GM interview: Praveen Nanda

Hotel apartments currently make up a significant segment of Dubai’s budget and mid-market offerings, and according to London Crown One general manager Praveen Nanda, their future growth rate is set to overtake hotels in the region. “I think the trend for hotel apartments will continue to grow over the coming years – in my opinion it will far outpace the growth in the budget and mid-market hotel segment.”

With the influx of new family attractions arriving into the emirate, including those by Dubai Parks and Resorts, an opportunity for hotel apartments to accommodate a new type of tourist has been created. “We see many tourists arriving with families, often young children; many hotels will only offer families one extra bed, or a fold out sofa bed, here at London Crown One you have your own apartment.” Nanda continues: “In a hotel apartment your children are with you, they are safe, the layout is open and you have your living areas and your bedrooms all together; this concept will appeal to new visitors and the sector is sure to grow.”

Located in Bur Dubai, on the western side of the Dubai Creek, London Crown One is near BurJuman shopping mall, the Gold Souk, Meena Bazaar, the Dubai Museum and is only 15 minutes from the Dubai International Airport. The hotel has a target market of larger families arriving predominantly from India, African nations and the GCCs. Each apartment offers spacious, self-catering apartments with a private balcony, and features a large living room, dining hall and fully equipped kitchen. “Originally there was mostly hotels here in Bur Dubai, but the owners felt there was a gap in the market for hotel apartments, this led to the opening of London Crown One, and this decision has surely paid dividends,” says Nanda. London Crown One has 140 fully furnished apartments; of which 72 are one bedroom, 56 are two bedroom and 12 are three bedroom apartments. “Like many hotel apartments in Bur Dubai, this was actually an residential building originally, then the owners converted it to meet the new and growing demand for hotel apartments.” London Crown One bedrooms are furnished either with a King size bed or twin beds. Most of the apartments open to large balconies, and all rooms have a daily housekeeping service. Situated at the lobby level, the hotel restaurant serves a buffet and a la carte menu for breakfast, lunch and dinner, in addition to room service offered daily from 6am to midnight providing a selection of Arabic, Indian, Chinese and international cuisines.

“In this segment we get a lot of repeat bookings, so much so that in 2015 we achieved 82% occupancy,” says Nanda. “I think repeat bookings are the key to success for London Crown One – it is very difficult to go out and get new guests here in the UAE. However if guests like what you are providing and you look after their needs, they should come back.” Nanda continues to highlight a simple, long running and effective incentive programme at the hotel to encourage repeat bookings; returning guests receive free breakfast at the hotel restaurant throughout their following stay. “You must deliver on what you promise,” he adds, speaking on the tough competition in Dubai. “I offer you a clean room and a clean bathroom – which I will promise you, because I’m a budget hotel I do not promise luxuries. But there are many other hotel apartments here offing very similar products, the market is tough.”

Nanda acknowledges the impact that future mid-sector growth is likely to have on London Crown One: “Dubai is commercial – it is hard fought business. I would say that here, the only way you win in business is by delivering your promises. If the guest knows they will be serviced well – and that their vacation will not be ruined by something going wrong with their accommodation, you will increase your chances of success.”

Nanda offers an example: “We recently had a group arrive from Singapore for a New Year’s Eve vacation. We had huge occupancy at this time, with a lot of arrivals and departures daily. We pulled in two additional bell boys to help out. But one gentleman in particular became irritated at having to wait for the bell boy to return for his luggage, so he carried it himself. He later complained. He said no one was available to carry his luggage after a long and tiring journey. I didn’t want to remind him that we are a three-star property, so I told him that we made a mistake, I offered to correct the situation by providing free airport transport at the end of his vacation. Needless to say he was more than satisfied.” Nanda emphasises, where it is not expensive to correct a complaint or issue, it is essential do something that makes both parties happy – in his opinion this feeds directly into retaining guests and securing future bookings in an increasingly competitive market. “So yes there are challenges but mid-market hotels must look for ways to resolve them quickly – remember people talk to each other, and social media is huge today; one guest with a complaint can easily cost you multiple bookings. Sort it out, nip it right there and make the guest happy – let them get on with their holiday.”

Attracting new guests, on the other hand, is a challenge, says Nanda. He points out that his target market is large, but with new properties continuing to open, there is a strong supply of competitors fighting for business. “People in this market are looking for good deals, so attracting new guests will become a real challenge” he begins. “As far as I see it, 2016 and 2017 will not be very good years for hotel apartments. Fresh properties will be looking to grab our business, they’ll be watching our prices and monitoring our services, trying to shift loyalty from us to them.”

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The split between business and leisure bookings at London Crown One stands at 35% business and corporate and 65% leisure. “We are a natural choice for corporates putting up their new recruits during training programmes. Often we see bookings for 15 days or more for large groups of new employs arriving into the emirate.”

Anyone staying more than five nights prefers to have kitchen and laundry facilities, says Nanda. The average length of stay at London Crown One is 3.5 nights, with many business guests opting to extend their booking. “They stay in Dubai until business is complete – so we regularly see business travellers extending their stay, we offer a home away from home.”

The daily operational challenges facing budget and mid-scale hotel apartments in the UAE are largely a result of the team, says Nanda. “Please remember your teams make you, you don’t make the team. Your people can make or ruin your business – you succeed because of them – luckily I have good team members – I offer them authority to make decisions, they are empowered – they make my life a little easier.” Currently London Crown One has 52 members of staff, and employee turnover stands at approximately 10 to 12% annually. “You must also remember that if you make your team feel like this is their hotel – the turnover is hardly an issue; it is not only money – it is also how good staff feel working in your business. Give them freedom and they’ll feel wanted.” Staff can walk into Nanda’s office at any time, regarding any issues, personal or professional: “They feel empowered and they are involved in running the hotel – they protect it like their own.” If it’s a small decision, his team have full authority to take action, alternatively they can call him 24/7 if they need any assistance. “Finding new staff is a major challenge, because salaries are not as high has four- and five-star properties. We cannot match the salaries of luxury properties and often lose good candidates to these hotels; for this reason we will recruit fresh and we train them ourselves.”

Nanda offers his personal insight into what hoteliers can expect in the year ahead: “Dubai is not a city, it’s a brand,” he begins. “This brand has been marketed very well under our able rulers – as a result people come to brand Dubai, just look at the cleanliness on the streets – when people come here they see a clean city with good attractions, it is opulent, Dubai is opulence, look at downtown Dubai too – it’s a wow city – the rulers have made all this possible and they have made Dubai a globally recognised brand.”

Nanda claims that mid-market tourists are ‘followers’, meaning they will wait until they hear more and more about a destination before they begin to arrive. In Nanda’s opinion, Dubai is now ready for a mid-market influx of budget travellers. “Events and attractions in Dubai are created for tourists, this is what will sustain the arrival figures here; this is all part of the strategy created by Dubai.”

He concludes: “This city will go through hell in terms of occupancy and revenues in the short term; a big problem for us in the mid-market is the hotel rates of four and five star properties – when they start cutting their prices to drive occupancy, what are we to do? Will a guest stay with a mid-market hotel when for an extra 25 dirhams per night he can take advantage of a four-star offer? This tells you where the market is going in 2016 – people with deep pockets will survive – they may see losses – one year will be absorbed, perhaps two years – but how many others can survive – if they don’t get the revenue what are they going to do?”” He ends: “This is going to be the toughest year I have seen in a 25 year career – 2015 was hard, 2016 will be harder, by 2017 I will be saying “Thank God’”.