Rezidor Hotels (Sweden) Plans Big for the UAE
25 Feb 2010 - After a bumper year in 2009, with 36 hotel openings across Europe, Africa and the Middle East, Rezidor Hotel Group plans to keep up the pace of expansion despite tough market conditions.
The Stockholm-listed, Brussels Head quartered group’s portfolio of five brands: Radisson Blu, Country Inn, Missoni, Park Inn and Regent currently feature about 400 hotels and over 80,000 rooms in operation and under development in more than 60 countries. It runs 25 hotels in the Middle East and plans to open up to 15 hotels, with seven in the UAE alone, in the next several years. With a stake of 42 per cent, Carlson Companies are the largest shareholders of Rezidor.
President and CEO Kurt Ritter said Dubai will get the lion’s share with four new openings, but added that going forward the emirate should turn a bit cautious on granting new licences to avoid a possible collapse of room rates.
“I think it would be good if they (Government of Dubai) get a little stricter with the permits,” said Ritter, a hotel industry veteran who has spend about 50 years of his life running hotels across the world.
And he is no stranger to the Gulf region. Ritter’s first visit to Dubai was in 1979 when the most popular tourist spot for Europeans was the Chigaco Beach, where now stands the sprawling Madinat Jumeirah complex. He then went on to become the general manager of the Radisson Blu Kuwait, the group’s first hotel outside Europe opened in 1981 at the start of the Iran-Iraq war.
“When I came here in 1979....there was no infrastructure — nothing. But now you see out there. It must be some really clever heads behind all this. Any Gulf state could have done that if they would have put their minds to it. Because it is not that Dubai is more beautiful or less beautiful. It was just the perseverance and the plan, the strategy. They said we are going to be one of the world’s top metropolitan and they succeeded very well.
“But I think they should now be cautious. When I say we want to go with four new hotels, it is because if I don’t do it somebody else would. But if you really ask me with a hand on my heart if these four hotels are needed, I probably would have a hard time saying yes. But they are coming and let’s just hope that the price doesn’t collapse because if it does a lot of people will be hurt.”
Ritter’s words of caution cannot be taken lightly. Ritter was born in the room of a hotel his parents used to run in the Swiss Alps. So from a very young age he had made up his mind to be an hotelier. He has been at the head of the Rezidor Hotel Group for more than 20 years. Honoured as the longest serving CEO in the worldwide hotel industry, he has been with the company for 30 years. Under his leadership, Rezidor has become one of the fastest growing hotel companies in the world. Winner of two Lifetime Achievement Awards, by respectively the prestigious MKG Group in 2008, and International Hospitality Investment Forum-IHIF in 2004, Ritter is considered one of the most respected and accomplished leaders in the global hospitality industry.
He has been part of a lot of changes in the industry and has witnessed several booms and busts through his career. He believes that the downturn brought about by the global financial crisis was probably the worst.
“It came very brutally, it came very quick,” he said adding even though the world had started talking about the downturn in late 2007.
Ritter said that RevPAR (revenue per available room) growth started to thin out in the summer of 2008. And when in October RevPAR growth went down to zero, the group rolled out a cost managing plan—“hedging for turbulence”. Still in November RevPar fell to minus five. “Thanks God we had started that hedging for turbulence and that somehow brought us through the bad times. But with all the downturns that I have seen in the early 90s...this it was never as deep. You can follow the charts of RevPAR and see that it has never been as low as now.”
The year 2009 was tough throughout but a slight recovery in occupancy was witnessed in December and January which Ritter said usually is taken as a signal of the beginning of an upturn. “It’s not that the prices go up all of a sudden. It’s the demand that go up first. That’s one indicators and the other indicator that we have in the last year is that we have much more on the books.”
Ritter said the company plans to keep its focus on emerging markets, especially in places like Russia, Asia Minor, Africa, and the Middle East and will continue to seek more franchise and management agreements.
In the UAE the group recently had two openings; a 397-room Radisson Blu Hotel, and an adjoining 204-room Park Inn, both on the Yas Island coinciding with the 2009 Formula 1 Grand Prix.
The four hotels planned in Dubai will include two Radisson Blu and two Park Inn. Ritter said given the excess supply of five-star and above hotels in the Dubai and most of the Gulf region, the way forward was to increase mid-tier offerings like the Park Inn.
“When you take a parallel with the US or Europe we see that the mid-market is very much grounded in the American continent and Europe too. And I am sure it will grow here as well because there is really an abundance of 5-star hotels in this area. Everybody is 5-star.
“But I think even in the Middle East the modern businessman doesn’t need anymore 40 square metre room just to sleep for eight hours, or bathrooms that are like ballrooms. It’s simply too expensive. So our goal is to grow very strongly with the Park Inn brand here which I think has a good chance.
KhaleejTimes
