Fresh from being appointed senior vice-president and head of development for Rezidor, Elie Younes is humble about his recent promotion. He sees it as a gesture of encouragement and a "reflection of confidence" in his work from the company’s board and president – proof that he and the company are pushing in the right direction.
"There’s nothing I’m doing this year that I wasn’t doing last year," he says, when asked what changes the new job has meant for him. "In terms of priorities and daily activities, there’s not been much change. My focus continues to be on securing our strategy, helping our team to deliver our targets and making sure the latter align with what we want to achieve."
Every international hotel developer understands that geopolitical considerations come with the job. Younes knows this more than most, having worked on development in Africa, Europe and the Middle East from 2012 up until his recent promotion. He’s now tasked with even more pipeline to manage and more relationships to take care of, and Rezidor is currently close to having more rooms in development than any other group, with more than 20,000 set to open in the next three to four years.
Uncontrollable causes
But the one thing that even the most adept of hotel executives cannot control is external geo-political factors. From the very beginning of the eastern Ukraine crisis, and the economic sanctions and currency depreciation that followed, it was clear it was going to hit the hotel industry hard. A year on, while things might appear to be improving slightly, until a political agreement is reached between Putin, the EU and the US, there is unlikely to be any dramatic change.
"It goes without saying that the Russian situation, specifically in 2014, has been tough," Younes acknowledges. His is the largest hotel operator in Russia and its neighbours in the Commonwealth of Independent States (CIS), and managing this economic uncertainty has defined much of the executive’s recent work. Sanctions on Russian banks, tumbling oil prices and, consequently, rising interest rates have stalled development objectives. "Sanctions did not help, neither did the currency devaluation, so the overall consumer and investor sentiments have deteriorated to some extent," Younes says.
Finding funding
With interest rates hovering at levels higher than 20%, it’s increasingly hard to get funding. But despite this slowdown, Younes trusts in what he sees as the strength of the Russian consumer mindset and the country’s economy.
"It’s a very resilient market, and you can see that already this year with the improvement in confidence levels," he says. "Economically, the rouble is gaining traction again. From a business development perspective, in 2015 we will probably deliver more than what we had anticipated for the year."
Fast-growing economies are where Younes will expend much of his energy, and Rezidor has expanded its portfolio by 9% a year since 2010 in markets such as Africa and the Middle East. On the African continent, where Rezidor has a larger pipeline than any other company, 30 hotels and 6,300 guest rooms are under development. At the moment, the priority is developing conversions and seeking out projects already under construction, and on the day Younes spoke to Hotel Management International, he had, coincidentally, just signed two such hotel deals in Mauritius.
"We recently took over a project in Cape Town, which involved converting an office building into a Radisson Blue," says Younes. "Earlier this year we also took over a project under construction that is due to open in three months in Brazzaville."
Conversion involves developing funding and hiring turnkey subcontractors, while at the same time hedging against the risk of erosion. This means keeping the pipeline fertile with projects that have a short time-to-market period in a market where financing is often difficult to come by. Lack of funding is less of a concern in the Middle East, another region where geopolitics looms over the hotel industry. Despite massive growth in Saudi Arabia, the region has been mired by conflict and instability in recent years, and it’s a situation that is for Younes, a Lebanese national, particularly close to home.
"It’s very unfortunate what’s going on there," he says. "Luckily, the situation has been reasonably contained in Syria and its adjacent countries, and there has been no spillover into the GCC markets."
The deteriorating situation and conflict in Yemen, too, has had an impact. The country lies on the southern border with Saudi Arabia, and this has, understandably, caused many Saudis to stay in the south of the country.
Opening opportunities?
Geopolitical shifts in the Middle East could also bring opportunities, however, and Rezidor is keeping a close eye on ongoing developments in the negotiations between Iran and the US. If an agreement is reached on nuclear power and sanctions are lifted, Iran could become a major international leisure and business destination.
"Iran is a country that is of interest to us today," he says. "We are looking at the outcome of the negotiations between the US and the Iranian Government, which could hopefully result in the opportunity to do business in that market. This would create an immense opportunity for a company such as ours."
There are also established markets where growth is solid. Rezidor identified Turkey as a focal point three years ago, for example, and since then the company has increased significantly in scale across the country, and now has close to 20 hotels.
Brand dynamics and balancing growth across different kinds of hotels as the numbers of rooms under construction increases are strategic priorities for Younes going forward. At the moment, it’s fairly evenly balanced between Radisson Blu and Park Inn, with two new brands – the youth-oriented Radisson Red and the upper-upscale lifestyle brand the Quorvus Collection – on their way.
Modern for the millennials
Radisson Red is already a key lifestyle project for Younes. Designed for Generation Y and the "young at heart", as he puts it, it’s a select service hotel concept that hopes to offer a more lifestyle-led, modern design feel.
"It’s really driven by the new attitude of the consumer," Younes argues. "You really need to analyse what the new consumer wants, and design a brand around that."
The operating philosophy is what makes Radisson Red particularly appealing, he argues. With a multitalented staff able to do a lot, a philosophy he calls the "total football" approach to running a hotel, the brand is a slimmed-down alternative to the more old-fashioned hotel experience.
"The DNA from the brand will be based on the millennials," argues Younes. "It’s not a revolution; we don’t claim to be revolutionising the industry. This is just an evolution based on consumers’ demands."
So committed is Rezidor to the Radisson Red roll-out that it’s the only brand for which it would consider investing in bricks and mortar. Much of Younes’s work is linked to Rezidor’s Route 2015 goals and to further consolidate its asset-light strategy, jettisoning the last of its leased hotels, and picking up management and franchise contracts – a strategy designed to minimise risks and the need for potentially pricey new investments.
"We’re aiming to hit all of our targets for Route 2015," he says. "For this year specifically, we are more than likely going to surpass our target from a development perspective. Our priority is to deliver on our growth strategy."
Selective scheming
This is not to say Rezidor will never invest in building projects, but this would require the right investment and the right project to get off the ground. Younes says a venture would be considered only if it were linked to Radisson Red, and only if it could co-invest as a side partner and in select cities. "These would probably be a few provincial English cities, and certainly London, but that would be expensive," he says. "They could also be places such as Edinburgh or Cambridge, or perhaps the top five Germany cities."
Opportunities for development in Europe are limited and competition is high, but this does not mean Younes is planning to neglect the market. As the eurozone rebounds and capital flows in from overseas, it’s all about liquidity and investment, and there is increasing traction and interest in the key gateway cities, as well as in secondary and provincial cities in the UK, Germany and Nordic countries.
"Given the fact that hotel values and transactions have been pushed upwards, we may soon reach, if we haven’t already, a situation where developing hotels is probably more viable than buying them," he argues.
From Europe and Africa to the CIS and the Middle East, there are plenty of complex obligations and challenges for Younes and his colleagues at Rezidor to navigate. But six months into the job, he seems confident and exhilarated by the work still to be done.
