Roundtable: The GM debate

Meet the experts

Abdellah Essonni, CEO, Abjar Hotels International

With more than 25 years of managerial experience spanning four continents, Abdellah Essonni has been in his current role for the last three-and-a-half years. Abjar Hotels is a subsidiary of Almulla Group of companies, which owns and operates nine hotels in Dubai under global brands. Previously, Essonni was managing director — asset management for Actif Invest, a Casablanca-based hospitality investment fund.

Andrew Humphries, RVP of Viceroy Hotel Group, and GM of Yas Viceroy Abu Dhabi

Andrew Humphries’ career spans more than 30 years with luxury hotel brands in Europe, the Caribbean and the Middle East. Andrew oversees the day-to-day operations and commercial success of Yas Viceroy, Abu Dhabi, while managing the development of future Viceroy properties in Dubai, Algarve and Serbia. Prior to this, he was RVP & GM of Four Seasons Resort Nevis, West Indies and managed the collection’s Caribbean development.

Kai Schukowski, general manager, Kempinski Hotel Ajman

Following Kai Schukowski’s graduation from Emirates Academy of Hospitality Management in Dubai, he took a position as the corporate operations performance analyst at Kempinski’s head office in Geneva, Switzerland and reported directly to the company’s COO. After becoming regional operations manager in charge of all Kempinski hotels in China, he was appointed hotel manager at the Kempinski Hotel Ajman, and earned a promotion to general manager.

Maria Tullberg, general manager, Radisson Blu Hotel, Dubai Deira Creek

A Scandinavian national. Maria Tullberg has more than 22 years’ experience in the industry. She graduated from Uppsala University with a Bachelor of Science, Business Administration and Economics. Most recently, she was the general manager of the Radisson Blu Arlandia Hotel and the Radisson Blu Skycity Hotel, both located at Stockholm-Arlandia in Sweden.

Markus Roeder, pre-opening general manager, La Ville Hotel & Suites City Walk Dubai

Previously senior director of operations Middle East & Africa for Marriott International, Markus Roeder was responsible for property management, project management of brand initiatives, re-branding, renovations and hotel openings as well as F&B concept development and design for Ritz-Carlton, JW Marriott Hotels, Marriott Hotels, Renaissance Hotels, Courtyard Hotels, and Residence Inn properties across the region. Previously, he was director of operations for the JW Marriott Cairo for five years.

Stefan Fuchs, general manager, Jumeirah at Etihad Towers, Abu Dhabi

Stefan Fuchs first joined Jumeirah in 2006, working at Madinat Jumeirah in Dubai for three years as director of food & beverage. He re-joined the company in 2010 as hotel manager at Jumeirah at Etihad Towers for its pre-opening. A German National, Fuch’s previous industry experience spans more than 15 years working for Ritz-Carlton and Kempinski Hotels. His international experience has been gained from working in Europe, the Middle East and Russia.

The venue

The Hotelier Middle East Great GM Debate 2016 advisory panel meeting was held at The Croft Dubai, at the Dubai Marriott Harbour Hotel & Suites. Head chef Darren Velvick and restaurant manager Jane Nedanoski hosted the panel of experts with breakfast and coffee and tea. One of the winning ideas of Marriott International’s Project Canvas campaign, the venue is the brainchild of Marcus Wareing protégé and former patron chef of Table 9, Darren Velvick.

The Hotelier Middle East: Great GM Debate 2016 is set to take place on September 27 this year at the Conrad Dubai, and to set the agenda for the event, Hotelier gathered six experts to talk about current trends and opportunities in the hospitality sector. The panel discussed the role of the hotel GM and his/her relationship with various stakeholders such as owners, operators, and tourism boards, as well as highlighted the importance of MICE and F&B in the upcoming development of the region’s tourism industry.

HOTELIER: There has been a lot of talk about new markets that are either opening up, or existing markets that are now being seen as having potential. Which ones are these, and what do you think about the opportunities?

ABDELLAH ESSONNI: The first market that comes to mind is Iran. It is going to open up, although I think the timing is a bit tricky. If I speak for our group, all our hotels are in Dubai right now, and we’d like to venture outside of Dubai, and this would be one of the areas we’d look at. But we’re not looking at it immediately. We’re probably going to wait and see how this global economic uncertainty pans out before we make serious steps. Iran, Oman and Saudi Arabia — it’s a no-brainer, really.

ANDREW HUMPHRIES: Once it opens up, traffic to Iran will be tremendous. The potential for businesses here for Iranian markets is enormous as well.

KAI SCHUKOWSKI: Every other week, we have a request from Iranian tour operators to start doing business with us.

STEFAN FUCHS: If this market is going to open, this is a great market. Another market is India, it’s a market we as hoteliers have neglected for inbound travel, but it’s coming. If you look at the business we generate with Indian weddings, it’s a huge market. If you look at Etihad Airways, it’s now flying its flagship airplane into Mumbai, after New York and Sydney. That tells you a story of how important this market is.

ANDREW: Saudi Arabia could be contracting quite substantially. That could be quite painful and I don’t think there’s any short-term solution — certainly three to five years of Saudi economy going through dramatic change. Change brings uncertainty, and uncertainty brings people keeping money in their pockets. The Saudi business will definitely contract, it’s hard to say by how much.

ABDELLAH: I dare say it may be the other way around because the Saudis will travel, no matter what. There’s been a reduction in government spending so we see less groups coming in from KSA. But individuals and families will still travel.

MARIA TULLBERG: I agree that the Saudi market is going down and spending is going to be less, but they’re not going to stop travelling. They’re just not going to travel as far — they will skip Europe and come here.

MARKUS ROEDER: Huge developments like entertainment and leisure parks will attract a lot of Saudis to come, eventually.

STEFAN: A lot of bookings are done already in our sister hotels and the currency plays in the favour for the Saudis because the euro lost 20-25% and shopping is still an attraction. And it’s hurting us a lot that the retail prices for us are not as competitive compared to Europe. And this is a big driver if you look at the Chinese market, and this is currently very unattractive. Saudis are very hesitant to shop here because they have 20-25% cheaper prices in Europe.

HOTELIER: What about theme parks, as already mentioned, as an attraction for the regional guests and beyond? There’s also cultural tourism that’s being considered a focus — what do you think?

ANDREW: Our view is that it needs to settle in the long-term. Parks that are coming along will need to be all open before they really attract big volume. When the last attraction opens is when it will kick in as a viable destination.

ABDELLAH: Hotels here are very pro-active, they quickly forge partnerships with attractions, as is the case with Ferrari World, the water parks in Abu Dhabi, the water parks in Dubai. Most hotels offer packages that includes these attractions.

STEFAN: We are waiting for the Louvre to open and there is a lot of interest. Are we able to convert this into room nights or dollars?

MARIA: This is a longer-term perspective as well. We see that the government now is putting a lot of effort into heritage but that won’t happen overnight.

MARKUS: When you look at the Opera coming up, the Dubai Canal project and everything around it, then all the parks and entertainment… with 2020 Expo, it will be stunning. Maybe not short-term, but eventually it will be very positive. The destination is becoming much more urban and cosmopolitan, like London or New York.

ANDREW: One of the challenges with a pure leisure destination is that you become highly seasonal so getting a greater balance of cultural attractions which are typically outside of school holidays is very important for all of our businesses. But extreme focus on leisure brings extreme seasonality.

HOTELIER: We are also noticing governments focusing on the MICE sector more than ever before. How lucrative is that market for you as hoteliers?

MARIA: Dubai is doing enough when it comes to exhibitions, but I think we could do so much more to get large MICE events. You were talking about us being a leisure destination, so we need to make us a more a business destination, get large conventions.

ABDELLAH: We only have a half a dozen big conventions that fill up the city. It does us a lot of good.

MARIA: There are so many medical conventions going on all over the world all the time and I don’t see that here.

STEFAN: Large conferences, say in Dallas or Hong Kong, have a lot of backing from the tourism offices, with the airlines and hotels together. As hoteliers we can come up with rates in different segments, but this needs a lot of involvement from the government because the convention bureau has to bring them.

MARIA: This has to be co-ordinated, and most of the hotels need to come on board and promise at a specific time that they give away a certain amount of rooms to a limited amount of money as well — because the problem is, whenever we hear as a hotelier that a conference is coming, what do we do? Rates up. And we scare off our customers instead. Getting them here and not triple our rates — that’s kind of short-sighted.

ANDREW: The challenge we have is convention space. There’s pretty good exhibition space but when you start looking at big associations, like bar associations or medical associations where you’ve got 5,000 or 8,000 delegates coming, sometimes with partners... Those are massive investments because they spent most of the time empty. But when they are full they make a lot of money for the city.

STEFAN: I’m dealing with my neighbours who are soon to open and we are trying to work together. It’s amazing if you put the facts together. We have more than 1,000 rooms and 23,000m2 of banqueting space together… these are the hard facts. Combined we have more than 100 sales people on the road to sell this product — five hotels and 100 people in the sales team. There is a lot of synergy but it’s not easy; it makes sense for clusters to create demand.

ANDREW: This goes back to the challenge of the actual convention and meeting space. So you’ve got the rooms, but do you have a single space that’s big enough? You can’t get 2,000 or 3,000 people in a room.

HOTELIER: Obviously there’s a lot of supply coming on to the market in the run-up to Expo 2020 — what are your thoughts on what will happen post-event?

STEFAN: The build up to Expo 2020 is very well thought out. What will also bring a lot of business is the 2022 World Cup in Qatar.

KAI: Expo 2020 is a major milestone, but it’s obviously not the end. The way Dubai has marketed it really speaks for itself. It’s just another stepping stone in the long-term development of the UAE.

ABDELLAH: There’s enough demand generators that will be on the market to sustain that business, build that momentum and continue on it.

ANDREW: There’s a lot of, anecdotally, supply coming on that’s aimed at [people coming here for the Expo]. If the supply does come on to satisfy that short-term demand, it will be a cliff on the other side in terms of rates and occupancies across the city unless a plan is in place.

MARIA: The Shanghai expo was quite a good one, and with regards to 2010 the demand increase for hotel rooms was 13% over the Expo year.

ABDELLAH: The UAE has always worked miracles, and there’s one thing they excel at: destination marketing. They make so much hype about an event that the whole world knows about it.

ANDREW: The Expo will certainly add a lot of demand for the city, and we’re in very long-term businesses.

ABDELLAH: And it’s happening as we speak. All these demand generators are being built: theme parks, the museums and the water canal in Dubai. There are so many things in the works, that when we get these 27 million tourists, they are going to be repeat visitors. For our hotels, we have the highest repeat ratio that I’ve ever seen in my industry life. In some hotels it’s up to 35% return ratio. Why do people keep coming back? Because it’s a great experience.

MARKUS: I fully agree. There was probably a similar discussion 15 years back, and we’re doing well now.

HOTELIER: Coming back to daily operations, the conversation around outsourcing is growing louder. Any comments to share?

STEFAN: Outsourcing is very interesting. Traditionally in this part of the world we carry a lot of fixed costs. Business demand is not so lavish anymore so we have to look at how to convert fixed cost to variable cost, and give this to outsource companies. People say the quality is not there, but that’s not true.

ANDREW: Yes, that’s changing rapidly.

STEFAN: All of Europe is doing it and I think it’s a hot topic because we’re very resistant to doing it. But in order to improve performance, this will be the next thing.

ABDELLAH: We’ve never really had to resort to outsourcing because of the high level of occupancies in the UAE in general. Once you start running occupancies below 50% then it would make sense to outsource most of the departments. Right now, it’s not worth it. Now we do security and cleaning the public areas.

ANDREW: Which are semi-variable anyway. There are players coming into the market which are able to offer high quality housekeeping service.

ABDELLAH: Do the costs add up? It would cost you less to have a permanent employee, than an outsourced one.

ANDREW: Not necessarily.

MARIA: It depends on the variance in occupancy. When you have fluctuations, that’s when it makes a difference. Too much fluctuation, I’d rather outsource than have it myself.

KAI: On the flip side, we have to also look at alternative revenue streams. We are all seeing the impact of Airbnb, but then you have some of those hotel operators capitalising by being the preferred spa partner for the Airbnb. Yes it’s bad for us, but it’s happening. So how do we capitalise on that?

MARKUS: Going back to third-party and outsourced contractors, we also have the responsibility for the people working for us, whether in-house or outsource. We do the utmost to see that the staff is happy. You want them to be part of the hotel or brand spirit, and how do you achieve that? We should look deeper than just the cost per hour. At the end of the day, you integrate them like your own team but that’s tricky.

MARIA: The issue I’ve had with outsourcing companieswhen I used them previously, is that customer satisfaction was higher when I had my own staff rather than outsourced. That is hard because they will clean the room and so on but their heart and soul is not with the company. You never have that sense with belonging with outsourced staff and guests feel that. That’s the risk, not the quality itself.

ABDELLAH: You need to insist with the outsourcing company that they give you the same people because you have to train them to your standards.

HOTELIER: What about food and beverage in terms of revenue stream? We have heard that an estimated 1,600 new F&B outlets will open in the UAE over the next three years, along with people saying hoteliers can’t do restaurants.

ANDREW: There’s no doubt that food and beverage businesses fail at an alarming rate. So what’s the balance? Are we gaining 1,600 but losing 800, or are we gaining 1,600 net? It’s an interesting question, but particularly independent restaurants fail at a frightening rate. The market will decide how many F&B places you need.

MARKUS: What’s really dictating the food and beverage scene is Generation Y for the next few years to come. It’s sometimes hard to keep track of that because when we do F&B development, it takes place three or four years before we open the hotel.

For Gen Y, it’s the experience, and you can see that coming to the Middle East. For them it’s also a social currency to talk about good experiences or restaurants.

For my hotel, we looked at a free-standing approach. So the people I hired are not hoteliers, they are from the free-standing market. We also looked at the outside customer, because the in-house guests will come anyway. Those restaurants who are getting great chefs in and servers and then fading it out, they will not survive.

ABDELLAH: We came to that realisation that you can either be a hotelier or a restaurateur. As an owning company, we are going to lease space as much as we can. Let me ask you this, if you’re in London or Paris and you want to entertain friends for a night out, would you take them to a hotel? The immediate answer is no — you don’t even have to think about it. You take them to an independent restaurant. Here in the UAE there weren’t any standalone restaurants earlier. When we saw this emergence of independent restaurants then it became clear to us that we’re not restaurateurs. Zuma in Dubai makes more money — and this is a fact — than a 200-room hotel. And that is a trend now, you have more and more independent restaurants that are licensed and they are taking business away from the hotels. The only way that hotels can counter-attack that is by putting independent restaurants in their hotels.

ANDREW: It’s the tyranny of the brand. We have a brand, whether it’s Radisson or Kempinski or Jumeirah or Viceroy. The brand is more important than the individuality so as soon as you start having individuality, you start moving away from the brand. It’s an interesting discussion for us. Is it good to have a brand? You have all these mergers going on and the emergence of a mega-brand, and certainly in F&B and in hotels, the landscape is changing. People are looking for individual experiences, which brands tend not to be able to give. That doesn’t mean they can’t but they are more restricted in F&B and the guest experience. So the question is: are brands a good thing?

KAI: But the perception of people, you mentioned Europe — who goes for brunch to a hotel? They don’t, also because of the perception that the hotels are going to be expensive, which is not necessarily the case.

STEFAN: If you look at how we approach food and beverage now, we only talk about food and beverage costs — the only number which interests the owner. The question is, for independent restaurants, are food costs and beverage costs the main objective? Because for hoteliers, that is. The fact that we’re having this discussion shows that we are challenged in food and beverage, and there must be a different approach to what we did over the last few years, because this is not the recipe for the future.

MARKUS: There are some of us who came from food and beverage, but general managers are all trained on room flow, RevPAR index, more than how to activate and create experiences. The experience is the key for the future. The time is over when you have a static menu for two or three years and don’t change anything.

ANDREW: This is interesting because it goes back to hotel design, which is designed with X number of rooms and X number of restaurants. Maybe the reality is that we keep the X number of rooms but keep X minus restaurants. Because as cities evolve, there’s no doubt that the independent restaurant scene will always be more vibrant. There is the wrong focus in many hotels where we have too many restaurants. Hotels haven’t caught up.

OTHER TOPICS RAISED:

• Women in leadership and how this affects the industry
• Loyalty programmes and the reasoning behind them
• Concession business at MICE events
• TripAdvisor’s new hotel ranking algorithm and how hotels should understand this
• The industry’s mergers and acquisitions
• Using Whatsapp as a room reservations tool