Palm Jumeirah hotel

Palm Jumeirah hotel

Distinction secures lucrative Dubai export contract

London-based bespoke furniture manufacturer Distinction has landed a lucrative export US$7m export deal to supply products to Dubai's seven-star Palm Jumeirah hotel.

Distinction has been designing and supplying bespoke furniture for luxury hotels for over 33 years. With customers across the world, exporting has played an important role in the company’s success to date; its business has traditionally been focused in Europe, but as the tourism industry in the Middle East has seen such rapid growth, this too has become a significant market for Distinction. In fact, more than half of its sales are now exported to the region.

While being a valuable market for Distinction in the last few years, exporting to the Middle East has not been without its challenges. In late 2016, Distinction won a US$7m contract to supply the furniture for the Palm Jumeirah hotel. As the first Viceroy hotel to open in Dubai, with over 477 luxury guest rooms spread across 16 floors, this represented a huge and prestigious opportunity for Distinction.

The company received an advance payment from the buyer: cash it could use to pay its staff and suppliers prior to contract completion. In return however, Distinction needed to provide an advance payment guarantee from its UK bank, an assurance for the buyer that it would deliver its side of the deal. To issue such guarantees, banks usually request a cash deposit from the UK seller – but this can put pressure on smaller companies who are keen to take on ambitious export contracts yet may not have sufficient liquidity to fund both a deposit and contract fulfilment.

This wasn’t the only challenge: it’s not unusual for UK banks to take weeks to decide whether they will issue a guarantee and the company has found this to be an area of difficulty for customers in the Middle East. Mark Elliot, CEO of Distinction said: “Turnaround times are much faster in the Middle East – there you can get a bank guarantee in 48 hours. So when there’s a delay on our side, we risk looking slow and inefficient to our buyers. This is something we’ve experienced time and time again.”

Luckily for Distinction, they were able to tap into the support of UKEF, the UK’s export credit agency which provides financial support and guidance to afford UK companies the means to achieve their exporting ambitions. Under its Bond Support Scheme, UKEF issued a US$1.2m guarantee to Distinction’s bank (enabling the company to secure the guarantee it needed without such a large deposit) and liaised with its contacts at the bank to ensure a fast turnaround time.

Elliot added: “The Middle East is a thriving market; there is a respect and demand there to buy from UK companies and we want to take full advantage of that. To secure this deal we needed to get everything finalised on a short timescale and UKEF pulled out all the stops to make it happen; this and the direct financial support we received from UKEF was invaluable. I doubt we would have been able to take on the contract without it.”

As a result, Distinction secured US$7m in revenue with an important customer in an auspicious market for the company. Thanks to the success of this deal, Distinction was able to build a strong relationship with a new customer and grow the headcount of its UK office by almost half. This will play a vital role in its ambitious plans for growth and to significantly expand its exports to the Middle East, particularly Dubai, alongside its strong domestic business.

The Rt Hon Greg Hands MP, minister for international trade and London, said: “Small businesses are a driving force of the UK economy and Distinction is a great example of how SMEs can thrive in the international marketplace, when they get the support they need. Supporting SMEs is a growing part of UKEF’s role and that is why I’m proud the UK government could support Distinction on this high-profile project, growing its business and creating jobs here in London.”