Laying down sharia law

Consumer demand for sharia-compliant hotels is strong, but confusion surrounding the term means many brands are reluctant to commit. Louise Birchall seeks to clarify what it takes to comply.

Two-to-three years ago ‘sharia’ was the buzz word repeated by ambitious, international hotel chains intent on tapping into the rich, intraregional Arab tourism market by offering a unique and traditional Arabic experience.

Eager to differentiate themselves, hotel brands witnessed the success of sharia-compliant banking and investment systems compared to conventional institutions and saw an opportunity to apply the concept to hospitality.

This trend, coupled with an increasing amount of government funding and private money being injected into sharia-compliant developments stirred the interest of hotel investors.

However, today only a handful of the talked-about sharia hotel developments have materialised and experts attribute a lack of progress on the hotel front to the confusion surrounding the term ‘sharia’.

Dubai-based Almulla Hospitality recently unveiled plans for a sharia-compliant brand comprising 30 hotels, but there has been no news of its development and similarly Dubai-based Shaza Hotels’ alcohol-free luxury hotel joint venture with Kempinski Hotels and Guidance Financial Group has yet to open the first of its 30 hotels scheduled to launch in the Middle East over the next 10 years.

Defining sharia
“The terminology ‘sharia compliant’ is mixed up in the sense a lot of people confuse the term and their practices. For a hotel to be fully sharia compliant, it would need a team of religious advisors on board and it really has to go the whole way,” says V. Five Continents Hospitality Group CEO and founder Richard Abou Jaoude.

The Abu Dhabi-based hotel operator’s portfolio of sharia-compliant properties has grown from two to 14 in the Middle East and North Africa since the company entered the market in 2006.

“It was boom time and we realised we were competing with the top guns of the industry and the first thing that came to mind was how to be different, what is missing in the regional hotel market and how can we make a quick return on investment,” says Jaoude.

At that time few companies had approached the sharia niche and V. Five Continents hoped it could differentiate itself with a three- to four-star plus brand. It also had the backing of international brands such as Ramada and timeshare in companies such as Kerzner.

Finding a niche
According to Jaoude, the brand concept proposed by V. Five Continents was to be an “entirely new one”. The concept encompasses the major parts of sharia, including no alcohol, and other aspects such as no smoking, ‘green’ measures in the building and landscaping, and the promotion of wellness.

The company has partnered with various international spa consultants, health academies and environmentalists to offer a well-rounded, healthy-lifestyle concept, which incorporates the basic principles of sharia law almost by coincidence. As a result, Jaoude says he does not consider the hotel fully compliant, but rather, “sensitive to the hotel surrounds”.

“Other operators, like Rotana, are looking to diversify into the sharia market with their new sharia-compliant brand, but we only specialise in sharia and wellness properties,” adds Jaoude.

Rayhaan Hotels & Resorts by Rotana encompasses the norms of traditional Arabic hospitality. Its first property, The Al Marwa Rayhaan, opened last month in Makkah, Saudi Arabia and Rotana executive VP and COO Imad Elias also claims it is in an “entirely new concept, both in the region and on the market”.

The hotel group based the development of Rayhaan Hotels & Resorts on “research indicating this category of sharia hotels has huge potential due to its inherent appeal in the region”, says Elias, who adds “Rayhaan is set for incredible growth in upcoming years”.

Most recently, SHUAA Capital Saudi Arabia (SCSA), the Saudi Arabian subsidiary of SHUAA Capital, announced the signing of a master agreement with Rotana to develop 17 four- and five-star sharia-compliant hotels and resorts and hotel apartments, comprising 5500 rooms across Saudi Arabia.

In the UAE, the Khalidiya Palace Rayhaan, Abu Dhabi is due to open in the last quarter of 2009 and will “complement the values of the contemporary Arabian culture, in an alcohol-free environment”.

“The acceptance of the brand from customers has been excellent. On our regular sales trips throughout the GCC countries, we have received encouraging and supporting feedback for Rayhaan. As for the owners; investors in the GCC have seen a niche, which was not covered by any brand and Rayhaan fits perfectly into it,” says Elias.

“Nowadays the competition is so ferocious that you end up competing with everyone. Our key to success is based on the fact that Rayhaan is endorsed by Rotana; a guarantee for the customer and we have defined our service to be unique,” he adds.

“We must emphasise that Rayhaan Hotels & Resorts is not fully sharia compliant, but it is an alcohol-free brand. We have a large Arab national customer base and are careful and sensitive towards clients’ needs and traditions,” explains Elias.

Guidance needed
Despite being known for their sharia concepts, neither V. Five Continents nor Rotana profess to be fully sharia compliant. Instead, elements of sharia law are used to develop a brand.

For example, V. Five Continents intends to define itself by incorporating ‘green’, wellness and sharia aspects in its hotels.

“We want to prove wellness doesn’t necessarily mean a hospital or spa. It depicts a wider environment,” says Jaoude.

Other hotels, such as Tamani Hotel Marina, Dubai follow the basic fundamentals of sharia, such as no alcohol and separate public areas for men and women as indicated by the Muslim hotel owners.

These differences mean that currently there is no set standard for sharia hotels. “There is no benchmark. Sharia is not very well defined. Different people have different interpretations of what sharia is,” asserts Tamani GCC sales and marketing director Roddy Gordon.

Similarly, the Radisson Blu Residence, Dubai Marina — a sharia compliant property — is still fine tuning its sharia values.

“The sharia law is very demanding, but we’re not 100% compliant. We’re not serving alcohol and we have separate recreation areas for women and men,” explains general manager Cornelia Erhardt.

But that was not always the case; the hotel used to have a mixed, outdoor pool. However, during a sharia inspection the hotel was advised this could not be permitted.
 

To accommodate guests, Erhardt will soon be launching a shuttle bus service to the beach for families who wish to sunbathe and enjoy the water together.

While the hotel claims to receive a healthy mix of guests; 70% international: 30% intraregional, communicating the message of what the hotel offers to potential visitors familiar with the Radisson brand can be a challenge.

Sending the right message
“We try to announce right from the start what the hotel does and doesn’t offer. When any Europeans come to an Islamic country, it’s very nice for them to experience the traditional Islamic offering. So we promote it positively, because a sharia hotel is another environment,” says Erhardt.

Similarly, Jaoude says the company’s “education process” starts with the bookers. If the person selling the hotel is clear on the concept, the guest will be, where as Tamani hotels “understate” the sharia aspect in the company’s communications.

“We don’t go into a lot of detail during the booking process regarding sharia. We always tell them we do not have a bar to manage expectations. But through marketing we need to keep it very simple.

“We prefer to give potential guests a chance to see the brand culture and use the website as a vehicle to provide the information they’re looking for. Our website states clearly the hotel’s core values,” says Gordon.

Tamani is careful to illustrate the brand’s values as Arabic hospitality. “That’s the focus because we want people to be comfortable with the idea and we want to attract people from all markets. We can’t rely on business from GCC nationals,” he explains.

Appealing to all markets
Gordon says the ‘sharia’ terminology can sometimes “scare people off” and he suggests this could be one of the reasons hotels have been reluctant to attach the term to their brand, in spite of the apparent customer demand for the concept.

“If you’re in Scandinavia and you’re on a website booking a room in a Dubai hotel, if you see a property offering ‘genuine Arabic hospiality’, it’s more endearing than saying sharia compliant; especially when a lot of people don’t know exactly what that means,” asserts Gordon.

V. Five Continents has also been “extremely careful not to overburden the dry hotel, sharia compliancy or Islamic trends, which may be perceived as scary or taboo”, says Jaoude.

“That’s one of the reasons that pushed us not to go over the edge with the concept and is why we’ve dressed it up with other concepts such as wellness, which is widely accepted.”

Likewise, Rotana stresses that its new Rayhaan brand is not just targeting Muslim travellers. “Alcohol is not served in this brand, but we provide an environment and service where anyone will feel at ease, not just Arab nationals or Muslims,” says Elias.

Gordon explains it is important for sharia-compliant hotels to be flexible to guest requests and their surroundings. For example, a sharia-compliant hotel in Dubai may not need as strict practices as the same hotel situated in Saudi Arabia.

“There are no set rules for hotels and the meaning of sharia differs from country to country,” explains Four Seasons Riyadh senior sales managher Eslam Fouad.

At the Four Seasons Riyadh, the hotel does not serve alcohol, does not have nightclubs, nor casinos, marriage certificates have to be presented at check-in for a man and woman to share a room and the hotel cannot hold mixed-sex events.

Sharia advantages
Hotels that successfully market their sharia niche, target the right markets and take into account their surroundings can benefit from more intraregional travellers as well as a good base of international guests.

“When we talk about attracting the Arab world, it’s very well known they spend 10—15% more than the average traveller, so if we target this market with tailored sharia properties this will be our main feeder market in the future,” says Erhardt.

“That will bring in more revenue. They stay longer, they’re mostly large families and they come and use the F&B services and shop. The lost revenue from alcohol is almost immediately made up,” she adds.

The hotels were in agreement that their sharia niche had worked in their favour, particularly during the financial downturn.

In Abu Dhabi, Jaoude claims his hotels are “leading”; running at 90% occupancy with a high yield. In Dubai the company is on par with the market, despite a slight setback in May. “Hopefully with the creative marketing package of brands we’ll maintain our market share. Sharia is an advantage,” adds Jaoude.

The Radisson Blu Residences, Dubai Marina claims to be running at 80% occupancy and has maintained a high revPAR.

Tamani’s Gordon acknowledges that operating a sharia-compliant hotel during the downturn is a different business model, as in many hotels, alcohol profits are greater than other parts of the business.

“It can be challenging, but it’s all about ensuring the long-term profitability and requires hoteliers operating sharia-compliant hotels to be more creative and translate revenue streams,” concludes Gordon.

The halal revolution
According to the Kuala Lumpur-based Halal Journal, the global halal food industry is currently worth around US $632 billion per year.

Even for hotels targeting both Muslim and non-Muslim markets, offering non-halal items means financing separate suppliers and storage facilities and so on.

“So making your whole operation halal is actually the most cost-efficient method of production. It would almost be easier if all suppliers did things that way,” explains Shangri-La Qaryat Al-Beri’s executive chef Gary Robinson.

He points out that non-Muslims expect to see halal foods and may even prefer halal meat based on their health as halal regulations are strict and appear to pay a lot of attention to the standards of food products.

“We’ve been exporting meat from Australia for 20 years and have had a really strong relationship with the Middle East for about five of those years,” says Country Hill International’s Hamish McKerrow.

“There’s been a dramatic rise in halal meat imports from Australia since 2003, when ‘Mad Cow Disease’ broke out in the US and a lot of countries banned US meat”.

Australia and New Zealand then decided to fill the profile, became well-positioned in the halal market and have continued to grow as Halal meat providers ever since.

“Today we’re seeing an increased demand for halal across the globe,” adds McKerrow.