Yas Island GMs debate its future

Following the speedy departure of the F1 cars and the thousands of Grand Prix spectators, Louise Birchall investigates what lies ahead for Abu Dhabi’s seven new hotels

Sat in the peaceful Yas Island Rotana lobby early last month, it’s hard to imagine the “tsunami” of guests that Joe Batshoun, complex GM for Yas Island Rotana and Centro by Rotana Yas Island, recalls flooding into the hotel just one week before, during the first Formula 1 Etihad Airways Abu Dhabi Grand Prix.

Now, guests are outnumbered by the many attentive staff. At breakfast, one polite employee carries my plate to the table, another carries my handbag and one pulls out a chair, while a fourth staff member pours some tea.

The quietness extends across the plaza to the Radisson Blu Hotel Abu Dhabi Yas Island, only there aren’t quite as many employees.

“Our staff didn’t have a day off in 10 days so I’ve given everybody five days’ holiday for all their hard work,” explains Radisson Blu and Park Inn Abu Dhabi Yas Island cluster general manager Torbjörn Bodin.

The hoteliers say this is just the calm after the storm, but to a sceptical onlooker there’s a distinct drought of guests, which raises the question of ‘what happens next?’

What does the New Year hold for the seven Aldar Hotels and Hospitality-owned Yas Island properties now, since the F1 cars have sped off, taking the spectators with them?

Only 2010 will tell whether Yas Island hotels will be able to attract enough guests without the hype of the Grand Prix. However, the hotels have proved sceptics wrong before and are convinced they can do it again.

Previously doubtful industry players have told Hotelier that the biggest surprise of 2009 was the speed at which the Yas Island development and its hotels came together. Even the Yas Island hotels’ management had their doubts.

“Two weeks before the race there was nothing on the plaza; there wasn’t even a road to the hotel, but when you saw how fast these things were appearing you were amazed. You’d go for lunch and come back and the landscape would have changed,” observes Bodin.

Similarly, Batshoun admits being “stressed and concerned” over whether the hotels would be ready for the looming race deadline.

“I was showing the Rotana chairman around the hotels and he just kept saying ‘wow’, while I’m saying ‘I don’t think it’s going to be ready’. But the last time that he had seen it, there had been nothing. The foundations were only laid in February 2008. It’s not only the quality and magnitude of what has been achieved on Yas Island that is mind boggling; it’s the speed,” says Batshoun.

Furthermore, in August, wholesale giant Gulliver Travels Associates (GTA) director of business development MEA Younes Ajdi warned Yas Island hotels that they were “unlikely” to achieve the 100% occupancy rates they expected during the race due to the global economic downturn.

A confident Paul Bell, managing director of Aldar Hotels and Hospitality, fought off such speculation saying the hotels would “not merely be full”, but would be “turning away many room enquiries”.

And Bell was right. All seven hotels open on the island, comprising two Rezidor hotels, two IHG hotels, two Rotana hotels and Aldar Hotels’ first owned and operated venture The Yas Hotel, claimed full occupancy of available rooms during the race days; though not without a few hiccups.

The Yas Hotel traded more than 400 bedrooms out of a possible 499, but “lots of hotels trade a year after opening with five to 10% of rooms out of order,” defends Bell. Similarly, technical issues meant that 40 rooms at the Radisson could not be sold.

“The room I stayed in was out of order. The bathroom mirror was broken, there were only two lights working, the TV didn’t switch on and the door wouldn’t lock,” says Bodin.

Forecasting performance

Anticipating that Abu Dhabi Tourism Authority (ADTA) would impose a cap on room rates during the race days, the hotels appropriately set rates in line with ADTA’s expectations (ADTA could not reveal the capped rate), but significantly higher than a normal demand period.

Average daily rates (ADR) were around AED 2650 (US $721) at Rotana Yas Island, AED 2500 ($680) at Radisson and around AED 1850 ($503) at Park Inn, for example.

In September, IDeaS Advantage senior consultant Paul Van Meerendonk told Hotelier that during special events like a Grand Prix, it is especially important for hotels to keep a tight control on room inventory. He said appropriate overbooking levels should be set to account for the expected higher rate of cancellations.

In spite of having little experience managing host hotels for an event of that scale, hotel management at all seven properties wisely implemented minimum-stay periods and cancellation clauses, though most did not overbook. “People were paying a lot of money and we could not walk them somewhere else if we were full because every other hotel on the island was full,” explains Batshoun.

However, inexperience was evident in other areas. The “tsunami” of guests Batshoun mentioned certainly took Yas Island Rotana’s F&B outlets by surprise, so much so that Batshoun and the hotels’ department heads found themselves cleaning tables.

“There were scheduled events where up to 50,000 people were leaving at the same time and they all wanted something to eat and drink. The shuttle bus stopped just before the hotel and people could see guests on the restaurant terraces and wanted to come in. It was difficult trying to serve everybody and we tried to limit the number of people coming in, but they were just very upset. It was a huge learning opportunity,” says Batshoun.

On the other hand, Radisson and Park Inn expected the wave of guests. “We had a ‘tsunami’ warning out and we tried to channel as many guests as possible to our buffet restaurant, which is obviously easier for us to cope with”, Bodin says.

On the best race day, Radisson’s food and beverage outlets made 1480 covers, where as Choices buffet restaurant at the Yas Island Rotana had specific meal times that, unfortunately, didn’t synchronise with event timings. So people left an event at 2:30 pm and came to the restaurant at 3:30 pm to find the buffet had closed half an hour ago, for example.

The hotel extended its buffet timings for the remaining race days to open from around midday to the early hours of the morning, and on the up side, it doubled its forecast revenue from F&B over the race period.

Sufficient staffing

Opening to 100% occupancy with an enormous demand for F&B was never going to be easy, but aside from some slight oversights, all seven hotels had prepared well in terms of staff training and product supplies.

Crowne Plaza & Staybridge Suites Abu Dhabi Yas Island prepared for full occupancy with more than 100 staff brought in from other properties that left just after the race, according to complex GM Dieter Franke.

Similarly, the two Rotana properties had around 70 staff assistants from other Rotana hotels.

Radisson and Park Inn, however, only had 25-30 staff brought in and Bodin probably wasn’t exaggerating when he said employees did a “tremendous job” as the hotels only staffed for around 50% occupancy to account for reduced demand after the race.

Bodin accepts that “of course there were some unhappy guests and on some occasions we compensated them for a stay that wasn’t perfect, but the majority was more than satisfied and we received many ‘thank you’ letters”.

The Yas Hotel didn’t have the benefit of having sister properties to pull its 800 plus employee base from, but the hotel put a successful operation down to pre-planning.

“We hired staff earlier and did a huge amount of off-site training that really paid off. You needed experience and flexibility,” says Bell.

In the months leading up to the race, up to 2000 staff members were recruited across the seven hotels; many flocked to Yas Island from Dubai properties that had frozen pay rises and promotions in the midst of the global economic downturn, but the Yas Island hotels weren’t offering anything “extraordinary” in terms of its staff packages, according to Bell.

“The excitement of the product, the location and the relative stability of the Abu Dhabi hotel market was attractive to staff inside and outside the UAE,” he says.

“We were fortunate because we were recruiting when a lot of other hotels were letting people go,” adds Batshoun, who says 40% of employees came from existing Middle East Rotana properties, around a quarter from Dubai and the rest from overseas countries, such as India and a new source market, China.

Luckily, the ‘excitement’ of the Yas Island project made it a priority for most suppliers too, who were very “committed”, say the hotels, but they were understandably “stretched”.

Rotana had some challenges with fresh produce and the Rezidor hotels faced problems with laundry, but considering that seven hotels opened on Yas Island to one deadline, the operation was relatively smooth.

Rare relationships

This rare situation also meant the hotel management developed a unique relationship to the point where they borrowed items from one another.

“The fact that seven hotels have opened at the same time, in the same place, by three different hotel groups and one owner is unique in itself and presents lots of opportunities for a consolidated effort in creating a destination,” says Franke.

Going forward, Franke expects the hotels’ relationship to be a key driver of their success: “Each of the hotel’s products has been designed to complement each other. It’s in everyone’s interest to raise awareness of Yas Island and jointly build a destination that has so much to offer. Hence, we all work very closely together,” he says.

Driving demand

But what does Yas Island offer that can justify adding 2260 hotel rooms — plus more than 13 additional hotels planned in later phases of the development — to Abu Dhabi’s expanding hotel market? After all, the capital began 2009 with just 13,000 hotel rooms. It now has 18,300 and anticipates hitting the 25,000 mark by the end of 2012.

“The growth in the number of hotel rooms will match the expected growth in visitors to Abu Dhabi over the next few years as it develops into a cultural, leisure and business destination,” asserts Franke.

Similarly, Bell points out that Abu Dhabi has one of the strongest hotel markets in the world and he is backed up by Deloitte global managing partner of tourism hospitality & leisure Alex Kyriakidis.

“Abu Dhabi’s hotels have achieved double-digit growth for five consecutive years, but started to contract in June 2009 as the global economic crisis continued to dampen international travel demand during the low season,” says Kyriakidis.

“Despite this, hoteliers in Abu Dhabi still achieve the strongest occupancy (74.2%), average room rates (US $279) and revPAR (US $207) in the Middle East, year-to-September 2009,” he says.

Of course, the staunch support of the ADTA also stands Yas Island in good stead.

According to ADTA deputy director general Ahmed Hussein, the capital has already benefited from a “significant upturn in awareness of and interest in the destination following the Abu Dhabi Grand Prix”.

And promotion of Yas Island will form part of ADTA’s overall destination marketing, which is to be significantly enhanced during 2010 with the planned openings of new overseas offices and the roll out of a global marketing campaign.

Bodin says that the race has put Abu Dhabi on the map. The focus has not been on promoting individual hotels; it has been on promoting Abu Dhabi and Yas Island.

Bell adds: “You have got to let people know that the product is out there and they should know what to expect, which is what we’re doing through the World Travel Market (WTM) and Institute of Business Travel Management (IBTM) in Germany, then we have to deliver as operators.

“We were at WTM, not on an Aldar stand or a Yas Island stand, but as part of ADTA’s presence supporting Abu Dhabi first and foremost and then telling people what we’re doing as part of Plan 2030,” he explains.

On an operator level, the seven hotels are focusing on three short-term goals: creating awareness of the product, raising the profile of their F&B outlets to attract weekend stays from surrounding emirates, and attracting meetings, conferences and events business to entice mainly GCC and European markets to the island. All express long-term intentions of looking beyond these traditional markets and targeting the leisure sector.

“We are currently working hard to attract business travellers and to make contracts with various corporate companies,” says Bodin.

“If you are a businessman and would like to do business in Abu Dhabi and Dubai, Yas Island is the perfect spot. We’re just in between the two capitals of the UAE,” he adds.

Future focus

Franke believes that in the future, Yas Island could be a “strong contender” as the UAE’s number one MICE destination, given its extensive facilities, location and its infrastructure.

But ADTA’s Hussein emphasises that while Yas Island will be a “key MICE destination”, it will “by no means be the only one”, highlighting the development of Abu Dhabi National Exhibitions Centre (ADNEC) and new venues such as Qasr Al Sarab desert retreat in Liwa Desert, Fairmont Bab Al Bahr and Al Shaheen Conference Centre located in the Abu Dhabi Falcon Hospital, among others.

It is clear that ADTA’s long-term ambition for Yas Island extends beyond meetings and events business. Hussein says Yas Island adds an important new dimension to Abu Dhabi’s attractiveness as a leisure tourism destination, helping to increase overall length of stay.

“And the potential to grow leisure tourism in the capital, which until now has been a business-dominated environment, should not be underestimated,” he adds.

Compelling conclusion

Yas Island’s potential as a leisure and business destination is a crucial piece of the jigsaw for Abu Dhabi in “aggressively competing” for its market share of visitors to the UAE, according to ADTA’s Hussein.

Yet, whether Abu Dhabi can compete against Dubai — or the ‘second capital of the UAE’ as Bodin refers to it — remains to be seen.

“Brand Dubai is a very powerful brand, now we need to go back and create brand UAE,” suggests Rotana’s Batshoun.

“Abu Dhabi and Dubai should be marketed jointly, we are one country with two phenomenal products; it’s important we sell them together. The emirates have something unique to offer, put it all together and it’s a treasure chest,” he adds.

That’s the tactic Batshoun has adopted in marketing five-star Yas Island Rotana and mid-scale brand Centro by Rotana Yas Island; selling the two different products together with the same vigour and leaving it to the customer to choose.

However, Hussein insists that Abu Dhabi is not attempting to steal the limelight from Dubai. “We are not trying to steal anything, but to develop our own compelling proposition, which will complement the varied offering now available throughout the wider UAE,” he says.

Whatever the motives for developing Yas Island, there’s no denying that it is being marketed as an “unrivalled destination”, with more than 20 hotels, three theme parks, a super regional mall, golf courses, several marinas and commercial and residential developments (see timeline).

Lucratively positioned just 45 minutes away from Dubai, 30 minutes from Abu Dhabi mainland and 10 minutes from Abu Dhabi International Airport, the destination has the potential to become a must-visit for business and leisure guests to Dubai and Abu Dhabi.

The seven hotels on Yas Island believe it is the perfect stepping stone between the two emirates and, in spite of the current come down from the hype of the Grand Prix, speak positively of its potential.

“Dubai is growing towards Abu Dhabi and Abu Dhabi is growing towards Dubai, very soon they will come together and Yas Island will certainly be an important part of that,” says Batshoun.

“Yas Island will be able to position itself worldwide as a prime business and leisure destination,” adds Franke.

Hopefully so, as the success of the seven Aldar Hotels and Hospitality properties, and that of those hotels to come, relies on Yas Island becoming a year-round destination.

When that will happen remains to be seen, but with ADTA’s determination, Aldar’s vision and the seven hotels’ united front, it could be sooner than some think.

And it’s certainly not a case of waiting until the F1 returns in all its glory in a year’s time.

Before that, the launch of the golf course, yacht club, and most excitingly, the world’s first Ferrari theme park — already visible to anyone driving by Yas Island — will each attract a different audience.

But visitors to the island will have one thing in common — a need for somewhere to stay.

The opportunities are clearly wide open for these seven new Yas Island hotels; they now need to focus on ensuring that they have a strategy in place to capitalise on each one of the upcoming products, just as they did with the super-successful inaugural Abu Dhabi Grand Prix.