Earlier this month, Driven Holiday Homes co-founder Khadija Meziane El Otmani sat down with Arabian Business to discuss female entrepreneurs in the Middle East, the growing short-term rental market in Dubai, and the fine balance between hospitality and real estate.
This article was originally posted on ArabianBusiness.com
For some, finding a niche market requires the invention of a ground-breaking new gadget.
For others, success relies on their own eye for spotting a gap within an established industry.
Similarly, when navigating through the myriad of business challenges that arise, some flow gracefully while others lack soft skills and balance.
Khadija Meziane El Otmani, co-founder of Driven Holiday Homes, a licenced short-term rental operator, clearly possesses these skills.
Leaving nothing to chance, or the whims of potential business partners, she has two business cards; one with the title of managing partner and the other with ‘a short-term rental consultant’ inscribed on it.
“I beat them at their own game,” she says when we discuss such partners, and the opportunities and challenges for business women in the region.
In actual fact, she finds Dubai to be a very empowering place for women.
“I chose Dubai because it’s the best for me today to build my company, to attain my personal achievements,” says the charismatic 34 year old Moroccan.
“In this country, everything is set up for a woman to work and have a family.
“They [the UAE] are making history now. I always say [that] I’m part of it and I’m very proud of it. I’m part of the first group of people to get this licence [holiday homes], for example.”
Hailing from an entrepreneurial family from Casablanca, El Otmani completed her law and business education in France before arriving in Dubai in 2007.
Having been in and out of the city for a few years, she explains that her curious nature urged her to consider starting a business. “Last year, I wanted to do something, but didn’t know what,” she explains.
Neither the real estate sector nor the hospitality industry are her core fields, she says, but after spotting a business opportunity at their intersection, the seed of an idea was planted in her head.
“In Dubai it’s completely different from the rest of the world because short-term rental is related to the real estate when it’s actually hospitality,” she explains.
“In Paris, people buy houses to live inside. In Dubai, they buy more for investment [purposes].
“The way they do it in Paris is very interesting. I found that sector here very conventional. Accommodation for tourists is [offered] in hotels, apartments, villas, and maybe a weekend in the desert. In France, you can basically spend a weekend in anything that can accommodate a person.”
And so, the DXB Bound concept was born – an idea to offer a wide range of luxury units for short-term rental with bespoke concierge services.
From one side, it offers a new, more profitable avenue for those who wanted to own a little piece of the city but turned out to be buy-to-let investors. From the other side, El Otmani’s unique selling point is in providing tourists with ‘new ways to experience a holiday in Dubai’.
She says: “Imagine that you wake up in Dubai on a fully accommodated boat, have an experience of being on an amazing yacht, and have your breakfast with views of the Dubai skyline.
“But for the same price as a night at a hotel.
“Why do people choose an apartment or villa rather than a hotel? It’s because they want to feel like home. [Our additional] services are mainly included in the price. Imagine that you have a hotel service, but sitting at your home.”
And as has already been proven, that home-away-from-home feeling sells very well.
It’s a fact that has urged the Department of Tourism and Commerce Marketing (DTCM) to start regulating the grey area of renting furnished properties on a short-term basis. The move is also aimed at helping the city to prepare for welcoming an anticipated 20 million annual visitors by Expo 2020.
According to the decree number 41 of 2013, home owners wishing to rent out their property as a holiday home are required to use the services of a licenced operator, with their property becoming part of the operator’s portfolio. A failure to do so will lead them to a fine of AED 5,000.
In addition, the decree has been adjusted to the regulation of the hotel sector by adding two new categories – ‘Holiday Home – Standard’ and ‘Holiday Home – Deluxe’ – to the hotel classification framework.
For the entities which aim to be operators of a portfolio of properties, the application process for issuing licences was opened in June 2014, and only around 30 licences have been issued until now. Among the very first ones was the licence for Driven Holiday Homes.
“The licence didn’t exist before. That’s why it’s very exciting,” El Otmani recalls. “When I started, we were aware that the licence would be issued, but we didn’t know when or what the regulations would be.
“It was difficult because we didn’t know what was going to happen and what we would be able to do, whether the tax would be expensive.
“Finally, all is good now. They [DTCM] are experimenting on us, but also DTCM is listening to us. They are very supportive, helping us each step of the way.”
The decree stipulates numerous conditions to be met by potential licenced operators, one of which is a minimum of 20 properties in a portfolio. To bring the DXB Bound concept to life, El Otmani teamed up with Abdullah Al Ajaji, managing director of Driven Properties, a Dubai-based property brokerage and consultancy firm, and a proven supporter of Arab entrepreneurs.
“This is fantastic. If you are capable of doing it, I’ll give you everything that you need,” was his answer to El Otmani after she had presented her concept.
With various surveys recognising Dubai as one of the top global destinations for international travelers, it obviously didn’t take long to the experienced real estate professional, Al Ajaji, to realise the proposal’s potential.
According to the 2014 MasterCard Global Destination Cities Index, which ranks 132 most important global cities, Dubai received roughly 12 million international visitors, up by 7.5 percent year on year.
Furthermore, overall tourist spending in the UAE rose by five percent in the first quarter of 2015 compared to the same period in 2014.
The most recent proof of the concept’s potential is in a Network International study, based on credit or debit card transactions by country in the first quarter of 2015, that further found that Americans accounted for the largest portion of total spending with 21 percent, Saudis with 12 percent, British with nine percent, and so on.
Combining her concept and his infrastructure, El Otmani and Al Ajaji formed Driven Holiday Homes.
The soft launch of their joint venture was in September 2014 while the official launch of the website is planned for October 2015.
“We are quite a victim of our success,” says El Otmani adding that their services are offered through various portals such as propertyfinder.ae or booking.com.
“So far we cannot launch our website because we cannot manage our demand.”
With her team of 10, she currently manages 50 units, and prefers to focus on growth and quality over profits. “We’ve stopped taking more because what is important for us is the service that we provide to our landlords and our guests,” she says.
During its first peak season, the period from December to February 2015, their occupancy rates were almost 90 percent. The summer period, which in Dubai is considered as low season, she expects around 65 percent of its properties to be occupied.
Looking at it through the eyes of potential renters, it’s an easy calculation, she says.
“They [renters/investors] were very surprised,” she explains. “Actually, the first landlord was very brave because there was no guarantee that you would earn more. Why do you choose short-term and not long-term rental? It’s because income is 15 percent higher minimum.
“It was a gamble back then. But now short-term rental has been proved and improved. Now landlords ask us, but in the beginning it was very difficult to convince them.
“And you convince them with numbers.”
The benefits of short-term rentals, she explains, are manifold.
“When somebody buys an apartment for investment that means he or she doesn’t want to live inside,” El Otmani explains.
“He wants money to pay his mortgage or income every month. So, he has two choices. One is long-term rent to get a fixed amount of money. But when the markets picks up and he needs money, wants to resell, he’s stuck with somebody for one year inside.
“And you have short-term rental. We sell like a hotel, so it means daily, weekly, and monthly. And if you have somebody staying at your accommodation and paying for one week or ten days, it’s more income than someone who is staying longer.”
When asked about the future plans, she is confident. “Within one year, I want to bring a new way to experience a holiday in Dubai, and in five years I want to be the leader in the market,” she says.
“I project myself very far in the future. I’m here to expand and export the concept across the GCC. Some countries are very promising.”
For El Otmani, however, something that is more important than earning a spot on the annual CEO Middle East Women’s Power List is not getting there alone.
“I want my team to be happy. My target is that the people who started with me to stay with me for 10 years,” she says. “In Dubai [employee] turnover is a big problem.
“Happy team members make a happy company. If we are a happy company, we will make money.”