CAPM-Layia JV to develop budget hotels

Layia Hospitality and CAPM Investment have entered into a joint venture agreement to develop five properties under a new budget hotel brand titled Day & Night Hotels.

The Dh500 million project, under the Layia Abu Dhabi brand, should see the first hotel open in two years' time in Abu Dhabi, with the objective of adding 1,000 rooms to Abu Dhabi in five years, said CAPM Chairman, Khaled Al Mass. Further expansion into the GCC has also not been ruled out.

The Abu Dhabi-based CAPM Investment plans to invest Dh250m into the project, with the company investing half of that figure as a general partner, while the remaining Dh125m will be raised through investors, via its newly established hospitality brand, CAPM Hotels Investments Company.

"We are targeting high net-worth individuals and institutions from the UAE and the region to raise Dh125m in initial required capital," said Yasser Geissah, CEO of CAPM Investment.

The group's hospitality brand will own 20 per cent of the new joint venture company, with the Dubai-based Layia Hospitality owning the remaining share.

The three-star Day & Night Hotels will be dry properties, "targeting the next generation of executives", said Layia Hospitality CEO, Daniel Hajjar.

He said: "We are aiming to keep our prices low, with room rates ranging between $100 (Dh367) and $120, yet offering rooms that are 15 per cent larger than average three-star budget hotels."


Marketing mechanics

Looking at an average occupancy ratio of 70 to 80 per cent, the brand's target market includes university graduates, or who Hajjar refers to as "the new batch of business executives who we call the Apple and iPod generation".

Keeping the budget brand's target market in mind, 50 per cent of Day & Night's marketing expenditure will be online, said Hajjar. "We also expect 50 per cent of our revenues to be generated through online methods for Day & Night, especially since our other hospitality brand – the four- and five- star flagship Layia Hotels – made 43 per cent of its revenue last year online."

There are currently four hotels operating in the UAE under their flagship brand.

To keep the hotel's prices even more competitive, Hajjar said new techniques will be introduced into the brand to cut costs down and make the stay as contact-less as possible.

Much like British budget hotel brand easyHotels, which charges nominal fees for housekeeping services and other miscellaneous amenities, Hajjar says Day & Night hotels will introduce a vending machine concept.

"We cannot take away basic housekeeping services, however, perks such as bellboys maybe available at a minimal cost. Even amenities such as bathrobes and toothbrushes can be obtained for a nominal fee through vending machines placed on each hotel floor," he said.

Hajjar added: "We also want to introduce self check-in at our hotel properties, however, due to technical issues biometric scanning for all passports is not possible. This is a glitch we are still working on, but we hope to at least introduce self check-out."

Airline partnerships

Hajjar also confirmed that Day & Night was seeking to partner with budget airline carriers in the future, especially since their target market has become more money conscious in the wake of the global economic downturn.

"We are flirting with carriers and people in the aviation sector, but it is too soon to announce partnerships, since the first Day & Night will open doors only in two years time," said Hajjar.

He added: "We have seen the success of budget carriers such as the Sharjah-based Air Arabia, Kuwait's Jazeera Airways and flydubai in recent times, and we believe the stigma of the word 'budget' has ceased to exist.

"An added incentive is that Abu Dhabi Airport is also now welcoming budget carriers, with Jazeera and AirAsia flying out of the capital."

When quizzed if a partnership with full-fare carrier, Etihad Airways, could possibly be on the cards, Hajjar did not completely rule this out.

"Much like Emirates airlines' partnership with budget hospitality brand, Premier Inn, we believe that there is a big market out there and ruling out Etihad would be ridiculous on our parts."

The economic downturn has been a challenging time for the global hospitality industry and Hajjar said that Layia had not been spared with their Al Barsha property, which opened in 2009, suffering with an average occupancy ratio of 62 per cent.

Future growth

"But that has not caused any delays on our part," he said.

"In fact, if we look at our projections, we aim to open between 10 and 15 Layia Hotels and add another three Day & Night hotels to the five already announced.

"Plus, find us a partner and we will even pencil regional expansion soon enough."

QNH to run hotel operations

Doha-based developer Qatar National Hotels Company (QNH) has announced it will enter the hotel operation business with Merwebhotel Central Doha, a converted ancient fort.

The 218-room business hotel, which opened in December last year, is the first of many hotels being planned under the Merweb brand, QNH said.

"Merwebhotel Central Doha is a prototype of the Merwebhotel brand and it is a product tailor-made for its market. With a unique 'can do, will do' attitude, we are confident to exceed the expectations of any guest who wishes to experience a 'stressfree living' environment," said Mario Borg D'Anastasi, General Manager of the hotel.

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