Executive Summary Fairmont hotels.

A booming economy in Western Canada is fueling a strong hotel market there, with room rates and investment activity leading the country. Occupancy rates in the region will run at about 69% next year, PKF Consulting predicts. Toronto’s Four Seasons Hotel in the exclusive Yorkville neighbourhood, was sold by a private real estate fund managed by Maritz, Wolff & Co. for more than $100 million dollars and is likely to be one of the largest single asset real estate transactions in Canada for 2005. The purchase of the Four Seasons Hotel in Toronto marks the entry of Prince Alwaleed into the Canadian market. This deal will have an impact on the commercial real estate market in Canada, and on the hotel and resort industry as a whole.

Major Industry Competitors

Fairmont hotels has a wide array of competitors in Canada that include Four Seasons Hotels Inc.; Hilton Hotels Corporation; Global Hyatt Corporation; Marriott International, Inc.; Radisson Hotels & Resorts; Ritz-Carlton Hotel Company, L.L.C.; Starwood Hotels & Resorts Worldwide, Inc.; Wyndham International, Inc.

Industry Trends

        The current Canadian hotel markets, particularly in western Canada has grown exponentially since the strong economy and large amount of workers who work in the oil industry use hotels as a home while they work. Trends have shown that the hotel industry in Canada has picked up since the devastating damage the terrorist attacks on 9/11 did on the hotel industry.

Rationale for Expanding Internationally

        Fairmont has experienced considerable success throughout its many hotels in Canada. There are currently 15 countries that have Fairmont hotels in their cities and the majority of them especially the ones in the United States and the Caribbean have had considerable success with tourist arrivals.

Background

        The United Arab Emirates is an every growing country and has one of the highest tourist numbers in the world. The United Arab Emirates is a federation of seven states situated in the southeast of the Arabian Peninsula in Southwest Asia on the Persian Gulf, bordering Oman and Saudi Arabia. The seven states, termed emirates, are Abu Dhabi, Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah, and Umm al-Quwain.The United Arab Emirates has a population of 5,432,746 as of 2008 and a GDP of $42,500 per capita. It is a small developed country  rich in oil and natural gas, has become highly prosperous after gaining foreign direct investment funding in the 1970s. The country has a relatively high Human Development Index for the Asian continent, ranking 39th globally, and had a GDP purchasing power parity of $164.4 billion in 2007 according to the CIA. UAE has one of the most diverse populations in the Middle East.19% of the population is Emirati, and 23% is other Arabs and Iranians. An estimated 73.9 percent of the population is comprised of non-citizens, one of the world's highest percentages of foreign-born in any nation. In addition, since the mid-1980s, people from all across South Asia have settled in the UAE. The high living standards and economic opportunities in the UAE are better than almost anywhere else in the Middle East and South Asia. This makes the nation an attractive destination for Indians, Filipinos, Pakistanis, and Bangladeshis along with a few thousand Sri Lankans.

Needs and Wants of Foreign Market Consumers

        The needs and wants of tourist coming into cities in the United Arab Emirates are very basic. The hotel will have to have all the amenities that hotels normally have. These amenities include room with a bed, a cupboard, a small table and a washstand with modern facilities, including en-suite bathrooms and air conditioning or climate control. The hotel will also need five star cuisine for the clients since the food in a hotel is in integral part in pleasing clients.

Target Market and Existing Market Condition

        The Dubai hotel industry is red hot, with occupancy levels above 80% and room rates on the Jumeirah Beach strip at $150 per night, the highest in the region. Under these circumstances almost any hotel project looks a great investment. There is an expected surge in demand for hotel bedrooms over this period, and it puts Dubai ahead of Chinese cities and Las Vegas in per capita hotel investment. The overall accommodation market has been growing dramatically in the UAE, but hotels are the main driver, accounting for approximately 85% of the market. The largest growth in percentage terms was experienced in 2004 when hotel sales soared to AED7 billion from AED5 billion in 2003, an increase of 38%. In 2005, the country's hotels continued to perform well and experienced near-full capacity of 86%. In 2005, an increase of 14 new hotel chains opened their doors in the United Arab Emirates, reaching a total of almost 300 chained hotels. The UAE's accommodation portfolio spans across the star service range with many also operating at the less expensive end of the market. Nevertheless, the focus is on expanding the market for luxurious hotels that provide top quality customer service. Currently, there are nearly 150 5- and 4-star hotels located across the territory.

Government and political factors to consider

The Presidency and Premiership of the United Arab Emirates is de facto hereditary to the Al Nahyan clan of Abu Dhabi and the Al Maktoum clan of Dubai. The Supreme Council, consisting of the rulers of the seven emirates, also elects the Council of Ministers, while an appointed forty-member Federal National Council, drawn from all the emirates, reviews proposed laws.

Legal Factors to Consider

        

The United Arab Emirates Legal system is based on Sharia Law. is the body of Islamic religious law. The term means "way" or "path to the water source"; it is the legal framework within which the public and private aspects of life are regulated for those living in a legal system based on Islamic principles of jurisprudence and for Muslims living outside the domain. Sharia deals with many aspects of day-to-day life, including politics, economics, banking, business, contracts, family, sexuality, hygiene, and social issues. Except for Dubai and Ras Al Khaima who maintain their own judicial systems, the other Emirates have joined the Federal system. The Federal UAE courts, similar to the courts in most of the countries in the Area, are organised to form two main divisions civil and criminal and are also generally divided to three stages of litigation namely courts of First Instance, Appeal and the Federal Supreme Court (colloquially referred to as Court of Cassation). The jurisdiction of the third division, namely the Shariah courts, which initially was to review matters of personal status, was expanded in certain Emirates such as Abu Dhabi to include serious criminal cases, labour and other commercial matters. Important cases with a security aspect are referred to special courts.

Economic Factors to Consider

        The United Arab Emirates has one of the fastest growing economies in the world. The United Arab Emirates (UAE) is one of the most developed countries in the world, based on various socioeconomic indicators such as GDP per capita, energy consumption per capita, and the HDI. At $168 billion in 2006, the GDP of the UAE ranks second in the Cooperation Council for the Arab States of the Gulf (after Saudi Arabia), third in the Middle East—North Africa (MENA) region (after Saudi Arabia and Iran), and 38th in the world. There are various deviating estimates regarding the actual growth rate of the nation’s GDP, however all available statistics indicate that the UAE currently has one of the fastest growing economies in the world. According to a recent report by the Ministry of Finance and Industry, nominal GDP rose by 35 per cent in 2006 to $175 billion, compared with $130 billion in 2005. Although the United Arab Emirates is becoming less dependent on natural resources as a source of revenue,  and  exports still play an important role in the economy, especially in . A massive construction boom, an expanding manufacturing base, and a thriving services sector are helping the UAE diversify its economy. Nationwide, there is currently $350 billion worth of active construction projects.The UAE is also member of the World Trade Organization.

Transportation Factors to Consider

Dubai has a public transport agency called the Dubai Roads and Traffic Authority (RTA). Dubai has a very large  system run by the Roads and Transport Authority (RTA). The bus system has 193 routes on weekdays and transports over 30 million people weekly. This will draw in many tourist to Fairmont hotel since they will be able to travel to any tourist destination easily and efficiently. This authority is responsible for the bus network currently in operation. Recently, the RTA purchased 300 buses from Germany's MAN AG in an effort to reduce the city's growing traffic problem. RTA is also developing the Dubai Metro system. The first line (Red Line) is expected to be completed by September 2009. The yellow lines, currently in development, will go through the man-made Palm Islands.

Necessary Modifications to the Service

        In order for this hotel to be successful in Dubai it will have to be very unique and different. There are currently hundreds of hotel in Dubai that are all creativity designed including the very popular Burj al Arab which is the tallest building used exclusively as a hot el and is in the shape of a boat. I recommend a unique blend of contemporary style art and decoration and that the hotel be placed in the heart of city. I also recommend that it be modelled after something that is based on Arabic history to show the history of the United Arab Emirates. The hotel should also have a spa, interactive dinner service and 24hrs hotline.

Map of Booming Hotel Industry of the United Arab Emirates:

Distribution Plan: Establish an office in Dubai and provide service information from there.

Cost Factors:

Labor: 
Cost of wages and benefits to employees are important factors to this hotel.  A human resource manager should review procedures and training in order to optimize the output per employee, commonly referred to as pounds per operator hour. Knowing the productivity of employees, and what it should be for the type of laundry and equipment in use is critical to controlling labour cost.

Energy: 
The cost of water, sewer, electricity, and gas are all things that are going to be needed to be paid on a monthly basis. A manager can evaluate equipment efficiency in wash formulas - full loads, proper temperatures, and cycle times - and see that all are balanced to deliver high quality with a low rewash percentage. Properly utilizing dryers with full loads, correct temperatures and times helps control finishing costs. This is a variable cost that is often overlooked, but is a real cost that should be analyzed closely.

Chemical: 
Cost of all supplies used to clean linens A manager will review all options to take advantage of technology that can deliver the benefits of controlling cost in the above areas as well as the chemistry itself. The chemistry used can dramatically affect other variable cost, so close scrutiny is well advised.

Linen Replacement:
Cost of replacing linens to a pre-determined par-stock is an important cost factor in any hotel. A manger will evaluate the quality and life of linens. This can include theft, normal wear, and intensity of wash formulas, rejects, and overall handling procedures by housekeeping personnel, as well as the laundry staff. Buying the right quality and controlling its use can be beneficial to reducing replacement cost.

Development Plan

Once Fairmont obtains a sizeable land permit, this will enable us to begin work construction the hotel. We will establish an office in the downtown core of Dubai to anser any questions from the public regarding the construction of the hotel and will use this facility to layout plans for the hotel. Fairmont would hire local contractors and construction worker to help build the hotel which should take a maximum two years to build. The main goal when developing this hotel is to construct a luxury hotel that will serve the needs of not only tourist from the western world but even tourist from the Middle East. It is very important that we place the hotel in a geographic area that is in high demand for a hotel since allot of tourist visit that area. We will have to also place the hotel near a landmark or tourist attraction since this will allow  tourist to simply see the destination and come to the Fairmont hotel without using transportation.

Conclusion

The United Arab Emirates is the perfect candidate for Fairmont hotels to expand into. The United Arab Emirates is situated in the southeast of the Arabian Peninsula in Southwest Asia on the Persian Gulf, bordering Oman and Saudi Arabia. The United Arab Emirates hotel industry has been booming throughout the past five years. The largest growth in percentage terms was experienced in 2004 when hotel sales soared to AED7 billion from AED5 billion in 2003, an increase of 38%. In 2005, the country's hotels continued to perform well and experienced near-full capacity of 86%. There is an every growing demand for hotels in Dubai to accommodate to the growing amount of tourist entering Dubai every year. By expanding Fairmont hotel into Dubai it will allow a new door to open allowing a Canadian brand to be established in a middle east. I feel the United Arab Emirates is the perfect country for Fairmont hotels to expand to since it’s has a booming hotel industry and it’s one of the world top tourist destination.

 

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