In terms of the returns that hotels generate from rooms in the Middle East, the past couple years might have come off from historic peaks. But the new CEO of Carlson Rezidor Hotel Group, Federico J. González, isn’t worried.
Flush with cash after being acquired by Chinese conglomerate HNA Group in December 2016, the Brussels-based company is on the hunt for more properties in the region.
“If you know of any owners who want to consider doing business, give them my number,” the Spanish CEO tells Arabian Business on his visit to Dubai.
Appointed CEO in May, González has finalised the company’s five-year plan which has big ambitions in the region.
“It’s clear. We want to be among the top three hospitality companies in the world. That means being top three in the Middle East as well. And that means adding more hotel space in the region,” he says.
Carlson Rezidor Hotel Group already has a portfolio of more than 1,440 hotels in operation or under development, covering 115 countries and territories. It list of brands includes Quorvus Collection, Radisson in all its various guises, and Country Inns & Suites By Carlson. The plan is to grow hotel numbers by 25 percent and rooms available to over 20,000 from 18,000 by 2020, if not more.
Some would argue that oversupply and saturation are what’s driving room rates down in the region. But like other industries with declining yields and margins, volume is beginning to dictate who wins the game. And Carlson Rezidor’s thirst for more space has a case: only 10 percent of its portfolio comes from the region.
“The Middle East’s evolution in the last few years overshadows every other news coming out of here. As a foreigner, you see that it keeps building. We want to be in the middle of it, with the right team, and more hotels,” he says.
The next 12 months will see the company open 14 more hotels, including nine in the Saudi Arabia, four in the UAE and one in Lebanon. Carlson Rezidor currently has nine hotels in operation in the UAE as well as 13 more under development, 11 of which will open their doors by 2019. González is also keeping an eye on the company’s hotels in Lebanon, one of which will open by the end of the ear.
“The future is bright for Beirut,” he says. The city’s strategic location means it is the only deep water port for supplies to Syria. “If Syria stabilises, Beirut benefits over the medium term. We all hope everything remains stable politically,” he says.
Keys to the kingdom
However, it’s Saudi Arabia that features most prominently in the growth plans. Over 25 million tourists are expected to flock to the kingdom over the next three years. Carlson Rezidor has 13 hotels in operation there, with 27 more in the pipeline including two Park Inn by Radisson hotels which will open their doors in 2019.
The majority of tourists to Saudi Arabia are religiously ardent. Both of Carlson Rezidor’s biggest Radisson hotels are in Makkah, each with over 1,000 rooms “and on the higher end of their class,” says González. Most Muslims visit the holy cities of Makkah and Medina only once in their lifetime. However, giving them an experience they remember is vital, he says. “They might not come back, but if they like what they experience they’ll tell other people about it.”
However, Carlson Rezidor is looking beyond religious tourism and developing hotels even in lesser known cities such as Najran, Jubail and Unaizah. With the country attempting to liberalise its economy across the board, there are opportunities across the country.
The kingdom, for instance, has 27 airports it plans to privatise by 2020. In September, it also launched a new airline to help push domestic tourism and grow the number of international visitors. “Any growth in aviation always helps the hotel industry,” says González when asked about airport hotels.
“Of course airport hotels are a better proposition in Western Europe where their distance from the main city makes them convenient to stay at. But if there are convention centres being built and a high proportion of affluent travellers, then we will look at any opportunity that comes along.”
Making a difference
Saudi Arabia’s liberalisation programme makes for a natural fit with the company’s own balanced leadership initiatives. Through its Women in Leadership programme, the company has grown its female staff in the kingdom from six employees in 2014 to 102 including 21 in leadership roles. Earlier this year it appointed the country’s only female general manager. González is keen to see more join the profession he loves.
“There’s no better job in the world than being the general manager of a hotel,” says González. “You have all the autonomy and responsibility as well as the profit and loss to look after, and everyone has to leave satisfied. There are very few jobs with that power reflected every day.”
Which is why appointing a female general manager was an important milestone in that regard. “It’s important to promote women to important positions in Saudi Arabia just as it is in Germany or the UK, where barriers exist for women to have the same possibilities as men. But we want to leave some legacy and some contribution and we want to be authentic about it.”
Business is personal
The one difference Carlson Rezidor encounters in the Middle East is in finding owners to work with. The group works through a hotel under management model, and in most countries in Western Europe, has to deal with owners who happen to be big institutions.
“They have teams, are very well established, professional. It’s kind of like working with a bank.”
The Middle East is different, says González. “Here you have to build personal relationship and trust. Many of the owners already have a hotel they work with and it takes time building that relationship, making mistakes, learning as you go.”
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