VP interview: The reawakening of Babylon
Area vice president at Rotana, Mohamad Haj Hassan who oversees more than 12 hotels in Iraq, Sudan, Egypt, Iran and Bosnia speaks about the signing of the Babylon Hotel Baghdad, its challanges and Rotana’s operations and pipeline in Iraq
Mohamad Haj Hassan joined Rotana in 2003, serving as director of conferences and catering at the flagship Beach Rotana Abu Dhabi. Today, he is the area vice president at Rotana and the general manager of the five-star Babylon Rotana Baghdad Hotel in Iraq, which, fully operational, Rotana took over on February 1 this year.
The Babylon Rotana Baghdad Hotel is not Rotana’s first hotel in Iraq. It joins Erbil Rotana – 2011, Karbala Rayhaan by Rotana – 2013, and Erbil Arjaan by Rotana – 2017. But evidently, Rotana’s latest signing comes with a great deal of history, despite that it was only constructed in 1982.
To use the old adage “been through the wars” is an understatement when describing Iraq, and the hotel.
The hotel, then operated by Warwick International Hotels, was one of two “upmarket” hotels that were attacked in a double bombing in May 2015. The attack at the Babylon hotel saw six fatalities.
Fast forward to today, and according to Haj Hassan, Iraq’s ambitious reconstruction efforts have seen the country achieve “tremendous progress in accelerating economic growth and development and improving the security environment over the last few years. This makes it a perfect destination for our expansion,” he says.
Iraq is not a new market for Rotana, which, according Haj Hassan, has been operating there “with great success since the opening of our first property, Erbil Rotana, in 2011.” This said, Iraq is a risky market in terms of security. Yet this has failed to dampen Rotana’s confidence.
“Iraq – Baghdad in particular – has been experiencing an increase in the number of corporate and leisure travellers, thanks to its greater financial stability and rebounding tourism sector,” says Haj Hassan, who goes on to say how the country is increasingly becoming an attractive market for hospitality investments that holds great potential for Rotana.
“We will continue to seek new opportunities to further enhance our presence in this market,” he adds.
On a regional level, Rotana has been active, with more in the pipeline. On February 17 Hotelier reported on its online news site that Rotana is to add more than 1,000 keys to Saudi Arabia in 2019 alone. During its 2019 GCC Roadshow, Rotana confirmed its plan of four new hotels in Saudi Arabia, as the company steps up efforts to deepen its footprint in the Kingdom.
Centro Corniche, Al Khobar and Dana Rayhaan by Rotana, Dammam are scheduled for opening in the first and second quarters of 2019 respectively, while Salama Arjaan by Rotana, Jeddah and Centro Medina, Madinah will open their doors to guests in the second quarter of 2020.
Currently, Saudi Arabia is home to six Rotana hotels under operation across three cities: Al Marwa Rayhaan by Rotana in Makkah; Rosh Rayhaan by Rotana, Centro Olaya and Centro Waha in capital Riyadh; and Centro Shaheen and Centro Salama in Jeddah, with a combined room inventory of 1,603 keys.
Furter north in Iraq, Rotana also has pipeline plans, albeit on a lesser scale in terms of key numbers. Apart from the recent signing of the Babylon Rotana Baghdad, which brings the Rotana’s total inventory to 838 operating keys in Iraq, Rotana said that Q4, 2019 will see the opening of Slemani Rotana, Sulaymaniyah in Iraqi Kurdistan, adding a further 240 rooms to the country’s growing hospitality inventory.
Guy Hutchinson, Acting CEO, Rotana, said that the signing of the Babylon Rotana Baghdad was in line with the company’s plans to expand its presence in the region. “At Rotana, we will continue to seek new opportunities to further enhance our presence in this market.”
Speaking about the agreement, Ima, with a highly trained team and extreme Al Yasri, chairman, Al Ibaa Company (the hotel’s owner) said that they were looking forward to the upgrade of the famed hotel.
“We are confident that the partnership with Rotana will present a compelling value proposition for our guests, employees, and stakeholders, and further drive our business growth,” he said.
Apart from the signing of the Babylon Rotana Baghdad, which brings the Rotana’s total inventory into 838 operating keys in Iraq, Q4, 2019 will see the opening of Slemani Rotana, Sulaymaniyah in Iraqi Kurdistan, adding a further 240 rooms to the country’s growing hospitality inventory.
The five-star Babylon Rotana Baghdad is located next to the green zone, close to the banks of the Tigris River and just 30 minutes’ drive from Baghdad International Airport.
“The hotel] offers guests convenience and comfort in the heart of downtown Baghdad with extensive measures implemented to make it the most secure hotel in the downtown Baghdad area,” he says.
“We are looking at a diversified and an optimal business mix that will enable us to drive revenues,” he adds. “Our main target market is Iraq, followed by Lebanon and Jordan. The majority of our business is from corporate clients and companies operating in Baghdad.”
Fifty percent of guests are NGOs, 30% corporate, 10% MICE and 10% leisure reveals Haj Hassan.
“We are seeing a new market segment in terms of guests, which is honeymooners from the domestic market. They travel to Baghadad from different parts of the country, ‘ he says.
In terms of foreign leisure guests staying at the hotel, Hassan revealed that “famous” singers from Lebanon, such as Fares Karam, have been booking rooms at the hotel. “They play concerts in Baghdad” he adds.
Haj Hassan describes how the market [in Iraq] has been witnessing extremely positive trends. He says that overall in Iraq, that Rotana hotels have been “performing well with positive results that have benefitted from stable market conditions in the country.
For the Babylon Rotana Baghdad, Haj Hassan says that the strategy includes driving business across all verticals, which, he says, will provide a steady mix of the various segments. “Depending on the market conditions, next year we are aiming to achieve an average room rate of more than USD $225 with an average occupancy of 90%,” he adds.
That Iraq is still an emerging market, means challenges exist for all industry sectors, including hotels.
“Guest amenities such as shampoo and soap are not available locally and have to be imported via Jordan,” he says. “The majority are from Dubai and Turkey. It’s the same for service operating equipment. There are no showrooms here Iraq]. Most is imported from Dubai.”
Importing supplies has an effect on hotel budgets. “We import 80-85% of the foodstuff needed for the hotel, such as margarine, Danish pastries, flour. This increases costs. In a normal environment, food costs would be 18-20% but at the hotel it is 30%,” he says.
Haj Hassan describes how having to helping import much of the hotel’s food can lead to a lack of consistency. “Sometimes, it is available and other times it is not,” he says, pointing out that since the hotel maintains large quantities of the stock, guests are unaffected by it.
Hiring experienced and qualified staff who have a background in hotel s is also challenging, espeically at a five star level.
“Iraq is not an attractive destination for skilled foreign labour, as they prefer safer destinations,” says Haj Hassan.
“In order to attract [such talents] cost plays a big role since you have to pay 25% to 30% above the market rate. There is also the cost of insurance, which for exapts is quite high,” he says.
“The hotel does hire locally but you need to train them, since they are fresh graduates.”
Other challenges he describes are related to the infrastructure, which he says is “still very far behind.”
Despite the added costs, Haj Hassan says that the the profit margin of hotel owners’ in Iraq is 50%.
“None [hotel owners] in the region are now making 50% profit,” he says.
When asked what will drive people into his hotel over the competition, Haj Hassan is clear. “Security,” he says. “It is the hotel’s most important feature. It is the most secure hotel in Baghdad, with a highly trained team and extreme precaution measures taken when entering the hotel, not to mention the hotel being fully fenced by a concrete wall.”
There are additional factors helping drive footfall, too. Haj Hassan describes the 280-room hotel as a destination in itself. “It is in Baghdad’s most desirable districts, with an incredible array of dining, recreation, relaxation and entertainment options,” he adds.
The property features four dining venues, serving a range of regional and international cuisines, recreation and leisure facilities including tennis courts, Bodylines Fitness & Wellness Club and temperature-controlled indoor and outdoor Olympic-sized swimming pools.
Onsite, there are also extensive business facilities, including more than 1300 sqm of flexible event spaces such as multiple meeting rooms and a ballroom that can host up to 600 guests. The hotel also includes an executive lounge and business centre.
Today, refurbishment is underway at the hotel whose current average room rate is USD $200. The completion date for the refurbishment is two years.
Clearly, Haj Hasan and his team have their work cut out. That said, Haj Hassan’s experience in the hotel sector spans more than two decades, with a stint as general manager of the five-star Al Salam Rotana in Khartoum, where he spent two years.
Haj Hassan, who holds a BA in Business Administration and an MBA from the University of Hampshire in the UK, and has completed the General Managers Program at Cornell University in Ithaca, New York, not to mention holding positions world wide. Despite such accolades, Haj Hassan is adamant that it will be “Rotana’s company culture’ that will be behind the success of the Babylon Rotana Baghdad.