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September 17, 2008

Breaking with convention

With 40,000 group room nights already secured and directly attributed to the conventions sales team, Atlantis is rising at a rate that nobody – not even the resort’s own sales team – could have predicted.


“The budgets for the conventions sales team have already been revised upwards at least four times,” jokes Brett Armitage, senior vice president sales for the 1,539-room Atlantis, The Palm. “We really have surpassed our best expectations and there are lots more bookings to come.”


But what has really startled the property is the source for all this business. While the rest of Dubai would expect this to follow the usual trend of UK, Germany and France, incredibly these leading European markets don’t even feature in the top 10.


“Interestingly, our source markets for groups are not the traditional markets that you would expect. UK and Germany are outside the top 10. Local business ranks first, followed by Spain, Belgium, Australia, South Africa, Russia, Italy, Portugal and Brazil. That’s actually in terms of contracted, signed and sealed business,” says Armitage.


By local business, Armitage clarifies that he is mostly referring to big-name corporates from throughout the UAE. He claims that the iceberg has hardly tipped towards the intra-regional market for the time-being.


The partnership approach being adopted with DMCs is also a change in tack for a Dubai property, with Armitage commenting: “Groups form the cornerstone of the business model that we have put together for Atlantis and we have been very aggressively targeting this market."


“While we have our own representation and marketing investments in certain markets, we have certainly benefitted from our partnership with DMCs, which has generated more than 50 percent of total bookings so far.”


So will this strategic arrangement with DMCs turn out to be a case of being ‘fairweather friends’? Or is Atlantis, The Palm gearing up for a long-term commitment towards this partnership?


Armitage is candid when he admits: “This has been one of the initial scepticisms voiced by the local DMC partners as well as international meeting planners. But one has to realistically look at how Dubai is going to transition over the next few years. Will the heyday ‘95 percent occupancy’ FIT business continue?"


“The convention infrastructure, the size of the facilities, the cornerstone of what has been built into Atlantis is to support groups business. We will always have a strong component of groups business.”


Echoing this confidence is Frederic Bardin, senior vice president, Arabian Adventures, one of the key DMC partners for the property.


“Atlantis, The Palm is the best news we have had for some time. We haven’t had such a large property opening in a long time and we had been voicing our concerns about this,” said Bardin.


“We were desperately out of rooms in Dubai and were turning away a large amount of business. Now we are finally getting to where we should be and within the next two or three years, Dubai will see an additional 40,000 hotel rooms. Atlantis, The Palm is just the beginning,” he says.


Zaki Badawi, head of business development at Gulf Dunes, another significant Atlantis partner, says, “A huge property like Atlantis needs the support of DMCs to fill in the room nights. We have been promoting the property to all our clients and agents and this has resulted in two big groups for 2009, both taking 700 rooms each."


“In my opinion groups business is very sensitive and can hit highs and lows depending on the political or economic situations in the destination; whereas FIT is more consistent and resilient in nature. Hotels obviously find it easier to cater to FIT business, but Atlantis, The Palm will bring group business back to Dubai. Prospects for this sector for 2009 and 2010 look very good.”


David Hackett, chairman of The MINT Organization, a member of BI Worldwide, a global company in business improvement, believes Atlantis, The Palm will soon become the venue of choice with DMCs and event organisers. “Dubai has lots of large scale hotels but it is very positive for event organisers to have a beachfront hotel that is willing to commit to providing 500-700 rooms for groups. If Atlantis, The Palm maintains this policy they could become Dubai’s premier choice for large scale international meetings,” he says.


Business partners

This seems a significant turn of events for local DMCs and international meeting planners who have faced some resistance from Dubai hotels to accommodate their groups.


The challenge has been created by the relative comfort hotels have found in the vast amounts of FIT business enjoyed over the past few years. Little room has been left to work with DMCs to bring in group business – they simply haven’t had the space or desire to block/allocate rooms as this tends to create a dip in occupancy during the shoulder periods before and after the events.


“There has always been a cap on the size of groups that could be brought to Dubai. In addition, there was also nothing new to offer, which for some time had led to the wane of Dubai as a meetings and incentives destination. Atlantis, The Palm has perked up interest and will give us the opportunity to bring large groups to Dubai and accommodate them in one property making it logistically feasible,” says Badawi of Gulf Dunes.


Bardin of Arabian Adventures concurs by saying, “Atlantis, The Palm is embracing groups business and 1,500 rooms on the beach is long overdue. We’ve placed some groups into the property in early 2009 which we could not have placed anywhere else. The other hotels already have their business, so can’t help us with our groups. Atlantis is more flexible because of the number of rooms."


“We have a group of 400 staying there in February 2009. No other hotel on the Jumeirah strip would either want that business or be able to handle it, because they are getting good business from FITs. What remains to be seen is if one year after the opening, Atlantis, The Palm is still as flexible,” he adds.


Armitage is cognisant of the sentiments reflected within the industry and reiterates by saying, “The one thing that straightaway sets us apart from other hotels is that we actually want group business. We have a 600-room group ceiling every night of the year. This is a year-round block. There is not a day in the year when we cannot host groups.


“For 2009, taking the full year into account and going by the business confirmed and in the pipeline, a total of 15 percent of our business will come through groups. During ‘Oct-Nov’ and ‘Feb-Mar’, which are typical group periods, we will be doing a lot more than the allocated 15 percent."


“That’s really where this result becomes very interesting for Dubai, because we are bringing to the destination business which would not have come here before. In January a very large multinational cosmetics company from Belgium has confirmed 664 hotel rooms for a group. There is no hotel in Dubai that can give them this kind of allocation or is big enough to accommodate this size. In March we are hosting a sports event which will be significant for Dubai’s world calendar and they are taking 450 rooms per night. We are hosting all the players and teams. At the end of April we have a very large finance company from Spain taking 750 rooms. We believe this is because Atlantis, The Palm is seen as a ‘one-stop shop’ or a destination in itself,” he adds.


On the other hand, Hackett’s experience has been slightly different. “We have presented Atlantis to clients in the UK, USA and locally. We are experiencing reluctance to commit until the property is fully operational. We all know that a successful hotel is a combination of the facilities and service, and corporate event organisers place great dependence on assured delivery standards – something that can only be measured when the resort is up and running."


“The fabulous facilities of Atlantis should make it an attractive incentive destination as well as an impressive meeting venue. However, some of our clients have expressed concern that their event will be ‘lost’ within such a large-scale hotel – or that bigger groups will enjoy priority. Again, we must wait to see how the management delivers before being able to allay that fear. I hope that in the near future, once the hotel is operational, we will be able to confirm business at Atlantis, The Palm.”


Pricing strategy

It is no secret that Dubai is ranked as one of the most expensive destinations in the region. Given visitor demand, hotels have often been able to dictate high prices, sometimes as much as 20 percent higher than current rates for an event 12-months out.


With the dropping value of the dollar, hotel accommodation accounts for the majority of a planner’s budget, leaving little else for other luxuries, thus prompting them to look at other destinations offering better value for money.


“What the industry has seen and what they are telling us is that the prices for group rooms is so high that it is no longer viable to come to Dubai. With 1,500 rooms and a business model which is trying to build off a group base, we are definitely going very aggressively into the groups market. We have redefined how we look at pricing our product in the groups market,” says Armitage.


Bardin says, “Groups don’t have a budget to come to Dubai. Of those that do have a budget, the problem is not a case of rates, but of availability."


“Atlantis, The Palm have got to position themselves. One thing that will work in their favour is the novelty. But the fact that The Palm Jumeirah (where Atlantis is located) is not completed may play against them. But there’s the whole magic of the hotel – its uniqueness and opulence – and some people just love that kind of thing,” he adds.


Badawi on the other hand thinks the new kid on the block can call the shots. “Atlantis, The Palm is a different product. I disagree that it will need to offer lower rates. It’s about the opportunity. Earlier, for large groups, we had to look at multiple properties, and now Atlantis has the USP of being a one-stop shop and should capitalise on that. Earlier, the beach properties were highly overpriced because of the imbalance in demand and supply. If anything, Atlantis will even out this equation.”


"Having a new product like Atlantis, The Palm in the destination adds a new dimension, and that’s what the meetings industry is expectant of and what the property is seeing as translating into confirmed bookings."


“In terms of signed contracts, we have 40,000 room nights booked. This is particularly significant when you put it into context as we are not even open. For the meetings business to commit to confirming an annual global partners meeting in a hotel that has not even opened, is a huge buy-in for Atlantis, The Palm,” says Armitage."


The incentive experience

With the resort set to welcome its first guests on September 24th, Atlantis, The Palm is scheduled to host its premiere event in the first week of October, leaving no opportunity for a soft opening.


Armitage says, “The way we are positioning the resort to the meeting planners usually depends on the requirements of the group. One of the first groups that we are hosting is from the UK, which includes partners and families. So there can be a kids’ programme and a spouse’s programme, while it's business as usual for the delegates. The post-meeting celebrations and gala dinners can be special affairs at any one of our exotic locales.”


Responding to the entertainment element that is intrinsic to any incentive trip, Armitage says, “If you look at the DNA of Atlantis and the history of the group, whether in the Bahamas or in South Africa, it’s all about entertainment and its one of the added values that the brand brings to the destination. When Sol Kerzner opened the Lost City in South Africa, Frank Sinatra was the headline act for the grand opening. In the Bahamas, it was Michael Jackson.”


Armitage chose not to divulge the headline act for Dubai, though local media have been carrying reports of Australian superstar Kylie Minogue performing on the opening night.


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