pandemic levels by the end of 2022, is now "a little bit ahead of that curve", Mr Hutchinson said.

With the faster rebound, hotel rates will rise but not to "extortionist" levels, and will rebalance towards 2019 rates, he added.

The executive expects a brisk pace of hotel development in the region and beyond, and is close to signing a deal for two properties in Eastern Europe.

"I'd like to see more realistic optimism in the industry going forward," Mr Hutchinson said, noting lessons learnt from the pandemic to continue focusing on human capital and environmental sustainability.

Updated: September 20, 2021, 1:54 PM