The evolution of branded hotel supply in the Middle East has been on an upward curve in the last 25 years, according to data from Colliers International. The UAE hospitality sector’s direct contribution to the country’s GDP has increased by 138% in the last 10 years according to Knight Frank Dubai’s 2018 market update.
Construction in the Middle East is also up 36.3%, compared to the same period last year by April 2017. An STR report states there are 386 properties currently in construction, totalling to 114,456 rooms in the pipeline, 115 in final planning stage, with 28,044 rooms and 177 properties in the planning phase, with 47,797 rooms.
Out of the total rooms in construction, Dubai takes up the biggest chunk with 41,846 rooms making up 41.2% of the existing supply. While in Saudi Arabia, Makkah leads with 25,619 rooms in the pipeline (71.4% of the existing supply), Riyadh has 6,244 rooms in construction and Jeddah is adding 3,952 rooms to its existing supply. With Dubai gearing up to receive more than 25 million tourists during Expo 2020, Colliers International forecasted five-year compound annual growth rate (CAGR) for hotel supply, expected to increase by 10.% in the UAE, 13.5% in Saudi Arabia, 11.8% in Oman, 5.7% in Bahrain and 3.5% in Kuwait. For hotel occupancy rate, the five-year forecasted CAGR is 2.7 percentage points (pp), 7.4pp in Saudi Arabia, 3.7pp in Oman, 3.6pp in Bahrain and 3.9pp in Kuwait.
According to the World Travel and Tourism Organisation, travel and tourism investment in the GCC in 2017 was US$34.3b billion, or 9.1% of total investment. It should rise by 5.5% in 2018, and rise by 6.6% per annum over the next 10 years to US$68.5 billion in 2028, which is 12.3% of total. The excess hotel supply in the region naturally fuels more jobs in the hospitality sector, making it one of the fastest growing sectors in the Middle East. So how does all this growth momentum affect hoteliers in the region? To find out, Hotelier Middle East launched its tenth annual Hotelier Middle East Salary Survey where respondents gave insights into pressing matters such as career growth opportunities, pay scales, employee satisfaction factors, and also shared views on the changing fiscal structures such as value added tax (VAT) and its probable influence on the buoyant market.
JOB SATISFACTION
On the Hotelier Middle East Salary Survey, on a scale of one to 10, respondents rated an average of seven for job satisfaction. 30% of the survey’s respondents said they are actively seeking new opportunities within the market. TRI Consulting director Christopher Hewett says that based on the pipeline data from TopHotelProjects, hotels are expected to add 300,000 jobs in the region in just direct employment. 26% of respondents said they’re not looking for jobs, but would not mind changing jobs if the right opportunity came along. While 25% of respondents said they’re not particularly looking for jobs, but would move within the company if the right opportunity came along. 18%, however, expressed complete satisfaction in their current roles.
Crowne Plaza Dubai general manager Mrad El Khoury says he’s not surprised that people are looking for new opportunities. “I am not surprised by this feedback. The UAE and the Middle East region continues to be one of the most dynamic and exciting markets in the world, with many new hotels coming online across all tiers. There are great opportunities for personal development for hoteliers across the board, from entry level to senior positions. In addition, millennials now dominate the work force within the hospitality industry in this region,” El Khoury explains.
El Khoury’s point on millennials dominating the market is backed up by the fact that 20-somethings, whether hoteliers or professionals in another industry, widely accept job hopping as a norm. In a study conducted by global staffing firm Robert Half, 75% of employees between the ages of 18-34 said they viewed job hopping as beneficial, while only 59% of workers between the ages 35-54 and 51% of those 55 and older saw switching jobs as beneficial.
The Hays GCC 2018 Salary and Employment Report highlights the attrition rate of 28-29%, a rather high one compared to global standards. The report further stated that the two biggest challenges for HR teams are employee engagement and staff retention in 2018.
Despite high attrition rates, when asked how inclined they were to recommend their employer to others, out of a scale of 10, 22.34% of the respondents on the survey rated their employers a full 10, while 23.39% of the respondents rated their employers between one to five. Hoteliers responding to the survey revealed that besides a salary, they are compensated with a pay package that includes additional benefits. 87.36% of the respondents revealed that accommodation or additional allowance for it was part of their compensation, 85.06% received annual air tickets to visit home, 80.46% got medical insurance, 67.82% received food & beverage discounts or allowances as hospitality professionals and 43.68% received commissions or bonuses, on top of salaries.
Other incentives include company car or allowance for one, allowance for school fees for hoteliers’ children, gym membership, tips, moving allowance and reimbursement of phone bills. However, while a high percentage of the respondents are clearly loyal to their employers, the same numbers don’t translate when it comes to job security. 24.47% of the respondents said they felt “less secure than they did 12 months ago” in their jobs while 14.89% felt anxious about keeping their jobs and 5.32% of the respondents confided that they were already informed that they were at risk of redundancy at the company. A substantial number of respondents also expressed dismay at stagnant salaries, which didn’t correspond to rising living costs in the Middle East.
Among the respondents, a majority of them earn between US $1,000 to $3,000, with 24.14% revealing a pay raise in the last six months, and 19.54% had received a raise between one to two years ago. On the contrary, 39.08% respondents stated that they had never received a pay raise. Fortunately, 90.8% of the respondents had also not received a pay cut in the last 12 months at the time of the survey.
VAT
While a majority of hoteliers may not have suffered a pay cut in the last year, UAE and Saudi Arabia, Middle East’s two biggest economies brought the value-added tax or VAT into effect on January 1, 2018. Other GCC countries like Oman and Kuwait opted to delay the implementation. The VAT adds a 5% tax on endconsumer products but salaries remain unaffected by the new levy. Despite that, because of the rising costs of living in the region, the new tax has negatively affected the “attractiveness” of the once lucrative no-tax job market.
The 5% levy, still lower than the global average of 15%, is very new to the region. Considering yearly inflation and lack of pay raise to adjust to the new costs that residents will incur, has surely led to disgruntled hospitality professionals. On the survey, when asked if VAT will affect salary and standard of living, there seemed to be a consensus on the fact that with 5% increase in consumer costs but lack of salary upgrades, there would be notable changes and that VAT implementation is sure to affect the lifestyle standards. One respondent said: “Absolutely will. When no changes are being made to my current pay, but the cost of living increases, it is time to make sacrifices.”
Another respondent agreed with the sentiment and noted: “VAT will definitely have a negative impact on inflation. If basic salary is not adjusted annually as per inflation, it will negatively impact purchasing power and reduce Dubai’s attractiveness for an expat.” When asked about how VAT is affecting hoteliers, Fairmont Dubai recruitment manager Mary Redman told Hotelier Middle East that her colleagues are being pre-emptively cautious in the wake of VAT. “Our colleagues are definitely more cautious and mindful of spending on their personal goods now, hence I believe that not to affect their standard of living,” Redman says. However economists have rebutted that
VAT will have long-term benefits not only for the country but will also eventually boost hiring. Harish Bhatia, a management consultant at Korn Ferry Hay Group told The National during an interview that the lack of prior experience with regards to tax in the region has been the root cause for overwhelming confusion and anxiety over its impending long-term effects on the industry. “We’re all making a big deal over VAT because it’s a new tax and we’ve never played with the word tax in this part of the world, but it was inevitable so the government has other sources of revenue,” Bhatia said. According to Dubai government authorities, the first year of VAT is expected to draw US$3.26 billion while in the second year, the net amount is expected to rise to US$5.4 billion and ultimately boost hiring in the region.
EMPLOYEE RETENTION AND TRAINING
And with stagnant salary concerns and issues with job satisfaction, how is the industry going to build a steadfast, loyal employee base? AccorHotels senior vice president, talent & culture MEA Rachel Moosa says the effort has to start from the company via a cultural transformation. Moosa highlights the “qualitative shift” required after all the business changes AccorHotels has undergone in the past 24 months, such as acquisitions and growth, brand strategy and expansion into different business streams.
By implementing employee engagement programmes like the Heartist, AccorHotels reneged the focus from just profitability onto actually developing the talent resource and delivering its brand promise of ‘Feel Welcome, Feel Valued’ to its employees, according to Moosa. El Khoury says that establishing a career path for employees from the beginning encourages retention. He said: “Within Crowne Plaza Dubai, as part of a reputable hotel chain and owning company, we look after all our team members. Delivering a proper career path for employees is very important and plays a major role in employee retention, hence our turnover ratio is very low compared to the industry.
“Crowne Plaza Dubai has an extensive range of over 100 training programmes which support our brand ethos of creating environments, which give colleagues ‘room to grow’ and career safety. We have a clear career path internally within the hotel, and externally throughout the company, as it is expanding in the region. There are multiple assessments which have been put in place to ensure colleagues can plan their personal development and career growth,” he explains. This rings true in the Hotelier Middle East Salary Survey too, as 45.74% of the respondents said their company had made them aware of a career road map or development route within the organisation as part of their employment.
El Khoury also points out that recognition is also integral for employee engagement. “We have a key focus on team and individual recognition which we believe is critical to retaining employees; and provides our team members huge opportunities to grow and develop. Every month teams and team members are recognised for demonstrating behaviour that matches the company’s brand promises,” he says. Besides engagement and recognition, incentives, according to Hilton vice president human resources Middle East, Africa & Turkey Koray Genckul, play a big role as well.
“At Hilton, we firmly believe that providing great rewards and career opportunities helps us recruit and retain team members. Last year, we launched our new team member value proposition, Thrive@Hilton. Through initiatives such as building in time to recharge during the work day, sabbaticals and modern tools for increasing recognition, we enable team members to flourish in body, mind and spirit. In addition, we offer world-class rewards and benefits such as the Team Member Travel Programme which allows all team members discounted rates at Hilton hotels. Last year, we introduced a minimum of 12 weeks’ fully-paid maternity leave in the Middle East and Africa,” Genkul relays.
MOVING UPWARD
The hospitality sector in the Middle East is growing rapidly in certain parts such as the UAE and Saudi Arabia while other regions are strengthening their pace too. But, this very growth, Hewett says, has created a shortage of employee force as the supply of jobs is tilting the scale more than there are takers for it. “It’s hard to generalise, however this appears to be the case in individual markets in the region, particularly in the GCC where the hospitality sector has been booming. Markets such as Saudi Arabia and UAE are experiencing significant shortage in supply of highly skilled/qualified staff due to exponential growth in supply there,” Hewett points out.
The shortage might have something to do with the high turnover rate as well. 49.06% expressed they would leave the Middle East if they had the opportunity to move, while 32.02% expressed that they were keen to move to the UAE. But all things considered, the hospitality sector has no dearth of ambition. For the second year in a row, Marriott International took the top spot for the company employees would love to work for. 46.43% of the respondents want to shift to the hospitality giant, which has revealed plans to expand its presence in the Middle East and Africa region by 50% within the next five years. This would increase Marriott’s MEA portfolio to nearly 370 hotels.
With a motivated hospitality workforce ready to jump ships to reach higher, what’s the secret to building a loyal employee base? Moosa says it’s pretty simple: “It’s not rocket science. It’s about being good, kind, caring and respectful. It’s about what we give and not necessarily about what we get. It’s about how we treat people, care about people and this is at the heart of what we do.”
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