Explaining hospitality

The announcement of the construction of a multimillion dollars investment in the hospitality industry has dominated news headlines last week. This huge investment will realize the construction of two brand and upscale hotels to be built in the capital Addis Ababa and the rising tourist city in the Southern Region, Hawassa. Marriott Hotel which is planned to be built in the vicinity of Bole Medhanialem Cathedral in Addis Ababa is one of the two new entrants of the hospitality sector while the construction of Hilton Resort and Spa which will take place in Hawassa is another. These two highly valued properties are owned by Sunshine Business Group, a local firm which is well known in the Ethiopian construction sector. The announcement of the two new hotels last week coincided with the inaugural ceremony of another Marriott property in Ethiopia which is also owned by Sunshine Business Group—the first Marriott Executive Apartments in Addis Ababa. Alexis Kyriakidis, president and managing director of Marriott Middle East and Africa Region, and his staff was in Addis during the week to attend the inauguration of what they said was the first Marriott Executive Apartments in Africa. Henok Reta of The Reporter sat down with Kyriakidis to talk about Marriott’s increasing presence in the Ethiopian market and trends in the hospitality sector in general. Excerpts:

The Reporter: What are the market signals which drove you to come to the Ethiopia hospitality industry and establish your first Executive Apartment in the continent?

Alexis Kyriakidis: First of all, I would say that 2015 has been a great year for us. We completed the first year since our acquisition of Protea, the South African based hotel company, and as a result of that we became the largest hotel room operators in the continent. So, we completed the first year of transition since the acquisition; and over the past six months since I was based here overseeing the transition process, we have opened six hotels in Africa. We have been very successful in signing new deals; particularly in Nigeria we signed three deals; and we also sealed other deals in South Africa. We are really exited about the growth prospect of Africa. Today, we have more than 30,000 rooms, 111 hotels and if you look at how many hotels we have under construction that will grow to nearly 150 properties by 2020. That means that our operation in Africa is growing at an average rate of 20 percent per annum. This is a very a health growth rate. I therefore see your country as one of the major destination for our presence in the continent. I can give you several reasons for this. For starters, the country’s growth and development has been among the top ten in the world and its safety and infrastructure boom is also another significant factor for us.

What are the specifics requirements when you select a local partner like Sunshine Business Group?

I think what we are trying to do at Marriott is really to come up with a win-win situation with our owner partners and investors. We really spend more time in reviewing the credentials of our partners. Thinking about the location, thinking about which brand is best positioned to deliver to our owners and maximize their return for their investment. I might think of the luxury brand and when we do our market analysis, we may find that it’s better to go with one of our upper scale brands. So, we will focus on giving a greater return to the owner and the investment. Hence, a lot of work goes into the time before we formed the marriage.

Is this the only consideration when selecting Sunshine to be your investor in Ethiopia?
Well, our partnership with Sunshine is one of the strongest in Africa; and we dealt with a lot of issues together. When you enter a country with only few of the internationally-branded hotels in the market, learning should take much of your time. Sunshine and Marriott have worked very hard to learn from each other and finally came up with such a wonderful property. We also have another Marriott coming out in the next two and half years; and I think it would be one of the fastest and most efficient construction projects that Sunshine have ever undertaken. So, it is a greater relationship we have with Sunshine and we look forward to grow further with Sunshine in Ethiopia.

What are the major benefits from this investment to the country?

MEA is designed to create a comfort zone for both long and short term visitors and guests who will stay in the hotel. And such facilities are very powerful in terms of attracting the kind of executive who wants to come to Addis and want to stay here for several weeks and months. It can just be taken as home away home. On the other hand, the Marriott that is under construction will serve corporate guests that come to the country to explore potential investment opportunities in the Ethiopia. In terms of job opportunities, our properties here are expected to employee some 600 workers on a permanent basis.

What were some of consideration you had to take in to account before coming in to Ethiopia?

Yes, we do take in to consideration a range of issues whenever we enter a new market. Safety and security are greater concerns to us. We have been following these issues very closely in Ethiopia over the past few years and we have witnessed that they are kept well here. But, we have other details too. For example, we have to make sure that the market is yielding and that there is no tension with regard to the turnover for our partners. We are concerned with the location and others related issues around the properties. These are some of the demands from our side to seal a successful deal everywhere.

Hotel customers, especially expats who are based in Ethiopia still complain about the quality of the services that is being delivered by the star-rated hotels including those bearing universally recognized brands like yours. What is your take on that?

I think international-brand hotels are still young in this country and many of these concerns are arising from this reality. Regarding Marriott, the concept of hospitality services is exceptionally high for all of our brands. Within Marriott, we are known for developing human capital; most importantly the local talent. We might have to begin with deploying our expat staff to train new employees and help them adapt to the trend and the trademark services within Marriott. We can train people who we recruited from the local labor market. We take our employees somewhere and bring them back more equipped with the advanced ways of service delivery. We are trying to staff our hotels with 100 percent local talent. So, we still have some work to do in terms of getting our staff to the best of our standards. I was very pleased to see our Ethiopian associates greet me with a wonderful Ethiopian smile when I arrived at the front door.

What have you observed since your arrival in Addis and specifically in the hospitality industry?

I am very happy to be here along with other Marriott associates. We are here to see the growth phenomenon that Ethiopia is experiencing at the moment; and we are very happy for what we have seen. Marriott has a long standing track record in working in partnership with companies, governments and associations worldwide in a typical mutually beneficial approach; and I think our marriage with Sunshine has helped us to get to know the country and its great people. We can also see that the country has a bright future ahead. The one amazing thing I saw here is the Ethiopian charming smile and I think this is indeed half way towards excellent services in hospitality. How many times have you ever been to some place where the service is perfect but the smile is just not there? And frankly, there is something not appealing about such places. I can honestly say that this is a value that Ethiopia could share with the rest of the world.

Recently, a Kenyan newspaper has reported that Ethiopia’s capital is most expensive in terms of hotel rates per night despite the industry’s poor quality and existence of few numbers of brand hotels. What is your take on this?

I think Addis Ababa enjoys the average highest rate for hotel rooms per night; and that is due to its significance in the continent and the level of visitors which come to the capital on a regular basis. It’s a diplomatic city with several international organizations having offices there. It is also a hub for conference and exposition and it attracts more guests than many other cities in Africa. Its young brand hotel experience is a real situation to observe, but it will never be a problem for it in the coming ten years as the city is being seen as a flash point to attract international brands. Our brand has understood the factors and will be dealing with it as much as possible. If you ask me how much our executive apartment would charge per night I would say it can be a USD 250 per night.

Isn’t that a bit expensive since hotels in Cairo and Johannesburg are charging not more than USD 100 per night on average?

I said it already. Addis is becoming to be a flash point at the moment and more importantly it’s not having more option in the brand hotel service. I know how significant and profitable these markets are in Africa including Abuja, Cape Town, Algiers, and Nairobi but Addis is a new frontier this time.