Rudi Jagerbacher, Hilton Worldwide. Rudi Jagerbacher, Hilton Worldwide.

It remains unlikely that international chains will sign franchising agreements in the Middle East according to several global hoteliers.

“We are a management company. I think we have the expertise to manage our properties irrespective of the brands we have. As long as I'm here we will definitely not do franchising. Are there some future possibilities? Maybe, but at this stage, definitely not,” stressed Rudi Jagerbacher, president, Middle East and Africa, Hilton Worldwide.

The profitability of a franchising model in the Middle East as well as maintaining the brand’s reputation are also key factors of concern for hoteliers.

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“It is actually quite difficult to make money from the franchise model unless you can develop critical mass and that really does bring you to the big markets in the region, potentially the kingdoms of this world, and other markets where you can actually build and leverage some significant infrastructure for yourself as a franchisor and for your franchisee,” said Alex Kyriakidis, president and managing director Middle East and Africa, Marriott International, Inc.

“If you go down that road, I think the critical element is who the operating partner is. Who is going to protect your brand integrity? That is actually the key question,” explained Joe Sita, president, IFA Hotel Investments.

Pascal Gauvin, CEO of IHG, India, Middle East and Africa, which has 22 franchise contracts in the Middle East believes it depends on the maturity of the region or market.

“We need a bit of sophisticated market, a mature market. It needs to be the right partner, making sure the infrastructure is right because what is important to us is our brand, and all brands have to perform so it could be through a managed contract or through a franchised contract,” said Pascal.

“I think it’s a matter of time,” agreed Kyriakidis. “I believe it’s a matter of the markets here developing operating expertise over time so that you then have qualified franchisees come forward and then we both as partners have comfort in working with each other, partnering with each other to go down the path of a franchise model.”