Ras Al Khaimah: At the world’s largest hotel company, the president of its Middle East and Africa (MEA) division says that regional instability is one of his greatest concerns.
Alex Kyriakidis, regional head of Marriott International, a hotel operator with a market capitalisation of around $50 billion, told Gulf News in an interview on Wednesday that while the company takes a long-term view on such issues, he was nevertheless preoccupied with the region’s tensions.
“If the question is whether or not geopolitics concerns me, yes it does. I will tell you: One thing I worry about when I go to sleep at night is geopolitics. And when I wake up in the morning, the one thing I worry about is geopolitics,” Kyriakidis said.
Despite this, the top executive said that he was confident in the company’s diversification, and its experience in handling crises.
“I think Marriot has always taken the view that this is a long-term industry. If you look at our presence in Egypt which is now 38 years old, that country has gone through the most incredible rollercoaster in terms of pure politics, change of presidents … And yet, throughout that entire life cycle of 38 years, we continue to be profitable, to give returns to our owners, and employ our associates,” he said.
In a wide-ranging interview, Kyriakidis discussed the $13.6 billion (Dh49.9 billion) merger of Marriott International and Starwood Hotels and Resorts, the recent announcement regarding the unification of the pair’s rewards programmes, the group’s expansion plans, and the downward pressure on hotel rates across the region.
Last week, Marriott said that in the next five years, it planned to increase its portfolio in the region by 50 per cent, debut additional brands, as well add 30,000 new jobs.
The move will amount to more than 80,000 rooms across 21 brands in the region, although Kyriakidis says that he actually has plans for many, many more hotel rooms.
In total, Marriott has 32,000 hotel rooms currently in its pipeline for the region, spread across 143 hotels.
“That means, if you take our operating rooms, which are 56,000 today, and add the pipeline, you get 88,000,” he said.
Describing the group’s recently refreshed five year strategy, Kyriakidis said: “I am getting everybody’s attention and focus on taking that number [of 88,000], and increasing it organically by 40,000 by 2022,” taking the total from 90,000, to nearly 130,000 rooms in total.
Not satisfied, however, with 130,000 hotel rooms throughout the region, Kyriakidis says that he would like more, the majority of which would come through acquisitions in the next few years.
According to the hotel group, the majority of the new rooms would be located in the UAE, Egypt, and Saudi Arabia.
Following time spent with the Saudi Crown Prince Mohammad Bin Salman in New York, Kyriakidis said he was increasingly bullish on the kingdom’s vision, shrugging off concerns about oversupply in key markets such as Jeddah. “They’re very, very serious. They’re putting their own money to launch these tourism projects, and that’s incredibly positive for us.
Regarding Egypt, Kyriakidis praised the stability of Abdul Fattah Al Sissi’s regime, saying that it was “bouncing back phenomenally well,” with a return of Gulf investors buoyed by the country’s reliability.
And in the UAE, he remarked that the more developed nation “still had some way to run.”
With virtually zero branded hotel rooms, Kyriakidis conceded that Iran remained an “attractive market,” but as an American company, he remained prohibited from doing business in Iran.
Competing for market share
If that were to change, he would be “keen … to participate” in Iran, he added.
On the decline in room rates, Kyriakidis said that despite the complaints from hoteliers, this was a natural progression as more hotels entered the market and dropped their prices to compete for market share.
He pointed to strong revenue per available room rates (RevPAR), an important industry metric, and positive occupancy rates in Dubai, despite increasing supply, as indicators that the sector was in good health.
The hotel veteran also noted the rise of branded residences: “These residences are becoming a popular was to de-risk luxury hotel investments. You sell the residences and borrow less money, it works very well,” he said.