GROWING COMPETITION
The growing number of real-estate companies developing hospitality divisions and launching hotels is another concern for Sharpe.

“We’ve noticed a lot of people jumping on the bandwagon. All of a sudden all these development companies that specialise in real estate are opening hospitality divisions and saying ‘we are now experts in hotels — three-star, four-star, five-star’. There are pros and cons to it,” he says.

“If your core business is real estate, and then you attach a hotel to it, you’ll always look at it as a real estate development, not as a hotel, and you’ll start getting all these spins where they’ll start selling you the bedroom as a real estate product and then putting that room in [the rental pool], and it takes away from what hospitality is all about,” he stresses.

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However, Sharpe says he can see why developers would be attracted by the idea, citing Jumeirah Group and Emaar Properties’ successes as examples.

“Jumeirah has done a very good job, a very successful job. I can’t fault Emaar because the Address Hotels has been a success. But are you going to have 10 of these guys running around, doing their own hotels? It’s not just that, it’s about building a brand,” he argues.

With the growing number of brands and hotels in the region — particularly in Dubai, where the number of hotels is set to double in time for Expo 2020 — Sharpe also questions how hotels are filling vacancies in upcoming and existing properties.

At present, there are three Citymax Hotels under construction in the UAE — in Al Barsha and Business Bay in Dubai, and one other in Ras Al Khaimah — that are scheduled for completion by 2016. The new hotels will bring the group’s total inventory to 2000 rooms, while more properties are in final negotiation for agreements in Abu Dhabi and Fujairah.

“The challenge owners face is capital intellect, because where do you get people to run these hotels? Looking at countries like India for example, or Philippines, that have been the cornerstone of hotel labour, there are a lot of people that don’t want to come here anymore because they can earn just as much money there and have a career,” he explains.

To tackle the issue, Citymax has adopted a two-pronged approach by exploring new markets to source staff, and incorporating a more detailed training programme for existing and new staff.

“We are looking at new places like Vietnam, China, Indonesia and Manama for labour, but all of these have challenges. They have their own food, culture, languages, and religions. You can’t mix them up and I think this will be the biggest challenge going forward. Saudi Arabia for example is really struggling.

“Even with Dubai, doubling the number of hotels, means you have to double the number of staff to run those hotels. Where do you train them? How do you train them? Where do you house them? And that’s the other area that we help the owner with. We’ve invested a large sum of money in our training and development.

We have a whole separate department now that does just learning and development and HR. We have training modules for lower grades and then we move it up all the way to senior management and the executive management. But we do all of it in-house,” explains Sharpe.

As much as the group strives to stay ahead of the game, Sharpe acknowledges that in a market like Dubai, where developments are constantly changing, planning ahead is more of a challenge.

“There was a quote I read by a broker in a magazine and he said, ‘the benefit of planning ahead is that you will know your fixed costs and your variable costs. But you don’t have a clear picture in Dubai,’” he laughs.