DEVELOPMENT AREAS
The UAE, Qatar and the Kingdom of Saudi Arabia are areas where the firm has been active recently, and its next point of interest is Iran. Hartzuiker says: “Whilst it will still take a bit of time, there is a huge appetite and demand for hospitality and hotels. In fairness, the infrastructure has been lagging behind, and a lot of people want to go to Iran, and it’s not just for one reason.”
He ticks off business, the leisure and cultural potential, and domestic tourism as being gold mines of opportunity for the hospitality industry. “No one is in doubt of the opportunity for hotels in Iran, it’s a matter of how to get it done. We are very fortunate that we have been in touch with that market with quite some time, so we already have solid relationships. We have a good understanding of where the market is, where the hurdles are and how to overcome it. We are in advanced discussions with ‘the’ development that everyone will soon know of, and it looks like we will be playing a very instrumental role in that development.”
TRENDS IN THE MARKET
Hartzuiker says one the biggest trends the industry is trying to address is the change in how travellers now purchase. “The OTAs have a huge chunk of the business, and frankly speaking, the brands are struggling with how to manage that whole situation. I think some moves have been made and I’m sure the industry will sort it out at a macro level, so to speak. But what I want to point out is that this also needs to be addressed at hotel-level. E-commerce is something that is a life within the hotels, some have it within their job description. But if I look at the whole skillset, the whole competency, it doesn’t yet really exist on property, and where it exists, it is, in my view, considering the impact it has, at a much junior level.
“One of my qualms is that hotel companies haven’t re-engineered themselves to recognise that business is conducted in a different way, and that the employees are becoming different individuals than they were many years ago. The hierarchy has not changed.”
He asks: “What is the next generation hotel organisation looking like? Where does the real importance and competency, and therefore salary scale recognition sit? I feel it still sits in the old model and that model in most cases is no longer relevant to how the business is to be delivered today. We should re-engineer the way hotel organisations are and make it a lot more interesting industry to join.”
Another debate, which Hartzuiker thinks isn’t being discussed enough, is the relationship between the hotel operating company and the investors — most of which is expressed in the hotel management agreements.
“It’s again archaic; it was designed 30-40 years ago and in essence it hasn’t changed, and it needs to realign itself to today’s situation.” Currently, he says brand operators are being rewarded in a “fairly blanket kind of way”, which needs to change.
The zero risk model for the operator is not going to last forever, he opines, because “a real estate developer is being inundated by brands and hotel management companies all willing to take on the property”.
Investors will soon look for a shared risk philosophy, and due to the historical nature of management agreements they are still too operator-friendly, and need to be more balanced, according to Hartzuiker. He admits that while both parties need to be equally protected, his issue is with the clarity of the document itself.
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