Radisson Hotel Group continues to be on track for ambitious growth and development across global markets. Earlier this year, the group announced its outlook for the coming year to become one of the top three hotel groups in the world.
We spoke to Elie Milky, Vice President, Development, Middle East, Pakistan, Greece and Cyprus, Radisson Hotel Group, for insights into the brand’s growth in his markets.
In between travels to Riyadh, Greece, Cyprus and a speaking opportunity in Abu Dhabi at GIOHIS, where he was invited by the Cyprus Investment Board to speak on behalf of the country, Milky shares his personal ambition with TTN. “I want to make a difference this year, with a more balanced portfolio of signings geographically as well as product wise - I want this year to stand out more than other years.”
“There will be more headlines coming out of Saudi Arabia as we enter new markets – primary cities, secondary cities and holy cities as well”
– Elie Milky
So far, the key signings and openings in Q1 have been in line with the regional VP’s goals. The group’s eighth hotel in Riyadh, Radisson Blu Hotel, Riyadh Convention & Exhibition Center opened doors, and Radisson Blu Hotel & Residences, Islamabad, was announced.
The group’s Radisson brand continued to be the fastest growing upscale brand in EMEA with the signing and opening of new properties in Greece, Saudi Arabia and Pakistan. The signings of Radisson Hotel Islamabad Multi Gardens, Radisson Hotel Bahria Town, Islamabad and Park Inn by Radisson Serviced Apartments Islamabad also underline Milky’s ambitious plans for his markets.
“We remain optimistic about the future of hospitality, and we are on track to reach our goal of having 100 properties in the region in the next three years and 150 hotels, resorts and serviced apartments by 2030,” he said earlier this year. “We will continue driving significant growth and further expanding our footprint across key markets, most notably KSA and the UAE, to positively contribute to the region’s thriving tourism and travel sectors.
More than 50 per cent of this pipeline are conversions, Milky explains to us. “By conversions, we mean rebranding existing hotels whose contracts are running out, branding an unbranded hotel or signing the deal while the hotels are under construction already.
“When you have opportunities like this, the likelihood of these hotels opening up is much higher than signing a greenfield project, which has development risk. While we continue signing newbuilds for strategic deals, for us to minimise that risk as we also focus on opportunities that are more likely to open in the short term, and more likely to open at all.”
Milky reiterates, “Our pipeline has already been updated and cleaned up - when we say we have a certain number of hotels opening, these hotels are actually going to open.
“In the past, and what we see in the market with some other operators is that we that their pipelines may seem bigger, where, in fact, at least half of those projects are on hold and may never materialise.”
Saudi Arabia make up 50 per cent of the group’s portfolio in the region, a just cause for the group’s recently opened dedicated office in the kingdom. “There will be more headlines coming out of Saudi Arabia as we enter new markets – primary cities, secondary cities and holy cities as well.”
Milky is all for the franchise model as a means to expansion but it is not a one-size-fits all solution, he explains. “We were always reluctant and careful with how we franchise our brand, but we’ve started to accept it with the right partners.
“Of course, for us operators, we make more money from management contracts but franchise contracts are easier to sign. So we have to find the balance, the right partner, the right opportunity, the right locations, strategic partnerships before we go ahead.”
In Saudi Arabia, for instance, despite our volume of properties, we have no franchises there because we prefer management contracts there. With the rise of reliable white label operators and a culture of owners developing a management structure to be able to run franchise properties, we are now looking at select opportunities in the Kingdom, but nothing is imminent. We will only franchise in Saudi with a reliable partner.
“In other markets we are looking for franchises, but they are still a minority of our portfolio.”
Franchising will pick up as white label operators such as Aleph Hospitality and Valor Hospitality do a fantastic job, he says, adding that most of the group’s properties in Greece and Cyprus are franchised under reliable partners who are currently operating contracts for other brands. Key UAE properties such as Radisson Blu Deira Creek and Radisson Blu Hotel & Resort, Abu Dhabi Corniche are also franchised.
Meanwhile Milky’s focus on Radisson’s brand expansion means he cannot ignore the group’s economy brands such as prizeotel. “We’re looking at prizeotel but only with strategic partners who want to roll out 10 or even 20 properties, whether it’s under a management contract or a franchise. These are small properties in the budget category and promise high GOP margins by creating cluster operations and efficient back of house space.
“This is a very strong value proposition for investors and we are just waiting to roll this out across Saudi Arabia, where we are seeing high interest in this brand.”
* Find Radisson Hotel Group on stand HC0630