FRHI to double Middle East portfolio
FRHI Hotels & Resorts has turned its attention to the Middle East, with an aggressive plan to double its portfolio. Hotelier speaks to senior VP development Francois Baudin, and VP sales and marketing Frédéric Savoye, to find out how the group hopes to achieve this
In recent years, FRHI Hotels & Resorts has set its sights on growing its presence in the Middle East and North Africa, and a spate of recent signings have demonstrated the company’s commitment to the region.
It signed agreements with Citystars Properties for two new Egypt projects — a Fairmont hotel in Soma Bay, south of Hurghada, and a Swissôtel property in Katameyah, Cairo, which are both scheduled to open by 2020. These will add to the three-hotel complex signed with Citystars in 2014, which will include the operator’s three brands; Fairmont, Raffles and Swissôtel.
During the Arabian Hotel Investment Conference (AHIC), the group also announced a partnership with Sisban Holdings for the 350-key Fairmont Jeddah Hotel & Resort, to open in 2018.
In addition to these properties, FRHI also has hotels under development in Riyadh, Fujairah, Amman, Abu Dhabi and Dubai, among other destinations.
To further demonstrate the importance of the Middle East/Africa, FRHI has just moved its regional headquarters to Dubai. Most recently, Frédéric Savoye joined the team as vice president, sales & marketing for the Middle East, Africa and India, and is now responsible for the overall sales and marketing operations for all 19 operational hotels in the region.
Commenting on his plan to increase brand awareness in the region, Savoye says: “Taking into consideration the importance of brand equity, I believe this is the right time to really leverage our brand recognition to the benefit of the future projects that will open — for example in the next five years we will double our portfolio. So it’s important that our brands are recognised in this part of the world.”
Brand equity and recognition are equally important issues for FRHI Hotels and Resorts senior vice president development, Europe, Middle East and Africa Francois Baudin, especially with the group eyeing more properties in the GCC.
Baudin reveals FRHI is actively seeking more opportunities in Abu Dhabi, with perhaps a Raffles hotel on the cards, while secondary markets like Ras Al Khaimah and Sharjah also offer attractive opportunities in the UAE.
Similarly, Saudi Arabia continues to remain an important market for FRHI. “We are looking at more projects in Jeddah to complement what we have already signed. Jeddah has different pockets of development and there is a lot going on in the north of Jeddah, so we are interested in going there as well,” Baudin commented.
“We are also in discussions with some partners for doing a Swissôtel in Riyadh and also a Raffles. We have a Fairmont under construction, which will open by the end of the year. What is tricky in Riyadh is there is a lot of supply coming and we want to make sure we are in the correct spot to capture the demand, so we want to position ourselves as different and have unique selling points.”
With a considerably hefty pipeline for the group’s relative size, Savoye says his responsibility is ensuring investors receive returns in terms of guest numbers and profitability so that they continue investing in FRHI properties in the region.
Article continues on next page ...
“It’s not just about us aggressively looking at markets, but also the opportunities that our owners give us. And that’s one of my main responsibilities — to ensure that our owners are taken on as long-term partners, because for us it’s important to deliver what we promised in terms of service level and top line and market penetration,” he asserts.
“Because we are doubling our footprint with all these hotels, it’s also about getting them off to a good start with ramp ups and so on. The mission is sustained growth by increasing the demand and penetrating the occupancy and average rate at a high level. The strategy comes from focusing on the GCC in order to ensure the brand is strongly recognised,” he adds.
Another part of the strategy, to ensure return on investment, is a continued focus on mixed-use developments. Almost all of FRHI’s properties, Baudin reveals, offer a residential component.
“We don’t do standalone; we always combine residential when we have a hotel. The resorts are very rarely standalone today — most of them have residential components in the form of villas and apartments — it helps a lot with the rate of return for the projects, and helps to ease the financing of the project.”
However, Baudin is quick to point out a fair bit of research goes into each property before deciding how much of it will comprise residential units.
“You have to be careful and make sure the inventory is sold properly, that there is demand. It needs to be consistent with the positioning of the hotel as well because you want to have the same kind of customers on both sides of the business.
“Also it’s important to make sure it’s not a speculative project where you would sell a residential project to fund the development of the hotel, which we saw during 2006 to 2008 before the crisis, where everyone was developing a hotel as an amenity to residential. We don’t want to do that — we want there to be a balance,” he explains.
Savoye employs a similar approach when working on the sales strategy for the region. He reveals the team is currently working on overhauling its Arabic messaging, given the fact that the Middle East is a key target market for the group.
He says: “What we are doing slightly different from the past is our resource deployment to ensure visibility within the market, especially targeting the key markets we are focusing on. For example, developing our content in Arabic is key and the content we display to those guests is relevant and clearly explains the brands and the experiences they deliver to them; that is key I believe.
“In Makkah I believe we should ensure that our clients should have as much of the information they need in their own language to make the experience better. The Arabic content was already there, but we are just adding more.”
The group is also working more closely with the travel trade, and launched agent reward programme, ‘Famous Agents’ last year to encourage more bookings.
“Famous Agents is an incentive for travel agents booking our hotels around the world. It has been quite well received — we have seen double-digit growth year on year since last year.
“We are really trying to ensure they enjoy doing business with us and are being rewarded in return. We give them the opportunity to redeem their points through an online shopping mall, which gives them access to about 1000 different products and luxury brands such as Tiffany & Co., Coach, Bose, and more,” Savoye explains.
Article continues on next page ...
The steady and pragmatic approach seems to be a common theme for both Savoye and Baudin.
“We really like to work with feasibility studies done by third parties because we want to make sure we are all on the same page and we have the right advice.
“We always say that at FRHI our growth doesn’t depend on the number — we are not here to make volume, we are here to develop a quality portfolio, so we are very careful about the way in which we approach those developments and we also want to have partners who have the appetite to do more with us. This is what is happening with Citystars in Egypt, which we have signed five hotels with.
“I always say you have to tick all three boxes — the right partners and the right location in the right market.
“This is the beauty of having three brands which have a distinctive positioning — you have the luxury of trying to understand what makes more sense for the investment and you can drive the rate in this market,” Baudin declares.
FRHI MIDDLE EAST PIPELINE
Fairmont Riyadh
Opening: 2016
Fairmont Fujairah
Opening: 2016
Fairmont Citystars Sharm El Sheikh
Opening: 2016
Fairmont Amman
Opening: 2016
Swissôtel Citystars Sharm El Sheikh
Opening: 2016
Fairmont Marina Resort Abu Dhabi
Opening: 2016
Fairmont Jeddah
Opening: 2017
Fairmont Al Jazayer Beach
Opening: 2018
Swissôtel Jeddah
Opening: 2018
Swissôtel Jaddaf
Opening: 2018
Raffles Jeddah
Opening: 2018
Fairmont Jeddah
Opening: 2018
Raffles Citystars, Sharm El Sheikh
Opening: 2019
Fairmont Soma Bay, Hurghada
Opening: before 2020
Swissôtel Katameyah, Cairo
Opening: before 2020