REMAINING POSITIVE
As the travel and hospitality industry continues to evaluate the damage from the global pandemic, José Silva, CEO of the Jumeirah Group, says the homegrown hotel chain is adjusting to the market while plowing ahead with new openings this year.
ON ON
February 6, as a laser light show pierced the night sky in time to pulsing music, and fireworks exploded in the background, world-famous DJ David Guetta stood alone as he played a dramatic set to a global online audience of thousands from the windy helipad of the Burj Al Arab in Dubai, 212 meters above sea level. The iconic Burj Al Arab is the landmark hotel for homegrown luxury chain and Dubai Holdings subsidiary, the Jumeirah Group, and the Guetta gig is not the first time it has used its protruding helipad for an attention-grabbing event.
“It's a popular choice for high-energy activations, in particular on our helipad, which keeps the hotel connected to its audiences around the world,” explains the group's Portuguese-Canadian CEO, José Silva. In 2005 the hotel's helipad hosted a tennis match between Roger Federer and Andre Agassi, and in 2011 US Open golf champion Rory McIlory hit bunker shots from its green surface.
The Burj Al Arab remains a unique symbol of Dubai's skyline—and pretty lavish at more than $1,600 per night for a deluxe onebedroom suite according to February 2021 prices on booking.com—but the Jumeirah Group also operates other high-luxury interests. It currently has 25 properties across nine countries, with three more due to open in new territories later this year, namely the Jumeirah Jabal Omar in Makkah in Saudi Arabia, the Jumeirah Muscat Bay in Oman, and the Jumeirah Bali in Indonesia. The Carlton Tower Jumeirah in London is coming to the end of an extensive renovation and is due to reopen in spring 2021. And the new Marsa al Arab Hotel, which is slated to be managed by Jumeirah, is still under construction next to the Burj Al Arab and is reportedly now due for completion in late-2022.
Despite a difficult climate as the hospitality industry recovers from the impact of COVID19 on travel, Silva says the Jumeirah Group is plowing ahead with its new openings this year. “We have no projects on hold at the moment. In fact we have been very active during this pandemic,” he insists.
Even with the most unrelenting optimism however, the global context cannot be understated. In January 2021, the UN's World Tourism Organization reported that 2020 was the worst year on record for global tourism, resulting in an estimated revenue loss of $1.3 trillion—11 times more than the loss recorded during the 2009 global financial crisis. The International Air Transport Association reported in February that annual passenger demand in the Middle East in 2020 was 72.9% less than 2019, with traffic for December down 82.6% compared to the year before. And according to a report from Dubai Tourism, five-star hotels in the emirate averaged an occupancy rate of 45% last year.
“Almost without exception, the global hospitality markets have experienced a major shock. The U.A.E. and the Middle East hotel markets are no different and have had to adapt during a very difficult period,” says Dunia Joulani, Head of Travel, Hospitality, and Leisure (EMEA) at Deloitte Middle East. “A recovery to pre-COVID performance levels is not expected until the second half of 2023.”
However, while the Jumeirah Group is unlikely to be emerging unscathed, Silva is keen to focus on what it has delivered. While he came on board in March 2018 to help the group in its quest for globalization, in March 2020 he had to reduce the scope of his radar. With borders closed, planes grounded, and customers locked down at home, he says he made moves to be closer to operations and set about making adjustments and focusing on what could be achieved.
“Maybe I prepared for even more difficult times than what we went through,” he admits. “I said to all the senior leaders, this will be a year that we will develop our product and customer experience. I didn't want to move
to a defensive management mode.” A couple of months later, the U.A.E. began gradually lifting its lockdown restrictions.
Over the last year, the Jumeirah Group has opened or renovated a handful of eye-catching pools, spas, and lobbies, as well as F&B destinations. In May 2020, Jumeirah Al Naseem on Dubai's beachfront became the first hotel in the world to be awarded a Bureau Veritas' Safeguard label—at that time a newlydeveloped standard from the global certification company focused on health, safety, and hygiene. By the end of June, Jumeirah had launched daycation packages at four of its hotels, and that same month the group opened a new pop-up restaurant, the French Riviera, at Jumeirah Al Qasr to entice customers. In September, the Burj Al Arab revealed SAL, another new pop-up dining destination. For some of Jumeirah's properties, all-day dining has evolved long-term into multi-restaurant dining venues, favoring á la carte over buffet— something Silva thinks is beneficial for several reasons. “To be frank I always thought that aggregating in a lineup at breakfast was not the most relaxing experience,” the CEO confides.
One of the main aims of focusing on F&B and lifestyle has been to increasingly attract a local audience in the absence of international travelers, reveals the CEO— and it has had some success. “This is like the world upside down because we've just had an announcement from the government saying we must cap our occupancies at 70%, whereas in many European cities they are running single to teen occupancy rates,” says Silva. “It speaks to the way Dubai has managed its economy with a disciplined balance of restrictions and as such has done much better than the rest of the world. We have been very fortunate.”
Those in the industry hope this trend will fuel a steady recovery. “In the short to medium term, it is expected that the main focus will be on cash management and restructuring while the market adjusts to new trends including an increase in domestic travel and staycation demand, changes to seasonality, and accelerated technology adoption,” says Deloitte's Joulani.
Silva has a history of reviving hotels, with a passion for architecture and an inclination towards fine dining. Born in the Azores islands, Portugal, and raised in Montreal, Canada, the civil engineering graduate opened his own restaurant aged just 22. By his late-twenties he was working as the catering director for the Sheraton Montreal and privately developing his own residential real estate units when an opportunity at Four Seasons Hotels & Resorts arose. He spent the next 27 years with the brand.
In his mid-thirties he was given the opportunity to venture to Europe to work
as a general manager for a Four Seasons' asset in Lisbon. With his European roots he thought it would be an interesting adventure before returning to his businesses back home. He ended up spending seven years in Lisbon, nine in Geneva, and four in Paris, becoming regional vice president overseeing France, Switzerland, Spain, and Portugal in the process. Silva recalls every project centering around a major refurbishment. “I was maybe known in my previous roles as the turnaround guy and the developer guy, but I've always favored delivery and contribution, I was never in a hurry to move on to my next promotion,” he reflects.
His last posting pre-Jumeirah was arguably his most prestigious at the time. Silva was appointed general manager of the George
V in Paris in 2014, which was already then widely touted as being among the world's top hotels. That being said, Silva saw room for improvement. He focused on modernizing and expanding its appeal, increasing the number of Michelin-starred restaurants within it from one to three, with a total of five Michelin stars between them. In 2016, the Georges V was awarded five stars by the Forbes Travel Guide for the first time. In 2019, it was named the best hotel in the world by Virtuoso.
When Jumeirah approached him in 2017, Silva says he was ready for a change. “I was destined to do a specific role as President of Europe for my former company, but I thought do I do another 10 years of those 27, or do I push myself into a space where I know I can be transformational?” he explains. “Organic to me is fine if you're talking about food, but if it's growth then going against the stream has always been my passion.”
“We have no projects on hold at the moment. In fact we have been very active during this pandemic.”
While exploring the expansion of the concept of luxury with the Jumeirah Group, Silva admits that things are changing, with sharable experiences being the new reality. “I'm not approaching luxury in Jumeirah in the way I would have done previously. Luxury today is less formal and, more importantly, experiential and certainly more inclusive,” he acknowledges, admitting that being “instagramable” now has its place.
And as the world takes cautious yet confident steps towards recovery, the focus now is on what can be delivered next. Silva says that the Jumeirah Group's next opening will be its property in Makkah, Saudi, and similar extensions of the brand are planned for Europe, South Pacific Asia, and indeed North America, from where the Jumeirah Group is currently noticeably absent. Silva says that going more global is all about finding the right partnerships under management contracts, something he sees as one of his biggest tasks going forward. “I'm quite confident we will deliver brand expansion announcements during 2021,” he states. “I think this is a moment of transactions, deals being made, owners changing their position on one asset or another. I don't see this period as being a challenge.”
Experts agree that there are opportunities available. “Hotel investors are long term investors, and their decision as to whether to invest or not will not necessarily be influenced by what is happening in the next two-three years, but rather how they believe a market will evolve over the next 20 years,” explains Nicolas Mayer, Global Industry Leader Tourism & Hospitality at PwC. “Many value-type or turn-around investors may actually become particularly active over the next 24 months in acquiring, converting, renovating or repositioning luxury assets, as there are numerous assets available for sale from distressed owning entities.”
For his part, Silva seems to be taking things day-by-day. “Too many leaders hope that someone is going to tell them the future. No-one can tell you the future,” he muses. “What you can do is anticipate customer needs. You need to be leading the industry, not playing catch-up.”