INTERVIEW: Five on it

 Tarek el Sherif, managing director of V.Five Continents Hospitality Group, talks to Hotelier magazine about the mass appeal of dry hotels.

When a hotel operator announces they run a dry hotel, they more often than not act immediately defensive when asked about it, quickly citing figures for business travellers whose companies prefer them not to be near temptation, families who don’t want any chance of rowdiness or simply those who don’t drink alcohol and don’t wish to stay somewhere that serves it.

But Tarek el Sherif, managing director of V.Five Continents Hospitality Group, is happy to explain that the company runs dry hotels — and seeks out owners who wish to do so — for purely religious reasons.

It was a straightforward decision for the company — which is a part of Emirates Associate Business Group (EABG) — and el Sherif says that many owners have actually approached V.Five Continents, as they too like the idea of running hotels which do not serve alcohol.

“In the beginning [when dry hotels first came onto the market], I think a lot of hotel companies were afraid to tap into the dry hotel concept — they were worried they would not make money and asked ‘how can you operate a hotel without a bar, how can our restaurants serve food without wine?’,” he says.

“But then there were a number of owners who said ‘I don’t want to serve alcohol in my hotel, yet I want to work in the hospitality industry’, so it was a little bit of an equation that somebody had to find the solution for.

“Some of the hotel companies were brave enough to start, so they managed the hotels for owners who wanted dry hotels, which in turn encouraged some other companies to come and do it, and there are very successful stories in the market with dry hotels now,” he adds.

Clientele
These success stories have been particularly popular with GCC families, says el Sherif, unsurprising since this is clearly the target audience for dry hotels.

But what is surprising is that a large number of the guests at dry hotels are business travellers — who el Sherif says choose hotels based on price point and location.

“It comes down to your position in the market,” he says.

“It has to do with your marketing and the price of the rooms as well. Essentially, if you are offering good service at a reasonable price then people are interested in your hotel.

“In my opinion business travellers do not come to the UAE to have alcohol, they come here to do business — so if there is a business traveller coming over here, whether they choose to stay in this hotel or that hotel, alcohol is not a decision maker for them,” he asserts.

Sharia compliant
Of course, the customer base is predominately made up of Muslim families, as el Sherif explains that GCC families who are travelling “would rather not be associated with places that serve alcohol”.

But while he says that GCC families prefer staying in a dry hotel, he doesn’t think there is a need to make any of the V.Five Continents hotels sharia compliant.

“I think a lot of people get mixed up with the idea of sharia compliant and dry hotels — they are two different concepts. In my opinion, if you look at the reality of these two concepts, a dry hotel is simply a hotel that does not serve alcohol, while a sharia compliant does much more than that,” el Sherif explains.

“I have firsthand experience with my previous employer where we had a hotel that was built to be a dry hotel and then after some time it was decided it would be a sharia compliant.

When we made the conversion from a dry hotel to a sharia compliant hotel, guess what — we lost most of the Arab families because they wanted to go to the swimming pool together,” he adds.

Profit
While it is a sensible business decision not to alienate GCC families, there are many dry hotel naysayers who argue that dry hotels will automatically make a loss through not serving alcohol in their outlets.

But el Sherif argues that this is not the way to think about dry hotels: “The right statement for that is not ‘losing money’; it is that you are ‘not making as much money’,” he explains.

Though this sounds like splitting hairs, el Sherif points out that dry hotels were never intending to make money from alcohol in the first place.

“You know what to expect from a dry hotel , you set the budget accordingly and you achieve what you expect to achieve — so you are not making losses,” he continues.

“I always say to industry colleagues ‘why are you saying you are losing money — you know from day one you are a dry hotel so don’t complain about it’.

“I would assume that you didn’t budget to make revenue out of beverage — so don’t tell me you’re losing money. It is like you either want to open a small grocery store on the corner or you want to open a big supermarket. You cannot make the same money from the small grocery store,” he adds.

While the company is hardly a small grocery store — el Sherif reveals that it intends to expand from its current three properties to a potential 15 over the next three years — understanding its place in the market, and who its customers are, has seen the hotel group prosper despite launching during the global economic downturn.

And with more owners seeking out operators willing to run dry hotels, and an increasing number of GCC families travelling to new destinations in the region, V.Five Continents seems perfectly positioned to do very well indeed.

Expansion plans
V.Five Continents Hospitality
Group currently operates three properties: one each in Dubai, Abu Dhabi and Jeddah.

It has contracts signed for five-star hotels in Egypt and Kuwait (under its five-star brand Palazzo), and is also looking at launching properties in Doha, Egypt and Medina. Overall, the company is looking to have 15 hotels operational within the next three years.

Five continents
The company V.Five Continents was established three years ago in 2007, and is part of the mother company Emirates Associate Business Group (EABG).

V.Five Continents is a hospitality management company, and is one of around 36 different companies which are owned by EABG. At the core of the hospitality company is its decision to manage only dry hotels. It currently has three properties operational and is planning to have up to 15 hotels operational in the next three years.