Abu Dhabi-based hotel management firm Rotana expects to report its strongest financial performance in the past five years this year, driven by renewed growth from hotels in the emirate after a tough spell, and expansion overseas.
“Company-wide, we’re expecting strong single-digit revenue growth in 2019 – it’s very positive,” said Guy Hutchinson, acting chief executive of Rotana.
"We've seen a lot of stabilisation across the region, we've seen Saudi Arabia do well, Riyadh in particular; with one or two exceptions we've seen growth all across the region," he told The National at the Arabian Travel Market in Dubai.
The company’s hotels in Abu Dhabi have recorded double-digit annual growth in the first four months of 2019 – “this is going to be the best first quarter we’ve seen in years”, Mr Hutchinson said – as the emirate works to attract more international visitors and boost its tourism sector to diversify the economy.
The solid performance in Abu Dhabi marks a turnaround from recent years, when hotels in the emirate – and across the Middle East – suffered steep declines in revenues and room rates as low oil prices dented consumer purchasing power and rising supply of hotel keys put downward pressure on prices.
Average revenue per available room (RevPar) in Abu Dhabi declined by 14.7 per cent year-on-year in the first quarter of 2018, according to an EY hospitality sector report last year.
Rotana operates 65 hotels across the GCC, Turkey and Africa through management agreements, and has a further 10 scheduled to open by the end of 2020 and 109 hotels including pipeline plans. It recorded an average RevPar drop of 10 percentage points across the portfolio in 2017, but the rate of decline was set to slow last year, the company's former chief executive Omer Kaddouri told The National last July.
To stay lean, Rotana cut operational expenses by 10 to 20 per cent over the past five years in areas such as food and beverage and staff accommodation. It continues to monitor its costs closely and this approach has paid off, Mr Hutchinson said.
“The underlying market trends are all very positive, but it’s also about how you oversee your operations and that real sharpness when it comes to profit management,” he said. He declined to reveal figures as the company is private.
Rotana is also eyeing growth from expansion overseas in the coming two years. It opened its first hotel in Iraq – in Baghdad – in the first quarter, and will open a five-star resort in Dar es Salaam in Tanzania in August, marking the company’s entry into the East African market. It already operates in sub-Saharan Africa, in Nigeria, Sudan, Egypt and the Congo, as well as in Egypt, and is seeing “solid growth” in Africa, the chief executive said.
Another country debut in 2019 is Bosnia and Herzegovina in the third quarter, while in 2020 Rotana will open its second hotel in Iraq, in Suleymaniyeh; plus a hotel in Mashhad, Iran, as well as its third hotel in Jordan, and a new residences project in Dubai.
Saudi Arabia, the largest market in the GCC, “continues to be an important market for us”, Mr Hutchinson said, and Rotana will open a hotel in Dammam in the third quarter this year, and in Al Khobar in 2020. It already has six hotels in the kingdom.
There are no further management agreements expected to be signed this year but Rotana is “always in talks” with prospective investors and scanning new opportunities. “However, we don’t believe in this ‘grow or die’ philosophy. We grow in a very measured way, our value is not in the number of hotels we have," the chief executive said.
The company continues to scout for opportunities to enter the UK and Europe, he added.