Bawadi’s success plan

Bawadi will be built over three phases, which means that opportunities will be left open for investors depending which stage of the programme we are at, and according to the marketing and promotional materials that we have. Definitely phase one is the hotels, we have actually signed several agreements, and we still have opportunities left – specifically hotel investment opportunities, where people can come and choose either three-, four-, or five-star hotels, based on a specific fee and a specific timeline where we can commit to it.

But interestingly enough, it’s more of a partnership that we do here, it’s not just selling off land for an investor to develop into a hotel. It’s selecting the right person and the right developer and giving them the access to build a specific hotel or facility structured to exact specifications.

At the same time we have our own criteria for selection, and our own criteria for the approval process; because if you are talking about 1000 rooms, and talking about three or four or five stars, it’s a very large investment. So we are building a mechanism where we will be able select the right developer, and select the right product, agree to a specific timeline, and agree on specific offerings that hotel will offer, which should add value and should be complementary to the destination as a whole.

What stage is the development at now – is construction underway or is it still being planned?

We have always said that the cycle would be divided into three phases: there is a designing phase, a construction phase, and there is an operation phase, which is a destination management phase. Currently, because the launch of Bawadi was in May last year, almost eight months ago, we are still in the planning phase, but we believe construction will start from Q3 next year.

Are there any timelines beyond that for when construction will be complete?

Definitely, for construction there are specific timelines for any project that you do, and there are specific timelines for designing and concept planning. Definitely because we are driving the business and driving the success of Bawadi, we will be taking risks and venturing onto the site as the first developers. Phase one will be built, owned and operated by our parent company, Tatweer, and these will be the hotels Asia Asia, Desert Gate One and Desert Gate Two. The completion of these will be by the end of 2010 or early 2011.

You said you are going to be building the phase one hotels, are you going to operate them as well?

As far as operating hotels, we don’t have the skill-set to run them and manage them. We will commission a managing company to run them for us. We are negotiating with different companies, and we will be disclosing who will be managing those hotels before the end of the year as far as Asia Asia and Desert Gate are concerned.

Do you have any indications of which hotel brands will be part of Bawadi?

Each of the investors that we have announced so far will be announcing their own operators and their own management companies. As far as Bawadi is concerned, we are trying to make sure that all of the developers coming in and operating in Bawadi will be international names, and will be able to offer the best offerings to the market and to the end customers.

Given Bawadi is going to contribute a massive number of rooms to the Dubai hotel inventory, are you worried about oversupplying the market?

[There will] definitely not be an oversupply, it will be a balance in the market. Currently you have occupancy that exceeds 90% year-round, and this is not really a normal occupancy rate. Bawadi will be contributing more than 29,000 hotel rooms over different phases. Currently, Dubai boasts around 38,000 or 40,000 rooms, but in the coming four or five years there will be an increase in that number, and Bawadi will be contributing to the overall hospitality sector in Dubai. But Bawadi will not be driving the oversupply. I would say Bawadi will be managing the great demand that we are experiencing in Dubai.

With Bawadi situated in Dubailand, how do you see the two interacting? Do you think that they will take visitors away from each other or will they offer an integrated experience?

If you have a turbo engine, and a supercharger next to it, definitely there is a synergy. We believe there is a huge complementary between Bawadi and Dubailand because Bawadi will capture certain things and Dubailand will capture another market, the theme park side of things. There is a need for such offerings, and a great synergy between the two. As far as location, we believe that being in one geographic location adds a great value to us as a master developer and to the end customers and visitors, because there is a great opportunity for visitors to Dubailand and Bawadi being able to move around and visit it all from destination to destination. There is a synergy from being next to each other.

Is the project’s investment on track?

We don’t want to go to the public and give away all the opportunities. We have phases even for our sales activities, allowing for investors to come on board. So that is exactly what we have done, we have announced Bawadi and we have been able to bring certain partners with us.

We will be signing our partnerships according to the plan in terms of what to sell, when to sell, and what sort of relationship to expect.