Hospitality on the rise

Wolfgang M. Neumann has been President and Chief Executive Officer (CEO) of the Rezidor Group of the Carlson Rezidor Hotel Group since 2013. Prior to that, he served as Chief Operating Officer and Executive Vice President of The Rezidor Hotel Group from May 9, 2011. Apart from that, Neumann also worked with other giants in the global hospitality world for over twenty years. His company Carlson Rezidor owns Radisson Blu Addis Ababa located in the kazanchis area in partnership with a local company, Emerald Addis Hotels PLC. This week, Neumann was in town for the African Hotel Investment Forum (AHIF) 2015, and according to the ECO, the Radisson Blu in Addis Ababa might not be the only Radisson to operate in Ethiopia in the future. In fact, he pointed out that two brands from the Carlson Rezidor might grace the local hospitality market soon. Asrat Seyoum of The Reporter sat down with him for an exclusive interview. Excerpts:

The Reporter: Carlson Rezidor Group is a strategic partnership between a US-based Carlson and the Scandinavian Rezidor group. Can you elaborate on how this partnership works and functions in the market?

Wolfgang M. Neumann: Rezidor Hotel Group is a listed public company on the Stockholm Stock Exchange. We run hotels in Europe, Africa and the Middle East. That is our territory. We have 340 hotels in operation and under development. That company is owned 51 percent by Carlson in America. So, they own 51 percent of our shares. Carlson is a private company in Minneapolis. They own Carlson Wagonlit, the world’s biggest business travel agent. The two companies [Rezidor and Carlson] have a strategic partnership and globally that gives us 1,300 hotels. Carlson runs the hotels in the Americas and Asia Pacific. Rezidor runs hotels in Europe, Africa and the Middle East. Hence, it is called the Carlson Rezidor Group.

When you look at my business card it says Carlson Rezidor but I am the president and CEO of the Rezidor Hotel Group. Rezidor operates four hotel brands – Quorvus Collection & Luxury, Radisson Blu, [Radisson] Red and Park Inn. Carlson has the Park Plaza and Country Inn brands.

Of these different hotel brands, on what basis do you choose a specific hotel brand to a specific market? For example, in Ethiopia you have the Radisson Blu.

Our two core brands are the Radisson Blu and Park Inn. Radisson Blu is for the above scale and Park Inn is in the mid-market segment. In Africa, we have a clear strategy to establish Radisson Blu as the leading above-scale brand and we want to be in all capital cities and key financial cities. For Park Inn we want to have scaled and focused growth in key countries. Radisson Red, which is a new brand, is more for the younger generation. We hope to see some five to ten hotels in Africa. We have just signed in Cape Town our first Radisson Red. And Quorvus Collection & Luxury is only for big capital cities where the opportunity exists for a luxury hotel.

Which brand do you want to expand in Africa more aggressively especially from the core brands?

Mostly Radisson Blu. Radisson Blu is our core brand on the African continent. Today, we have 30 hotels in operation and we have 35 in development in Africa. I would say about 65 percent of those are Radisson Blu. Radisson Blu is the fastest growing brand on the African continent.    

How do you see the recent dynamics in the hospitality industry in Africa? We are seeing international brand hotels coming to the continent. How do you explain this trend?

As you said, there is a lot of momentum with different hotel companies coming to the continent. We have been actually in Africa for many years. We have believed in Africa for a long time and now there is more and more interest because Africa as a continent is gaining more attention. That is because the African continent is a continent of opportunity. There are fifty-four countries which are developing at different paces but very fast. There are a lot of infrastructure investments in the different countries, there are natural resources, tourism is growing, there is political stabilization and democracy is developing at a great pace.

It is a very rich continent which has a huge youth population, very talented and eager population that wants to grow, learn and work. So, there are a lot of positive changes. All these factors come together and make it a very appealing opportunity and add to that the beauty of the countries because so many of these countries are not just business destinations but also leisure destinations. We at Carlson Rezidor, still the leading hotel company in the continent with the biggest pipeline of hotels to be added, very much believe in the continent, have for a long time and seen the potential in the continent.

Potential is one thing, but what about in terms of actual rewards for your investment? For example, you have been in Ethiopia since 2010 and quite a long time in South Africa, where your first hotel in the continent was opened. Is the African market rewarding?

Extremely. Why? We work with local partners. Wherever we are we work with local partners. So, we enjoy great local partnerships. In South Africa, when we started, it was the first local partnership which we established and we still have the joint venture. So, it is rewarding because of the local partnerships. It is rewarding because we participate in the growth of the countries.

We create employment, we help employees and staff to develop their potential and we do a lot in terms of responsible business by giving back to the local communities. That is rewarding from responsible business perspective. And it is also rewarding from financial perspective because the hotels are doing very well in general. There are differences always because some countries do better. Now you have a slowdown in Nigeria, for example, because of the decline of oil price and in Egypt because of political tensions. But they always rebound very quickly. So, it is an extremely rewarding but, may I also add, it is challenging.

It is not easy because doing business in Africa takes much more patience. You need to understand the African continent but more importantly you need to understand the differences in the fifty-four countries. Ethiopia is very different from Nigeria and Nigeria is very different from South Africa. Today, we operate in 27 of the 54 countries. We have a very good presence in Africa and a very good understanding of what it takes to be successful and to have this reward in Africa.

In Ethiopia, you call yourself the “first-class business hotel”. Can you explain that concept of a business hotel?

Radisson Blu is an above-scale brand. It is mostly business hotels. We have leisure hotels also, resorts. But, Radisson Blu, in essence, is business hotels. Here, for example, in this hotel we have about 80 percent corporate, business and NGOs customers. Only 20 percent is leisure. So, it is a typical Radisson Blu, city center, great location, hotel which is geared towards the business traveler. It provides all facilities that an international business traveler is seeking in a good location. We are not a luxury brand. Sheraton here is, obviously, a luxury hotel. We position ourselves as an above upscale business hotel. In many African cities we have similar patterns where it is mostly for business travelers. But we just opened a hotel in Mauritius. There it is totally different. It is 90 percent leisure. So, we have the exceptions but in essence Radisson Blu is a business hotel.   

Do you have other plans in the pipeline in Ethiopia?

We absolutely believe in Ethiopia. It is the second most populous country in the African continent. It is a country with very good and solid economic growth. It is a country which is very stable. People live together in this country in a very harmonious way. Whenever I come to Ethiopia I always enjoy being here. It is the headquarters of the African Union. So, in Addis Ababa we believe we could have more than two more hotels. And as the leisure and tourism industry develops more we also see us going into secondary cities in Ethiopia. There is definitely an opportunity and interest to grow here and it is one of our ventures which we watch very closely on the African continent.

Will you be looking to other brands?

Yeah. The first priority would be to have a mid-market hotel.

You’ve been here for the past five years now. What are the major challenges for the hospitality industry in Ethiopia and what would you like to see changed?

As I said the country is developing very positively. The city is developing very positively. I think there are still some supply chain challenges like getting supply easily into the country. Getting international product you need for an international hotel into the country, logistics and customs, is a challenge. Currently, we have also a challenge of making sure that our hotel has the best possible talent.

Other hotels are opening; you have the Ramada, Marriott and small and local hotels opening. They are all pinching staff from us. But we have a very loyal workforce because we do a lot in terms of talent development. When we opened this hotel, I think in the whole management team only one was a local. Today, we have 305 employees, we have only two expats – the general manager and the EA [executive assistant]. The rest are all locals.

So we have done a lot to develop local people. We participate in youth career initiatives from international tourism partnerships. We take, always, underprivileged team members on to train them for six months to introduce them to the tourism industry and we retain about a third of these people. So, we have special women in leadership initiative to bring young women on the African continent to leadership positions. We have a real ethos in Rezidor to develop local talent and I think that differentiates us. That is where we need to put our focus on because new hotels are opening and even NGOs are pinching our staff here.

Can you elaborate more on the Youth Career Initiative, I think it is part of Rezidor’s social responsibility?

The program is through the International Tourism Partnership. I am the chairman of the partnership which unites all the big international hotel chains to be very active across all responsible business initiatives. And local talent development is a primary focus through the Youth Career Initiatives – YCI.

This program started a few years ago and runs across various countries in Africa, and Ethiopia is a founding country. Various hotel companies are now participating to take young employees who have no understanding about the hotel industry whatsoever, very often unemployed. It also gives attention to women. We take them on and introduce them from the scratch and learn about the hotel business and how it is professionally done for six months. You talked about rewards. That is an example of incredibly rewarding work. They love it.

You’ve talked about international hotel brands coming to Ethiopia. How do you see the competition in the hospitality industry in Ethiopia? Do you see a tough time ahead?

Whenever competition opens, it is challenging. But competition is also positive because it brings attention and business to the city. Radisson Blu here has a very good reputation. When we look at our guests in this hotel, it is extremely high. We have established ourselves as a very successful business hotel in a great location.

Obviously, we constantly have to improve and redefine our product. We are always eager to become better and see new things we can do. That is a constant strive which we need to do to stay competitive. Addis is a leading international city on the African continent. The African Union is here and you have Ethiopian Airlines which has developed amazingly. It is a fantastic, great, international carrier. So, the city is doing well. A lot of conferences are happening here. So, I am not worried about [the competition] at all.

Different from many sectors where international companies come in as foreign direct investors, the hospitality industry seems to be interested in working with local partners. Why do you think that is?

Because local businessmen want to invest in their local country and you have locals who are proud to invest. And they want to have an international operator. That is the case with most of our hotels. There are very few exceptions in Africa where we do not work with local partners. Because we want to understand the local dynamics and the business network better. We are an international company. When we grow and have various hotels in the country we get to know the market. But when we come in we need a local partner who shows us the way. The local investors, who very often does not know anything about the hotel business, approaches [an international operator] and says I have a plot of land, I have a building, I want to open a hotel can you help run it for me? That is how the partnership is formed.

Is this something peculiar for the hospitality industry?

Yes. However, not every international hotel company does that. We, almost without exception do it and we have been very successful.

Some studies have indicated that Addis is one of the most expensive destinations in terms of hotel room rates. Why do you think that is the case?

You are referring to the STR [STR Global is a hospitality research firm] statistics. There should be a bit of caution with the statistics. First of all, not all cities are included. Secondly, when we compare, for example, some countries and cities they are less expensive than they used to be. I am thinking of Lagos, for example. Lagos was always the most expensive city. Nigerian currency has devalued by some 20 percent. Business in Nigeria is down. Now, yes Addis is one of the cities which has a higher rate. But why is that? Because it is the capital of the African Union, conferences are happening here. So, there is good demand and with good demand there is a higher prices.

With the coming of many international-branded hotels, do you forecast these prices going down?

Hopefully not.

Let us talk about the recent hotel rating that was assigned to all the major hotels in Ethiopia a couple of months ago. Radisson Blu received a Four-Star rating. Do you think the rating standard meets the global standards? How do you see it?

I have two thoughts about that. First of all, I think it is good that the Ministry of Tourism introduced this rating for the hotel industry. That gives some consistency to all the hotels in the country. You now have a standard which applies to all the hotels and know exactly what to expect. So, that is good.

Radisson Blu is Europe’s largest above-scale brand and the leading above-scale brand in Africa when it comes to development. Radisson Blu is extremely well-known. And the customer knows what Radisson Blu is – an above-scale hotel. From Carlson Rezidor perspective, we are more focused on communicating to the customer that ‘you come to us and stay at our brand and with that brand comes a certain experience than with a certain star rating’.

Across the world we operate in 72 countries. In these countries, four-and-five star ratings is certainly not the same. In many countries, they apply different standards. But Radisson Blu always stays the same. So, we are not too worried about these star ratings. Because what is much more important for the customer is the brand.

For the hotel industry in this country, particularly in a developing Africa, it is good that the ministries are rolling that out. Now, you can have a discussion that should the hotel have a four or five star rating. The local team is discussing that with the authorities here and I am not worried about that.