Key feeder markets accent Jumeirah’s steady expansion
 
Key feeder markets accent Jumeirah’s steady expansion
20 JUNE 2017 7:31 AM

Jumeirah is taking a measured approach in its hotel development, emphasizing its growth in key feeder markets.

GLOBAL REPORT—Officials with Dubai, United Arab Emirates-based hotel firm Jumeirah don’t want the company to become a behemoth, but are instead content with expanding in the Middle East and where its Middle Eastern core market wants to travel to.

China might be an exception to that rule, where Jumeirah will soon open new hotel assets in Guangzhou and Nanjing. Doris Greif, SVP of operations for the Middle East, Africa and South Asia, said those properties will be strictly business hotels, with Jumeirah owning the real estate.

Overall, though, Greif added, “We’re a small Arab company. Our home is the United Arab Emirates.”

While the company plans to continue ownership of freehold real estate of existing and pipeline assets, Jumeirah’s growth will be intentionally slow, focusing on the company’s core Middle Eastern guest demand and where the UAE’s Etihad and Emirates airlines fly to, according to Jumeirah executives.

But officials also said they want Jumeirah as a leader in Dubai’s tourism development.

“Dubai has proven itself all over again,” Greif said. “It constantly reinvents itself and has (transformed) into a global family tourism destination.”

Charles Clark, GM of the 292-room Jumeirah Creekside, Dubai, said the market is evolving.

“Its diversification is a part of its maturing as a market,” he said. “Occupancies are very strong.”

Clark pointed to one initiative in Dubai that underlines his optimism for the destination.

“Dubai is constructing a second ski slope, twice as big as the original one in the Mall of the Emirates. Two ski slopes in Dubai,” Clark said.

Dubai’s key feeder markets include Saudi Arabia, Kuwait and Oman, Greif said.

“So we want to be in those markets, too,” she said. “The United Kingdom and Germany are vital as well. The U.K. contributes to approximately 40% of our leisure market, although exchange rates are dampening things a little, with the (Emirati) dirham pegged to the U.S. dollar.”

Destination deluxe
Currently Jumeirah has 22 hotels, including the iconic Burj Al Arab Jumeirah and the sprawling, resort-like Madinat Jumeirah, which contains four hotels.

Apart from China, Jumeirah also is looking to expand in Germany.

“We’d love to have a hotel in Munich,” Greif said, who added many Middle Eastern guests coming to Frankfurt are medical tourists.

Stefan Winkler, GM of the Jumeirah Frankfurt, agreed the Middle East is Frankfurt’s No. 1 market, with post-Ramadan and medical-treatment stays buoying occupancy and revenue.

“Medical tourism has risen 20% in the last six years,” Winkler said, who added his property had Jumeirah’s highest ratio of suites to rooms, 49 out of a total of 217 guestrooms.

Munich is another key market, but as with Frankfurt there is competition between hotels and other real estate classes.

“There are scouts in town looking for office space,” Winkler said.

In other development news, a Jumeirah hotel in Bali is in its final stages of development, with an opening date in the second quarter of 2018. Pre-opening is underway at the Jumeirah Saadiyat Island, United Arab Emirates, and the Jumeirah Muscat, Oman, is in final preparations.

All three resorts are beachfront properties, which has been a distinguishing feature in Jumeirah’s portfolio, Greif said.

“At the Madinat Jumeirah, we opened up almost a mile of beach,” Greif added.

Jumeirah also has a property in St. Petersburg that is under construction.

Optimism abounding
Challenges in London, another key Middle Eastern destination, include the recent spike in business rates, according to Ian Richardson, GM of the 88-room Jumeirah Lowndes Hotel.

“Especially for (small- and medium-sized enterprises) with smaller cash flows, business rates are proving crippling, with increases of between 70% and 80%,” Richardson said.

Staffing is another concern.

“Luxury, at the top end, recruits for attitude, and chefs are proving difficult for everyone,” Richardson said. “Some companies will pay inflated salaries, but what is needed is to provide a stable environment, to provide advice to staff over the entire length of their careers, to help in the practical nature of living in large, expensive cities such as London.”

The optimism across Jumeirah is that the company is large enough to weather such storms.

“We have a strong offering in London, with three hotels, and while they are different, they are complimentary,” Richardson said, referring to the Grosvenor House Suites by Jumeirah Living, an extended-stay hotel; Jumeirah Carlton Tower, a full-service property; and the boutique Jumeirah Lowndes Hotel.

The Jumeirah Living brand, an extended-stay product, began in 2009 and has assets in Dubai, Abu Dhabi, United Arab Emirates, and London, but Greif said two more are planned in Dubai and perhaps one in Guangzhou.

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