United Arab Emirates Country Notebook &

Four Seasons Marketing Plan

Steve Callis

Carlos-David Islas-Labastida

Renee Werner

April 25, 2006

Georgia State University

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Table of Contents

Topic Page Number

Part One: United Arab Emirates Country Notebook

I. Introduction

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II. Geography 3

III. Economic Environment 3

IV. Cultural Environment 5

V. Business Customs and Practices 9

VI. Political Environment 11

VII. Legal Environment 11

VIII. Marketing Research 11

IX. Other Statistics 13

X. Competitive Environment 14

Part Two: Four Seasons Marketing Plan

I. Target Market

16

II. Product Adaptation/Modification 17

III. Market Entry Strategy: Foreign Direct Investment 17

IV. Pricing Strategy 18

V. Promotion Mix 20

VI. Conclusion 20

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Part One – United Arab Emirates Country Notebook

I. Introduction

The United Arab Emirates (UAE) is a promising location for U.S. marketers to do business for

many reasons – among them: high and steadily increasing GDP, pro-business orientation of the

country’s government, the stability of the country’s political and legal systems, and well-developed

infrastructure. Also, the country has been actively pursuing ways to diversify its economy, which

has historically been very dependent on oil.

The Four Seasons is a premium 5-star hotel chain known for its elegance and pristine customer

service. The hotel has many international locations, but currently has no presence in the UAE.

However, there are many other luxury hotels in the country both of domestic and foreign origin, such

as the Ritz-Carlton. The hotels in the country, particularly those in Dubai, do a very brisk business

with both business and leisure travelers, as evidenced by the fact that this market has a hotel

occupancy rate even higher than New York City.

The sections that follow contain an overview of the important aspects of the United Arab

Emirates, and the proposed marketing plan for the entry of the Four Seasons Hotel into this new

market.

II. Geography

UAE is located in the Middle East between Oman and Saudi Arabia. The country also borders

the Persian Gulf and the Gulf of Oman. Although most of the country is flat, the eastern side is quite

mountainous. The climate is desert with very little rainfall, but it gets very hot and humid along the

coast during the summer. Most of the land is flat and barren, and less than 1% is arable.1

III. Economic Environment

A. GDP

The economy of UAE is certainly thriving, and shows no signs of faltering in the future. The

country’s GDP is $74.5 billion, and GDP per capita is $29,100. The GDP growth rate is 6.7%, almost

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twice the rate of the United States.2 The wealth of this country is certainly attractive for marketers of

almost any type of product, from basic necessities to luxury goods. In our case, this presents an

excellent opportunity as a location for the Four Seasons, as a premium upscale 5-star hotel.

Although the country has a rich economy, it’s difficult to place them in a definitive economic

group. The wealth of the UAE economy comes primarily from oil production. Countries whose

economies flourish almost solely because of oil aren’t generally counted among “developed” countries

such as the United States and Japan.3 However, these rich countries don’t seem to fit in the Less

Developed Country (LDC) category either, because of their high GDP per capita. As a result, they seem

to fit best in the Newly Industrialized Country (NIC) category, which falls between LDC and More

Developed Country (MDC). It’s notable that the country is taking steps to diversify its economy to

decrease reliance on oil production. For example, Dubai has become a leading tourist destination with 5

million tourists per year. Their goal is to attract 15 million per year by 2010. Dubai actually has a 30-

year strategic plan that specifically states that they plan to become a “developed” economy by 2010 by

diversifying into areas of tourism, trade and commerce.4 This is another plus for the luxury hotel

business, as it fits well into the country’s plan to diversify economically.

B. Economic Risk

Because the economy of the country is heavily dependent on the petroleum industry, it is very

susceptible to fluctuations in the price of oil. However, this risk should be on a trend to decrease in the

future as the country successfully diversifies into other sectors. Inflation isn’t a big problem – the

inflation rate has been approximately 4% for the past few years. The exchange rate also doesn’t

contribute to economic risk – the Emirati Dirham (AED), which is the country’s currency, has been

fixed to the U.S. Dollar since 2002.

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C. Population Demographics

The country’s population is 4 million with a growth rate just over 1.5% and a staggering 80%

being non-UAE nationals. 87% of the population resides in urban areas. Household sizes are fairly

large, with an average of 5.5 people per residence.5 There are more men than women, and relatively

higher numbers of young/middle-aged residents.

D. Infrastructure

UAE has very well-developed transportation, communication, and energy infrastructure. As of

2004, the country had 35 airports and 2 heliports. The existence of several international airports is of

major importance, considering the drive for tourism and commerce. They also have an excellent system

of roads connecting all major cities, and all the roads are paved. Although there is currently no rail

system, this is being considered for the future. UAE has one of the highest Internet and cell phone usage

rates in the Middle East. In fact, about 74% of the population uses a cell phone, and 28% use the

Internet.2 All of these factors contribute toward UAE being a convenient place to do business.

IV. Cultural Environment

A. Cultural Values

The Arab countries are treated as a whole by Hofstede.6 Large Power Distance (PDI) (80) and

Uncertainty Avoidance (UAI) (68) are predominant Hofstede Dimension characteristics for the countries

in the region. These societies are more likely to follow a caste system that does not allow significant

upward mobility of its citizens. They are also highly rule-oriented with laws, rules, regulations, and

controls in order to reduce the amount of uncertainty, while inequalities of power and wealth have been

allowed to grow within the society. When these two dimensions are combined, it creates a situation

where leaders have virtually all ultimate power and authority, and the rules, laws and regulations

developed by those in power reinforce their own leadership and control. It is not unusual for new

leadership to arise from armed insurrection – the ultimate power, rather than from diplomatic or

democratic change. The high Power Distance (PDI) ranking is indicative of a high level of inequality of

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power and wealth within the society. These populations have an expectation and acceptance that leaders

will separate themselves from the group and this condition is not necessarily subverted upon the

population, but rather accepted by the society as their cultural heritage.

The high Uncertainty Avoidance Index (UAI) ranking of 68 indicates the society’s low level of

tolerance for uncertainty. In an effort to minimize or reduce this level of uncertainty, strict rules, laws,

policies, and regulations are adopted and implemented. The ultimate goal of these populations is to

control everything in order to eliminate or avoid the unexpected. As a result of this high Uncertainty

Avoidance characteristic, the society does not readily accept change and is very risk adverse.

The Masculinity index (MAS), the third highest Hofstede Dimension is 52, only slightly higher

than the 50.2 average for all the countries included in the Hofstede MAS Dimension. This would

indicate that while women in the Arab World are limited in their rights, it may be due more to Muslim

religion than a cultural paradigm. Here’s what the UAE president has to say about the role of women: 7

"Nothing could delight me more than to see Woman taking up her distinctive position in society... Nothing should

hinder her progress... Like men, women deserve the right to occupy high positions according to their capabilities and

qualifications. We expect our young women to support and to proceed in accordance with all that is undertaken by

their brothers, the young men of the United Arab Emirates, so that there may be fruitful cooperation between them in

all spheres." And his wife, Sheikha Fatima bint Mubarak, says: "We have not yet reached the target for which we

strive, but we are sure that we are making substantial progress along the right path."

The lowest Hofstede Dimension for the Arab World is the Individualism (IDV) ranking at 38,

compared to a world average ranking of 64. This translates into a Collectivist society as compared to

Individualist culture and is manifested in a close long-term commitment to the member 'group'; that

being a family, extended family, or extended relationships. Loyalty in a collectivist culture is paramount,

and over-rides most other societal rules.

B. Rituals8

Music is traditional. The United Arab Emirates are a part of the Persian Gulf khaleeji tradition,

and is also known for Bedouin folk music. Distinctive dance songs from the area's fishermen are also

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well-known, but the country's most famous performers are Ahlam, the first female pop star in the Gulf,

Aithah Al-Menhali, and Ali Burrogha, who has now requested that his recordings be banned as he is

living a strict Islamic lifestyle. Other singers from the United Arab Emirates include Samar, Reem,

Rouwaida, and Abdallah Belkhair among others.

The names of the streets are not respected. In Abu Dhabi as well as in Dubai, the usual street

names are not necessarily those written in the street signs or in the maps. For example, in Abu Dhabi,

the 7th street “Zayer Road” on the right of “Airport Road” is known as “Elektra Road” as that is where

all electricians are located. In Dubai, the street names as “Trade Center Road” is indicated as “Khalifa

Bin Zayed Road”.

Welcome Packages are used in corporations to incite Emiratis to work. Most of the Emiratis do

not need wages as they already have high shareholder incomes (dividends) from the oil companies.

Thus, they are not incited and do not have any motivation to work. As a consequence, new laws have

been passed to oblige companies to hire local people. Then, companies give them gifts to work. One of

the gifts are the “Welcome Packages” that include coupons, brochures, and menus for the employees

and their families.

If you enter the residence of an Emirati, it is polite to remove your shoes. Traditionally, Arab

people sit on the ground although there are more and more chairs. It is forbidden to cross the legs and an

Arab should never see the sole of the shoes as it is an insult.

Men and women do not mix in public. When someone is invited with his wife, she will be

invited in the “districts of the wife”. It is impolite to ask an Emirati news of his wife and daughter, and

preferable to ask about his family and children in general.

The coffee ceremony is important. A tradition strongly anchored in the spirit of the Emiratis as

it is a true ancestral ritual. Guests have to hold the cup in the right hand, ask for more cups (it is a sign of

courtesy) and to shake it several times before drinking it.

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C. Symbols

Language

The official language is Arabic. English is widely understood and ranks alongside Arabic as the

language of commerce9. Even though there is no particular mother tongue in the Emirates (because of

the diversity of Arab dialects), we can consider that the Arabic-speaking people as a whole constitute a

kind of majority of language, culture and religion. Nearly 60 % of the population speaks one of the

many varieties of Arabic: Arabic of the Gulf, Arab shihh, Saudi, Omani, Egyptian, Jordanian,

Palestinian, Lebanese, Syrian, Sudanese, Yemenite, and Iraqi. All the varieties of Arabic belong known

Semite group of the Hamito-Semitic family (or Afro-Asian).

The United Arab Emirates developed a linguistic policy of Arabization since their independence.

The Article 6 of the Constitution of December 2, 1971 proclaims that the “Union will belong to the great

Arab nation to which it is bound by religion, language, history and common destiny. The people of the

Union will be unique and belong to the Arab nation”. The Article 7 declares that Arabic is the official

language: “Islam is the official religion of the Union. Islamic Charia is the principal source of the

legislation in the Union. The official language of the Union is Arabic”.10

Aesthetics

Despite their “Abaya” (black on-coat and veil), women in UAE are very vain. In general, people

in UAE are very fashionable, and they enjoy keeping up with the latest trends. Men are always neat in

their “Dishdash” (white dress). Foreigners have to avoid miniskirts and shorts (Although Dubai is more

tolerant) by respect for the traditions and habits of their interlocutors.

D. Belief System including Religion

The predominant religion for these countries is Islam, the practice of the Muslim faith. More than 80 %

of the population of the UAE is non-citizens. Virtually all of the country's citizens are Muslims; approximately 85

% are Sunni and the remaining 15 % are Shi'a. Foreigners are predominantly from South and Southeast Asia,

although there are a substantial number from the Middle East, Europe, and North America. Although no official

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figures are available, local observers estimate that approximately 55 % of the foreign population is Muslim, 25 %

is Hindu, 10 % is Christian, 5 % is Buddhist, and 5 % (most of whom reside in Dubai and Abu Dhabi) belongs to

other religions, including Parsi, Bahá'ís, and Sikh.

Most of the Sunni citizens adhere to the Maliki legal tradition. Some Sunnis of the Wahhabi sect

(followers of a strict interpretation of the Hanbali legal school) live in the Al Buraymi Oasis, and some who

follow the Shafi'i legal school live along the Al Batinah coast. Although varying from emirate to emirate, the

degree of religious freedom afforded non-Muslims is greater in the UAE than in Saudi Arabia and Qatar. For

example, non-Muslims are permitted to worship but not to proselytize. There are several large Christian churches

and schools in the UAE, primarily in Dubai and Abu Dhabi.11

E. Thought Processes

Emiratis are long-term oriented in their thought process. Concerning rationality, they are more

emotionally oriented even if western customs are more and more present and some rationality is making

its way in the decision process.

V. Business Customs and Practices

A. Authority and Decision Making

As shown by the low Individualism Index (38), the decision making process of the Emiratis is

very collective, they focus on belongings to target groups that make the decisions. Moreover, the High

Power Distance Index indicates that there are several hierarchical levels. The decision makers are

separated from the rest of the group. As a consequence, the decisions are taken by the top management

of corporations. Nevertheless, the decision making system is getting younger as the number of young

university graduates joining corporate structures is increasing steadily12.

B. Management Objectives and Aspirations

Security and Mobility: Security and mobility are not a big issue as dividend income can easily

back up a loss of job.

Personal life: Personal life is more important than work. Emiratis dedicate a big amount of time

to leisure and religion.

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Affiliation and Social acceptance: Working in a corporation could be seen as not having enough

revenue to maintain one’s lifestyle. However, owning a corporation or being a member of the board of

directors is very well seen.

Power and Achievement: Social barriers exist to achieve high goals when starting from the

bottom of the hierarchy. The level of achievement and power increases with the position in the

hierarchy.

C. Communication Styles Here are some important points to be aware of regarding communication in the country:

• Names are often confusing. It’s best to get the names (in English) of those you will meet, speak to,

or correspond with. A foreigner should learn both their full names and how they are to be

addressed in person before they meet.

• Communication is slow, and one should not feel obligated to speak during periods of silence.

• "Yes" usually means "possibly".

• Meetings are commonly interrupted by phone calls and visits from friends and family.

• The person at a meeting who asks the most questions is likely to be the least important. The

decision maker is likely a silent observer.

• A customary greeting is salaam alaykum. Shaking hands and saying kaif halak follows13.

D. Formality and Tempo

Local businesses and foreign companies differ in working hours:

Local businesses: 08.00-13.00; 16.00-20.00

Thursdays: 08.00-12.00

Foreign companies: 08.00-18.00

This difference is driven by the necessity for local people to pray. Foreign companies, as Emiratis do not

necessarily need to work, have a majority of expatriates which have other work cultures.

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E. P-time versus M-Time

Punctuality is important, expected and appreciated14.

F. Corruption/ Bribery Index15

The UAE is ranked 30th in the Corruption Perception Index made by Transparency International. The

value of the index is 6.2 out of 10, that is to say above the average (5) and it means that people and country

analyst have an above-average perception of the country. It is the highest index among all the Arab countries,

which indicates a favorable climate to investments in the country.

VI. Political Environment

UAE’s government is a federation, with certain powers delegated to the federal government, and

others reserved to the emirates. The government is fairly stable, with no major administration changes

anticipated in the near future. According to the Economic Intelligence Unit, UAE has a political risk

rating of C. (A=lowest risk, E=highest risk)16 Political tension in the region is high, particularly with the

ongoing conflict in the nearby country of Iraq. However, the Bush Administration views UAE as an

important ally to the United States.

VII. Legal Environment

The legal system in UAE is divided, depending on the type of issue involved. Criminal, civil and

commercial issues are resolved using code law, while family and religious disputes are resolved with

Islamic law. The legal system is generally regarded as being well-established and fair. The country has

laws in place to facilitate commercial transactions and protect intellectual property. 17 UAE is a member

of the World Trade Organization, having joined in 1996.18

VIII. Marketing Research

The UAE, as noted earlier, is a highly developed country with strong economic conditions,

especially when considering its position within the Middle East. Because of its expansive and continued

growth, overall market research is readily available regarding many of its industries and more

specifically the tourism industry. However, to better understand the dynamics of collecting research, the

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following will assess the availability of secondary data and the challenges presented with capturing

primary data.

Secondary market data research on the UAE is readily available and easily accessible. Since the

country, specifically within many of its emirates, is highly developed and experiencing tremendous

growth, there is much information provided on its economic conditions, primary industries, market

trends and opportunities, and consumer information. Through the proliferation of the Internet, there are

many government and industry sources available to marketers for foreign investment analysis purposes.

Caution must be taken, however, regarding the reliability of some secondary data offered through

sources outside of governmental sites. Yet, the risk of collecting unreliable secondary data is mitigated

due to the UAE’s more developed and “westernized” state.

Primary data is a good source for collecting detailed information specific to a marketer’s core

objective; however, capturing this type of information comes with many challenges. In crafting a survey

for primary research, one challenge presented is the language barrier to overcome by a foreign marketer.

The official language in the UAE is Arabic, therefore requiring careful translations to ensure the key

objectives are met. One positive regarding language is that English is also spoken within the country

and is the primary communication method when dealing in business transactions.19 Depending on a

marketer’s objective in collecting primary data, it may be advantageous to create a survey in English

that elicits the needed response. Another challenge presented in collecting primary research is that the

population of 4 million is only made up of 15% - 20% national citizens. This is a staggering statistic

and would negatively impact a marketer who would like to survey citizens for information because the

survey sample size is dramatically reduced to approximately 200,000. Thus, finding the appropriate

survey pool may be difficult. A final challenge to collecting primary data is that the culture of UAE

citizens is one of trust and strong relationships, which one can conclude that the willingness to share

information may be low. To assist in overcoming any of the challenges of collecting primary data in the

UAE, it is critical for the marketer to use a local agency to assist in the process. Fortunately, there are

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well over a hundred marketing firms operating within the UAE which could assist in a marketer’s

efforts.20

IX. Other Statistics

The UAE is a fast developing country, primarily due to its immense oil and gas reserves. It

currently houses 10% of the world’s oil and 5% of the world’s gas, which has led to its prosperous

environment. The oil and natural gas sectors make up almost 32% of the U.A.E’s GDP. Other primary

industries in the country and their GDP contributions are Agriculture, such as vegetables, fish, dates,

dairy and poultry, (3%), and Services, such as trade, government, and real estate, (44%).21

A. Foreign Investment Opportunities

The UAE offers vast opportunities for foreign investors. With petroleum serving as the catalyst

for growth in the country, tremendous foreign investment opportunities exist, especially within

industries outside of oil. In addition to a very strong economy and high per capita income, the nation

does not charge any corporate tax or income tax and has a relatively low import duty. It currently has

sixteen free trade zones with more in development that offer foreign investors unique benefits such as

100% ownership rights.19 These reasons collectively create a favorable environment for foreign

investors. The U.S., in fact, has over 500 companies doing business within the U.A.E. ranging from

Boeing to Ford to Wendy’s Restaurants.19 To further expand its trade relations, the U.S. and UAE

began negotiations in 2005 for a free trade agreement to further expand opportunities for foreign

investment. However, these have recently been postponed due to the controversial U.S. port agreement

to be controlled by a Dubai based company.22

Because the UAE is focused on reaching the development state of a more developed country, its

foreign investment opportunities reflect such needs to achieve its goal. High demand foreign investment

opportunities would include security and safety equipment; IT equipment and services, medical

equipment, services and supplies; architecture, construction and engineering services; air conditioning

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and refrigeration equipment; environmental and pollution control; sporting goods and equipment; water

and power projects.19

B. International Trade Statistics

The major exports for the UAE included crude oil, natural gas and other petroleum products,

dried fish, dates, and re-exports with Japan, India, Singapore, and Iran serving as the major export

partners. The country is the third largest trading partner for the U.S. in the Middle-East, and runs at a

trade deficit with the U.S.; importing four times as much as it exports. The UAE exported a record

$103.1B in 2005, primarily led by the increased oil prices and production exports. This trend is

anticipated to continue as it’s expected the country will export $106B in 2006.23

The UAE imports machinery to assist in its rapid development, consumer goods to satisfy the largely

wealthy population, and food. The largest suppliers to the UAE are Western Europe, Japan, U.S.

(6.5%), China and India. The estimated import value in 2004 was $54.2B. However, with the foreign

investment opportunities, imports should continue to trend positively around some of the critical need

products, such as medical equipment.21

Regarding the exchange rates, the UAE exerts a single currency exchange rate that was fixed to the

U.S. dollar in 2002. The current rate of exchange is 3.67 Dirham to one U.S. dollar. There are no

significant trends regarding the exchange rates, as it again is fixed. Plus, there are very little restrictions

on the currency exchanges with exception to Israeli currency and the currencies of countries that are

currently under U.N. sanctions. Payments or currency exchanges on imports and exports are immediate

and do not experience any delays.19

X. Competitive Environment

The location of the UAE makes it ideal to attract tourists and business travelers, as it links

Europe, SE Asia, and Africa. The country consists of varied terrain, beautiful coastlines, luxurious and

wealthy cities, crime-free and hospitable environment, westernized flair, and a booming economy, all of

which has led to the immense growth in the tourism industry. To specifically address Dubai, the

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anticipated location for the Four Seasons Hotel, it’s estimated that annual growth in tourism contributes

as much as 20% of the emirate’s GDP.24 In fact, the tourism industry is expected to overtake the oil

industry in GDP contribution for Dubai in the near future. These factors alone make Dubai a hot spot

for the hotel industry, which is evident through the immense competitive presence of domestic and

foreign hotels located there.

The Four Seasons Hotel, which currently has no presence in the UAE, will operate as a 5-star

hotel, consistent with its current business model. To that extent, the Four Seasons will face both direct

domestic and foreign direct competition with other current 5-star hotel operations. Currently within

Dubai, there are close to 300 hotels that served the five million guests that visited in 2004 and that

generated $1.2B in revenue from business travelers alone.25 Some of the direct domestic competitive

brands include the One & Only Royal Mirage, Burj Al Arab, and Al Maha Desert Resort & Spa, which

are considered a few of the top luxury hotels in Dubai.26 U.S. based hotels have also entered the Dubai

luxury hotel market, such as the Ritz-Carlton (2005 Dubai Quality Gold Award recipient), the Hyatt

with its Park Hyatt Dubai and Hyatt Regency, and the Hilton with its Hilton Dubai Creek and Hilton

Jumeirah Dubai hotels.27

These competitors to the Four Seasons offer the luxurious features and amenities expected at a 5-

star hotel. Each consists of luxury suites, many high-end restaurants and lounges, spa services, and

some with golf courses adjoined. The hotels also cater to corporations and business travelers with the

presence of meeting rooms and convention or event arrangements. The direct domestic competitors

primarily incorporate middle-eastern designs throughout their resorts, whereas the foreign direct

competitors maintain their corporate “brand” designs with hints of middle-eastern accents.

Regarding marketing efforts to reach their target patrons, more affluent tourists and business

travelers, the hotels maintain standard promotional channels and strategies. The promotional channels

to reach potential travelers include the hotel’s website, partnerships with online and traditional travel

agencies, and referral relationships with government and industry organizations and associations. The

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hotels utilize promotional efforts through their marketing strategies, such as advertising and direct

marketing, and their established channels, leveraged through travel services partners, by creating special

travel and service packages and promotions to drive incremental business. To advance promotional

efforts through advertising and direct marketing, the hotels must adhere to the regulations of the UAE,

which for service industries, such as hotels, do not preclude them from marketing directly to the end

consumer or advertising via television, print, and the internet.19 Lastly, the prices of the competing

hotels do vary significantly, ranging from a high average price of $1,284 at the Burj Al Arab and to a

low average price of $269 at the Hilton Dubai Creek. Although the 5-star local and foreign hotels offer

similar amenities and services, the pricing for the local competitors is on the higher end of the price

variance because they tend to attract the foreign tourists who are looking for a unique and authentic

middle-eastern experience. The foreign direct competitors on the other hand are on the moderate to low

end of the pricing variance mentioned above, albeit still high prices, assumingly to position themselves

to better penetrate the market overall and to attract the “locals” within the region whose culture is

willing to pay higher prices for the perceived high-quality of services provided by U.S. firms. 19

Part Two – Four Seasons Marketing Plan

I. Target Market

As previously mentioned, the hotel industry in Dubai is in high demand to support the

tremendous growth in tourism and business travel. There is a high concentration of 5-star luxury hotels;

however, the demand for rooms is so high that there are not enough hotels to support it. 28Dubai is

currently a large commercial center in the middle-east, and with other major projects currently

underway, such as Dubailand, Palm Islands, and another major international airport, the city is setup to

continue to attract tourism and business travelers.4

Factoring in the strong economic conditions, complementary cultural climate, travel and tourism

industry demand, and favorable foreign investment conditions, Dubai is an ideal market for a Four

Seasons Hotel. The hotel will focus to attract the foreign tourist, domestic visitor, and business traveler.

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This target customer base will be centered on the middle class and affluent tourist. It will also include a

focus on regional business conventions, exhibitions, and business travelers that other regional nations,

such as Singapore and Hong-Kong, and competing hotels pursue.

II. Product Adaptation or Modification

To attract and penetrate this target market, the hotel will be built on Dubai’s expansive and

beautiful coastline. The core components of the hotel will continue with its existing business model

centered on luxury rooms and suites, world-class restaurants, spa services, business services, meeting

and events, and other special activities such as golf, tennis facilities, fitness rooms, water sports, and

other recreational activities. As mentioned previously, the culture in this region values the perceived

high-quality of services received from U.S. companies. Therefore, the overall hotel aesthetics and

atmosphere will adhere to the Four Seasons central design guidelines that are very westernized but also

look to include accents and tastes accustom to the middle-east. To this aim, the Four Seasons should

leverage its U.S. roots to incorporate the American culture within many of its amenities, such as offering

fine dining on American cuisine within one of its restaurants and spa treatments that are accustom to

American spa services. For corporations and business travelers, the hotel will look to offer wireless and

TV Internet, in-room printer/fax machines, prepaid cell phone services, and convention/meeting

planning services and accommodations to attract this market and ensure they have all required

communication channels to maintain business at their fingertips. These modifications set the hotel apart

from the competitors in terms of offering the complete package of services, specifically as it pertains to

business travelers, and will enable the hotel to attract the foreign tourists and business travelers that are

looking for a U.S. based luxury hotel with middle-eastern flair.

III. Market Entry Strategy: Foreign Direct Investment

Because the Four Seasons Hotel is a service, the entity will not be subject to exporting guidelines

or regulations. It will enter the Dubai emirate of the UAE through foreign direct investment market

entry. To operate as a foreign entity within Dubai, the UAE does have ownership restrictions that

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mandate a minimum 51% UAE national ownership, ensuring local entities are the primary shareholders

in the operation.19 Although 51% shareholder ownership is maintained by a local UAE entity, the

primary management and control of the Four Seasons Hotel is assumed by the firm. Taking this

approach will require capital outlay for construction of the facility; probably financed through a local

bank which is the primary source for investment in non-oil projects.

The factors affecting the choice of direct foreign investment include cost, capital, control,

character, and continuity. The cost of operations and capital involved will be assumed by the Four

Seasons’ ownership structure of the hotel, again with 51% of the ownership resting with local

shareholders. The control of hotel operations will be assumed by and in accordance to Four Seasons’

corporate standard operations, but as with any ownership structure, the hotel’s performance must meet

the expectations of the shareholders. Because the hotel will need to contract and partner with local

companies for the development and promotion of its core services, such as construction contractors,

travel related entities and travel agencies, marketing firms, etc., the character of these firms must have

the core competencies, relevant experience and strategic fit to align and meet the objectives of the hotel.

In conjunction with a strong character fit, the hotel will need to analyze and assess these companies to

ensure that they have sustainable operations and will be in business long-term for continuity purposes.

IV. Price determination

Overall, the Four Seasons Hotel will pursue a skimming pricing strategy that enables it to price

comparatively to what the market will bear and maintains a fit with the overall brand image of Four

Seasons as a 5-star premium hotel. The hotel will also utilize full costing that incorporates both fixed

and variable costs to determine target profit margins that will influence its pricing strategy.

The following is a range of prices for the rooms offered:

• Single room: 650 AED

• Double room: 750 AED

• Suites: from 800 to 1250 AED.

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These prices were established taking into account the subsequent factors:

• People expect high quality products

• The price range for a single room at a five-star hotel is AED 250-AED 1,350 and AED 350-AED

1,813 for a double room. (68-360 AND 95-500 USD)

A. Taxes and Tariffs19

• Room rates are subject to 15% tax and services charge

• No corporate taxes exist

B. Administrative Costs

• Emiratis must own at least 51% of foreign companies

• UAE national workers will need to be incited to come to work, so the cost of labor can be high

C. Middlemen and Transportation Cost

Foreign companies and individuals are not permitted to own land or real estate in Dubai. All

property must be rented or leased for the purposes of running a business. As a result, the company does

not build equity through the property in its business investment. We will need to work with local agents

and contractors to procure the real estate. Also, we will work with local middlemen in promoting the

hotel, such as travel agencies and marketing firms. All required middlemen to the development and

promotion of the hotel will encompass a certain amount of cost.

D. Exchange rate fluctuations29

Due to its fixed peg to the US Dollar, the AED depreciated as a result of the USD against most

major currencies. During 2004, the Dirham depreciated against the Euro (9.2%), the GBP (10,2%), the

JPY (7,3%) and the CHF (7,3%).The exchange rate of the EAD remained unchanged against all GCC

currencies at the end of 2004.

As a consequence, foreign investments in the UAE are less expensive (especially from Europe

and Japan) and despite the fact that European and Japanese product became expensive, since we would

be dealing with local products, no major impact for Emiratis can be forecasted.

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E. Inflation The inflation rate is quite low, compared to other Arab countries, of 4.6%. V. Promotion Mix

We plan to engage the services of a local advertising agency, to take advantage of the expertise

that such a firm would already have about the local market. Specifically, we would choose a firm that

has experience working with other luxury hotel chains, as they would have the experience to see what

type of advertising campaigns work best to gain momentum in conjunction with a new entry in the

market.

Our preliminary plan would be to pursue a mix of promotion types including print and Internet.

We will gain listings with all the major online travel agencies, such as Travelocity and Expedia, along

with UAE-specific travel listing sites, such as the one maintained by the Dubai Government-the

Department of Tourism and Commerce Marketing.

Languages used in advertising would include both Arabic and English, and would feature

messaging that was both respectful and elegant. This is based both on the high-end image of the Four

Seasons hotel, and the fact that we want to fit within the conservative culture of the country.

The message of the advertising will target both business and leisure travelers. UAE is a big

destination for business travelers, and we will target messages about our business and convention

services to that group. Our ads targeted toward leisure travelers will emphasize other amenities offered

by the hotel, such as the spa services. Our overarching message will feature the high-quality experience

offered at the Four Seasons hotel; as we mentioned earlier, locals within the region value high-quality

products and services provided by U.S. firms.

VI. Conclusion

In conclusion, we feel the introduction of a Four Seasons hotel in Dubai would be a successful

venture for many reasons, including:

• The country’s robust economy, with a high per-capita GDP

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• High hotel occupancy rate in Dubai

• The region’s efforts to diversify its economy into several areas outside the petroleum industry,

tourism being one of the most quickly growing industries

There are some disadvantages to the selection of Dubai for a new hotel location, such as the political

risk, and the required local ownership percentage. However, based on our extensive research on the

region, we feel that the advantages far outweigh the drawbacks, and the new Four Seasons hotel location

will certainly be a successful financial investment.

References

1 Central Intelligence Agency: http://www.odci.gov/cia/publications/factbook/geos/ae.html#Geo 2 Central Intelligence Agency: http://www.odci.gov/cia/publications/factbook/geos/ae.html#Econ 3 Wikipedia: http://en.wikipedia.org/wiki/Developed_country 4 HSBC Business Profile Series – United Arab Emirates. Eleventh edition, fourth quarter 2004. 5 http://www.unhabitat.org/habrdd/conditions/westasia/untdem.htm 6 Geert Hofstede™ Cultural Dimensions: http://www.geert-hofstede.com/hofstede_arab_world.shtml 7 Arab Net: http://www.arab.net/uae/ue_womenrole.htm 8 Expatriés: http://www.expatclic.com/eofi/article.php3?id_article=86 9 Dubai Internet Pages: http://www.uae-pages.com/information/language.html 10 Université de Laval: http://www.tlfq.ulaval.ca/AXL/asie/Emirats_arabes.htm 11 Wikipedia: http://en.wikipedia.org/wiki/Islam_in_the_United_Arab_Emirates 12 All Business: http://www.allbusiness.com/periodicals/article/715174-1.html 13 UAE Business Etiquette: http://www.cyborlink.com/besite/uae.htm 14 International Business Center Newsletter http://international-business-center.com/international_newsletter/volume2_issue5.htm#Tips 15 Transparency International: http://www.transparency.org/policy_and_research/surveys_indices/cpi/2005 16 ViewsWire: http://www.viewswire.com 17 MGI Worldwide: http://www.mgiworld.com/doingbusiness/BusinUEA.php 18 World Trade Organization: http://www.wto.org 19 Doing Business In United Arab Emirates: A Country Commercial Guide for U.S. Companies: http://www.export.gov 20 http://www.middleeastmediaguide.com/adagencies.htm - List of Marketing Firms in the Middle East/UAE 21 U.S. Department of State: http://www.state.gov/r/pa/ei/bgn/5444.htm 22 U.S./UAE postpone Free Trade Agreement - http://usinfo.state.gov/mena/Archive/2006/Mar/10-730043.html 23 UAE Current Account Surplus Hits Record in 2005 - http://www.uaeinteract.com/news/default.asp?ID=12 24 http://www.uae.gov.ae/Government/tourism.htm 25 http://edition.cnn.com/2004/TRAVEL/05/10/bt.dubai.hub.growth/index.html 26 http://www.worldtravelawards.com/index.php/wta/nominees_2006/2005/middle_east 27 http://www.ameinfo.com/80473.html 28 http://travel.timesonline.co.uk/article/0,,19270-1290469,00.html – Hotel Demand 29 UAE Central Bank 2004 Annual Report: http://centralbank.ae/pdf/Annual/annual04E.pdf