Dubai: Rotana Hotels has signed a management agreement for its first property in India, Omer Kaddouri, president and chief executive of the company, told Gulf News in an interview on Thursday.

The 200-room hotel under its midscale Centro Hotels brand is expected to open in Mumbai by 2018.

“Once we open one, I’m sure there will be more to come,” Kaddouri said without providing additional details. He, however, declined to name the hotel’s owner.

India has attracted the interest of a number of hotel companies, including Dubai-based Jumeirah, which reportedly plans to operate a hotel in Mumbai by 2019, and US-based Starwood Hotels and Resorts Worldwide, which has more than 40 properties there.

“The Indian hotel market is large and diverse. India has an increasing middle class with money to spend,” said Christopher Hewett, senior consultant at TRI Consulting.

The Abu Dhabi-based hotel chain, which has 50 properties in operation and 55 under development, will focus on expanding in other areas in the Middle East and Africa region in the coming years. Rotana had set a target two years ago to have 100 hotels in the region by 2020.

“We’re very strong in the UAE and that allows us to start thinking about signing more hotels in other areas around us,” Kaddouri said.

The company plans to open 10 hotels in the region by the first quarter of 2016 in markets including Turkey, Qatar, Jordan, Bahrain and Congo. Two hotels in Qatar and one in Bahrain are scheduled to open by the end of the year, while properties in Lagos, Nigeria and Mauritania are expected to open in two-and-a-half years time.

Domestic market

Africa has attracted a number of hotel operators, such as Marriott International and Minor Hotel Group. Rotana’s other plans in Africa include a mixed-use project in Dar es Salaam.

“Nigeria is one of the largest economies in Africa. Lagos is starting to see large hotels entering the market,” Hewett said.

Rotana also plans to expand in its domestic market, with two hotels in Dubai — the Creek Rotana and Wafi Rotana — due to open in 2017 and 2018, respectively. It expects to sign management agreements for more hotels in Dubai in the next three to four months in locations including Dubai World Central, where the Dubai Expo 2020, a six-month trade fair that is anticipated to attract 25 million visitors, will be hosted.

In Abu Dhabi, Rotana plans to open an Arjaan-branded hotel apartment building, a Centro property and the Marina Mall Arjaan in 2015, 2016 and 2017, respectively. The UAE is Rotana’s largest market, accounting for 65 per cent of its total revenue.

While Kaddouri declined to say how much he expects the company’s profit and revenue to grow this year, he said last year’s growth was “small” without providing a figure.

“There was very small growth from 2013 to 2014. I think the reason is that 2013 was a good year and a lot of hotels in the region hoped that 2014 would be as strong as 2013. But with the increase in inventory in Dubai, there was a lot of pressure on revenue. Therefore, the increase was minimal,” he said.

Supply

Increasing hotel room supply has put pressure on room rates in Dubai. Last year, 46 hotels entered the market, bringing the total to 657, according to the Dubai Corporation for Tourism and Commerce Marketing (DCTCM).

Average daily rates of hotels in Dubai fell 5.6 per cent in February to touch Dh983, while occupancy dropped 1.9 per cent to reach 86.6 per cent, resulting in revenue per available room (RevPAR — an industry benchmark for performance) reaching Dh852, down 7.4 per cent, according to data from research firm, STR Global.

According to Kaddouri, Rotana’s Dubai hotels have lowered their room rates since the beginning of the year. That, plus a lower occupancy rate, has led to pressure on the company’s profitability. However, he expects “an improvement in year-on-year business from April moving forward.”