Lounge bar business feasibility in

Dubai

Submitted by: Abhishek

SMBA09004

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 Landmark Group
• Statement of purpose: Creating exceptional value for all those whose lives
we touch
– Turnover of USD 3.2 billion

– Growth at a CAGR of 25%

– Operation in 15 countries

– 13.4 million sq. Ft. Of retails space

– More than 31,000 employee

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 Dubai
• It’s capital of expatriates with only 20% (Dubai population 1.7 Mn) local residents
• The population is increasing 10,000 every month
• It’s strategic location makes it a popular destination among Asian, European &
African residents for business and leisure purpose
• It’s one of the top 10 most visited city
– with 7 Mn guests in 336 hotels (52 five star, 59 four star, 55 three star,
44 two star & 126 one star hotels)
– with highest average room rate and average revenue per available room
in the world i.e. very effluent visitors
• As per local rules:
– only non-Muslims of 21 & above can purchase alcohol from designated
MMI & A&I retail shops
– Liquor license is required to purchase alcohol
– Can’t drive after drinking
– All bars to be closed between 4pm-6pm
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 Lounge bar

• Lounge is an area designated for waiting and relaxing (usually not for eating)in
a hotel, apartment, theatre or airport etc.
• A typical lounge bar would have
– Seating arrangement: a comfortable usually sofa

– Theme: bright and a formal look

– Food: with limited service for snacks (very few 4-5) but serves all
beverages including tea/coffee and alcoholic
– Music: With instrumental or Jazz music having
– No dance floor or live entertainment e.g. DJ or band
• Lounge bar in a hotel is mostly used by the in-house guest (approximately 70%)
for business client and official meetings
• It’s not a hangout casual place but more of an official classy place
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 Lounge bar industry structure in Dubai

• All four & five star hotels have at least one lounge bar
• A lounge bar license would be easy and less stringent rules as compared
to nightclubs etc.
• A lounge bar in a hotel with corporate and executive clients would cater
higher revenue than a leisure based clientele
• Lounge bar has wine & beer clientele
• Lounge bar has almost 90% regular clients
•
•
•
•

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Typical revenue break up in a lounge bar

• Lounge bar has a payback period

of approximately 3-3.5 years
• It involves less capital investment
than any of the nightclub,
discotheque etc. operation &
entertainment
• We shall find very few typical
lounge bars e.g. The Bar at
Hyatt, NEOS at The Address
• Lounge bar concept is not very
clear and popular other than
five star hotels

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 Perceptual mapping of lounge bar

B u sin e ss stre n g th

Strong Medium Weak

High I/G I/G S

Medium I/G S H/D

a cti
M ar

a ttr

ve n
ke t

e ss

Low S H/D H/D

I/ G = IN V E S T / G R O W ; S = S E LE C T IV E ; H / D = H A R V E S T / D IV E S T
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Porter’s Five Forces

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 Contd.

• Barriers to Entry
– Licensing, rules & regulations
• Bargaining power of Suppliers: high
– Duopoly ( only two MMI and A& I)

• Bargaining power of Customers: medium

– Strict rules make tough to direct alcohol purchase
– But illegal availability slams the onsite sale

• Threat or development of substitutes

– New hotels and bars with similar theme
– There is no price of switchover

• Rivalry among the existing bars

– Established bar has created its own clientele

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 Nelson’s bar at Media Rotana in Al Barsha

•
•

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NEOS , The address

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Crystal bar at Grand millennium, Dubai

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Buddha bar

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Bar 360 at Jumeirah beach hotel

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Barasti bar at Le Meridien Mina Seyahi, behind
Dubai Media City

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 Price comparison in bars of Dubai

N am e of bar B E E R P R IC E ( A E D ) H e in e k e n P rice W h isk e y P rice

Regular Happy Hours ( AED ) ( AED )
360 degrees 40 NA 40 45

1897 bar 36 20% Discount (Till 7 36 42

pm)
Apres Bar 33-38 NA 33 32-55

Bar 44 36-40 NA 38 44

Barasti bar 32-34 AED 22 (5 TO 7 pm) 32 40

Boston bar 30 AED 20 (12 TO 8 pm) 30 32

Budha bar 36 NA 36 44

The Agency bar 36-42 NA   44-125

The Agency bar 35 NA 35

The Apartment bar 40-46 NA 40 46

The Balcony bar 33 NA 33 42

The Bar Hyatt 35 NA 35 32-60

regency
The Bar Marriot 36 NA 36 40
Dubai
Neos 45 NA 45 60
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Sapphire 31 AED 20 till 8 PM 31 36
 World famous lounge bars

FELIX Club, Berlin, Italy

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Tapas lounge bar: Hotel Siddharth, Jaypee
group, New Delhi

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 Cervantes Hotel, Paris

•
•
•
•
•
•
•

Persian design
Serves breakfast in the morning from 7-10 am

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Carpe Diem Lounge Club and Restaurant,
Barcelona

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Neva, Munich

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 La Caravella, Venice

 Hours: daily 12.00 to 15.00 and 19.00 to 23.00

Prices: Main course 32 Euros
Cuisine: Italian

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Moro, London (Spanish & Portugal feel)

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Fifteen, Amsterdam graffiti theme

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 Customers’ choice: data collection

• Sampling method: Convenient sample

• Survey spots :3
– E-max at Oasis mall
– Home Centre at MOE
– Centre Point at Mirdiff mall
• Sample size: 74 samples
• Nationalities: 25
•
• Survey form
•
•

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Survey results

• The sample contains 25

nationality origins
• The highest % of Asians
33%
• Followed by 22% of GCC
nationalities and 18 %
Europeans
• With 12% Africans and
rest other part of the
world

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Age group, gender, marital status & annual
income

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 Resident or not?
Have they ever visited a lounge bar?

•
• Our sample had 86% of
UAE residents
• With very little of 14%
only were tourists
• Sample contains 68%
respondents those
have visited a lounge
bar at least once
• 32% said they had not
visited a lounge bar
or they had no idea of
that
•
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Preferred bar choice of the respondents

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Preferred bar drink & starters of the
respondents

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Bar preference of nationalities

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Beverages preference of nationalities

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Quality of crowd choice at different bars

• If we see the trend

of preference
the quality of
crowd is of
utmost important
in case of lounge
bar
• Shishabar the
customer may
come in small
group or
individual for
particular test so
at second
preference
•
• In case English bar it
seems as if of
low importance
as compared to
other places 35
Importance of theme w.r.t. bar choices

• As per our survey

respondents
English bar
lovers has the
highest
importance out
of all the bars
• For lounge bars
slightly lesser %
has as their first
choice as theme
but the equal %
has as the 2nd
choice
• For nightclub also
theme is quite
important
• For small no of
shisha bar
respondents its
prima
importance 36
Music lovers preference distribution

• For night club lovers

music as their
first is highest of
all the bars first
choice
• Not only as their first
choice but if we
see the top 3
choice combined
its significantly
high
• Lounge bar music is
very important
for the first
choice music
lovers
• Particularly may be
due to slow,
soothing and
specific choice
of music 37
 Findings and Recommendation

• The lounge bar business is premium business

• It is basically driven by its distinguished theme, music & ambience
• The franchise concept is not very popular but can be thought as the
preferred location would be inside a five star hotel
• Preferred choice is nightclub/disc in Dubai so a fusion theme might be a
good idea
– as the place is dominated by Asians in numbers and they are not a very good target for
lounge bar
• Of course the business is profitable and with the growth of Dubai its going
to grow
•
•
• Now we need to make & discuss the business plan elaborately in terms of
financial aspect/theme or concept development/location/ and marketing
etc
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 Learning out come & difficulties

• Understood the industry structure

• Entrepreneurship in Dubai : investment, rules and regulation approvals
• Learned the basic uses of SPSS software
• We were facing difficulties in collecting information about business in UAE
• Difficulty in conducting the first hand data: survey
– It’s not allowed in Dubai/UAE
– The alcohol being taboo to the locals

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 

 Thank you

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