By Neil Halligan
UAE-based Hospitality Management Holdings’ chain of Sharia-compliant hotels is expanding quickly, in line with the growth in the region’s hospitality market. New chief executive Laurent Voivenel says he is keen to target the mid- and low-range segments of the industry
Hospitality Management Holdings is a hotel group growing in the face of adversity.
Founded just over 11 years ago, the Emirati-owned, dry hotel chain has gone through some rough times. The global economic crisis in 2008 shelved a planned expansion plan with a budget brand, and then the Arab Spring hit and closed eight of its hotels in places like Egypt, Libya, Syria and Bahrain. The prospect of any of those re-opening remains slim.
Unbowed, however, the owners — Sheikh Faisal Bin Sultan Al Qassimi, Sheikh Mohammed Bin Faisal Al Qassimi and Michel Noblet — remained positive and ambitious.
Hospitality Management Holdings’ (HMH) current portfolio lists 20 properties in the MENA region, under four brands: Coral Hotels & Resorts, a four and five-star brand; Corp Hotels, a three and four-star hotel brand; EWA Hotel Apartments and the standalone Ajman Palace.
The latest phase of the company’s expansion, which will see another brand added to its portfolio, is spearheaded by the group’s CEO, Laurent Voivenel, who was appointed just over a year ago.
The experienced Parisian brought a wealth of experience — including 14 years in the Middle East with global chain Starwood — when he was appointed to lead the group’s expansion plans.
An appointment with the UAE hotel group was not what he had in mind, however, when he was looking for a new challenge.
“When the board of directors approached me to look after HMH, it was the opposite of what I had in mind, because I’m a huge corporate person, with 27 years in the business. I was planning to go out on my own, planning to build my own company and maybe to get my own hotels or go into partnership somewhere in Asia,” Voivenel explains.
“What interested me was the plan that the board of directors explained to me,” he adds.
That plan is to double the company’s current property portfolio, and to create a chain that spreads right across the GCC region and introduce a new brand that will offer something different to what’s available in today’s marketplace.
Voivenel started just over a year ago, created a strategy — based on a two-month SWOT (strengths, weaknesses, opportunities and threats) analysis of the business — and outlined a five-year plan for the board that would tie in with the firm’s expansion plan to become “a global regional company”.
“Six months later, we are exactly where we wanted to be financially. We told them exactly where we would be in 2015 and 2016 and they accepted all of the plan,” says Voivenel.
“The growth plan at the moment is to double the portfolio in the UAE and to be in every single GCC country where we are not yet [present]. In Qatar, Bahrain and Kuwait, we are not there; we want to be there. We want to extend the path where we are already — in Saudi Arabia and Oman,” he adds.
Voivenel says there are seven hotels under negotiation in Saudi Arabia, Oman and Qatar.
“We are looking [for] an opportunity potentially in Abu Dhabi, because we are not there. From the strategy, we have to be in Abu Dhabi but it’s about getting the right owner. We should be announcing some signed projects before the end of the year, in the GCC region,” he says.
HMH is also looking at opportunities in Egypt, India, Indonesia, China and Sudan, where one of Voivenel’s predecessors saw an opportunity a few years ago.
The business model is divided between owning hotels and being an operator, and varies from country to country in terms of what works, but the core structure remains the same in either instance.
“If we want to go to Qatar or Kuwait, it’s most likely that we will have a partner, which means we will operate the hotel on behalf of an owner.
“The most important thing is that you must have the right product in the right locations and the most vital thing is you need to make sure you have the right owner, and that’s not always easy.
“We are an Emirati company, we are also alcohol-free and we are halal friendly, and still the only one internationally based to be that way,” he explains.
The dry hotel status is something that Voivenel says is an essential face of HMH and how it operates, but it has not diminished demand in any way.
“We need to make the [property] owners understand that being alcohol-free is not negotiable and therefore if after two or three years they change, that means that we have to pull out. Most of the owners that have approached us know that this is part of our DNA and part of the culture.
“What’s interesting is to see the numbers of demand when we do the development and the prospect; the interest that the owners have in this type of business is absolutely unbelievable,” he says.
The hotels themselves are also proving popular for a wide variety of customers, not just Muslim guests.
“You will be surprised, for example, but at some of our hotels the majority of our customers are actually Western and non-Muslim,” says Voivenel.
Coral Beach Sharjah has a 70 percent Western occupancy, and Ajman Palace has a 60-40 split. “In Deira it’s the opposite, 70 percent Muslim, 30 percent non-Muslim,” says Voivenel.
He says the issue of being a non-alcohol hotel is not an issue for Western customers.
“They are families, honeymooners — the issue of not having alcohol is not a problem. They want to enjoy the beach, and enjoy the hotel.
While the hotels do miss out on revenue from alcohol sales, Voivenel says their charges as an operator are half what the bigger operators charge.
“On the management contract, we are almost 50 percent cheaper than the big guys, for one very simple reason. We are charging almost the same basic fees, but we are 50 percent cheaper because we won’t have all the overheads that the big companies are charging because of their loyalty programme, their system and their networking,” says Voivenel.
He also places a lot of value in his staff, who he says make the hotel business a success.
“Every single businessperson is looking at the payroll as a liability on the balance sheet; I look at the payroll as an asset. Our company cannot run without people — we don’t only sell buildings, we don’t only sell brand, we also sell people and quality service.
“Without the people, our building is worthless,” he says, adding that the shareholders share the same philosophy.
The owners and management at HMH are also on the same page when it comes to the expansion plans and believing in the strength of its budget brand, Ecos, which was shelved some years ago.
“It [Ecos] was a fabulous project when it was done in 2007. At that time the Dubai Department of Tourism and Commerce Marketing [DTCM] rules and regulations were different to what they are now.
“The project was absolutely stunning — each room sleeps three, you can use the toilet, shower and wash basin, three people at the same time because they are all separate. The main concept is that you stay for one price, which means that breakfast is included, internet is included, and taxes,” Voivenel explains.
The Ecos brand was launched just prior to the crash, with investors lined up and management contracts for properties in Dubailand, Fujairah and Oman.
With confidence long since restored in the hotel marketplace, coupled with a change to DTCM regulations (smaller room-size requirements), Voivenel is now confident that they have a brand that will prove attractive to Dubai, where the demand is strong for budget-conscious accommodation.
“They gave exemption to the municipality fee if you sign a mid-market hotel between now and 2017," Voivenel says.
"Dubai is truly encouraging the investors to go in that mid segment because they know you have to.”
The revised brand will have two offerings — Ecos and Ecos Plus, with the latter including a restaurant and gym. The basic model would be a bed and breakfast.
The crucial aspect will be the price, which Voivenel estimates will be in the region of $68 to $70 per night (AED250/AED260).
“The average rate for the first nine months of the year in Dubai was $232 (AED852). Why is that? Most of the rooms are five star,” says Voivenel.
He says he’s in negotiations with “various investors” and hopes to have five to six budget hotels in the UAE by 2020.
One of the investors in Saudi Arabia said he wanted exclusivity on the Ecos brand.
“I said it was simple for me and that if he wanted exclusivity I would need so many hotels within five years. He wanted 50 percent more than what I was offering,” Voivenel says.
It’s all positive for HMH right now, and the volume of business is returning to where it was.
“Our UAE properties are running above the 80 percent level in occupancy. We are in line and above the market in most of the areas. In Beirut and Jordan we are in line with the market. The company is very healthy,” says Voivenel.
That confidence is backed up by the astute investment HMH has made in technology, with a new online portal due to be launched this month that Voivenel believes will be “exactly on-line with what the big guys are doing”.
Meanwhile, the Dubai Expo 2020 will provide an extraordinary growth platform for HMH, as is the case for many hotel groups. Along with the proposed six budget hotels, there should also be another 15 to 18 properties in the mid-market sector.
Voivenel, however, is encouraged by the legacy that will be left when the six-month event — which will be held for the first time in the Middle East — is over.
“What is interesting is that the infrastructure and investment which is going to be done, which will be left after [the Expo] 2020 — all the theme parks, the malls, walkways, and transportation will remain and that’s what’s important to us because it will create a bigger and better Dubai,” says Voivenel.
In executing his five-year plan, the Frenchman will also create a bigger and better HMH.For all the latest travel news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.