Rabih Feghali, Vice President, Roya
“I don’t have a crystal ball, and we at Roya are not in the business of predicting the future. However, I do happen to be on the frontline of everything related to our industry. Here is what I’m seeing and what I assume will continue to take place through 2019:
1. On a corporate level, we will probably see a couple more mergers, with larger international chains now on a buying spree, looking to acquire solid regional players.
2. More and more hotel owners are rethinking their existing relationships with their operators, and by that, I don’t mean a rebrand. Options such as franchising are now on the table, as owners look to take control of their assets, consolidate and synergize where possible, whilst still benefiting from the brand’s distribution capabilities. We will see a number of multi-hotel owners doing this in the coming year. But this won’t come easily; owners will need to fortify their operational capability, in order to demonstrate their ability to carry the flags. The above also applies to owners of new hotels negotiating the franchise option into their agreements, giving way to a franchise 3-5 from opening.
3. This is where the role of a third party (or white label operator) could come into play. Though the region falls behind others with this practice, there is a clear business opportunity here, but unfortunately, due to high barriers to entry, very few senior industry professionals are able to take the leap, and risk their finances and cushy general manager/corporate jobs to start up their own entrepreneurial ventures running hotels. This is why only a few such independent entities currently exist.
4. F&B operations within most hotels are suffering. Restaurants are closing left, right and center, with owners kept hanging with unutilized premium real estate. We have significantly reduced the number of outlets in most of our forthcoming hotels.
5. The year 2019 will see more deflaggings, as more of the newer stock matures into the fifth and sixth years of operation (broadly considered the test years, where an owner has the right to deflag should the operator not meet 80 or 90 percent of its budgeted gross operating profit (GOP) and revenue generation index). This is where relationships are more important than ever, with operators working hard to rescue their properties from the forthcoming deflags by working hand in hand with their owners to mitigate further GOP erosion in 2019.”