Abu Dhabi's Rotana ready for IPO pending green light from shareholders

Hotels group pursues expansion and seeks mergers and acquisitions to drive growth, vice chairman says

Selim El Zyr, vice chairman and co-founder of Rotana says the company plans to continue strengthening its presence in the existing markets. Chris Whiteoak / The National

Hotel operator Rotana Group is ready for an initial public offering and can list its shares “tomorrow” if its shareholders decide to go for a public float, but in the meantime, it aims to continue pursuing aggressive growth across markets, its co-founder and vice chairman said.

"The IPO is on the table and every time the board meets the option is discussed," Selim El Zyr told The National this week at the Arabian Travel Market in Dubai.

“We discuss if it is the right time and the value, do we get what we need. So, there is always a discussion going on and it is on the mind of everybody to increase value [for the shareholders],” Mr El Zyr said.

“It can happen tomorrow, if there is a consensus in the board and the shareholders.”

In terms of its IPO-readiness, the Abu Dhabi-based hospitality company is “almost” there, but the shareholders perhaps are waiting for a bit more growth before they are ready to give the nod, he said.

“They are, maybe, waiting that we reach a certain dimension, may be another 10 to 15 per cent growth in the next two to three years,” Mr El Zyr said.

“In terms of governance we have everything that an IPO needs … it’s just the decision [by the shareholders].”

Rotana is among the latest companies looking to ride the IPO wave in the broader Gulf region, where issuers have queued up to raise funds through listings.

Bourses in both Dubai and Abu Dhabi have also seen a sustained IPO momentum in the past few years, as the Arab world’s second-largest economy continues to grow amid diversification efforts.

There were seven IPOs across the UAE last year, including Talabat Holding, major retailer Lulu Group, ADNH Catering, NMDC Energy and Alef Education. IPOs in the UAE accounted for 47 per cent, or $6.2 billion, of total Gulf proceeds last year, according to a PwC report.

Overall, last year saw the highest Gulf IPO volumes on record, with 53 listings across the region and a total of $13.2 billion raised, the report said.

In 2021, the Dubai Financial Market unveiled an incentives programme to encourage new IPOs from private sector companies in key economic sectors that contribute to the country's gross domestic product.

M&A options

While IPO plans are still being hatched, Rotana plans to continue strengthening its presence in its existing markets and seek entry into new geographies, Mr El Zyr said.

The company, which has already mulled acquiring a hotel operator with a portfolio of about 50 hotels, is open to pursuing further merger and acquisition opportunities, both in terms of expanding its portfolio in current markets as well as gaining entry into new territories.

“We are open to both if there is a good opportunity,” Mr El Zyr said.

“M&A is a complicated exercise where you have to weigh options very carefully … but obviously, growth in the industry has happened through M&As. Everybody has acquired different brands.”

Rotana Group, which opened its first property in 1992, operates brands including Rotana Hotels and Resorts, Arjaan, Rayhaan, Centre, Edge, The Residences, and is also mulling plans to add a top-notch luxury brand to its portfolio to rival competitors in that segment.

“We are working on the plans, but we have to attract an investor,” he said, adding that the company has had a few discussions already with potential investors.

Portfolio growth

The group operates 79 hotels in markets including the Gulf, the wider Middle East region, Africa and Europe.

The hotel management company has maintained a robust growth momentum since bouncing back from the Covid-driven slowdown and Mr El Zyr said Rotana has “recovered 100 per cent of our numbers from 2019", which was one of the best years for the industry.

“Going forward, there is a yearly growth of 8 per cent to 10 per cent in our overall numbers … maybe more so in the bottom line. As Rotana expects about 10 per cent per annum expansion in the number of operating rooms and hotels across markets,” he said.

The value of the hotel portfolio being operated by Rotana is about $5 billion and if the company maintains the year-on-year projected growth, the overall value of the portfolio could double by the end of this decade, Mr El Zyr added.

The UAE remains its biggest market, but the company is very bullish on growth prospects in Saudi Arabia, as well as markets in Africa where it is pursuing an aggressive expansion drive.

In Saudi Arabia, the Arab world’s top economy and Opec’s biggest oil exporter, Rotana operates 13 properties with about 4,000 keys in total and has another 10 in the pipeline that are under development. The company expects the number of keys in Saudi Arabia reach the 10,000-mark by the end of this decade.

Across its portfolio of different brands and markets, Rotana operates about 20,000 keys and Mr El Zyr expects that number to grow by 50 per cent to 30,000 keys by 2030.

New markets

While it consolidates its position in the Middle East, Central Asian States and Turkey markets, the Abu Dhabi company is also keen to explore expansion opportunities in the UK – where it has agreements in place to develop 1,500 keys over several sites across the Greater London region – and other European markets, he said.

In Asia, China and India, as well as Hong Kong, Singapore and Thailand are on Rotana’s radar where it is seeking partnerships for its different brands.

In Africa, the hotels operator is seeking further growth in markets including Senegal, Congo, Gambia and Nigeria and by 2030, the company expects Africa to account for about the 10 per cent to 15 per cent of the total portfolio of properties.

“Africa is very interesting because of the fact that the existing hotel inventory is very limited, they have got a significant growth in middle class earning people ad there is always a good demand for quality events,” he said. “We are working on so many different projects.”

The US is another market of interest for Rotana but Mr El Zyr said the company needs to see the policy environment improve before it makes a move.

“America is the largest economy in the world, but we need stability as you need to see that an administration’s decisions do not change with individuals,” he said. “Our industry is long term … it's an industry that takes years to build and years to get payback on investments.”

Revenue boost

Rotana, which joined the Global Hotel Alliance in March this year, expects a significant long-term boost from the new partnership as it seeks to offer the 30 million members of the GHA Discovery loyalty programme options to stay across its own six brands in the Middle East, Africa, Eastern Europe and Turkey.

Over the next five years, Rotana could see a 10 per cent to 15 per cent, or perhaps even up to 20 per cent increase in its revenue although the exact number is difficult to project as it is a long-term process, Mr El Zyr said.

“We have an opportunity now to promote our hotels and our products … [and] our members will be able to redeem their points in countries where we do not have a presence,” he said.

“It will take at least one year for us to be fully integrated, and it will take another two to three years until the whole market knows that we are in.”