Hotel owner and operator Ali Hamad Lakhraim Alzaabi is a formidable character, who needs little introduction. I doubt there’s a single Hotelier Middle East reader who hasn’t heard of this enigmatic owner and operator, the only Emirati hotelier to make it into the Hotelier Middle East Power 50 2013. He’s confident, straight-talking and smart, but despite owning hotel assets worth millions of dollars — not to mention a variety of other business vehicles earning him a tidy sum — Alzaabi is remarkably friendly and down to earth.
He’s a man that values relationships and works hard at them, who understands the power of reputation and genuinely cares that people have a good experience in his hotels. For while he could successfully sit back and live off the returns of his outside ventures, Alzaabi is most committed to his role as president and CEO of Millennium & Copthorne Middle East and Africa. He competes tirelessly to win contracts from international hotel giants and has made no secret of his goal to run one of the most successful hotel management companies in the region. With a strong wind, his ambition, insider knowledge and local roots, this may well be achievable.
Ready for growth
Our interview takes place over lunch at Ritz-Carlton Dubai International Financial Centre, one of Alzaabi’s most high-profile hotel purchases, but the focus is not on his owning company, Emirates Hotel Group, but on his hotel chain, Millennium & Copthorne. Currently, there are 15 hotels operating and around 30 in the confirmed pipeline, with the current focus on expansion in emerging markets such as Iraq and everyone’s favourite, Saudi Arabia. Across the region, 10-12 hotels are expected to open within the next 12-18 months. A hotel has recently opened in Sulaymaniyah in Iraq, with two additional properties due to open this year and more on the cards, while in Saudi Arabia, there are 18 hotels “signed, sealed and under construction”. Not bad considering Alzaabi only made in-roads in the Kingdom three years ago.
“We are actually the fastest [growing hotelier] and probably the biggest in terms of pipeline number of rooms in Saudi Arabia. If you look at IHG or Hilton in Saudi Arabia, or others who have been there for 40/50 years, [considering] we have just entered three years ago, we have more rooms than them,” Alzaabi claims.
The success he says, is “mainly driven by relationships and also driven by us being so focused on bottom lines for the owners”.
However, he admits the numbers are not quite where he would like them to be, acknowledging that the recession of 08/09 put some serious speed bumps in his way. Indeed, back in 2009, Alzaabi told Hotelier Middle East he wanted 100 hotels signed by 2015. Now, he’s pushed this target to 2020.
“Contracts for more than 20 hotels did not materialise because of the recession. They are not cancelled. They have been shelved for now,” Alzaabi tells me.
Still, growth is starting to accelerate again for Millennium & Copthorne, with Millennium the “bread and butter brand” for expansion, followed by Copthorne. There are also new brands to add to the mix; Agarwood, a four-star brand aimed at the Middle East; luxury brand Biltmore; Millennium Executive Apartments; and funky three-star loft-concept, Studio M.
Alzaabi explains the differentiation: “Agarwood will be a new four-star brand for the Middle East, Africa and India that will go hand in hand with Copthorne. So, we’ll have the Copthorne and the Agarwood serving the four-star segment. And then for five-star you have the Millennium, plus you have our deluxe brand, which is the Grand Millennium. And then we are expanding also slowly the luxury brand, Biltmore. We also have Millennium Executive Apartments for long staying guests.”
There are Biltmore hotels signed in Abu Dhabi and Riyadh, and Millennium Executive Apartments in Abu Dhabi and Dubai Marina. Experience has taught Alzaabi he has his work cut out in expanding these concepts, however.
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“It’s not easy to bring a new brand into the region. Even with Millennium, it has been a challenge to be honest. It’s been a challenge to come and compete with the big brands who have been here for 50 years,” says Alzaabi.
“It’s always the case where we go in with five companies and we win the project and the other four are the big ones. So it’s been good. But then there are occasions when we lose the projects as well, which is okay. But overall, the rate of success was in our favour I think.”
For Studio M, a big hit for the group in Singapore, Alzaabi therefore wants to take a different approach to expansion.
“It’s a three-star, duplex, business hotel. You want to really be able to roll out quite a number of them to make it work. So, I am thinking about a development fund that we and certain investors will come in and develop maybe 20 or 30 of them together in the region. We don’t want to do this alone,” he asserts.
Widening the net
As well as brand expansion, in terms of wish-list destinations for growth, Alzaabi has his sights set on the Palm Jumeirah and JBR in Dubai, as well as further afield.
He’s also made the decision to move the Millennium & Copthorne MEA headquarters, comprising 42 staff, from Abu Dhabi to Dubai. This was a strategic decision to support the company, with more resources now dedicated to PR, marketing, sales and operations as the portfolio grows. Recruitment is underway for additional colleagues this year.
That’s not to say that development isn’t still progressing at a pace though, with Alzaabi currently considering his entrance to Africa.
“We are working on a deal [with one owner from UAE]. If it goes through, we will be having about 15 to 18 hotels altogether across the continent,” reveals Alzaabi.
“I want to finish this region and Africa first. Then I will free myself to India. I think we are reaching in this region in the next five years 25,000 rooms. We have 13,000 rooms today. So that is a very good growth. Actually, when we reach that level, we will have approximately US $9-10 million room nights. Our Millennium London head office has around $9 million,” reveals Alzaabi, explaining that the regional business he heads is now on a par with the company elsewhere.
“Mr Kwek [Leng Beng], the chairman, doesn’t mind that we grow to be one of the region’s largest operators.... which one day we will. It will be done on an even nicer level because when you start growing out of nowhere, sometimes you accept things that are not to your flavour. When you are hungry you will eat almost anything. But when you are full, you will be very selective as to what you eat. We have reached that level so the next step you will see is different,” asserts Alzaabi, positive as to what the future will bring.
To date, he’s confident in the performance of his operating hotels, revealing Grand Millennium Al Wahda in Abu Dhabi — a whopper of a hotel with 840 keys in a market heavily impacted by supply — closed 2012 at 53/54% occupancy.
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“This year I think we will be close to 60-64%. We are not struggling. We are Millennium, how could we struggle?” he says.
But he is more cautious about Qatar.
“We are expanding carefully. We have one hotel coming up this year, which is 220-224 keys. Qatar is going to be soft for some time to come. And I think room rates will start suffering. They are trying to keep room rates up with less occupancy but I think it will burst soon and you will see a lot of rate cutting etc. We have seen Qatar slow from the development side too. You have investors going more towards the serviced apartments, than hotels.”
This is where Alzaabi’s expertise as an owner comes in. Millennium & Copthorne globally holds US $4bn of market value assets — 91 hotels. Alzaabi himself owns established properties including Crowne Plaza Dubai, Sheikh Zayed Road and InterContinental Abu Dhabi. He is currently developing a hotel on Saadiyat Island.
“We will continue to do that,” he says of Emirates Hotel Company. “We are well established now. Between our pipeline, [four] under construction, and our own operating hotels, we have almost 14 or 15.”
“In Fujairah we are developing a hotel directly under Emirates Hotel Group. It’s right on the Aqah beach.
“We can be very selective with the investment and do it closer to home because we understand the market. It’s easier when you do it and everything is in front of you. Every day we are looking at 10 opportunities,” he reveals.
In awe of how much Alzaabi juggles — he takes multiple calls during our lunch, all regarding different businesses — I ask what motivates him. Ultimately, he likes what he does — and wants to build a reputation for success.
“The hotel business is a nice one and you have to be passionate about it. You have to also worry about your reputation in the market, with different owners, with the clients,” he explains.
“So it hurts me when someone calls me up and says, ‘you know, I went to your hotel and the service is bad’. Or, ‘the car at the valet was delayed’. It’s not only about financials. It’s about success. We have crossed the financial hurdle. Now it’s a success hurdle,” says Alzaabi.
On a personal level, Alzaabi has his sights set high too.
“I think I would like to one day maybe have one of my companies listed in New York or Hong Kong, or maybe acquire a company that is already existing and expand it. I would like to see our group also expanding vertically, to integrate ourselves vertically in hospitality. It’s just about having the right critical mass. That’s our next step. Now, mind you, you need to know one very important thing. I am the founder of this business, so this business has started from zero. So this is a different thing. It’s not something that is inherited or given or passed on. So there is a lot to grow,” he says proudly.
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