CEO INTERVIEW: Ramdan's revelations

Oct 14, 2009

Roya International chief executive officer Ahmed Ramdan.

Road to recovery

Ramdan refers to the impact of the global recession as like falling from a “cliff” not a “slope” for Middle East hoteliers. He says that as a result of the sudden drop, they haven’t yet had chance to plan their strategy coming out of the recession.

“What they did is they tightened their belts, stopped the project, suspended the project, possibly cancelled the project, but they have not yet thought strategically about what to do differently. It has been less than a year — on its anniversary or the minute we see sign of recovery you will see people think consciously or unconsciously as to how they can do things differently,” says Ramdan.

And on this he is adamant that yes, people ought to do things differently.

“They ought to because I think we did lots of crazy things in hospitality throughout the region here. Buildings were designed badly, not designed for purpose, buildings were put up very fast — nobody thought of sustainability, nobody thought of the future.

“And number two, because business was so good people did not negotiate a good deal with their product or negotiate a good deal with their bank. They did not think of a ‘plan B’ if ‘plan A’ didn’t go well after two or three years. Now, gradually, you will see people are thinking is it viable, what if? Before no one thought of what if?”

“Not only will owners and operators think differently, but bankers also,” continues Ramdan.

“Bankers are already thinking differently; lenders are quite different now than a year ago,” he says.

“They are more cautious; they are looking at viability. They are not going to finance you 90% any longer, they might finance you 60%, 65%. The risk department will analyse your building — are you spending cost effectively?

“This to me is a goods sign, bankers are caring and worrying,” he says.

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CONSULTANT’S CORNER

Another thing to change for the better as a result of the downturn, says Ramdan, is the fact that more people will consider investing in third party services.

“The market is coming up and I can see a few individuals doing what I do, but we are receiving more calls and more enquiries. They realise they benefit if they go to a consultant,” says Ramdan. “Still, it tends to be very traditional here; they think an architect can do everything. That mentality still exists; to change it will take time,” he observes.

Another positive outcome is the fact that owners are becoming more sophisticated in their management contracts, adding exit strategies and termination clauses into contracts.

“So many milestones are being thrown in on operators; that was not the case before. This will increase further. You will soon realise that owners are going to dig deep into the financial performance of their building; before they were making money, it didn’t matter,” says Ramdan.

Asset management is also likely to become more popular, he says, (see page 101), as is project management.

For this reason, Ròya has recently added this service to its portfolio. “We have created a project manager especially for hotels,” says Ramdan.

Already in demand at projects such as the Talal Liwa, this is surely set to increase Ramdan’s workload further — he is already overseeing 42 projects at various stages.

Somehow, we don’t see this phasing him, do you?

RÒya International has four divisions: