Abu Dhabi's Rotana group considering franchise opportunities in Europe after UK venture

Exclusive: The hospitality group is 'actively pushing' its franchise model in Paris, Athens and Munich, CEO says

The Beach Rotana Hotel in Abu Dhabi. Photo: Rotana Hotels

Abu Dhabi-based hotel operator Rotana is pursuing franchise opportunities in European cities with strong air connectivity to the UAE, following its first foray in the UK where it plans to have 1,500 hotel rooms in London.

The hospitality group is “actively pushing” its franchise model in cities such as Paris, Athens and Munich, its president and chief executive Guy Hutchinson told The National on the sidelines of the Arabian Travel Market in Dubai on Wednesday.

“We are pushing the franchise model because that is the most prevalent model among the brands now … we'd love to see a five-star Rotana in London,” he said.

“In terms of hotel management, we're focusing on the region. In Egypt and Saudi Arabia, there are still peaks in the development space but we're seeing a lot of traction across the board.”

The move to franchise its hotel brand in Europe comes after Rotana said earlier this week that it had entered the UK market for the first time with two new properties — Centro New Malden and Centro Kingston — adding 104 hotel rooms.

Rotana is working with developer CNM Estates, real estate adviser Colliers and property lending company Fairfield Real Estate Finance on the project worth more than £1 billion in assets ($1.25 billion).

Funding is complete for the first two hotels, which are currently being developed.

Centro New Malden is scheduled to open in November 2023, followed by Centro Kingston in the third or fourth quarter of 2024, Mr Hutchinson said.

Fund-raising is currently under way for the remaining hotel rooms amid discussions with investment funds, high-net-worth individuals, a UAE-based fund manager and a property developer in the UK, he said.

The remaining 1,400 Centro rooms are expected to open in the next four to five years, with an initial focus on London, although there are "very early conversations” about other metro centres such as Cardiff in Wales, Mr Hutchinson said.

More broadly, the group continues to expand across the Middle East and Africa region.

In Saudi Arabia, where demand in Makkah and Madinah is “absolutely flying”, the group signed six to seven hotel agreements in the kingdom in the first quarter of 2023.

In Egypt, which held on to its crown as the most sought-after destination for travellers in the Mena region for the ninth consecutive year, the group has six projects.

Its hotel on the north coast will open in 2024 while its luxury five-star property in Luxor is scheduled to open at the end of 2024.

In Cairo, Rotana is working on the opening of White Palace Rotana Resort in the city centre.

The five-star resort, which offers a view of the pyramids, will offer 353 rooms and suites. Another property will open in New Cairo, a satellite town in the eastern area of the capital, in 2025.

In Central and East Africa, Rotana expects “three or four serious signings” for five-star hotels in the next three months, Mr Hutchinson said, without specifying the countries.

In its home market in the UAE, the group expects to end 2023 with a hotel occupancy rate of about 80 per cent and an increase in yields of up to 10 per cent annually as demand remains strong, Mr Hutchinson said.

Chinese travellers, who were among the top visitors to the UAE, have not returned to strong numbers as airline capacity has yet to bounce back to pre-coronavirus levels, he said.

Inflationary pressure on consumer spending is not slowing down demand at the moment as people are still booking leisure and business trips, but “over time, a correction will come”, he said.

“When will it come? It's hard to know. Maybe next year, but it will not be dramatic; this will be a small shift,” he said.

Industry-wide hotel room rates are “competitively priced” in Abu Dhabi while Dubai may record “some softening” in prices over the next 12 months, which is a “positive” development for the industry over time as it allows it to tap into the emirate's tourism growth, he said.

Asked about the impact of artificial intelligence technology such as ChatGPT on the hospitality industry, Mr Hutchinson said it would change processes such as bookings and searches.

“Will it change how we do business to some degree? Absolutely, it will, it has to … we look to optimise all channels where technology can help us perform better but we focus on the fact that we're a human business.”

The “social element” of the hospitality industry remains a priority and technology is better used to improve the customer experience rather than replace human contact, he said.

“It's about how do we remove a pain point or a bottleneck or how do we smooth a process for our guests to make their experience better?”