Industry Update
Opinion Article30 January 2020

Let us restore our focus on the fundamentals

In the lead up to the 2020 Arabian Hotel Investment Conference (AHIC), we asked a number of industry partners how they are transforming their business for tomorrow

By Abdullah Al-Abdooli (B.Arch.), Chief Executive Officer - Marjan

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Al-Abdooli (B.Arch.)

The Arabian Hotel Investment Conference 2020 is being held at a time when significant changes are sweeping the hospitality landscape of the world - and the region. The state of flux that hotel operators face is driven by several variables and there are no easy solutions to address them.

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Every hotel operator, developer and owner agree on one truth: It is time to reboot our thinking and look at unlocking the true potential of the hospitality sector with fresh perspective. And that is why I believe that the key to success is to embark on a transformation drive that begins not tomorrow but today.

To underpin why such a significant transformation is important let us look at how the hospitality landscape has shifted in our own markets. The focus on luxury properties is increasingly giving way to a more diverse mix of hotels, including the rise of the midmarket segment. This stems from the fundamental premise that the profile of the 'typical traveller' has changed dramatically.

More millennials are travelling and just as much as they seek unique experiences, they also prioritise on the value they expect to receive from any hotel offering. They are digital-savvy, check out peer reviews, compare costs, and make decisions that they believe justify value-for-money. For the hospitality industry, this means having an offering that is not just appealing to the new travellers but also designed and operates to high levels of efficiency to sustain healthy bottom-lines.

The impact of digitisation is another significant force of change, with customers seeking digital-first experiences. From pre-booking to check-out and after-stay loyalty, today's guests seek the convenience of digital technologies. This is as much an opportunity as a challenge for the industry: An opportunity because it enables the industry to achieve a new level of operating efficiency, and a challenge because smart digitisation is also capital intensive, and not many hotels, more so if you are not part of global chains, have the luxury of extra resources to digitise their operations.

A third key factor that has a significant impact on hotel operations is the changing nature of developer-operator relations. The advent of online travel agencies is challenging existing revenue sharing models, and hotel operators are increasingly under pressure to channel sales through own channels, even as OTAs claim a heftier share of the bookings. More developers turn to building in-house competencies to drive hotel operations, while the larger chains are fast consolidating - even as they multiply the number of brands they operate - to secure economies of scale.

In this confounding market scenario, hotel investors need to be assured that their investments will secure the expected returns to continue to help build the hotel infrastructure. This is where industry transformation - both internal and external - gains significance. And this must start with the very fundamentals of our business model: Let us cut out the jargon and flab, and focus squarely on the task at hand.

We need to continue to build a robust, profitable, sustainable industry, and for this we must put our thinking caps on from a customer perspective. Every touch-point of our operation must be aligned to create value for customers, and this can be meaningfully achieved only through in-depth market studies.

At Marjan, we have strategised 2020 to ensure that we support our hospitality partners and new investors in our flagship development, Al Marjan Island. We provide extensive consultancy, including insights on tourism and travel market trends, as well as detailed feasibility studies. These help them in their decision-making process covering every aspect of hotel development and operation.

This has enhanced the confidence of our partners in us, and we are recording exceptional interest from global investors to build and operate hotels in Ras Al Khaimah. Our hotel pipeline is growing; it is varied and caters to the new tourism and travel trends, and we see from the success of our partners that when the fundamentals are addressed, succeeding and sustaining the growth come naturally.

With the emirate underlining its position as the GCC Tourism Capital offering varied attractions that appeal to every segment of travellers, we have a fantastic location that hotel investors and operators can leverage to succeed.

And as more investors seek Ras Al Khaimah to build their portfolio, our counsel for them is to bring in a transformative model of business that addresses today's challenges by covering all fundamentals for success. And these are: Choosing the right location, deciding the perfect positioning, ensuring world-class design and build quality, integrating digitisation and putting customers at the heart of everything they do.

Related Event

AHIC 2020

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Madinat Jumeirah Conference & Events Centre — Dubai, United Arab Emirates
event information

Abdullah Al-Abdooli (B.Arch.)

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