Amplifying Success: Radisson Hotel Group's Elie Milky On Rethinking Business In "The New Normal"
"One of Radisson Hotel Group's core beliefs is 'we are many minds, with one mindset'– this time has most certainly proven that we need to exercise this philosophy and stand together, as we are all faced with common challenges."
As Vice President – Development for the Radisson Hotel Group in the Middle East, Cyprus, Greece, and Pakistan, Elie Milky has been tasked with growing the global hospitality enterprise’s various brands (i.e. Radisson Blu, Radisson, Park Inn by Radisson, Radisson Individuals, Radisson RED, and Radisson Collection) in the markets that he governs.
In an interview with Entrepreneur Middle East, Milky offered a glimpse into how the Group has been navigating the business landscape after the effects of the global coronavirus pandemic- and how it’s poised to steal the show in the months and years ahead. Excerpts from an interview:
As Radisson Hotel Group moves into “the new normal,” has the recent trend of entrepreneurship influenced the way your business is run today? When catering to the market as it stands currently, how important is innovation in all that you do?
With daily changes, we need to be resilient but also flexible and open-minded to overcome this pandemic- and these are definitely traits of entrepreneurship. One of Radisson Hotel Group’s core beliefs is “we are many minds, with one mindset”– this time has most certainly proven that we need to exercise this philosophy and stand together, as we are all faced with common challenges.
While every industry and every business is different, it’s critical that organizations reinvent and redefine themselves and the way in which they work in the new world. We must change how we think and work and adapt to the new norm of business. As we rethink where and how business is done, it creates the opportunity for organizations of all sizes to advance and achieve their goals while reinventing their strategy, looking at new innovations and technology, experiencing a more flexible work culture, reducing their carbon footprint and enhancing diverse talent recruitment.
Being flexible and innovative will be key moving forward. Looking at the recent launch of Hybrid Meetings or Radisson Individuals, Radisson Hotel Group has shown a readiness to be innovative and explore new opportunities. Throughout 2020, we have continued investing in our systems and increased digital infrastructure with online and express check in and out, and we accelerated the launch of our new Hybrid Meetings and Hybrid Rooms Solutions, and we quickly put the full infrastructure in place to launch within a matter of weeks.
Radisson Resort RAK- Rendering. Source: Radisson Hotel Group
What are some of the plans Radisson Hotel Group has in terms of its future offerings within the region?
There has been a lot of talks in the recent months about the resilience of serviced apartments, amid the pandemic. Whilst we can continue talking about this hospitality offering and its appeal, it is important to remember that this product is not new to the industry, but rather how its success has only been magnified by the current situation. Serviced apartments as a product was already established as a mainstream lodging proposition in its own right for at least 10 years, and in some markets, longer. While serviced apartments were previously a mainstay of the corporate life, today’s market has led to an increased demand, with more and more people exploring the long-stay life. Over the last 7-8 years, global supply has increased by approximately 20%.
Looking at other markets we can see that the product is well established in North America- a market that features 60% of the global supply, followed by 15% in Europe, and a small share that stands below 5% in the Middle East and Africa. The Asia Pacific region holds the remaining 20% of the supply. Currently, the fastest growth is taking place in Europe with the UK, France and Germany heading up the continent, followed by the Middle East region, where UAE, Saudi Arabia and Qatar are have taken the lead. For investors, serviced apartments are an exciting product holding a lot of promise. The main reasons for this are the lower investment and operational risks generated by higher occupancy levels, healthy average rates, and gross operating profit (GOP) margins that average at least 10 percentage points more than hotel GOP levels. When looking at it from an investor or entrepreneurial mind, all of these factors speak for the hospitality real estate, making it even more interesting.
Does the new Radisson Individuals brand fit the requirements of the Middle East traveler and investor, and what are your plans for it within the region?
For us at Radisson Hotel Group, our focus remains on adjusting our short- and long-term plans to cope with the rapid changes, allowing us to find proactive solutions for our owners and investors. Over the past months, we have continued to work towards becoming more relevant to changing owner needs, and to remaining one of the best conversion-friendly partners in the industry. Radisson Individuals is our response to a market that is becoming relatively mature and as conversion solution for unique, independent hotels and serviced apartments looking to benefit from a brand affiliation, and we are about to announce the launch of this brand in the region very soon. This affiliation proposition is also for owners looking to brand their properties under one of our core brands, where they could benefit from our affiliation while they undergo a renovation.
Lobby rendering - The Mansard Riyadh, A Radisson Collection Hotel & Residences. Source: Radisson Hotel Group
How severely has the pandemic affected Radisson’s business within the region, and are investors still looking at hospitality, or has it raised concerns?
Hospitality real estate is a unique asset class that can be dissected into different types of investment models for investors to choose from. Investing in a luxury hotel in Dubai or in Doha or even in Muscat, for instance, may be risky due to oversupply within that category. Investors should be able to identify gaps within the hospitality investment landscape such as affordable lifestyle hotels in most markets of the region, a scale of budget and midscale hotels across major cities, affordable beach resorts in saturated markets, branded serviced apartments in most countries, and the list goes on. I personally have not seen a drop in investor interest overall.
It may be a temporary drop in building a new hotel in a saturated market, or another five-star in a market flooded with five-star city hotels. There may have been delays in openings, but that is mostly driven by airport closures leading to supplies and equipment not reaching the hotels on time, and by waiting for the lockdowns to be lifted. What I have seen is these investors are rushing to open properties to benefit from the post-pandemic boom. More investments are going into resorts and serviced apartments, as these products lead the recovery across regions. More independent operations are looking now more than ever to brand their hotels as a result of the standards, hygiene and distribution reach brands offer.
Radisson Hotel Dubai Damac Hills. Source: Radisson Hotel Group
What are some of the mid-long term expansion plans that Radisson has in the pipeline for the Middle East?
The Middle East is a key development area and our ambitions across the region have remained the same. In the past months we have announced the opening of the Radisson Hotel Dubai Damac Hills and the Radisson Blu Hotel, Riyadh Qurtuba. Looking ahead at Q3 and Q4, we aim to open three additional hotels in Riyadh, and another recently signed property in Jeddah, as well as announce our entry into Ras Al Khaimah with the 408-key Radisson resort.
We expect 2022 and 2023 to witness more signings and openings as we tap into various conversion opportunities in the market, particularly in Saudi Arabia and the UAE. We remain committed to our ambitious five-year plan and our mission to be recognized as one of the top three hotel companies in the world and the group of choice for owners, guests, and talent. Agility and flexibility, while still delivering the profitability needed, are going to be critical for everybody to succeed.