First mover

Hilton Worldwide has been a pioneer in the Middle East. Regional boss Rudi Jagersbacher says the best is yet to come
By Courtney Trenwith
Sat 29 Jun 2013 01:21 PM

If there was a pioneering international hotelier in the Middle East, it would have to be Hilton Worldwide. On countless occasions, the global giant has established a hotel in the middle of nowhere, only to see it gradually become the centrepoint of many.

Take Jumeirah Beach Residence in Dubai, for example. When Hilton opened its beach resort there in 2000 it was the standalone development, a lone hotel with miles of desert between it and the rest of Dubai.

Today it is dwarfed by not only a coastline of resorts but also a barrage of skyscraper residences creating three new suburbs, with numerous more buildings, including a mall next door, to come.

In the UAE’s northernmost emirate, Hilton was the first international brand in Ras Al Khaimah (RAK), taking on a rundown building in the centre of town and turning it into a booming property that prompted the government to build the operator an expansive resort along 2km of beach. Hilton Worldwide will manage six properties in RAK by next year, including its new flagship Waldorf Astoria, and the emirate is fast becoming the latest luxury tourist destination in the region.

Elsewhere, Hilton was among the first hotel operators in Saudi Arabia, including launching in Jeddah in 2002, before the kingdom took active steps to boost tourism in the coastal city. It has plans to launch in Erbil, in Iraqi Kurdistan, in the near future, as well as in Uganda, Sharjah and Lebanon. And it is one of the few international hoteliers prepared to stick to its commitments in Egypt, where the company is pushing ahead with plans for several new hotels despite political uncertainty presently affecting the tourism industry.

In total, the company has 60 hotels across the Middle East and Africa, with a further 12,349 rooms in 35 properties under active construction, making it by far one of the fastest-growing hoteliers in the region.

According to consultancy STR Global, Hilton’s regionwide expansion accounts for more than ten percent of the entire MEA hotel pipeline.

And Hilton Worldwide MEA president Rudi Jagersbacher says there are even more new destinations in his sights — many that others are not yet even contemplating.

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“We’re always encouraging and driving, trying to go through new boundaries and developing new businesses for owners, obviously for new customers because you want to expand the cake,” he tells Arabian Business.

“Clearly destinations like Libya, which are really beautiful and have wonderful archaeological areas [are attractive] for a new hotel. Once that [kicks off]... that’s going to be a destination for the European, particularly Italian, market.

“We really believe Morocco is really going to be the next [top tourist location], so we’re building another 1,000 rooms in different locations. And of course, Lebanon and Jordan, and, believe it or not... Egypt.”

Hilton has eighteen operating hotels in Egypt and is building three more in Alexandria, the nearby city of Borg El Arab — which presently does not have a developed tourism industry — and even Cairo.

“Yes, in Cairo,” Jagersbacher says, pre-empting the surprise. “Kings Ranch [Resort in Borg El Arab] is going to open soon, the other ones in three years. We believe that the political situation will resolve itself one way or another. The only country to compete with Egypt is Turkey, but Turkey runs at a much higher rate versus Egypt. So think of your business opportunity [and] if you’re able to grow. Certainly they have all the facilities in terms of business and we believe it’s going to continue and we’re going to be a driver; we want to stimulate the market.”

While hoteliers in numerous Middle Eastern countries have suffered since the various Arab Spring uprisings in the past two-and-a-half years, Hilton Worldwide has been able to capitalise on the enormous pool of 30 million customers in its loyalty programme. It has also been using specially targeted packages to help coax tourists back to troubled areas in a bid to sustain its hotels during the downturn.

“This is the great thing about brands. Brands can bring people,” Jagersbacher says. “We’ve been able to shift people to destinations and we’ve done this really well in the last two-and-a-half years with the resorts in Egypt.

While Cairo is running at fifteen-seventeen percent [capacity], the resorts are between 60-72 percent. The market outside Cairo is doing very well.”

Hilton also is rapidly expanding its portfolio in Saudi Arabia, where it is due to open its 20th hotel in 2015 after signing an agreement with Abdullah Abdul Aziz Al Rajhi and Sons in April to operate its eighth property in Riyadh, a DoubleTree.

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The company also is building six hotels in Makkah as part of the kingdom’s plans to increase capacity for pilgrims.

“Saudi Arabia has always been very strong,” Jagersbacher says.

As of April last year, Hilton Worldwide’s growth in Saudi Arabia represented more than seventeen percent of the total number of new hotel rooms in the kingdom and one-third of the company’s entire construction programme in the Middle East and Africa.

Qatar also is a focus point for the brand, in response to Doha’s growing international standing and the country’s need for 50,000 new hotel rooms by the time it hosts the 2022 World Cup.

“Qatar is very strong. We’ve signed Waldorf Astorias, we have Hilton, Double Tree and Hilton Garden Inn,” Jagersbacher says.

“All the brands are represented; they’re in the midst of being built. You have the new airport, that’s going to shift a lot of new customers, although many of them will be transient so one of the strategies [the Qatari government] needs to think about is how you retain some of the tourists within Doha and Qatar. And of course all the events they’re building there are very, very active; it’s definitely another up-and-coming tourist destination and a strong player in the Middle East.”

In Dubai, where Hilton Worldwide already has a significant presence across several of its brands, Jagersbacher is confident of growth and says he would not be surprised if the government’s goal to double tourist numbers to 20 million by 2020 was achieved much earlier, particularly with the opening of the new Al Maktoum International Airport.

The airport, which is due to open in October at the Dubai World Central project in Jebel Ali, will eventually have an annual capacity of 160 million passengers.

“I think they’ll exceed [20 million tourists] with the new airport, which is an unbelievable facility,” Jagersbacher says. “Once this comes into play I think you’ll find that this is a very achievable target.

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“They’re creating a whole new city out there. You have five runways which is actually the biggest in the world.

“I think it’s going to be a game changer. I would say ‘why did they do it on their own?’ But they’re focused, driving, because they believe they can develop, that’s why they’ve got all these new concepts. Everything has been forgotten from 2008-10. Look at the house prices. Is it a bubble? I don’t think so.

“I think [in] Dubai, as an international destination city, there’s going to be more and more room for us.”

But Jagersbacher says there is also enormous potential across other emirates. If the UAE is successful in its bid to host the 2020 World Expo in Dubai it will benefit the entire country, he says.

“I think it’s fantastic, but not just for Dubai. This will also be good for Ras Al Khaimah and I think that’s the way to look at it; such a major event will affect the whole UAE,” he says.

“I think there should be a cohesive strategy for tourism across the whole UAE. If you [take Dubai’s estimated 20 million tourists by 2020] and if you look at Abu Dhabi, which is also doing quite a huge [tourism intake] with Saadiyat Island and all the various projects, I think it will be beneficial. But it’s not in my hands.

“The important thing is, Dubai is not the Middle East; in the Middle East, there’s a lot of countries. Dubai is great for many, many things and I’ve always said ‘don’t worry about Dubai because Dubai will take care of itself’. As long as global economies are going from strength to strength Dubai will be like this.

“So it’s important to look at other markets, what other activities you can do to assist and drive and benefit from some of the other markets.”

The company has taken a particular shine towards Ras Al Khaimah, where it is the largest hotel operator. Its new Waldorf Astoria, the company’s premium brand will even take over from New York as the flagship.

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There are three new Hiltons in RAK in the pipeline, taking its total number of rooms to 2,000. It is a destination Jagersbacher is passionate about.

“It’s quite interesting because eight, nine years ago we decided where else is the new important factor in terms of expanding within the UAE and we felt that Ras Al Khaimah already at that time had the opportunity... and that’s how we started to develop, signing up with the ruler and the business people to develop our strategy,” he says.

“When you look at the overall view of Ras Al Khaimah, I think there’s a lot more to come in the future from a potential point of view. I think there you’re talking double digits yearly. Remember, you land [in Dubai] and one hour later you’re in Ras Al Khaimah.”

Hilton also has served Abu Dhabi practically since the beginning of the oil boom, opening its first hotel in the capital in 1973.

Growing in line with the emirate, the company announced in May it would rebrand the Abu Dhabi Al Maqta as Hilton Abu Dhabi Capital Grand, adding the 281-room property in the central district to its portfolio.

However, the company has been slow to launch in Bahrain. It will not open its first hotel there — a five-star DoubleTree Suites by Hilton in the upscale residential area of Juffair, Manama, until late 2015.

By the time its resort at the Dead Sea in Jordan opens later this year, it will be the seventh to take advantage of the immensely popular destination. It is also yet to develop in the capital of Oman, Muscat.

But you can’t always be first.

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