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Diageo drinks to the Middle East

Diageo drinks to the Middle East

We may be living in a dry part of the world, but that doesn’t stop alcohol from being one of the fastest growing industries, it seems.

December 14, 2010 3:29 by

“This is obviously a challenge to have no liquor licence,” said Michael Sorgenfrey, the hotel’s general manager. “It’s a loss. We are not the first one. I have to live with this because I cannot close the doors. We have done everything from the hotel’s point of view, but everything else is the authorities’. From our side we can’t do any more.”

An analyst at Jones Lang LaSalle Hotels told the paper, “From our research, the sale of alcohol impacts not only on the revenue levels and profitability generated from hotel food and beverage operations, but it also affects the appeal of the hotel to particularly non-GCC clientele. The sale of alcohol is usual in most business and leisure destinations and is often required as part of the brand standards for four and five-star quality properties.”

It is unclear exactly why the license has not been issued, but the hotel says it is losing out on considerable potential revenue because of the situation.

With the boom in hotel rooms in the region, Diageo could well meet its ambitious growth targets. Hotelier Middle East reports that Dubai alone will get an extra 30,000 hotel rooms (on top of an existing 50,000) in the next five years. The Middle East and Africa hotel development pipeline comprises 455 hotels totaling 126,273 rooms, according to the July 2010 STR Global Construction Pipeline Report. Without getting into questions of overcapacity, such trends virtually guarantee an upswing in sales for the alcohol companies.

But as Abu Dhabi’s Grand Millennium proves, things are not always so straight forward. Diageo may well double sales, but to do so it will have to navigate the varied cultural sensitivities of the MENA market.

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