CHAIN OF THE MONTH: Golden Tulip
The Golden Tulip regional management team reveals the group’s strategy behind its aggressive MENA expansion, with a focus on boosting the brand’s reputation and the bottom line
Golden Tulip, part of Europe’s Louvre Hotel Group, has fast-tracked its expansion in the Middle East and North Africa (MENA) over the past 23 years through franchise deals, but this strategy is set to change as it embarks on further growth and development of the brand.
The group currently operates 44 hotels comprising 6443 keys in the MENA region (in the UAE, Saudi Arabia, Egypt, Jordan, Oman, Bahrain, Lebanon and Tunisia) under its three-star Tulip Inn and four-star Golden Tulip brands. Out of these 44 operating hotels, 29 are franchised properties and the rest managed by Golden Tulip.
By 2016, Golden Tulip expects to more than double its regional portfolio with 46 signed properties comprising 7678 keys in the pipeline, according to data obtained by Hotelier Middle East.
The majority of properties will be under its Golden Tulip and Tulip Inn brands, and the region’s first five-star Royal Tulip will open in Amman, Jordan, in 2013. The group is eyeing 10 more Royal Tulips in the region over the next four years. Out of the 46 upcoming signed properties, only four are franchised.
“In the last three years I have tightened the valve on franchising and opened the valve on management for a better offering to our customers. My international traveller wants to have integrity of the brand,” Golden Tulip MENA president Amine E. Moukarzel explains.
While franchising hotels has given the operator a faster momentum of growth which it has capitalised on to date, going forward the focus is on three key aspects: fine-tuning the brand offering, quality and consistency of the product; boosting profitability; and enhancing employee welfare and opportunities. All tasks that can be tricky when dealing with third-party-run franchised properties, he says.
Stat attack
- 8th Louvre Hotels Group is the world’s eighth largest hotel company
- 1000 Properties across 40 countries in the Louvre Hotel Group
- 44 Existing hotels comprising 6443 rooms in MENA
- 46 Upcoming MENA hotels comprising 7678 keys to open by 2016
- 1962 The Golden Tulip brand was established
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Quality Control
“In some cases we have a very good, close and tight relationship with an owner which means full control of the brand and what we do. In other cases owners aren’t responsive and don’t like to participate in the programmes we do, such as training and development.
One owner mentioned to his manager ‘why should I send you for training’? Another said ‘why should I pay for training, let the brand pay’ and obviously this is not the case so owners and operators have to work together.”
Moukarzel says the group has reclaimed management of around six formerly franchised properties over the last few years due to the owners’ poor operating standards reflecting badly on the Golden Tulip brand.
“We have seen hotels departing in various countries that were not up to par whether in Jordan, Lebanon or Saudi Arabia — so we have seen where we had critical mass, where we can have hotels departing without hindering the owners, without hindering the brand or the overall set-up and relationship for that matter.”
A major part of Golden Tulip’s MENA expansion has been through franchise agreements in Saudi Arabia. Today, the group has 17 franchised hotels comprising 2002 rooms in the Kingdom and one managed 150-key property.
“We have the largest network of hotels in Saudi Arabia and the next generation is to have more managed properties. In the next two-to-three years we should be adding at least 10 hotels on the management side, so this brings the number of hotels – franchised and managed – to par, yet the number of rooms across the managed properties will be double the franchised,” says Moukarzel.
There are 16 managed properties comprising 2193 rooms and two franchised properties comprising just 243 rooms in the pipeline for Saudi Arabia, all due to open by 2016.
Furthermore, Golden Tulip MENA director of operations Paul Diab expects that as the number of managed hotels increases in the region, more existing Golden Tulip franchisees will opt to hand operations over to the group having witnessed the success of these managed properties.
“We hope the franchisees will see these hotels performing better due to the management decisions and style. Revenue is impacted because in the managed hotels we’ll be able to have more hands-on [involvement with] decision making, in franchised we do not.
There will be more monthly reporting and controls, making sure standards are followed properly,” says Diab.
Moukarzel asserts: “If the owner wishes to change from franchise to management we will take it over”.
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Boosting the bottom line
So through this evolution from franchised hotels to more managed hotels, Golden Tulip hopes to boost the bottom line as well as the brand reputation.
“The earnings for any hotel management business are higher than the franchise business so this enables us to invest more back into the system, our people and the product,” explains Moukarzel.
In addition to a new management approach, many of Golden Tulip’s existing properties in the region are being given a ‘brand-new’ look.
“We have a continuous programme of renovation to maintain our brand equity. For instance our Khasab hotel in Musandam is undergoing a renovation at the end of the year and our Golden Tulip Seeb in Muscat is having a major refurbishment programme currently. Our existing Cairo hotel was renovated recently too, and they’ve done a marvellous job.
“At Golden Tulip Bahrain we just completed a substantial capital expenditure on renovation of the lobby, coffee shop and the extension of it. In Lebanon, the same motto applies. In Tunis we took over the hotels and made a three-year plan to complete the refurbishment.
In Amman we took over the hotel and have spent more than 15 million dollars on the renovation over the last three years,” Moukarzel continues. “Each hotel deserves better business so we’re working with owners to prioritise the expenditure on a long-term plan.
We do some floors and some public areas without neglecting the back office or the implementation of the latest technologies whether on lighting, mechanical, electrical, air conditioning, we move from the very old specs to the very latest specs saving on energy, improving on environmental practices and so on.”
Attracting staff and guests
Alongside the growth of the brand comes thousands of hotelier job opportunities in the Middle East and North Africa. Golden Tulip has 14 hotels comprising 2175 rooms scheduled to open by the end of 2012 with an average ratio of one staff member to a room.
These 14 hotels include one property in Sharjah; one in Doha; four hotels in Saudi Arabia; two in Tunisia; three in Bahrain; two in Algeria and one property in Egypt.
“As we are expanding we need more employees and we support promoting from within the company – the people working with us already have the mentality, understanding and culture of the company.
For the management positions we like to promote, especially for heads of departments — promoting certain supervisors and moving good staff from roles in smaller properties to the same roles in larger properties,” says Diab. “We also have a few coming in from outside.”
Moukarzel expects the franchised-to-managed shift will also make it easier to attract new talent: “Many people in the industry like to work in a managed chain for the belonging, its trustworthiness and loyalty, and this is where best practice and management plays a role”.
As the brand continues to grow and develop in the region, the job of marketing it to employees, as well as potential guests, has certainly become easier, according to marketing and communications manager Viviane Khoury.
“In the past, marketing the hotels was more of a challenge because we didn’t have a big presence. Now when we’re looking to promote hotels we’re not talking about one or two and so we have the confidence in what we can offer potential guests and employees,” she explains.
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Full bloom
The group’s MENA hotels make up a significant part of the Golden Tulip chain’s global market, with 30% of the world’s Tulip Inns and around 70% of the world’s Golden Tulips located in the region.
Moukarzel attributes the popularity of the brand among GCC and international travellers to the Middle East and North Africa to the “versatility” of the brand, from primarily mid-market hotels and hotel apartments and dry hotels to the luxury Royal Tulip, all offering “international standards with a local flavour”. And as long as guests flock to Golden Tulip hotels, Moukarzel intends to continue signing new properties.
“My team doesn’t allow me to travel big time as everywhere I go I bring new hotels back with me,” he jokes.
“We have already established the critical mass, we’re the strongest four-star brand in the region and as we move forward my aim for December 2013 is to have reached 70 hotels even though we usually say 60.
“We write with pencils not pens when we talk development. Decision making is quick – we don’t have long corporate decision processes. We care, we dare,” he concludes.
10 Reasons to join Golden Tulip
1. Compelling core values: wellness, dedication, integrity, loyalty
2. An international hotel group with a focus on local culture
3. Emphasis on employee welfare and persoal development
4. Employees can grow with the company
5. A management style that gives employees a voice
6. Part of the Louvre Hotels Group, Golden Tulip has a worldwide network
7. An industry frontrunner in technology
8. Periodic and annual workshops for training and developing employees
9. Competiveness and leadership within the hotel marketplace
10.A loyal customer base offering stability and familiarity to the hotelier’s role