United Arab Emirates Country Notebook &

Four Seasons Marketing Plan

Steve Callis
Carlos-David Islas-Labastida
Renee Werner

April 25, 2006

Georgia State University

Table of Contents
Topic

Page Number

Part One: United Arab Emirates Country Notebook

I. Introduction

II. Geography

III. Economic Environment

IV. Cultural Environment

V. Business Customs and Practices

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

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
countrys government, the stability of the countrys 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

countrys GDP is $74.5 billion, and GDP per capita is $29,100. The GDP growth rate is 6.7%, almost
3

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, its 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 arent generally counted among developed countries
such as the United States and Japan.3 However, these rich countries dont 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). Its 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 30year 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 countrys 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 isnt a big problem the
inflation rate has been approximately 4% for the past few years. The exchange rate also doesnt
contribute to economic risk the Emirati Dirham (AED), which is the countrys currency, has been
fixed to the U.S. Dollar since 2002.

C.

Population Demographics
The countrys 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
5

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 societys 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. Heres 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
6

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.

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

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, Bah's, 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.
9

Affiliation and Social acceptance: Working in a corporation could be seen as not having enough
revenue to maintain ones 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. Its 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.

10

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
UAEs 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
11

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 UAEs more developed and westernized state.
Primary data is a good source for collecting detailed information specific to a marketers 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
marketers 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
12

well over a hundred marketing firms operating within the UAE which could assist in a marketers
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 worlds oil and 5% of the worlds gas, which has led to its prosperous
environment. The oil and natural gas sectors make up almost 32% of the U.A.Es 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 Wendys 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

13

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 its 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
14

anticipated location for the Four Seasons Hotel, its estimated that annual growth in tourism contributes
as much as 20% of the emirates 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 5star 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 hotels website, partnerships with online and traditional travel
agencies, and referral relationships with government and industry organizations and associations. The
15

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.

28

Dubai 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.
16

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 Dubais 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
17

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 hotels 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.

18

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 countrys robust economy, with a high per-capita GDP
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 High hotel occupancy rate in Dubai

The regions 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

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
Expatris: http://www.expatclic.com/eofi/article.php3?id_article=86
9
Dubai Internet Pages: http://www.uae-pages.com/information/language.html
10
Universit 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
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