DUBAI, United Arab Emirates—The Middle East is experiencing profound change, both in terms of geopolitics and tourism, and the region’s hoteliers and hospitality insiders are ready for the new challenges and opportunities that come with such change.
Throughout last week’s three-day 2017 Arabian Hotel Investment Conference, participants in the “Catalysts of change” speaker series outlined their businesses’ strategies for the region as well as their observations, including reasons for optimism and concerns for the Middle East’s place in the global landscape.
Hotel development
Despite the uncertainty surrounding the Middle East, Choice Hotels International President and CEO Steve Joyce spoke of the right opportunity for his company to make its debut in the region.
In Middle East markets, starting with the United Arab Emirates and Saudi Arabia, Choice aims to develop a certain property type with what Joyce called a “moderate-tier pricing component.”
We’ll develop “value-oriented hotels with 20 to 25 employees and low construction costs resulting in high margins, with simple, high-quality breakfast and complimentary Wi-Fi and with no frills (guests) do not want,” Joyce said.
He also confirmed Choice will begin franchising in the region.
“We have a multidevelopment agreement in Saudi, a pipeline of seven signings, and 15 sites we have control of,” he said. “In the first run of things, maybe 20 to 30 hotels, which is a good considering the initial agreement was about a year ago.”
Hilton also has its sights fixed firmly on the Middle East, according to President and CEO Chris Nassetta. During his keynote address, Nassetta noted the significance of the region hosting the Dubai Expo in 2020 and the World Cup in Qatar in 2022.
“Events like these present incredible opportunities for a destination to shine in front of a global audience, and we’ve seen how they help to increase tourism to an area for years to come,” he said. “As a global company, we certainly look at regional and global trends to inform our development strategy, and it’s also important that our brands have core standards that are recognizable in any location.”
Travel bans and unemployment
Both Joyce and Nassetta admitted that, as leaders of global hospitality companies, they have concerns about the Middle East.
For Joyce, a major issue is the rhetoric from U.S. President Donald Trump’s administration concerning travel bans for nationals of certain Middle Eastern and North African countries.
“We were the only hotel business to write a letter to Trump about the attitude (a travel ban) sets,” he said. “The question we asked was whether he understood the full implications. The situation requires a reasonable, balanced approach. It’s not a matter of having less safety, and in that regard, I think this is an argument Europe is largely winning.”
Joyce said he is also worried by the entry of companies like Apple and Google into the travel industry.
“Always look at who is getting between you and your customer,” he said.
Nassetta’s chief worry is global unemployment among young adults, which has been underlined during geopolitical upheavals such as the Arab Spring.
“The hotel industry is ignoring millions of millennials. … We have to make sure that youth understand the opportunities,” he said. “(Young people) need a line of sight to a better future, as all they see is technology and social media in a 24-hour news cycle.”
Social change needed in the Middle East
Also speaking during the conference’s “Catalysts of change” series was Her Royal Highness Princess Basmah bint Saud bin Abdulaziz al Saud, director of INSEED Holdings and director of Global United Research & Analysis.
Basmah bint Saud said INSEED is focused on creating jobs to change the view of both indigenous and overseas populations. As an advocate of improving women’s rights and civil rights in the Middle East, she added that change bodes well for the region’s hospitality industry.
“We have to concentrate on social economics that lead to projects that overcome Middle Eastern and global insecurities,” she said. “Firstly, civil laws are needed, then platforms. Now for women it is not the time to lean in, but to fully stand up in the light. … Tourism is ignoring women, while terrorism is not.”
INSEED’s regional business includes the Les Artistes and Dibage restaurants, and Basmah bint Saud aims to open the restaurants in hotels and resorts to showcase the best cuisine, art and culture of Saudi Arabia. She added the smells, tastes and visual joys of regional cuisine and culture are paramount to a better regional and worldwide appreciation of Saudi and Middle Eastern values.
Technology advancements
Personal computers, smartphones and the internet are crucial to global connectivity, and James Whittaker, distinguished engineer and technical evangelist at Microsoft, told AHIC attendees that no industry, let alone the hotel industry, can make ironclad investment decisions in technology. The speed of technological advancement is just too fast, he said, with businesses spending capital to install tech that is already becoming obsolete.
“Always follow the software developers,” Whittaker said, “because they reach the future first.”
Hoteliers recognize the significance of performance data, which will lead to opportunity as well as notable changes, he said.
“We are reducing the world to data,” Whittaker said. “What (hoteliers) need to do is to discern intent and identify data to resolve that intent.
“You can deny the future all you want, but remember the future doesn’t care,” he added.