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Region offers unprecedented opportunity

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HMH The Ajman Palace in Ajman, UAE

MH – Hospitality Management Holdings – is the Middle East’s first and largest operator in the alcohol-free segment and has made rapid strides in the industry since its formation in 2003.

'The UAE, Saudi Arabia, Qatar, Iran and Egypt are some of the most promising markets in the Middle East. The biggest challenge comes from geo-political instability and economic factors affecting not just the region but key feeder markets,' says Laurent Voivenel, chief executive officer of HMH, in an exclusive interview with TTN.

Voivenel took over as the company’s CEO in 2013 moving from Starwood Hotels & Resorts. His key priority has been to give the company a distinct competitive edge among regional players to put it at par with international hotel chains.

Home-grown brands, when led by the right leadership and vision, are often better placed to not just meet international standards but deliver outstanding local experience, he says.

The scale of opportunity in the region for hotels, especially in the budget, segment is unprecedented. 'By 2020 our goal is to multiply by four our total inventory of keys and have a hotel in every GCC country while doubling our portfolio in the UAE,' he adds.

Excerpts from the interview:

There have been a lot of geo-political and economic ups and downs in the region in recent years. How has HMH faired during this period?

At HMH we are facing exactly the same challenges as faced by the industry. The period had its share of ups and downs for the hospitality sector owing to the geopolitical instability and stagnant economic growth in certain regions. The dramatic drop in oil prices and the weakening of euro had a major impact on tourist numbers. In addition, a wave of new hotels opened resulting in oversupply of rooms that further intensified competition. It may take time for this situation to reverse. At HMH we strategically deployed and optimised our resources to effectively meet our financial objectives. While our performance was good in certain markets we experienced some tough months in Lebanon, Jordan and Iraq.


What are the challenges in building a local brand that meets international standards?

Voivenel

Home-grown brands when led by the right leadership and vision, and supported by world-class expertise, resources and technology are often better placed to not just meet international standards but deliver outstanding local experience. The key lies in marrying local business dynamics and culture with international know-how, global marketing and distribution, and the latest technology. HMH is a fully-integrated hotel management company that provides hotel owners and developers a broad spectrum of comprehensive management solutions with five distinct, yet complementary, hotel brands catering to varied market segments from budget to luxury. These include: The Ajman Palace Hotel, Coral Hotels & Resorts, Corp Hotels, EWA Hotel Apartments and Ecos Hotels.


What does the future landscape look like for the company and the hospitality sector?

All major Middle East regions are targeting tourism as key sector for growth and diversification in their respective economies. Among these Saudi Arabia currently offers huge opportunity for mid-range investment, particularly in Jeddah, Riyadh and the Eastern Province. Similarly, Doha, Muscat, Abu Dhabi all look very promising with events such as Dubai Expo 2020, Fifa World Cup in Qatar in 2022, etc. With the lifting of EU and UN sanctions, Iran holds enormous potential both in terms of domestic and inbound as well as outbound tourism. Officials in Iran have announced plans to build 400 new three- and four-star hotels over the next 10 years. Egypt has massive opportunity in economy and midscale hotels segment as well as quality serviced apartments. HMH is well placed to capitalise on these developments and aggressively expand our footprint in the region.


Kindly elaborate on the company’s future strategy and expansion plans:

At HMH we wish to grow the path according to our strategic plan that is sustainable in a physical sense. It is not only about business opportunities out there, rather our strategy is to drive ‘value over volume’. The GCC, with a special focus on the UAE, Oman and Saudi Arabia, is central to our expansion strategy. The scale of opportunity in the region for hotels especially in the budget segment is unprecedented. By 2020 our goal is to multiply by four our total inventory of keys and have a hotel in every GCC country while doubling our portfolio in the UAE. To achieve it we have set in motion a strong pipeline of development.

How challenging is it to run alcohol-free hotels? Does it limit your clientele?

Over the years we have gathered an amazing experience both in terms of operations and market intelligence in the alcohol-free hotel segment that is one of our key strengths. Contrary to popular belief, a dry hotel can be as profitable as any other hotel. It all depends on the facilities at the hotel. After food and beverage, the largest money maker in a hotel is banqueting. So whenever HMH is involved in planning and development of hotel, we advise owners to allocate maximum space to meeting and banquet facilities instead of too many food and beverage outlets as that could generate superb revenue.

We have got an international mix of corporate and leisure travellers and majority of these are from the Western world. A lot of companies worldwide prefer to put up their executives in dry hotels. Similarly, a whole lot of leisure travellers chose to stay in a safe environment and are not necessarily looking for alcohol. One of our key segments is no doubt families and women travellers who feel a lot more at ease in our hotels.

Is technology a blind spot in Middle Eastern hotel companies? What steps HMH is taking to be at par with international chains?

We cannot generalise the statement, however, majority of hotels in the Middle East definitely need to catch up on in-room as well as other technology. While some brands have been quick to adopt and upgrade the necessary hardware and software and are making the required investment in technology, others are lacking the vision and strategy. There are various factors behind the fact that most hotels are still lagging in terms of latest innovations in our industry. Lack of investment, level of professional expertise, availability of right resources in certain countries, large inventory of old hotels in need of upgrades, high cost of technology upgrades and equipment, level of guest skills and requirements of the region’s travellers are just some of reasons why bulk of the hotels are yet to be at par with their counterparts in cities such as Dubai or Abu Dhabi.

When it comes to technology, like everything else, the key is to know what is it that your guests desire and expect? There is no point to load them with add-ons that complicate rather than simplify. Technology must complement the service and enhance the guest experience. At HMH we believe in simplicity. Our objective is to meet the demands of the day without fixing complicated control systems for managing basics. Last year we had invested 90 per cent of our capital expenditure on technology upgrades while this year are investing more than 50 per cent of our capex on technology.

Which markets do you currently see as the biggest growth markets in the Middle East region? What are the particular challenges facing the region?

The scale of opportunity in the region for mid-market / budget hotels is unprecedented. Expanding airline network, especially low-cost carriers; increased airport capacity; growing middle class; emerging source markets; addition of new tourism and family attractions and enhancement of infrastructure are all fuelling the demand for mid-market hotels. We all know there is a near saturation in the market when it comes to luxury hotels. The market does not need any more luxury hotels at this point.

Therefore, every single operator is looking at how they can attract the future market, meaning the market of tomorrow, i.e., the middle class. This is why at HMH we have three brands out of five targeting middle class because it today represents 2.5 billion and will by 2025 represent 5 billion around the world. Ecos Hotels is a ‘no frills’ B & B brand that ties together a unique economical and ecological concept. It is a smart choice for investors offering strong investment opportunity because of lower construction and operating costs and quick and high return on investment.

The UAE, Saudi Arabia, Qatar, Iran and Egypt are some of the most promising markets in the Middle East. The biggest challenge comes from geo-political instability and economic factors affecting not just the region but key feeder markets.

Are you taking part in the ATM this year? If yes, what is your focus at the show? What to do you hope to achieve at the show?

This year the spotlight will be on mid-market travel at the Arabian Travel Market and since HMH is a key player in this segment, we are extremely excited about the prospects. In addition to showcasing our existing portfolio of brands and hotels spread across 13 cities in Mena region, we will be promoting our upcoming hotels. 2016 is a very significant year for us as we have got some fabulous announcements coming up. ATM is the perfect platform to introduce these to the global travel trade.

We have got an outstanding stand location with an equally stunning design that is being customised to meet the unique needs of our various brands. We want our stand to be an experiential destination for our visitors where they can get a true feel of our hospitality. Visitors will be able to find us on stand HC0420 at Sheikh Saeed Arena at Dubai International Convention and Exhibition Centre.

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