CEO INTERVIEW: Risk taker - Rotana's Selim El Zyr
Two decades since he took on international operators with the launch of the first UAE-based hotel company, Rotana president and CEO Selim El Zyr is still taking risks. He reveals the group’s expansion plans in some of the region’s most volatile markets, but says Rotana is in safe hands of the man he has earmarked to one day continue his legacy
Just over 20 years ago Selim El Zyr took the brave step of co-founding Abu Dhabi-based Rotana, the first local hotel management company in a market dominated by international chains.
Sitting in room 2013, the Royal Suite at the Beach Rotana Abu Dhabi, which was Rotana’s first hotel to open in 1993, El Zyr says this is where it all began — with a risk.
“I had a lot of contacts working for different companies — Sheraton, InterContinental, Hilton, Hyatt — and all of them said ‘Selim, why are you doing that? Go and work for a company. Why would you start this?’,” recalls El Zyr.
“I said I want to try it and in the worst-case scenario I can go back and get a job.
“My immediate target was to open a successful hotel. The existing hotels that were in operation were the Hilton, Sheraton, InterContinental, Meridien and there was a hotel under construction which is Le Royal Meridien today.
So all of these were established companies, but if you don’t feel any challenge, if you have nothing to put you on the edge, you won’t be able to achieve,” he says.
Not only was El Zyr taking on the big boys in the hotel business, he was doing so in a difficult market.
“In 1993, the business in Abu Dhabi was not great so I was anxious to ensure that a company that had just started with only two people in it — chairman Nasser Al Nowais and myself — could operate a five-star hotel in a difficult market where supply was as much as or even a bit higher than demand. My immediate concern was adding 250 rooms to an inventory of 1000 rooms.
“However, a year on from opening, this hotel was achieving the best occupancies.”
Twenty years on, Abu Dhabi is facing a similar challenge to that experienced in 1993, following an influx of hotel openings in the emirate over recent years.
“Business all over the world is circular. You have times when there is a shortage of hotels, everybody builds hotels and when these hotels are ready there’s a surplus of hotels. Then people stop building hotels for a few years, they’re worried, financing becomes difficult, and there’s natural growth in every country and there’s a shortage again.
“In Abu Dhabi there’s been a growth in number of visitors of 10% so if they stop building today the occupancy is going to soar and obviously they’re going to stop building, they cannot continue building in a market like this — they have to think twice before starting a hotel.
“When the investor sees the occupancy has stabilised between 80 and 90% they start building,” continues El Zyr.
“We have lost part of our business, but we certainly have not lost our market share, we are still leaders.
“This hotel [Beach Rotana] has been a success ever since it opened. Even today, with all the new hotels that have opened, this hotel has got the highest market share and positioning in the market,” he adds.
So the Beach Rotana Abu Dhabi proved to be a risk worth taking; last month, Rotana opened its 12th hotel in Abu Dhabi, the Centro Capital Centre (see page 62). The group has another four hotels opening in the capital between now and 2015.
However, Rotana’s most important market today is Dubai, where it recently became the leading operator in terms of number of operational hotels, overtaking Starwood with the opening of its 14th and 15th properties, the Al Ghurair Rayhaan by Rotana and Al Ghurair Arjaan by Rotana complex.
Speaking of the company’s growth, El Zyr says: “I was sure it was going to be a big challenge, but my dream was to have three-to-five hotels within reach that I could micromanage. My ultimate dream was to make it a big company, but a big company to me was 10 to 15 hotels.”
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Got guts
Today the group is targeting 100 hotels, with 46 already operating plus 39 signed properties in the pipeline so far. And aged 65, El Zyr is still chasing a challenge, with an ambition to establish Rotana as the leading operator in some of the region’s riskiest markets.
Rotana already operates one property in Iraq, the Erbil Rotana, and has three in the pipeline in Karbala, Baghdad and Suleimaniyah. The group also has upcoming developments in Sudan, Syria and Libya, and is eyeing opportunities in Afghanistan, El Zyr reveals.
“We have something now on our table for Afghanistan, but I have to go see [the country] and assess the risk,” he says.
Furthermore, he reveals that the group has signed management contracts for three hotels in Iran, each comprising around 200 rooms and branded under the group’s alcohol-free Rayhaan brand. Two of the properties are located in Tehran and the third, Mashhad Rayhaan, is located around 850km east of Tehran.
“Construction has started. We’ll see the hotels in operation after two or three years,” says El Zyr, adding that the three developments will include mall and residential components.
“Iran has tremendous potential — as much as Iraq or Saudi Arabia; these are the countries that have got potential now,” continues El Zyr.
“The opportunities are mainly [due to] the lack of construction in the last 20 years. Plus these markets don’t have a lot of stability unfortunately. Today they’re in difficulties politically — Iraq, Iran, Afghanistan — all of these countries have a lot of difficulties so you need operators with guts to go there.”
Risk management
In upholding Rotana’s founding principles, however, El Zyr is not taking any chances.
Having worked for other international hotel companies, including Hilton Worldwide for 12 years, he has always had a clear vision for the group, and how it is managed.
“I remembered the things that were annoying or inefficient [in other companies] and brushed them to one side. The decision-making process is very important because big companies were going through many layers, stopping here and there, with people involved who did not understand the problem, so red tape was the first issue to address when setting up Rotana.
“Second was delivery to the owner. An owner with a hotel costing him $100 million deserves attention, but with the number of hotels global companies are managing today, they cannot give that attention.”
As the company continues to expand, sticking to these objectives is a juggling act between pleasing the owners, the guests and the 10,800 employees.
“You have to balance who to please every minute of the day and this is what makes our position and performance interesting and difficult at the same time. At the time of salary reviews you have to please the employees; when presenting the budget you have to please the owner; and every minute of the day you see a guest, you have to please them so it’s juggling,” he says. But irrespectively, “as the infrastructure grows, the vision gets diluted”.
“The biggest challenge a company has is to make sure the vision of the founders, of the top executives, goes all the way down so they all speak the same language, but it’s extremely challenging because there’ll be someone in between who believes there is a better way of doing things to mess up the whole process,” he explains.
The company’s employees are its biggest asset, according to El Zyr, who has dedicated time and resources to developing individuals. He says to be successful in the hotel business you need to “keep learning, be passionate and committed, have big dreams, take risks, work hard and be humble”, all traits apparent in El Zyr.
“I believe in people. I trust people upfront; I don’t wait for them to show me their worth. I believe in helping people grow and these are the people that will be most loyal and outperform everybody.
Most of our executives in Rotana today, our top people in the corporate office, have grown in the company. Every one of them has put a brick in the wall, contributed in the building of the company and everyone feels he owns part of the reputation.
“These people joined the company when the company had three hotels, some of them when it had 15 or 30 hotels, so there was space for personal interaction with most of them and this is what makes them loyal.”
Safe hands
One man in particular has excelled under El Zyr’s leadership, executive vice president and chief operating officer Omer Kaddouri, who joined as resident manager at Al Bustan Rotana in Rotana’s early years.
According to El Zyr, Kaddouri has been earmarked for the past five or more years to continue his legacy: “We are in the process of development and exposure to deal with this growth.
My real ambition today is to see that Rotana continues to grow in a better way than it has grown under my leadership. It is very important for anyone to know that it is time for someone else to take the driving wheel.
“My dream is to see whoever takes that wheel does better than me. Take it to a further dimension — that’s what I’m focusing on today — it’s taking a lot of my time and my thinking. Firstly, running a company with 40 hotels is different to running a company with a 100,” he explains.
“Number two is thinking how we can maintain the vision, spirit and reputation of the company. As you’re growing you tend to lose focus, it’s unavoidable. How can the company ensure that attention is given to every hotel with the growing number of hotels in operation?
“It’s the determination, the drive, the hard-work, the integrity and the vision, all these have made Rotana what it is today,” he concludes.
Rotana Vital Stats
- Operating hotels: 46
- Pipeline hotels: 39
- Recent openings: Centro Capital Centre Abu Dhabi; Al Ghurair Rayhaan and Al Ghurair Arjaan by Rotana
- Recent signings: Iskenderun in March 2012; Iraq in April 2012; Doha in June 2012; Ras Al Khaimah in June 2012
Expected openings by end of 2013: City Centre Rotana Doha; Majestic Arjaan by Rotana Bahrain; Salalah Rotana Resort Oman; Capital Centre Arjaan by Rotana Abu Dhabi; Tuscan Residences by Rotana & Monaco Residences by Rotana Qatar; Boulevard Arjaan by Rotana Jordan; Hili Rayhaan by Rotana Al Ain; Karbala Rayhaan by Rotana Iraq