Dubai’s luxury and hospitality sector is looking at an exciting decade ahead. However, it’s going to be a bit of a tough start.
Competition in the sectors is getting stronger, and the focus on efficient, sustained performance is higher than ever. Preliminary data for Dubai released in December 2018 showed the demand for hotel rooms, measured in “room nights sold”, climbing 5.6 percent compared to the previous year. However, the trouble lies in the fact that supply is increasing at a far greater pace of 8.6 percent year-on-year. As a result, many hotels have resorted to lowered rates in their attempt to woo customers – evident in the average daily rates (ADR) falling 4.3 percent to AED 758.80, according to STR analysts. The revenue per available room (RevPAR) – another key indicator of the sector’s health – fell 6.9 percent to AED 600.98 in December 2018, compared to the previous year.
This drop in prices, however, is considered merely a stopgap measure, with many hotels looking at alternative strategies to boost the market. With the Expo 2020 coming up and the Dubai government’s various initiatives welcoming international and regional visitors, the future is far from gloomy.
AMEinfo spoke to Tareq Derbas, General Manager of The Ritz-Carlton, DIFC, for exclusive insights into the sector, strategies for the future, the outlook for the years to come and more!
Q: From your first foray into luxury and hospitality at the DoubleTree in San Diego, you've managed quite a bit in Dubai – St. Regis and Burj Al Arab, Four Seasons, and Le Meridien – in addition to your journey through Oman, Jordan, Saudi Arabia. What brought you here?
Tareq Derbas: Well, it's been an interesting journey – 27 years so far. I am passionate about the luxury hotel segment. I found myself mastering it, so, I specialized in it. I call it the Champions League and I mastered that very well. With Four Seasons, St. Regis and Burj Al Arab, I think I formed a good management style, which balances the people with the product and achieved a great profit. I’m so excited about The Ritz-Carlton, DIFC. It's been a dream for me since I joined the hotel industry back in the 90s. It's exciting also to be back in Dubai. Since 2008 – I left Dubai after Burj Al Arab – it's a different city. It's the same mindset, but it's a different city. That's what I like about Dubai – the mindset is there, the vision is there, but it's evolving on a daily basis.
Q: What differentiates a good hotel from an extraordinary one?
Mr. Derbas: I think it's the eye for detail – the details that we put into the guest experience itself. We don't brag about our product – how beautiful, how luxurious, and how expensive are our linen, and our beds, and our furniture. But we brag about the experience we provide to our clientele, and we take the culture that we build within the hotel very seriously.
Our mission is to score in every interaction and in every “touch point” with a guest – from the airport to the airport. That's the mission.
“We have 650 or 700 associates around me; they are the ones who make me look good.”
So definitely, I need to provide them with the right tools, training, and culture for them to excel and to achieve that score with every touch point.
Q: High-end hospitality brands are focusing on customer experience and customization. What is The Ritz-Carlton, DIFC, doing?
Mr. Derbas: I’m very familiar with the bespoke and personalized service we do in every luxury brand. Within The Ritz-Carlton, DIFC, the “wow factor” is the base we build the guest experience on. We try as much as possible to collect guest preferences – what they like, what they don't like. We even try to research. We have a case study on each VIP coming to the hotel – on what he likes, what he doesn’t like, which school he graduated from – so, at least, we will try as much as possible to make things tailor-made to his needs.
“We don't have one size fits all. We try our best to customize the experience towards the guest, and his needs, and his preferences.”
For instance, every guest, especially business-travelers get used to one pattern of a pillow. So for them to come, and adjust, to your pillow – that's not personalized. We make sure that they select, and every time they come, that pillow is already there – that they don’t need to ask for it. That’s just one of the examples we use to personalize the experience – (apart from) what amenities they like.
Q: What is your opinion on the incorporation of robotics or AI in the hotel industry?
Mr. Derbas: The brands and the corporate are working towards that because, definitely, this is welcome in the near future. But I'm a strong believer that the old touch points need to be done by humans. If anything in the back of house needs to be automated to run the hotel and (make) operations more efficient, I’m for it 100%. But I don't think this brand, or this, “Champions League” can afford to automate the guest experience at all.
And also, I mean, let's put ourselves in the guests’ shoes. They’re coming here – away from their home, their country, their network – and for them to start dealing with machines instead of humans, I don't think they will appreciate such a thing. They just want to interact and that's what we are good – interaction with our clients.
Q: In December 2018, the average hotel room rates dropped despite a surge in demand. This means that prices are dropping despite a surge in demand. What do you believe the hotel industry can do increase revenue along with footfall?
Mr. Derbas: Yes, there is that fear that the prices have started coming down due to a lot of players in Dubai.
“I'm also a believer that every brand creates its own market. I mean, if we all are going to take from the same cake, I don’t think that’s a smart way of running the hotel business.”
I think we need to actively go and try to seek new markets and attract that. We just finished our one week trip into the GCC market. We went from Kuwait to Riyadh, Jeddah, Dammam, and Bahrain. So we went around and told them that we have something different for you – we are 10 minutes from Downtown, we have the new mall just opened next to us, we have new family attractions opened within the hotel. DIFC, overall, is well-known as a great business destination. So for us to market that, to get a new segment in, or to grow the leisure segment in the hotel – I think that’s important. But as I said, the luxury hotel segment, they can always protect the prices by adding value instead of dropping the prices. It’s not good to keep dragging the rate down because it’s going to be extremely difficult to bring it up in the near future.
"Everybody is saying that 2019 is going to be challenging, but 2020 looks very promising.”
Q: We are at the cusp of Expo 2020. The UAE is building on its reputation as THE destination for investors and professionals. In your opinion, how will this affect the luxury segment in 2019?
Mr. Derbas: This is a forum, which is much bolder than the World Cup. I came from a destination where the World Cup was the mega event, but as soon as I started reading about the Expo and what the impact of the Expo will bring to Dubai – the period is not just a 20-day forum … and it’s not just a certain segment; this is the business segment, the government segment, the international market – the pre-Expo and the post-Expo is going to be impacting Dubai for many years to come.
Imagine what we are attracting: 50,000-60,000 room nights per year in 2019. If you take the repeated out, we’re talking about 35,000 new customers coming to my hotel only. We need to all play a part.
“The pillars of success for any destination are the hotel sector, the airline sector and the tourism authority – they all need to mesh well in their vision to achieve the required results.”
Q: Dubai's Department of Tourism and Commerce Marketing recently waived a mandatory requirement for hotels to obtain a PRO card in its aim to push Dubai towards a "paperless, smart city". How have these government initiatives benefited the luxury sector?
Mr. Derbas: I have worked in most of the countries in the region, particularly the GCC, and I must say that Dubai is probably 10 years ahead of everybody else – I can assure you, I'm not exaggerating – in terms of the mindset, in terms of the admin work required for the hotel business to run efficiently, they are much smoother. They're two steps ahead of us. You don't go and chase them for information; they give you the information ahead of time, so you can plan accordingly. And our hotel business is all about planning. They gave us the information ahead of time – the calendar of events for 2019 was in the system five months before.
Q: What’s new at The Ritz-Carlton, DIFC?
Mr. Derbas: The entire management team is new at The Ritz-Carlton, DIFC. We have done very well with the corporate segment, now we are trying to attract the leisure segment, particularly from the GCC. We have been planning and have been busy for the past three months preparing for the best Ramadan tent coming up – from the look-and-feel, décor, the program that we are going to run during the Ramadan tent in Iftar and Suhoor. We are also looking at new F&B concepts, something that I selected in my trip to London. The first one will, hopefully, open in Q4 this year and the other three will open next year. This will definitely add a lot of value to the guests coming in as well as the residents of Dubai and DIFC.
We are working on a new concept for our meeting space – a trendy, co-working space. Instead of a meeting table and a screen and so on, we will have a more casual, trendy space for people in DIFC to come in and rent the space in a casual setting.
The Ritz-Carlton, DIFC, milestones in eight years
- Almost 1 million “room nights” since its opening (Room nights = number of rooms multiplied by the number of nights they have been occupied during a period)
- F&B completed 3.5 million covers, serving guests and residents of Dubai
- More than 500 weddings in the ballroom
- Strategic partnership with Starwood – to benefit the guests’ loyalty program