As we enter 2020, the hospitality market in the Middle East is poised for great change. Performance shifts over the past couple of years have established a new reality, with a normalising of room rate amid continued supply.
When compared globally, hotel performance in the Middle East is still strong and the transition we are witnessing is not cause for alarm; it’s something most of us were expecting. However, it is high time operators accepted this new operating environment and reviewed their business models accordingly. After all, with 434 projects accounting for 119,991 rooms in construction in the Middle East according to STR’s latest data, competition is only set to increase.
Since taking over as CEO of Millennium Hotels and Resorts in August 2019, this review has been top of my agenda. As a hospitality professional, I run a business and as such, I need to ensure it is a business bold enough to challenge traditional mindsets and legacy systems for the success of our partners – the owners of the hotels we are proud to operate.
New operating models
Currently, our MEA operating portfolio comprises 45 hotels, totaling almost 15,000 rooms. With 32 hotels in the pipeline comprising 15,000 rooms under construction in MEA, we have one of the largest pipelines in the region and when it comes to brands, the Millennium Hotels and Resorts brand tops the leaderboard, with 7,251 rooms in the pipeline, according to STR. It’s an ambitious pipeline that we are committed to delivering in partnership with our owners, but it brings with it great responsibility.
Our planned expansion will take us to close to 80 hotels in the region within the next few years. As a business, we need to be prepared to manage our new supply within the ‘new normal’ of today’s operating environment. We cannot rest on past achievements or rely on the success of the fabulous destinations in which we operate to drive demand. We need to future-proof these hotels – to protect the investment of our owners, the longevity of our brands and the experience of our guests.
In 2020, we are taking several steps in order to do just this. Over the past year we’ve been reviewing our operating models and discussing how to make them more efficient. We’ve looked at our flagship operations in global cities, from London and New York to Singapore and Beijing, and learned lessons from them by challenging the traditional ways of working and establishing new systems that are more streamlined and cost-effective.
For too long, the industry has been copying what was initiated many decades ago. These structures were very successful for a long time, but to continue to follow them without looking at alternative options that better apply today would be foolish.
Some job titles now are obsolete, and we must reshape the structures that were built. Analyse each role and each management level in our hotels. Ask ourselves, ‘what is the output of each job?’ ‘What does a ‘supervisor’ really do?’ For example, we are eliminating the role of housekeeping supervisor in our hotels. If we train our housekeeping attendants to do their jobs, we don’t need to police them. We need to do our jobs properly when it comes to training and development, and trust our people to deliver.
In some brands, we have gone even further. Our Studio M hotels only have three department heads: one takes care of operations; one is in charge of back of house; and one oversees everything commercial. The results are amazing; teams are smaller but guest satisfaction scores are higher. Our people are more empowered and therefore, more efficient.
These steps have been pilot projects that have been hugely successful. So now, we’re ready to implement change across the board.
These changes are part of our commitment to bringing success to all our of stakeholders – our people, our guests and our owners. Ultimately though, it’s the latter that are pivotal to the new strategies that we implement.
Our owner-centric philosophy is critical to the success of our existing and upcoming hotels. It’s something we are well versed in; Millennium Hotels and Resorts owns and operates most of its global hotel portfolio, which totals 145 hotels comprising 40,000 rooms worldwide. Through our unique owner-operator model, we know how to maximise the value of the asset, create bespoke properties and services and deliver the unique essence of our brands.
The major adjustments we are seeing in some markets in the Middle East, mean owners are more focused than ever on business success and therefore, so are we. It’s our job to protect the value of their assets, even if this means sometimes compromising on some standards that hoteliers have historically cast in stone.
As AHIC predicts with its theme of ‘Transform Tomorrow’, change is needed and only with bold, fresh approaches to our businesses and an honest commitment to our owners, will this industry continue to thrive.