Aleph Hospitality, despite being headquartered in Dubai, has significantly grown its hotel portfolio in Africa with further expansion on the horizon.
Bani Haddad, Aleph Hospitality's managing director, said the company has a renewed focus on the Middle East, which has become more responsive to its business model of white-label, also known as third-party, hotel management. Aleph has the target of 50 hotels in operation and in its pipeline by the end of 2026.
Aleph Hospitality's new chief operations officer, Jad Shamseddin, will concentrate his efforts on Saudi Arabia, where he has experience from previous roles as managing director of hospitality investment firm Al Hokair Group and CEO of Al Ajlan & Bros. Hospitality, both of which are based in the Saudi capital of Riyadh.
Haddad said Aleph’s management model is based on three pillars: creating healthy bottom lines, providing contract flexibility and allowing owners to have a say in all aspects of operations.
“Flexibility extends all the way to the potential exit. We will not make it difficult," he said. "Who am I to say, 'No, you cannot sell'? Owners are used to a number of clauses in the typical [hotel management agreement]. We say we are far more accommodating and balanced."
Hotel owners deserve a seat at the table when forming an operations strategy, and they bring many benefits, Haddad said.
“Owners want control over what goes on in their hotels. They want a say, and they will have a say, and we reply, 'Yes, of course, we are happy to work with you.' Owners have more connections than we do in many situations, so they can open the doors for us, too,” he said.
In relation to expenses such as energy costs, hotel owners, especially in Africa, know the local energy representatives, which is a scenario often replicated for other costs.
“One might laugh and smile at these examples, but it is $10,000 here, $5,000 there, and soon there is a million [dollars] saved over the year,” he said.
Africa
Haddad said Aleph becoming a hotel-management player in Africa was not by design, but “opportunities came, and it is where we grew.” He added the situation in Africa is good and getting better.
COVID-19 has been present in Africa, but it has not resulted in the high numbers of death per capita and hospitalizations experienced in Europe and North America, Haddad said.
“Africans during COVID-19 were easy going with the pandemic, quite comfortable traveling domestically or to neighboring countries. Some countries took it more seriously, but it never lasted long and did not have the crippling effect it had elsewhere,” he said.
There have been other problems, notably the civil war in Ethiopia, which looks to be winding down.
“In Ethiopia, things have been much better since December, since then occupancy has been very strong. Kenya is picking up again,” he said.
He added the country has fully reinstated its visa system.
Aleph’s portfolio of 10 hotels includes four in Ethiopia’s capital of Addis Ababa, four in Kenya, including three in capital Nairobi, and two on the Tanzanian island of Zanzibar.
“Zanzibar is a little more affected due to the Russian market,” he said, referring to very new capital and transportation restrictions stemming from the Russian invasion of Ukraine.
“For Russians, flights have stopped, and that will have a big impact,” he said.
Haddad said the regional and domestic travel demand developed during the pandemic has been fascinating.
“It has been an eye-opener. Some destinations, those traditionally, heavily reliant on international business, have developed offers for the domestic market,” he said, referring to his two major markets of Addis Ababa and Nairobi.
He added Aleph enjoyed a degree of first-mover advantage in those two cities and beyond in Africa, helped with cluster offices in those two capitals.
“There are 15 hotels under development, and, yes, we have that first-mover advantage, with people on the ground and a lot of word of mouth. We have owners with multiple properties,” he said.
Those 15 pipeline properties include three more for each of Ethiopia and Kenya. Other hotels are coming to Liberia, Morocco, Mozambique, Rwanda and two hotels in Uganda.
An agreement with IHG Hotels & Resorts to open the 386-room Crowne Plaza Trade Center Dubai on Sheikh Zayed Road has been on hold since before the pandemic, but the hope is that it, too, will happen soon.
Three of Aleph's hotels in Kenya are owned by a subsidiary of the Red Cross.
Hotel brands have represented the opportunities for the firm, Haddad said.
“Sixty percent of leads come to us from the brands, which are all bullish for Africa and far more inclined to franchise than to operate directly,” he said.
As the pandemic chartered its course, local populations recognized that travel and tourism are one sector, if not the top one, providing communities with employment.
One of Haddad’s Kenyan hotels, the 68-room Boma Inn Eldoret in the Rift Valley is connected to a hotel school.
Coming Home
Haddad said there have been a few reasons for Aleph Hospitality not having a presence in the Middle East, notably in its home market of the United Arab Emirates.
“One is that as a startup, there has never been enough time to chase up opportunities, while, secondly, until COVID-19, it has been a challenge to get owners’ acceptance of the franchise model. They have been too used to having brands operating the hotels directly," he said.
“Brands had the regional offices, had the bandwidth, but maybe six months before COVID-19 we did see the market started to change. As performance declined, the market became more mature and there was an increasing need for granularity and a different way of operating to maximize returns,” he said.
Aleph Hospitality is considering hotel projects in several markets in the Middle East.
“We have opportunities in Saudi Arabia, Dubai and the UAE. We need time and focus, but owners and investors have seen our model is extremely beneficial in terms of control, flexibility and a better bottom line,” he said. “Dubai is having an exceptional Expo, and anyway there is always something going on there."
Source markets shifted during the pandemic, and now will shift again because of Russia's invasion of Ukraine.
“The drop in Russian trade will be balanced by the pent-up demand coming after the pandemic from other markets. Airlines are saying their numbers of bookings in April have reached record highs. They are calling it ‘Revenge April,'” he said.
Haddad said everyone has learned quickly how to develop new source markets.
Saudi Arabia is another focus, he said.
“We are actively in negotiations with several properties there,” Haddad said, noting that Aleph will open a hotel in the country by the end of 2022.
Africa will remain very important, he said.
“Africa is doing exceptionally well, but performance there always is subject to political instability or the simple fact of having an election, during which countries can freeze," he said.
“Kenya has upcoming elections. Uganda, with its discovery of oil and the infrastructure around that, will have a positive growth period,” he added.