Luxury Hotel Brand Bets on China

With one luxury hotel already up and running in Shanghai and five more properties under development there, Jumeirah Group’s Executive Chairman says he’s really excited about China.


“China is really taking the tourism and travel industry by storm,” Gerald Lawless tells CNBC’s “Access: Middle East”.

Over 193,000 Chinese tourists checked-in across the emirate in 2011, an increase of 27 percent year-on-year.

The World Tourism Organization (WTO) estimates that China’s outbound tourism will reach 100 million visitors by 2020.

“As people become wealthier, they want to travel,” says Lawless. “They love to come here and [one of] their favorite hotels is the Burj Al Arab."

In the first three months of this year the Jumeirah Group reported a 30 percent increase in guests from China. And as Dubai’s international luxury hotel brand, the company already has 12 properties in operation outside of the United Arab Emirates.

“We want to compete with the big boys, with companies like the Four Seasons, Ritz Carlton, Mandarin Oriental, and Shangri-La. We have always looked to be in that space,” Lawless said.

Official numbers showed a 10 percent increase in hotel guests in 2011, amounting to 9.1 million visitors checking in across the emirate.

But perhaps more significant is an estimate by the United Nations: Dubai’s visitors accounted for more than a fifth of Middle East international tourist receipts.

Most come from neighboring Gulf countries, followed by India, the United Kingdom, Iran and the United States. The expansion of Dubai’s airport is also supporting the industry.

It is the second busiest airport in the world in terms of international passengers so far this year, according to Airports Council International.

But it hasn’t been all smooth sailing.

When state-owned Dubai World announced it would be seeking to delay repayment of 3.5 billion in bonds out of a total of $59 billion in outstanding debt shook markets around the world.

Property prices in the region’s financial center plummeted and the construction craze came to a screeching halt.

Neighboring emirate Abu Dhabi came to the rescue using its abundance of oil wealth, and set in motion an arduous debt restructuring process.

Among the entities affected was government-owned Dubai Holding Commercial Operations Group (DHCOG), which owns the Jumeirah Group.

Lawless maintained the parent company acted in a “very mature way” over the crisis.

“Dubai Holding is our parent company and I think it’s steady as she goes,” he said, adding that the group’s expansion plans had not been curtailed as a result.

In a note earlier this year, rating agency Moody’s noted that “DHCOG’s recurring revenues stemming from Jumeirah Group, TECOM Investments and Dubai Properties Group’s rental portfolio remains supportive to DHCOG’s credit strength.”

Dubai’s economy swiftly found its way back to growth again, with the International Institute of Finance (IIF) recently forecasting real economic growth for Dubai at 2.5 percent this year.

Tourism, a key driver of Dubai’s economic growth, got an additional positive jolt with the advent of political turmoil elsewhere in the Arab world.

Destinations such as Dubai, Abu Dhabi and Qatar quickly become perceived as regional safe havens.

This was not a surprise for Lawless.

“I think that Dubai has been a regional safe haven for a long time. We have seen so many regional conflicts in and around here. The Iranian Revolution was going on right when I first came in 1978,” he said.

Find out more about where Dubai’s economy is heading, Jumeriah Group’s plans for the future and how profitable Lawless expects 2012 to be, on this week’s “Access: Middle East”.

Yousef Gamal El-Din is CNBC's Middle East Correspondent and contributes to the channel’s flagship shows, as well as analysis for CNBC.com.

Stay in touch with him on Twitter at http://www.twitter.com/youseftv @youseftv