It is hard to get a word in edgeways with Geoff Ballotti, the energetic and charismatic global president and CEO of one of the biggest hotel companies in the world, Wyndham Hotel Group. As soon as we sit down, he is firing questions at his interviewer. How long have I been in the Middle East, where do I live, what is it like, how do I get around and do I use taxi app Uber? “Uber is the biggest disrupter in transport today,” he exclaims. “Where I live in suburban New Jersey it used to cost $1,000 in a cab to get from Manhattan; now it’s a $75 Uber ride.”
We are here to talk about the regional growth plans of the New York Stock Exchange-listed Wyndham Worldwide Corporation’s hotels division, which operates 7,800 properties across 72 countries, including 54 in the Middle East and Africa. However, ten minutes in, we have covered seemingly everything but hotels, including the technology revolution, trade shows and aviation, the latter about which he is particularly passionate — all without me asking a single question.
In particular, he waxes lyrical about the longest flight in the world. While Emirates has just launched its 17-hour non-stop service from Dubai to Auckland, Ballotti recalls Singapore Airline’s 18-hour service from Newark to Singapore, which discontinued in 2013. “It was an all-business-class cabin on an A340, which has since gone out of service because of its pure inefficiency, but it was a beautiful plane. It had the four engines and a one-to-one configuration that means everyone has an aisle.”
“You ever flown Singapore Airlines before?” he continues. “No? Oh, my gosh! It’s great. Singapore, in terms of the configuration of the seats and the width and pitch of the seats — well, it’s the best seat in the sky. These international carriers just put our US carriers to shame.”
Time for the first question (which has nothing to do with hotels now that Ballotti has taken the conversation down an entirely different path). What does he make of the as-yet-unresolved subsidies dispute between US and Gulf airlines? Does he sympathise with Emirates, Etihad and Qatar Airways? He says he does. Gulf airlines should “absolutely” be applauded for opening up important routes in the US, Ballotti says, rather than standing accused of having an unfair monopoly. And he says the Open Skies agreement must be protected at all costs.
Emirates president Sir Tim Clark in particular has done an “incredible” job at fighting the allegations made by US campaigners that Gulf carriers have received $42bn of subsidies from their governments to help spur their growth, Ballotti says.
“I think the team at Emirates — Tim Clark — has been doing a remarkable job, an incredible job pushing back on the allegations that have been made.
“You know, it’s a question of choice, of preference for the general public and for consumers, it’s a question of great service and of competitive routes, and one of the biggest issues facing the industry right now is making sure that those Open Skies agreements are in no way, shape or form threatened.
“I’m optimistic,” he continues, “but at the same time very anxious about what happens next. The benefit of these Open Skies agreements to the aviation business and travel business is immense.”
Wyndham Worldwide’s 2016 first quarter revenues were up 3% from the prior year period.
His stance reflects widespread support for GCC carriers in the US, with their presence cited by many in the tourism industry as helping to create millions of dollars of new business and thousands of jobs.
“Trade body the US Travel Association [of which he is a board member] estimates that Gulf carriers provide roughly a $2bn annual economic boost to the US, by employing over 15,000 jobs, and just look at where these carriers are buying their aircraft from,” Ballotti says.
“Boeing’s biggest backlog of orders is to Gulf carriers. So yes, [Open Skies] is vitally important to the aviation industry, vitally important to [the travel] industry and it is vitally important to maintain and expand those routes.”
Now we move onto hotels. US-based Ballotti has been the president and CEO of Wyndham Hotel Group since March 2014, previously heading up Group RCI, Wyndham’s timeshare business, from 2008. Before that he served as president of Starwood Hotels & Resorts from 2003. He says that he joined RCI during “the really tough period of 2008, 2009 and 2010. However, timeshare is an incredibly resilient market and we did quite well while other pieces of the industry were struggling”.
Since heading up the hotels division, Ballotti has overseen its continuing international expansion, including in the Middle East and Africa (MEA) — a region that remains a small part of the global business when compared to the core North America business. Ballotti declines to provide financial information on the breakdown of the group other than to say that the US represents “the bulk of our earnings and as a listed company we don’t report on our segments”. Of the group’s 4,800 hotels outside the US, 450 are in Europe, the Middle East and Africa and 54 in the Middle East alone. “Gee whizz, we think there is tremendous growth potential,” he says in his typically enthusiastic manner.
“The pipeline here [in the Middle East] is as strong as it is in any other part of the world — today it is 116,000 rooms globally, with 70 percent of that already in construction and 70 percent of that happening in emerging markets such as the Middle East, China and India.
“At nearly 8,000 hotels we are already the biggest in the world and we are also one of the fastest in the world,” he continues. “We opened 65,000 rooms last year [globally]. This, in our world, is equivalent to about two hotels every day. Nobody else in the industry could say that.”
Last month the company announced the latest in a string of new openings across MEA. They include two Ramada-branded hotels in Muscat, two Ramada hotels in the Iraqi city of Najaf — a key destination for Muslim pilgrims and currently an underserved market, says Ballotti — and three new hotels in Ethiopia as part of plans to expand the group’s presence in Africa.
In the UAE, the company has just opened its 486-room Wyndham Dubai Marina — the launch of which took place a few hours after our meeting. In total in 2015, Wyndham opened nearly 40 new hotels across Europe, the Middle East and Africa (EMEA) and more than 50 hotels are in the pipeline.
The Wyndham Grand Istanbul Kalamis Marina Hotel.
At this point, Ballotti invites Daniel Ruff, Wyndham’s London-based president and managing director for EMEA, to join us. Ruff says midmarket is where the greatest opportunities exist in the region — “and we couldn’t be in a better position to capitalise on that, it is our strength”.
“The midmarket Ramada brand has always been strong in the region, and it is on the back of Ramada that we go into new markets. Ramada gave us our opportunity in East Africa, where we have a very strong pipeline. Ethiopia in particularly is a totally underdeveloped market and we are going in there with a bang,” Ruff says.
“We are now looking at putting a business development team in West Africa because we think there are amazing opportunities in Nigeria, Ghana, Senegal. We think off the back of what we are doing in East Africa it’ll be that much easier.
“In Dubai and the UAE we continue to look for new opportunities but there is also the potential to scale up tremendously in underserved markets such as Oman and Iraq and also in Saudi Arabia, the biggest market in the Gulf where we have only scratched the surface of what we can do.”
The recent announcement of Saudi Arabia’s 2030 economic plan is very exciting, says Ruff, and opportunities will grow as the kingdom broadens what is now predominantly religious tourism.
“We think our brands will work well both as it becomes an international destination, but also as a domestic destination because the Saudis continue to travel across their own country. Nobody does domestic travel as well as the Saudis do.”
Iran, too, harbours serious potential, adds Ballotti, but as a US-registered company Wyndham remains bound by certain restrictive sanctions. “We’d love to [enter the market] when the time is right, that’s all I’ll say,” he says. “We are limited right now. It’s a question everybody asks and everybody is trying to figure it out.”
While Ramada is the most common Wyndham brand in MEA at present, Wyndham Worldwide has other brands: Baymont Inn & Suites, Days Inn, Howard Johnson’s, Knights Inn, Microtel, Super 8, Travelodge, Wyndham, Wyndham Garden Hotels, Hawthorn Suites and Wingate by Wyndham. Ballotti reveals he has begun talks with prospective investors to introduce brands not yet represented in the region to the Gulf.
Among the brands with the biggest potential in the UAE specifically, says Ballotti, are Dolce Hotels & Resorts, which was acquired by Wyndham in February and provides corporate meetings, accommodation and conference space, mid-market hotel brand Days Inn and US-based budget chain Super 8, which has also been successful in China having just opened its 888th hotel in the country this year. “We were in a meeting with Dubai real estate developers just today. They were looking at which brands we already have here. Eight of our 16 brands are in this part of the world and they were curious about our other ones,” Ballotti says.
The Super 8 Hotel Xian Xi Da Jie, in Downtown Xian, China.
“One property owner saw Dolce and a light went on because he is looking to invest in hotels with a meeting room component. Dolce has indisputably the nicest meetings destination hotels across Europe and the US — that’s why we acquired it, we saw such a niche in our brand portfolio and meeting planners are a very particular breed who know exactly what they need — state-of-the-art technology, all-day destinations where they’re not going to get nickel-and-dimed to death — but it doesn’t yet operate here.
“It’ll be up to Dan to progress those talks but Dolce is an example of a brand we would love to introduce to this part of the world.”
Super 8, which has 2,200 hotels across the world, is another brand for which Ballotti sees enormous potential in the Gulf — especially with the UAE attempting to target the emerging middle class Chinese tourist. “The Chinese love Super 8,” he states. “It’s a very big brand with mass consumer appeal and the democratisation of travel means that group is looking for consumer brands they trust.”
Howard Johnson Hotels and Days Inn are two other examples of brands with regional growth potential. There is already one Howard Johnson in Bur Dubai, but Ballotti says both brands resonate with Asian travellers in particular — the group has identified ten sites for new Howard Johnsons in India and he says the brand has a strong appeal for value-seeking families who, “if coming on a family holiday with four kids, would not want to be paying a $450 average room rate when they need four rooms for a week”.
Ballotti says he is not concerned about the GCC hotels market in general — despite the fact that revenue per available room (RevPAR) was down on average 10 percentage points earlier year-on-year in January across Dubai and Abu Dhabi, according to analysts at STR Global, and the low oil price and global economic slowdown is tightening consumer purchasing power.
“I sound like a broken record, but we look for long-term partnership and we and our partners know there will be blips in cycles. Everybody is concerned about RevPAR, but in Dubai occupancy levels stand at around 80 percent, and with such strong brands in our portfolio, RevPAR seems to be the least of our owners’ issues. They are more concerned about flow-throughs and operating margins and driving their revenue at the bottom.”
In any case, macroeconomic issues have failed to curb Wyndham’s acquisitive ambitions, says Ballotti. “We don’t know what brand we’re going to buy next, but we look for brands for sale all the time and when we find an opportunity to plug a new one into our network it’s magical for us and it’s magical for the owners.
“We’re an asset-light company, we don’t own the real estate, we just manage and franchise, so the owners of these hotels are paying us for great branding and great hospitality. What matters most for us is being able to provide that in a meaningful way at the lowest possible cost.
“So, would we seek to acquire more brands that could fit on to our distribution platform? Of course — but we’d have to buy bigger business cards.”
He produces one of his cards and flips it over, revealing the 16 Wyndham hotel brand logos squeezed in small print on the back. It is true — he would need bigger business cards. But with Ballotti’s gusto, and the regional market remaining hungry for established international brands, this is unlikely to be a prohibitive factor in the firm’s continued growth.
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