How far is Qatar willing to go, in its quest for dominance in luxury?

For the past 3 years, a month has not passed by without a mention about Qatar’s ominous involvement in luxury, whether at an international level or at home. In its tiny capital of Doha, already crowded with luxury hotels (Four Seasons, St Regis, InterContinental, Ritz Carlton, W Hotel), several new luxury hotel developments are underway, most due to be completed within the next two years: a second Four Seasons Hotel, Nikki Beach Hotel, Park Hyatt, Mandarin Oriental, Shangri La and Sofitel.

Despite its limited potential, Doha is already home to four malls which include luxury retail, with almost all major international luxury brands present. There is also the Pearl of Qatar with 2 million sqf exclusively dedicated to luxury retail and fine dining. Qatar’s luxury retail market is set to double by 2014 with the addition of two major luxury retail projects, both already under construction: Msheireb‘s Downtown Doha (31 hectare mixed use development, with luxury retail ) and Al Futtaim‘s Doha Festival City (with dedicated luxury retail section).

Harrods, London

While developments in luxury hospitality may indeed tap into the growing coroporate events and state events which Doha has been attracting, development of luxury retail will very much depend on how the State of Qatar will succeed in implementing a coherent and feasible mid term strategy to transform Doha into a real leisure destination, to compete against power destinations of Dubai and Abu Dhabi, already the leading destinations in the Middle East.

Another important project announced in 2010 was Qatar Luxury Group, which, similarly to Msheireb Properties is directly controlled by Qatar’s First Lady, Sheikha Mozah. Run by an ex LVMH executive, Qatar Luxury Group completed in 2011 the acquisition of iconic French leatherwear manufacturer Le Tanneur, successfully repositioning the brand, improving its productivity and pursuing an aggresive international expansion. Qatar Luxury Group has set up in Doha a unique centre of excellence in manufacturing, with an investment exceeding 500 million euros – leather and jewellery craftsmanship as well as traditional couture ateliers. In today’s turbulent international economic environment, I am certain of an imminent acquisition by Qatar Luxury Group, most likely in the watches and jewellery sector.

While providing training and education for young Arab students (Qatar Foundation now has a luxury master degree jointly run with prestigious Italian university Bocconi) it would be unrealistic to recognize the potential of Qatar Luxury Group to acquire more prestigious international luxury brands and possibly even move their production to Doha. One of Sheikha Mozah’s biggest ambitions was the acquisition of a strategic stake in Italian luxury house PRADA, which did not succeed as the house later opted for an IPO on Hong Kong’s Stock Exchange.

Much like with organizing annually world class golf and tennis tournaments in Doha, which attract the worldwide elite of these sports, Qatar looks at luxury as an ideal marketing and awareness tool, internationally, positioning the small gulf state as a prosperous and stable ”Switzerland of the Middle East”. The association with luxury also brings prestige and in some cases, especially with the major international acquisitions,  a strong assocation with tradition (the preservation of crafts and talents). Prestige and tradition are complete by performance, hence, Qatar’s multi million dollar sponsorship of FC Barcelona, probably one of the world’s most successful football clubs.

Internationally, Qatar is also known as the biggest buyer of art, amassing a collection estimated by some at over 4 billion euros but also for its investments in prestigious hotels: Raffles Paris, Raffles Singapore, Peninsula Hotel Paris, W Hotel London, Carlton Cannes and recently Concorde Lafayette Paris, l’Hotel du Louvre in Paris and Le Palais de la Mediterranee in Nice. The amount of investment and long strategic business approach to projects such as Raffles Paris (multi million dollar renovation recently completed), Carlton Cannes (will be closed for at least 2 years starting this summer, for extensive renovations) and the spectacular ultra luxury Peninsula Hotel Paris project (currently under construction) have  all enhanced Qatar’s long term vision, without casting any doubt on immediate profit benefits. The same can be said about Qatar’s recent acquisition of a 5,2% stake in US jeweller Tiffany and its 10% stake in German luxury car maker Porsche.

Things seem to be different regarding HARRODS, London’s iconic luxury department store, which Qatar acquired in 2010 for an alleged GBP 1,2 billion. For a while, international rumours about Harrods department stores opening in Doha or New York have been categorically rulled out, those close to Qatar’s Royal family indicating that they wish to preserve Harrods’ uniqueness and Harrods is about London and an international expansion would ruin the concept and the reputation of the brands. Personally, I could not agree more and I was slightly surprised to find a Harrods boutique at the Corinthia Hotel in London, earlier this year, the first such Harrods retail outlet in a hotel. I understood it was an exception, which was mainly triggered by Sheika Mozah’s preference for the Corinthia London where she has often stayed and used the services of its ultra luxury SPA and that there were no plans to develop such Harrods corners in hotels. The company’s CEO, spoke earlier this year about the huge potential of China, however, no plans have yet been confirmed for Shanghai, the rumoured destination for a first Harrods department store in China.

Mention should be made that outside the iconic Harrods department store on London’s Knightsbridge, there are Harrods outlet at Heathrow airport and a online shop which sells select products from the department store. This week’s suprising news that Qatar is developing a chain of HARRODS HOTELS has come as a blow, overturning my entire perception of Qatar’s way of doing business and investment approach. And the first Harrods Hotel will apparently open in Kuala Lumpur – not in London or even in Doha for that matter. Harrods may be THE luxury lifestyle, probably one of the very few such true luxury lifestyle brands remaining, but the extension of the brand into hotels is a huge mistake which the owners make.

Even if, let’s say the Harrods hotel brand became part of an established hospitality company, like Bvlgari Hotels are managed by the Marriott Group (which I do not consider a model of success) Harrods cannot be redefined from London’s iconic department store into a hotel somewhere in Asia . Harrods is not only about shopping but Harrods is about the magic experience of travelling to London to shop at Harrods !

Can you imagine the Harrods logo on towels and linen in a hotel in Kuala Lumpur? If the Qatari owners have resisted the temptation (or maybe my information is outdated) of opening Harrods in New York, Doha or any other city internationally, why would they expand the brand into hotels? Will Harrods mobile phones and a co-branded Porsche or Bentley follow suit? Or maybe Al Fayed’s Ritz in Paris can be rebranded as Harrods Hotel under a licensing agreement with the Qatar company which owns Harrods.

Oliver Petcu