ATM 2022: Rotana expects business to return to pre-pandemic levels by 2023, CEO says

Abu Dhabi hospitality group plans 42 new hotels openings in Middle East and Africa over next four years

Visitors at the Rotana stand on the third day of the Arabian Travel Market held at the Dubai World Trade Centre. Pawan Singh / The National

Abu Dhabi-based hotel operator Rotana expects to return to pre-pandemic levels of business by 2023, spurred by a rebound in leisure travel, the return of business meetings and hosting mega events such as the Fifa World Cup in Qatar and Expo 2020 Dubai, its chief executive said.

The hospitality group reached 80 per cent of its 2019 levels of growth in the bottom line during the first quarter of this year, exceeding its own target of 75 per cent, as the Gulf and Middle East region witnessed a revival in travel, Guy Hutchinson told The National at the Arabian Travel Market in Dubai on Wednesday.

“We're still not at 100 per cent, we're still at 80, but we think that gap is going to continually close … because the recovery has accelerated a little bit beyond our expectations,” he said.

“We see the fourth quarter will be very strong but it's how we now navigate the traditionally more difficult summer months to see how that momentum continues.”

In the first quarter, Rotana's UAE, Qatar and Saudi Arabia properties recorded occupancy of about 80 per cent to 90 per cent.

Morocco, whose borders remained closed to international travel until March, recorded 40 per cent to 50 per cent hotel occupancy. Jordan properties were full at about 50 per cent and set to accelerate, while Lebanon, which is facing a severe economic crisis, managed an “excellent” performance during the Eid holidays and is set for a “strong” summer on the back of leisure visits, Mr Hutchinson said.

UAE hotels recorded a 24 per cent increase in occupancy rates in the first quarter of 2022, compared to the same period last year, with increased demand due to the winter holidays and last three months of Expo 2020, a Mena hotels report by Colliers released on Monday showed.

Dubai and Sharjah posted the highest growth in occupancy of 33 per cent and 30 per cent year-on-year, respectively.

Rotana will “without a doubt” recover to pre-Covid levels by 2023, but the “question is about how much we close that gap in 2022 — it's still a transition year”, he said.

Quote
We see the fourth quarter will be very strong but it's how we now navigate the traditionally more difficult summer months to see how that momentum continues
Guy Hutchinson, chief executive of Rotana

The executive is “extremely positive” about the direct and spillover benefit to the region from the Fifa World Cup in Qatar scheduled for later this year, with Dubai standing to benefit because of its flight connectivity and accommodation options, Mr Hutchinson said.

The impact of the mega event will be seen in the fourth quarter and Rotana has registered growing interest in hotel bookings, but more clarity is needed on the flight frequencies and accommodation arrangements, he added.

The Meetings, Incentives, Conferences and Exhibitions (Mice) business has also recovered faster than expected and the so-called hybrid format of events that combines online and physical presence will disappear quickly as people gain more confidence, Mr Hutchinson said.

The six-month Expo Dubai 2020, which concluded in March, was “beyond expectations” and “exceptionally busy”, with occupancy levels jumping 30 per cent to 40 per cent above 2019 levels, he said.

Rotana currently does not have any properties in District 2020 but would consider opportunities as they arise, Mr Hutchinson added.

District 2020 will repurpose 80 per cent of the Expo’s build environment into an integrated, mixed-use community to attract businesses and people to work, live and visit, its website said.

Guy Hutchinson, chief executive of Rotana. Delores Johnson / The National

Rotana's focus is to “rebuild our fundamentals” as the world has yet to fully recover to its pre-crisis travel patterns and plans to focus on restoring traditional feeder markets such as Germany and the UK, the company chief said.

When China ends its lockdown triggered by its zero-Covid policy, the two years of pent-up travel demand will also unleash growth momentum, he said. China was a major source market for Dubai and the UAE before the pandemic.

Rotana, which is experiencing a quicker-than-expected resumption of investments in hospitality assets, has 42 new property openings in the pipeline across the Middle East and Africa over the next four years, Mr Hutchinson said. About 80 per cent of these will be international expansions.

In Africa, Rotana is aiming to open new hotels in Kenya, Algeria and Egypt, he added.

Egypt, with its focus on improving infrastructure and attracting more tourists, will be the site of six of these 42 new properties. The hotels will be located in New Cairo, Luxor and the North Coast.

The company has been less affected by inflationary pressures and more by global supply chain bottlenecks, which have resulted in unit price increases of 20 per cent to 40 per cent, but this has been “neutralised” by more efficient operations, Mr Hutchinson said.

Amid the continuing Ukraine war, the number of Russian guests at Rotana's properties has dipped to 6.5 per cent of total visitors, versus 7 per cent before the conflict, particularly in the Northern Emirates and Sharm El Sheikh in Egypt, he said.

Updated: May 11, 2022, 4:30 PM