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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 Its capital of expatriates with only 20% (Dubai population 1.7 Mn) local residents
The population is increasing 10,000 every month Its strategic location makes it a popular destination among Asian, European &
African residents for business and leisure purpose
Its 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
Cant 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
Its 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
Strong Medium Weak
High I/G I/G S
Medium I/G S H/D
Low S H/D H/D
M
ar
ke
t
att
r
ac
ti
ve
n
ess
B u sin e ss stre n g th
/ = / ; = ; / = /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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Porters 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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Nelsons 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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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 Asians33%
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 & annualincome
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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 therespondents
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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 trendof preferencethe quality ofcrowd is ofutmost importantin case of lounge
bar
Shishabar thecustomer maycome in smallgroup orindividual forparticular test so
at secondpreference
In case English bar itseems as if oflow importanceas compared to
other places
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Importance of theme w.r.t. bar choices
As per our surveyrespondentsEnglish barlovers has thehighestimportance outof all the bars
For lounge barsslightly lesser %has as their firstchoice as themebut the equal %has as the 2nd choice
For nightclub alsotheme is quiteimportant
For small no ofshisha barrespondents its
primaimportance
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Music lovers preference distribution
For night club loversmusic as theirfirst is highest ofall the bars firstchoice
Not only as their firstchoice but if wesee the top 3choice combinedits significantlyhigh
Lounge bar music isvery important
for the firstchoice musiclovers
Particularly may bedue to slow,soothing andspecific choice
of music
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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 thepreferred location would be inside a five star hotel
Preferred choice is nightclub/disc in Dubai so a fusion theme might be agood idea
as the place is dominated by Asians in numbers and they are not a very good target forlounge bar
Of course the business is profitable and with the growth of Dubai its goingto grow
Now we need to make & discuss the business plan elaborately in terms offinancial aspect/theme or concept development/location/ and marketingetc
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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 Its not allowed in Dubai/UAE
The alcohol being taboo to the locals
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Thank you