Event Review: Great GM Debate 2013

More than 200 hoteliers attended the Hotelier Middle East Great GM Debate 2013 on September 9. If you missed it, here’s a round-up of the key talking points, which centred around leadership, innovation and industry collaboration.

More than 200 UAE hoteliers attended the Hotelier Middle East Great GM Debate 2013, held on September 9 at Jumeirah Beach Hotel in Dubai. The conference, now in its fourth year, was themed around Hospitality’s Leaders, Innovators and Game Changers and comprised a series of live interviews, panel discussions and workshops.

Rudi Jagersbacher, president Middle East and Africa for Hilton Worldwide, who scored the top spot in the Hotelier Middle East Power 50 this year, took the stage in a live interview, in which he revealed his mentor as a GM, leadership advice and his personal goals (see pages 36-39).

The event was supported by the Dubai Department of Tourism and Commerce Marketing (DTCM) and featured a live Q&A with director general HE Helal Saeed Al Marri, who also heads Dubai World Trade Centre (see pages 60-63).

Al Marri spoke of the need for industry collaboration and revealed various steps being taken by DTCM to foster this, including expanding its overseas offices. Al Marri also said that increasing business from the high-spending MICE traveller was a priority for the tourism board and urged hoteliers and travel trade alike to work with the body in this respect.

Throughout the day, a variety of pressing industry issues, such as the need for hoteliers to “think like businessman” and reassess the use of space currently allocated to non-profitable restaurants; the pressing need to target the Chinese traveller; adapting to demand for non-classroom based training from generation Y; and the ever-sensitive question of the service charge, and where exactly it goes, were tackled by frank speakers, keen to highlight potential challenges and best practices.

There were also a host of exclusive announcements, such as a new budget brand from Time Hotels called Time Express; revelations about the F&B offer at the Conrad Dubai; and the announcement by Al Marri of a new live events space under development at DWTC, which will be the largest in Dubai.

Article continues on next page ...

A question of price
Eyebrows were raised in the opening panel session entitled Hospitality Leaders & Innovators, moderated by Viability director consultant Guy Wilkinson and comprising Olivier Hick, vice president operations, Gulf and Levant countries, Accor; Christian Grage, vice president operations Arabian Peninsula, Hilton Worldwide; and Mohamed Awadalla, CEO, Time Hotels, when Awadalla proposed a cap on room rates should be enforced in areas of Dubai, such as Al Barsha, saying: “During Eid, none of the hotels in Dubai had 100% occupancy because of the overpricing and if they find another destination, we’ll never see them again, so we have to work together, we don’t have to threaten or fight each other.”

“I even suggested to the DTCM that every hotel should have a ceiling rate,” Awadalla revealed. 

“If we have a rack rate, hotel apartments and individual hotel companies can sell like Hilton and Sheraton in Jumeirah and not increase prices during high season,” he explained.

This comment brought Hilton Worldwide’s Jagersbacher to his feet, as he asserted from the audience: “I think we don’t want to go through the same system as we have in Kuwait where there are set rates for certain markets.

I believe that we have to look at the overall investment in building our hotels and properties and I think we should take a commercial approach. If you want to have a residence and want to have a revenue of x or price that’s up to you. I think commercially, you are going to have to make sure that we satisfy the needs of our owners and the local businesses. To create gaps for set rates, I think that’s terrible”. 

Accor’s Hick, also disagreed with Awadalla, stating: “I think you should create demand and you should be cashing in on that demand. We are here to make profit and to drive revenues and work with our owners as partners”.

Jumeirah’s Gerald Lawless was more vehement in his response: “This city, and the market here, has thrived for so long on the basis of a free market approach to everything and I think it would be a massive mistake to even talk about capping rates,” he said.

“The market finds its own level, the market will develop,” explained Lawless. “We know when we get to 2020 we will be able to accommodate 20 million people, even without Expo 2020. So the market will find its own level and the market in Dubai always has found its own level and I believe we should never talk about capping rates. This is a free commercial market and we are strong competitors and I think hoteliers in Dubai are very good at competing in one of the most competitive markets in the world.”

Article continues on next page ...

F&B strategy
The issue of pricing came up again later in the day during a panel discussion entitled ‘Can hoteliers compete in F&B?’, moderated by Hakkasan Dubai director of operations for Middle East and China Henk Bruggeman, who played devil’s advocate and said he believed some hotels do price themselves out of the market.

Jumeirah Group senior vice president food & beverage Gert Kopera admitted that sometimes this was true and suggested that dedicated revenue management for F&B could be a solution.

Kopera suggested the F&B industry could do well to learn from the airline industry and that “we need to learn to yield F&B, we need to learn to yield pricing from our restaurants and that would answer the question of pricing ourselves in the market.”

He continued: “We remain stagnant with our pricing and... with our offers throughout a full year, but the market in Dubai changes dramatically from season to season — your room rates change, airfare changes but F&B pricing remains stable. So the short answer is that partially we out-price ourselves but if we start yielding it might be a possible solution”.

JW Marriott Marquis Hotel Dubai general manager Rupprecht Queitsch said he wasn’t sure the same principles applied: “I don’t think so, I think there’s a market for everything and at the end of the day the customer decides where to go. You go through any of the malls on any day and you can’t get a seat in some of the restaurants. People will pay for it.

“The airlines have clearly set plans on pricing but the same thing in the restaurant business? I happened to be at La Serre [new restaurant from Emaar Hospitality Group], and if you try and get a seat there at a popular time you can’t get one — with no advertising.”

Rosewood Abu Dhabi managing director Luigi Romaniello said proper research was key to creating competitive F&B. “You’re competing with a lot of restaurants around you,” he added.

Romaniello then disagreed with the panellists about hotels out-pricing themselves from the F&B market, saying it was important to value what outlets provide appropriately. He said: “You find that it’s not necessary that affluent people are willing to spend the money — so you have to price things according to what they are worth.”

Article continues on next page ...

Competition heats up
A recurring question throughout the GM Debate was, as you would expect, how to stay ahead of the competition. The answer arising most often was by continually evolving the product and planning ahead.

As Jumeirah Zabeel Saray GM Stephan Schupbach said in the panel discussion entitled ‘Attracting guests from across rising markets’, it is irrelevant if you have decided upon the F&B concepts for your hotel, you must look at what your competitors are doing also, and “plan for constant change”.

Schupbach revealed he has at least a five-year plan for the hotel, with a steakhouse to launch in the next 12 months, along with the introduction of a new Italian theme at the beach, and a Japanese component in one of its bars. “You have to constantly review and look at numbers.”

Even at Burj Al Arab in Dubai, general manager Heinrich Morio said it was necessary to create new concepts. “We are going into our 15th year in December, and we have created new concepts at the right time with Jin Sui just before the Chinese market started to develop nicely and have further solidified the concepts that we had in the hotel,” he said.

With regard to further targeting the all-important Chinese market, Morio also shared his expertise on the need to adapt and evolve products to their needs.

“It is a market that you have to work hard at, but I don’t need to tell anybody here that the Chinese market is ‘it’. It is what we are all after and it is where the biggest growth is going to come from,” added Morio.

“However, there are, for lack of a better word, frictions for a hotel with having many Asian guests compared to other nationalities. For example the Asian market uses the hotel’s facilities completely differently to other groups, and are less prone to use the pool or the beaches. We therefore had to learn very quickly what our Chinese guests like.”

Morio also said it was important to focus on all emerging markets, later backed up by HE Helal Saeed Al Marri, who said Dubai’s DTCM was targeting 20 emerging markets as part of Vision 2020.

“However, other markets that we find that are on the rise are Africa as a whole; and within Africa the standout market is Nigeria,” commented Morio.

“It is a hugely interesting market and for the first time in July this year, it became one of the Burj Al Arab’s top five performing markets,” he revealed.

“It is quite interesting what is happening in that part of the world and you realise that Nigeria is one of the top 10 countries in the world utilising the internet, and how much easier that makes it to go into that market via digital marketing for example.”

Also speaking on the panel was Stewart Selbie, general manager of the Mina Seyahi Complex in Dubai, who pointed to the rise of the middle classes around the world as one of the big drivers for growth in the worldwide hospitality market.

“I think that consumers are changing faster than ever before. In the emerging markets, the significant thing is the emergence of the middle classes. Half the world’s population is now considered middle class I believe, and that presents a huge opportunity going forward,” commented Selbie.

“We were focused for a long time on the product, but are now starting to focus instead on the experience. And for the emerging markets, especially the middle class, it is the experience that is really important to them. And that is affecting how we go about structuring loyalty programmes, as people move away from reward more towards recognition,” he explained.

Article continues on next page ...

Learning to lead
The Great GM Debate concluded with a very apt session, ‘Thinking like a business person — is it the difference between a good and great GM’? Throughout the day, the lonely role of the GM — who must juggle countless colleague departments and guest demands, not to mention carry the burden of confidential owner business — was acknowledged and this session aimed to share ideas for ensuring general managers approach their responsibilities in the most efficient and exciting ways.

Managing teams was a key part of this and the panel, which comprised Patrick Antaki, complex general manager, Le Meridien Al Aqah Beach Resort, and Al Maha A Luxury Collection Desert Resort & Spa; Tim Cordon, general manager, Radisson Blu Hotel Deira Creek; The Oberoi Dubai general manager Karim Bizid; Atlantis the Palm president and managing director Serge Zaalof; and Andrew Humphries, regional VP and GM, Yas Viceroy Abu Dhabi, moderated by the very frank Tommy Ressopoulos, VP sales and marketing Time Hotels UAE, was keen to discussion staff recruitment and retention.

Empowerment and enabling delegation, was a key point panellists stressed on. Patrick Antaki said “People talk about empowerment but there is no real delegation. We tell service staff they are empowered, but we delegate them no responsibility”.

He stressed it was important to develop standard operating procedures to empower colleagues and encourage them to make their own decisions. “Give them the framework, give them the protection, write the SOP, write the procedure, and then the system has to be followed,” he said.

Tim Cordon agreed: “People have to believe in themselves as well and not just the product. Empowerment has to exist.”

The GMs also lamented the continuing practice of new hotels poaching staff through offering slightly higher salaries.

Antaki complained: “One thing I’ve found is that every time a hotel opens, they raise the bar in the salaries so the pool of employees is moving from one hotel to the newest one because they are paying an extra AED100 for the waiters.

“We really need to look at new pools of recruitment, we also need to start looking at educating the new recruits, educating the new generation of people,” he added, echoing earlier comments from Jumeirah Group president and group CEO Gerald Lawless, who urged the encouragement of ambition among junior employees and aspiring general managers.

The panellists also pointed to the lenient visa rules in Dubai, which allow hotel employees to move between companies with ease as a reason for the high turnover, prompting them to seek new ways to foster loyalty.

“As hoteliers, we have to start investing in our colleagues, investing in their welfare, investing in their accommodation,” said Karim Bizid.

“The benefits should be more than the salaries, to make them feel better, to make them more loyal and make them perform better,” agreed Cordon.

Atlantis the Palm president and managing director Serge Zaalof said: “The benefits are definitely more important. And I think slowly as we gear towards 2020, payroll and benefits will become an issue for us in Dubai as operators, which was not an issue in the old days.”

From the audience, Millennium Airport GM Glenn Nobbs asked the taboo question of ‘where does your service charge go?’, and at this point, the previously talkative panellists chose to remain tight-lipped, shifting nervously on their seats — except for Karim Bizid.

“I’ve seen different models being implemented. At the Oberoi, we pay 10% service charge to the colleagues,” he revealed.

“Not only that, all the tips ... we have a common tips policy at the Oberoi, which has been extremely successful at the other 30+ hotels around the world, which we have implemented here.

I got a lot of resistance from different colleagues who have moved from other properties within Dubai who said they would like to hold on to their own tips and I had to convince them that if that model has been so successful elsewhere, why don’t we try it? And I promised them that let’s try it, let’s see the impact out of it and within three months, if it does not work, we will go back.

Service charge is being paid to the colleagues, but surprisingly after four months of operation, I found out based on my own calculation that doing this common tips policy, which is something new for Dubai, we ended up having more tips than just having it by outlets or departments for us.”

With that revelation, the GM Debate 2013 concluded, with feedback from delegates and sponsors alike asserting that it was the best event in the series so far, with GMs describing the event as an “annual ritual” and “essential yearly gathering”. Email louise.oakley@itp.com with your thoughts as to the hot topics for the 2014 edition.