INTERVIEW: A meeting of minds

Range Hospitality chief executive officer Munaf Ali and Shaza Hotels president and CEO Simon Coombs tell Louise Oakley how they will meet the needs of religious tourists in Iraq and Iran.

Over recent months, the market has witnessed the entrance of two new companies: Range Hospitality, a specialist developer of hotels in areas of high religious tourism and Shaza Hotels, a new hotel operator inspired by Middle Eastern culture and focused on niche markets.

On December 5, 2010, the men behind these two exciting new firms revealed in an exclusive interview with Hotelier Middle East that they had come together in order to develop and manage contemporary, five-star hotels in Iraq and Iran, with yet more expected to follow in countries across the Middle East and North Africa.

Range Hospitality chief executive officer Munaf Ali and Shaza Hotels president and CEO Simon Coombs were refreshingly frank when we met to discuss their news, keen to communicate the unique balance of their relationship and the special nature of their hotels.

That very day they signed the contract for Shaza Hotels to manage Range Hospitality’s Al Rawdatain Gardens hotel planned for Karbala, Iraq.

The 624-key hotel is the first modern hospitality development to be built in Karbala, which is one of the holiest cities in Shi’a Islam, after Mecca and Al Madinah in Saudi Arabia and Najaf in Iraq, and is visited by 18 million pilgrims each year.

“We decided to look at the gap in the market to see how we can benefit the pilgrims,” Ali explains. “We found there are no five-star hotels in Karbala. What is available are two-star hotels at five-star prices. You can pay US $200-300 per bed where five or six people share a room, that’s more expensive than Dubai, more expensive than Europe.”

The opportunity for a developer like Range was obvious, but only in partnership with a hotel operator capable of understanding these market dynamics and meeting Ali’s specific requirements.

“We’ve had a lot of interest from hotel operators from all over the world. We came across Simon and I think that we just sort of gelled because we are both looking at a specific market; we are looking at religious tourism. It takes a particular type of a company to operate in these sorts of locations.

“Just because we want a five-star hotel doesn’t mean any five-star hotel operator will do: you need someone who is culturally aware of how to operate in an Islamic destination, a religious destination.

When we started working with Simon and opened up the negotiations and discussions, we found that they are aware of what we are trying to do; we do not have to teach them how to operate a hotel in a destination like this. So I think things accelerated quite quickly. And we were able to sideline the other operators who weren’t up to speed,” adds Ali.

Coombs comments: “With our very aligned views we were able to reach agreements fairly quickly. I think we were both very keen to conclude as soon as possible, basically because of the project dynamics as well. What I love about Range is they are very direct and very to the point and I hope that I am also. We are fairly straightforward in terms of our commercial interests”.

The Shaza concept
So, what exactly is the philosophy behind Shaza and why is it so suited to the religious market?

The word itself means fragrance and the brand is billing itself as “a contemporary, luxury, lifestyle brand which displays the values and cultures of the Middle East and North Africa”.

It is not, as some media reports have conveyed, a sharia compliant hotel brand and Coombs is eager to rectify the misconception.

“Wherever we are, whether it’s Geneva or Karbala, we won’t be serving alcohol. We have sharia funding behind the group but they don’t insist upon total segregation on floors, and many other elements,” he says, adding that actually, there has not to date been a set-in-stone sharia hotel standard.

“There isn’t actually one definition of what is a sharia compliant hotel and I don’t think there is a lot of legitimacy attached to brand marketing yourself in that respect,” asserts Coombs.

“We are sensitive culturally, we understand in each location some of the cultural values, but we try to express that through our service and our attitude and expression to guests, in addition to what you would call typical sharia compliancy, but I think you’ll find that a completely sharia compliant hotel has quite stringent design elements attached to it,” he adds.

He refers to Shaza as a design-led brand, but explains that it is challenging to find the right interior designers because major international names may not understand the sentiment of the brand.

For example, Shaza has recently opened its first ever hotel — a owner/operator hotel in Madinah, Saudi Arabia. This was created by Morten Hansen of LWD Dubai, in association with calligrapher Mounir Al Sharaani, Egyptian lighting designer Randa Fahmy and with photographic installations by the acclaimed Peter Sanders.

“In places such as Karbala or Madinah, there may be colours that people are familiar with from the actual mosque itself and you will see subtle elements come through in the interior design of the hotel so there is continuity of experience,” says Coombs.

“You don’t have this experience in the mosque then come into something that is very glitzy. The quality has to be there, you have to know that you are in an international luxury hotel but there are also tones in there from the local experience, whether it’s a religious experience or a different location, these tones are very important.”

For Ali, it was the attention to detail in Shaza’s cultural awareness that helped clinch the deal.

“The eye for detail that we saw in Shaza, from the products which were available in the room, there’s no alcohol-based products at all, whether it’s the scent of the shampoo or the cologne or the scent that’s given to the room, all these things have been taken into consideration,” observes Ali.

“We’ve had a lot of experience with the hotel in Madinah, any products you are bringing in have to be SASO-certified so it was very natural for us to be able to deliver those products without any concerns in a location like Karbala or indeed Madinah,” adds Coombs.

The Pipeline
That Shaza already has one hotel opening behind it will of course be beneficial to Range Hospitality, which has funds for the development of Al Rawdatain Gardens fully secured. Construction of the new hotel is planned to begin in February 2011, with handover expected by July 2013.

This hotel is the flagship, but a second hotel has actually overtaken it in the development process. Range Hospitality and Shaza are also working on a hotel development in Iran, which is scheduled to open by the end of 2011, Ali exclusively reveals.

“Karbala is our flagship project, which we started on first of all, but our second project, which is in Mashhad in Iran, will be delivered next year,” says Ali.

“That’s a hotel which is very close to the shrines in a similar situation; a lot of pilgrims visit this destination every year, there are no branded hotels, there are very high volumes and we’re there with Simon and Shaza and this one should be opening in 2011.

“We purchased a hotel which is about 70% complete, which works again because interiors are the only thing that really need to be worked on. The actual shell and core of the hotel is already there so now it’s just a case of designing the interiors, the layout, and this is about 200 rooms,” Ali explains.

“That’s a very good example of our involvement in the technical and the design side,” adds Coombs. “Our team is very heavily involved in that now. By getting in at this stage and reconfiguring the building and looking at the design, we are very hopeful of being able to come up with a very unique and interesting hotel in another location.”

Range is also looking at developing hotels in Damascus, Syria and Mecca, Saudi Arabia, again with Shaza Hotels as the hotel operator, adds Ali.

His aim is follow the examples of Karbala and Mashhad and target religious destinations — including Iraq, Saudi Arabia, Mecca, Madinah and Iran — that suffer from a lack of quality accommodation.

“Over the last few years we’ve seen huge increases in the number of pilgrims going to these destinations, however, what’s available is of very poor quality and standard and the prices are extremely high,” says Ali.

“We went visiting a number of these locations and we found that when going for a pilgrimage or going to visit these holy places, the shine is taken away when you’re staying in one of these places which isn’t very nice. You lose the experience of going to visit an old historical mosque or a shrine when at the end of the day you go back to accommodation which is very over priced and very poor in quality.

“What we want to do is to charge a reasonable price but give people a superior experience that doesn’t take away the fact you are going for a religious experience,” says Ali.

Doesn’t the seasonality of the business worry them, though, with occupancies varying between 100% and lower than 10%, depending on the time of the year?

“That’s why we like Karbala,” laughs Coombs. “What tends to happen is very extreme swings in terms of seasonality which makes management far more difficult.

But that’s why it’s good to be part of a wider group. One of the things I’ve done in Madinah is we’ve managed to take people from locations in Kempinski who are at low season and move them across, but it takes co-ordination and it requires planning.

And also by the same token, you don’t want a high proportion of temporary employees because they never absorb the culture of the company, so your core management has to be very strongly originating from the Shaza routes and basically able to manage the whole tone of service.

“In Karbala there are very distinct seasonal trends that are stronger throughout the year. We anticipate that the occupancy trending will be more stable than in Madinah.”

The pair are equally confident about the security issues in Iraq and the recent increase in airlines flying to Iraq (Emrates Airline launched a route to Baghdad last month) backs this up.

A specialist security consultancy called Control Risks has been appointed to work with Dewan Inc on the design and construction phases to ensure maximum security on the project.

“The international traveller or even the Muslim pilgrim is becoming more sophisticated, people are generating wealth and you’ll find they are a lot more cultured; people do not just want to visit Mecca and Madinah, they want to visit the other holy shrines and sites around the world,” says Ali.

“In Karbala, throughout the year you have about 18 million people visiting compared to three, four, five million to Mecca during the period of Hajj.

There are many more peak periods in Karbala, I’d say there are about seven or eight peak periods where there are millions and millions of pilgrims. I was there two weeks ago and the estimated population of the town was six million,” he adds.

All things considered — from the secure funding to the design detail — the bold move of Range and Shaza looks set to pay off. As Ali concludes: “We have the advantage of being the first involved in doing something like this. So many other groups are now looking to follow in a destination like Karbala.”

Range Hospitality
Range Hospitality was founded in 2009 and consists of four shareholders: Munaf Ali and Mohammed Asaria from the UK; a gentleman from Saudi Arabia; and a gentleman from Africa.

The flagship Al Rawdatain Gardens Project offers potential buys a sharia compliant fractional ownership investment proposition through Mulkiya Intifa’a.

Range Hospitality has worked with Standard Chartered from the outset and offers investment security through the bank’s Escrow account services.

Shaza Hotels
Shaza is a joint venture between Guidance Hotel Investment Company based in Paris and Kempinski Hotels S.A. based in Geneva.

The brand aims to have between 25-30 hotels by 2016, up to 10 of which will be owned by the Shaza fund managed by Guidance Hotel Investment Company.

The company currently owns and operates Shaza Al Madina and has properties committed in Marrakech, Fez, Bahrain and Cairo, in addition to the projects it is working on with Range Hospitality.