One of the largest retail groups in the region is turning its hand to hospitality with the launch of a no-frills hotel brand, the first of which is expected to open in Dubai next month. The UAE-based Landmark Group, which is best known for its 940-strong group of stores that includes big names such as Home Centre and babyshop, is to open its first Citymax Hotel in Al Barsha in Dubai on May 3.
Although Landmark is new to the hospitality sector, most of its retail brands are targeted at the non-luxury end of the market, just like its planned hotel chain. "Other than food, we have everything in the mid-market segment," said Vipen Sethi, the chief executive of the Landmark Group. "So we thought of venturing into the hospitality segment." The new 378-room Citymax hotel will charge between Dh250 (US$68.05) and Dh300 a night for its rooms and is expecting to attract mainly business travellers.
"In eliminating certain services compared to the four and five-star hotel categories, we can afford to be competitive in our rate structure and still be very profitable," said Michael Weyland, the general manger of Landmark Group's hotel division. He said Micky Jagtiani, the group's chairman, saw a gap in the market. "Micky Jagtiani felt some years ago that Dubai was just going in the direction of five stars, six stars, seven stars, and neglecting the mid-market," he said. "It was quite strenuous to find partners who believed in this mid-market concept.
Mr Weyland said the new hotels were not necessarily going to attract "cheap travellers", but would appeal to companies that were looking to cut costs. "It shows that Dubai is also affordable for everyday people," he said. "You've got a lot of low-cost airlines coming into the region," he added. Landmark is due to open another Citymax hotel in Bur Dubai and one in Sharjah later this year. The company has plans to expand internationally later.
"We have got a clear goal of not just restricting us to the UAE, but looking at the Gulf and looking internationally," said Mr Weyland. But for now the company wanted to focus on the launch of the new brand, he said. "We've been approached to take over five hotels in Saudi Arabia and manage them as Citymax hotels, but we've taken the call to not go ahead with this," he said. "I've said 'please, let us learn to walk before we can run. Let's open up our first hotel, get things right, really fine-tune our policies and procedures'."
Mr Weyland said the company would look at managing other hotels after six months to a year of operating. "We are looking at distressed sales," he said. The group says it has a turnover of more than $3.2 billion and 31,000 employees. It is launching a $150 million expansion across the Middle East over the next three years, starting with 150 shops this year. The company is also planning a $400m expansion in India.