Interview: Francois Kassab

With over 18 years of operational, financial and senior experience, François Kassab joined Millennium & Copthorne Middle East and Africa as chief financial officer and chief investment officer in May 2015 and was appointed as chief operating officer in January 2016.

In his current role, Kassab assumes responsibility for the strategic development of the group, overseeing its extensive expansion plans across the region, including the mid-market brand Studio M.

MID-MARKET EXPECTATIONS

“In general we see an appetite in the Middle East and Africa for mid-market growth,” Kassab begins. “It is actually not a new concept in most of these countries; many hotel companies have had mid-market [brands] here, but now it is really starting to grow.” Kassab is keen to point out that Studio M has been operational in Singapore since 2010, with great success. “What you can expect from Studio M in this region is a lot of innovations, it is a young and high-tech brand,” says Kassab, noting that the first property in Dubai is now expected in 2017.

Originally the Studio M brand was scheduled for launch in this region in 2014, to which Kassab commented: “Studio M is a very important brand for us, so we have spent considerable time researching and planning, to ensure we build a brand that stands out from its competitors and targets the correct market segments. Since 2014, we have been working hard to ensure we launch the brand successfully in the market and we are now very excited to be in a position with several projects in construction in UAE, Oman and KSA.”

He adds: “Based on the strong interest we have had from investors we are confident that Studio M will continue to make a significant impact in the market and we are excited to have further announcements later this year relating to the expansion of the brand throughout the Middle East.”

The importance of the mid-market sector to the overall strategy of Millennium & Copthorne is no secret, Kassab says: “It is important because today we see the demand coming from this sector, especially from a development point of view. The number of [mid-market] hotels you can bring to a market is different, there is more demand because you can put more properties in a city, when compared to the locations of luxury and four- and five-star hotels and resorts.” He adds: “This is because the number of people who can afford the mid-market is much greater, and from cost of development point of view it is cheaper to build.”

MARKET GROWTH

From a strategic point of view, Kassab highlights the transition a market goes through before the mid-market sec-tor becomes developed: “In our experience in hospitality, you start in the upper five-star sector, then the mid-market will follow; for example we are now expecting Saudi Arabia to demand more and more mid-range hotels, and we expect the appetite from investors will come too – especially we have seen this trend already in Oman.”

In response to the anticipated market growth, Kassab points out that Millennium & Copthorne is keen to take ad-vantage of new markets: “We have more mid-market properties planned in Riyadh, Muscat and Abu Dhabi too.”

Understanding your target market is cental to the strategy in place for Studio M, Kassab says: “In every source market you will see a diversity of guests with different needs; you have to cater to all of them. It’s also about the age and the capacity to spend, so in EU and USA you will see a journey of a consumer moving from budget, to mid-market, to luxury as people grow through life.”

He suggests this varies based upon usage and the requirements of each guest segment, noting corporate travel-lers and families need different things and their length of stay changes too. “We expect our customers to be loyal to the brand and to move through our product offerings as they move through life.”

PRICE VERSUS QUALITY

Studio M is actively aiming to give guests in this region a quality experience and to provide services that meet the needs of mid-market, according to Kassab. “So what we define as quality at Studio M is a comfortable bed, a good shower experience, all bathroom touch points must be very good and up-to-date technology like high-speed Wi-Fi – this is becoming the standard now.”

Kassab continues: “But the size of the room is not what the guest at Studio M is interested in. He or she is interest-ed in nice functionality, colouring, experience; the Studio M guest doesn’t define high quality by the size of the room, but by the quality of the experience. “So quality is not compromised in Studio M, we are directly addressing the quality requirements of this particular guest, it’s just a different requirement.”

COMMUNICATION

The impact of the millennial traveller on the mid-market sector has led Kassab to develop a strategy of decentralisation that allows the entire Studio M team to communicate with their guests on a personal level. “Our product is designed to capture the needs of this customer segment. They are very social, so we developed our in-telligence on how to communicate with them in a tech-savvy way.”

He adds: “Social media is the key strategy to market [Studio M] to them – they like to speak about their stays when travelling and use technology to communicate this with their peers; it’s a very tech-driven generation. We are not only planning this, we see this happening in our other Studio M properties, like in Singapore – that has been opera-tional more than seven years now and is very successful.”

SOCIAL MEDIA

Speaking about the need for constant social media monitoring, as a method of analysing and charting the success of his online communication strategy, Kassab adds: “We have an internal team to take care of this, they are our social media ambassadors – they’re very young and very social and they can implement the strategy more effec-tively.”

However, he stresses that hotel general managers will continue to directly answer to their guests, whether on so-cial media or face-to-face, adding: “This is not centralised system; it’s coordinated by each hotel individually.”

He adds: “We would utilise video in social media, it’s absolutely part of it, not just YouTube, but Snapchat too. It is very much about using the right communication vehicle for the audience. That is not to say Facebook is used uni-versally across GCC, UAE, Oman and KSA, they actually require different social media strategies – we have devel-oped our communication strategy according the each individual country.”

LOCATION

Speaking on the topic of mid-market locations, Kassab keenly adds: “You will always see a continued success of Dubai in this market.” He continues: “Doha is asking for it too, especially with the World Cup coming in 2022; they will certainly have arrivals coming who want mid-market hospitality options.”

Commenting specifically on the growth in the Kingdom of Saudi Arabia, he says: “In Saudi Arabia the demography speaks for itself, the scale of internal [mid-market] travel there is big too, so much so we are now entering sec-ondary markets there. It’s a very busy period with signings, openings and launches, we are hugely excited and very happy to be going through an era such as this.”

SAUDI ARABIA

With Studio M scheduled to open in Madinah in 2018, Kassab offers his opinion on how the Kingdom will be im-portant to the success of Studio M. “Saudi is defined a key market for us, as the mid-market sector is growing very fast there. Among the biggest in number of hotels will be located there once opened. We are going to many cities and planning other openings in secondary cities, this is very important to our strategy, especially in religious cities, like Makkah and Madinah, these are key markets for the sector.”

“When we enter into a market for a secondary city, we will typically start with our flagship brand, then immediately after the investor is comfortable, we go in with our mid-market brand.”

Saudi Arabia is focused on tourism and visitor growth according to Kassab, so much so they are reviewing the visa processes and enabling visitors to visit others cities more easily upon arrival into the Kingdom.

Kassab notes that facilitating such growth in the Kingdom is assisted by the new airlines opening up, and the addi-tion of new routes, especially from budget airlines: “It is growing, and it’s all growing together,” he adds.

But there are challenges waiting for the mid-market hotelier in Saudi Arabia, as Kassab explains. “All countries have their own regulations that you must understand,” he begins. “So we have our corporate office in Jeddah and we plan to increase management there. Because we are increasing the number of the properties we have in Saudi, you need to have knowledge of how to operate there; with that [knowledge] it all becomes less difficult.”

As Studio M embarks on a new phase of expansion in the Middle East, Kassab identifies this local knowledge as being the differentiator between Studio M and its competitors entering the market.