Smartotels Hospitality hones in on customization for new brand

DUBAI—A new brand is tackling hospitality in an alternative way by introducing the retail operating model to the industry—enabling guests to pick and choose amenities and services. Designed to inject flexibility into a stay, this approach—with customization at its core—attempts to provide guests with “everything they value, nothing they don’t.”

“Why customization is so prevalent—but also important—is because we live in an increasingly competitive environment, where it’s about providing the consumer with what they want, without forcing them to purchase a room that accounts for services and amenities that they may not typically require or need,” Tarek M. Daouk, founder and managing partner of Smartotels Hospitality International LLC—a UAE-based hotel real estate investment and full-service hospitality and asset management firm—told Hotel Business.

How Smartotels is pitching the new brand to guests is relatively simple; its selling point revolves around personalization, enabling guests to build upon a core foundation of amenities—or, as the brand calls them, five primary value propositions: a luxury bed, a high-pressure shower, a seamless technology experience, free WiFi and breakfast. Guests will then have the option of piling on additional services or amenities, including turndown service, plush bathrobes and a number of alternative offerings. “Form is really what the word means, which is form your own experience,” Daouk said, explaining the backstory of the brand’s name. “It essentially talks about the concept of customization.” The brand’s intentions are to operate the business under a retail model.

“The pricing of those add-ons are engineered to be extremely valuable to the guests. We believe that the five value propositions that we do deliver are what most guests look for in a hotel of that position, and we look to improve their experience by providing them with those added features,” he said.

Add-ons are treated differently depending on how they’re classified. For instance, guests can select amenities prior to their arrival or once they get to the property. Requirements for services will be less relaxed since they will depend more on availability (e.g., certain properties will have limitations due to resources). To ensure operations run smoothly Form will encourage guests to add services prior to their stay.

These add-ons are not where the brand expects the majority of its profit will be derived from. “Ninety percent of our revenue comes from the entry offering we have, which are the five value propositions that I mentioned,” Daouk said. “The remaining 10% is driven by those add-ons. Fundamentally, as an operation, as an investment opportunity, as a hotel brand, we are not highly reliant on those add-ons from a return perspective.”

Slated to open in Q1 2018, Form Hotel Dubai has been tapped as the brand’s flagship property. The 143-key hotel will have a rooftop infinity pool and gym, a design boutique and a boardroom. It will also include a lifestyle restaurant, which will be outsourced. It’s Daouk’s belief restaurant operators “run restaurants more efficiently than your average hotel.” The property’s culinary option will include a “well-balanced offering with the use of ingredients that are very relevant and highly sought after,” he said. A restaurant operator still hasn’t been selected for the property—although, according to Daouk, Smartotels is currently involved in active discussions with some prominent operators in the market.

Currently under construction, the property is being developed by Dubai Contracting Company (DCC) and designed by Paris-based global architectural firm Architecture Studio. “DCC has significant experience developing hotels,” he said. Several of the firm’s projects in the city include The Fairmont Palm Hotel & Resort; Burj Al Salam; Capricorn Tower; Four Seasons Resort Dubai at Jumeirah Beach; O-14; and Rolex Tower. “Because of DCC’s relationship with Architecture Studio, we essentially brought them on as the designer for the exterior but also the interior,” Daouk explained. Smartotels also decided to hire MKG Group, a European-based hotel and tourism monitoring group, as the brand’s technology architects for upcoming projects.

Smartotels selected Dubai as its flagship brand’s first location for several reasons, including the investment in infrastructure and the promotion of Dubai as a tourist destination, said Daouk. He also recognized Dubai’s positioning relative to other cities throughout the world and noted the progress of its hospitality market. “The hospitality market has started to show some positive signs of maturity, where new hotel brands and new entrants into the marketplace really have a place these days, given that a lot of the larger brands have essentially developed quite a few of their properties in the marketplace,” he said. “There is an appetite in the marketplace that we’re seeing for new boutique/independent brands that really are in line with Form Hotel.”

Locally based capital sources are more likely to invest in Dubai’s hotel real estate market, as well. “That’s why we essentially decided Dubai would be our initial launching pad for the brand,” Daouk noted. The majority of the brand’s stakeholders include investors from three Middle Eastern countries: UAE, Saudi Arabia and Lebanon.

Designed as a global brand, Form isn’t targeting guests based solely on demographics, especially since inbound tourism to the UAE is becoming diverse—at least compared to 20 years ago when regional visitors drove tourism to the city. “Saudi Arabia is their number-one inbound market, but then you also have India that continues to gain ground,” he said. “The Chinese market is becoming quite prominent, and then you have the typical markets that have been quite positive for Dubai—the U.S., U.K. and Russia.”

Referring back to its business proposition, Form is marketing to guests based on how they consume, breaking them up into behaviors: the hyperconnected consumer; the hybrid consumer (one who upgrades in one area and downgrades in another); and the bargain hunter, who is constantly seeking the best deal. “When you group all three consumer behaviors, it really drives to where we think Form adds value,” Daouk said.

Smartotels expects to grow its portfolio to 25 properties by 2026. Right now, the hospitality group’s focus is in Africa. “The markets have relatively low-to-medium barriers to entry, allowing us to participate in those various locations,” he said. Some prospective countries on the continent include Nigeria, Morocco and Kenya.

Other markets of interest to Smartotels include Riyadh, Saudi Arabia, and Istanbul. “Those are markets we like for the purposes of their opportunity, but also due to the strategic relationships we have in those marketplaces,” Daouk said. Somewhere in the near future, Smartotels will be announcing the location of its second property. HB