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Cover Story

Letting the good times roll

August 2012

Qatar’s luxury hotel market is developing strongly following the opening of another high profile property earlier this year

by Mark Lazell
[email protected]

Standing on the terrace looking out over the Olympic-sized swimming pool and beyond the beach to the aquamarine sea, it could be a scene from one of Dubai’s swankier resorts.

But this is Doha, emerging business centre and until not long ago, Qatar’s sleepy and undeveloped capital.

The luxury St Regis brand, more closely associated with the glitz and glamour of New York or Paris than a nouveau riche Gulf capital, is the latest big name hospitality company to beat a path to the tiny state’s shores. And from a purely business perspective, it is something of a no brainer – consecutive years of double digit economic growth driven by massive natural gas exports, and one of the world’s biggest sporting extravaganzas on the horizon has precipitated a dramatic spike in commercial activity and development.

The project’s backers, led by the Al Fardan Group, a successful local family which holds the dealerships for prestigious car makers including Rolls Royce, Ferrari, Maserati, BMW and Range Rover – have demonstrated their faith in the brand by pumping about QR2 billion ($549 million) into the hotel.

“They [the owners] understand the value of a prestigious brand, and believe in St Regis’ philosophy,” says Tareq Derbas, the hotel’s general manager. “It is now our responsibility to ensure a good return on investment,” he adds.

In this respect if early performance indications are anything to go by the waterfront property has made a reasonable start since its doors opened in March this year. According to Derbas, the hotel has already achieved the highest average room rate per night in the city, suite occupancy is “very high” (a night in the lavish Presidential Suite costs QR60,000 (about $16,500) per night and its facilities – including two restaurants bearing the signature of controversial British Michelin-starred TV chef Gordon Ramsay – have attracted the attentions of some of the city’s movers and shakers, having already hosted royal weddings and other high profile nuptials.

St Regis enters a rapidly developing local luxury market defined by an influx of top hospitality names in recent years. As of 2012, Doha has a total of 112 hotels offering almost 17,000 rooms. This fact, says Derbas, is dramatically changing market dynamics.

“Even 10 years ago there was very little choice [of luxury hotels] in Doha,” he says. “Where once hotels called the shots, customers are now in the driving seat, because they have a choice,” he notes.

Nevertheless there appears to be plenty of business to go around. According to figures from the QTA, five-star hotel revenues surged dramatically in Doha in the first quarter of 2012, compared with the same quarter of 2011, reaching approximately QR32 million.

Average hotel occupancy, said the QTA, reached 64 per cent in the first quarter this year against 68 per cent in the first quarter of 2011, and revenues of four and five star establishments stood at QR734 million, an increase of QR32 million compared to the same period in 2011.

Meanwhile, the average number of Gulf Co-operation Council (GCC) visitors to Doha increased 22 per cent year-on-year in the first quarter of 2012, the QTA reported.

“We expect boom years over the next five to six years as mega projects in Qatar trigger an inflow of companies, contractors and consultants. The 2022 World Cup is also about so much more than just building stadiums,” Derbas says.

The country’s elevated profile around the world since the World Cup announcement is a marketer’s dream, even though the country has a long history of hosting international tennis, golf, athletics and football championships. The World Cup has out the country onto another plane.

Now, in the travel trade is talking about Qatar as a destination in a way promotional budgets could probably not, says Derbas.

“Since then [December 2010 announcement] we have seen a distinct change in attitude around the world towards Doha as a destination,” Derbas explains.

“We have attended trade shows as far afield as Shanghai, Paris and South America and Qatar is the name on everybody’s lips,” he adds.

While much of the credit for Qatar’s raised profile lies in the determination of its ruling family and government, the long-term success of the leisure industry in the country, reckons Derbas, will depend upon the ability of the industry’s key players and decision makers – including the Qatar Tourism Authority (QTA), which as recently as May conducted a promotional roadshow in six GCC cities to promote the country’s MICE (meetings, incentive, convention, exhibitions) industry, and national airline Qatar Airways and the hotels – to work together to capitalise on the elevated profile.

“The QTA and government have played a key role in directing inward investment into the hospitality industry. But there is no doubt the best is yet to come – with the World Cup announcement the country is now on the path towards the big league as a leisure destination,” he says.

While there are obvious benefits to a booming leisure industry – more jobs, a more diversified economy – hotels like St Regis face a challenge very specific to the Gulf states: getting more locals into the sector, in line with national policy.

“A big challenge is the perception of the service industry itself,” says Derbas. “You need to do a lot of PR, a lot of outreach to schools. It often boils down to money, too. The simple fact is that other sectors of the local economy pay more.”

With Ramadan and the traditional summer lull in full swing, this is a useful time of reflection, reaction and fine tuning of service for Derbas and his staff of more than 700 from 52 countries in advance of what he hopes will be a busy autumn.

“In the early days of a hotel opening you prepare for the best but have to expect to encounter the good, bad and ugly in terms of reviews from the market. It is a learning experience and how you react to feedback which defines success,” Derbas says.

Looking ahead, the general manager is adamant the St Regis Doha will grow into its new home market.

“The hotel will mature in terms of occupancy levels – we have contracts signed with 150 local companies who will use St Regis Doha to accommodate guests and staff,” he concludes.

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