The Downtown Burj Dubai area is fast emerging as one of the most exciting parts of the city, says John de Canha, Operations Director of Al Manzil and Qamardeen hotels there. The hotels are owned by Emaar and managed by South Africa-based Southern Sun Group. In this exclusive interview with Emirates Business, de Canha talks about the challenges facing his company – and the opportunities that lie ahead as the Downtown continues to develop. And he says though the fall in the dollar's value is causing problems for some individuals he feels businesses should continue to support the government's decision to maintain the peg.
How is the hospitality sector in Downtown Burj Dubai developing?
Al Manzil and Qamardeen hotels opened less than a year ago and were the first commercial operations in Downtown Burj Dubai. The area was a huge construction site and at first it was hard to bring people in. But we quickly realised that this location is outstanding. Nearby you have the Dubai International Convention and Exhibition Centre, Sheikh Zayed Road – which gives you easy access to Dubai in one direction and Jebel Ali Industrial Area and Abu Dhabi in the other. In addition you have the Dubai International Financial Centre area and easy access to the Dubai Marina. This means the hotels are full all the time.
What are your future expectations for the area?
When you look at property values here you realise the importance of the location, it is so convenient. Let's not forget the Dubai Mall – the biggest in the world – will open soon. You will have all the restaurants. When the Burj Dubai is complete and fully operational this area will be exciting beyond imagination.
With all the hotels already operating in Dubai and the new ones that are coming up, do you believe there is still a shortage of rooms?
Some 10,000 rooms emerged in the market in the first nine months of 2007 but occupancy remained strong in all types of hotels and hotel residences. This year it is anticipated that a further 10,000 new rooms will come on the market.
What is attracting so many visitors to Dubai?
Look at all the conventions, events, festivals, conferences and shows – that is why they keep coming. Dubai is a huge corporate market and then there is the leisure component that brings people in.
What is breakdown of your guests?
Seventy per cent are corporate and the rest are leisure. As far as guests from outside the Middle East are concerned, 30 per cent are from the United Kingdom – the biggest group – then comes Germany, India and other Asian countries.
How have the recent currency fluctuations affected your business?
On the operational level we have been watching the cost of doing business, especially when it comes to food supplies. Inflation has impacted us, so we have to shop and purchase smarter. Food now costs 10 per cent extra. But from the guest point of view, business is coming here because major countries have currencies that have strengthened against the dollar.
Observers say Europeans here are suffering from the dollar's weakness.
Expatriates from countries with currencies that are not pegged to the dollar are paying the price. They have lost 30 per cent of the value of their money. Many have mortgages at home and they pay for their kids' schooling in Europe.
How long do you think the currency fluctuations will last and what could be done to ease the problem?
This is a geo-political situation. The question is when whoever is in charge will de-peg from the dollar. They are looking beyond the present and believe the dollar will rise in value. However I do not believe this will happen in the next 18 to 20 months. People are also waiting for the outcome of the US presidential election.
What challenges do you face?
From an operational point of view, bringing in staff is an issue that we keep having to address. The biggest issues arising from inflation for staff are food, accommodation and clothing – the fundamentals. But we provide all these so they do not effect our employees. So the hospitality sector may be able to absorb inflation better than other sectors.
Are you considering setting your rates in currencies that are not pegged to the dollar?
We had a similar situation many years ago in South Africa where people would not deal in the local currency and used the dollar. That was a very poor policy. Such thinking has not appeared on our radar screen. My gut reaction is that you want to be in step with the way the government conducts its business. What we have seen from the government in this country has been phenomenally effective and it has all been driven by the peg to the dollar. If we say we will change our rates to euro or any other currency the first thing I would say is, where would this leave us with regard to the way the government is going about promoting this country? So we would not do it.
PROFILE: John de Canha, Operations Director, Al Manzil and Qamardeen hotels
John de Canha is a South African national with roots in Portugal. From 1973 to 1995 he managed and developed Forte hotels in South Africa, the Netherlands, the United States, Mexico and Canada. In 1995 he joined South Africa's Southern Sun Hotel Group and worked at its luxury hotels including the Sandton Convention Centre.
He arrived in the UAE in 2006 to work at the group's first two hotels in Dubai, Al Manzil and the Qamardeen. He was president of the Monterrey Hospitality Association in 1991, chairman of American Institute of Wine and Food in 1993 and director of the Sandton City and Convention Centre Improvement District in 2005. De Canha is married with three children and speaks English, Dutch, Portuguese, Italian, Spanish and Afrikaans.