If recent events in the Middle East and Africa have taught us anything, it’s that predicting developments is an impossible task. Even by the standards of a traditionally tumultuous region, the speed, scale and suddenness of events over the past few years has been staggering.

Whether we’re talking deeply entrenched regimes collapsing under the weight of the Arab Spring, a self-proclaimed caliphate being established across large swathes of the Levant, tumbling global oil prices massively impacting the GDP of regional powerhouses, or Iran and the West hammering out a deal that could bring the Islamic Republic in from the international cold, there have been few legitimate forecasters, analysts, pundits or politicians banging down the door marked ‘told you so’.

Within the context of such seismic change, the drafting and execution of a roadmap that spans eight years might seem somewhat foolhardy but, soon after joining Marriott International as president and managing director for the Middle East and Africa in January 2012, Alex Kyriakidis was announcing plans to grow the regional footprint to 70,000 rooms by 2020.

At the time of Kyriakidis’s appointment, Marriott was operating just over 30 hotels across ten MEA markets, with a further 40 in the pipeline. Growth was certainly already on the agenda, but a more concerted focus was required.

"When I joined, our dominant country was Egypt, which accounted for nearly 30% of fees," Kyriakidis explains. "The idea was to gravitate away from dominance in one country and diversify geographical risk. That meant identifying and honing in on markets where we saw the potential for ‘super growth’ – 10,000 rooms either in operation or under development by 2020."

The eventual list consisted of five players: Egypt, Saudi Arabia, the UAE, Nigeria and South Africa. While Kyriakidis is keen to stress that this strategy does not amount to ignoring opportunities in other countries – Marriott remains the biggest player in Qatar, for example – the 2020 vision has seen the regional president commit significant resources, human and capital, solely on these markets.

"I now have people whose entire lives in terms of targets and bonuses are dependent upon a single country," he explains. "It’s a single-minded approach: employing leaders with links to the markets in question; making sure that my entire executive team is visiting these countries regularly; creating ever-closer relationships with development partners."

This cultural shift is visible from the top down. Up until the end of 2013, the group’s regional chief development officer was a Frenchman based in Paris. He was succeeded by Samir Baidas, a Jordanian who performs the role from Dubai.

"That’s a huge statement for the region, and our Arabic-speaking owners and developers, to have an Arab national leading the charge," believes Kyriakidis, a fluent Arabic speaker himself. "Beyond Samir, we’ve recruited in a way that makes sense; a Tunisian [Karim Cheltout] devoted exclusively to north and east Africa; a Ghanaian [Paul Ansah] focusing on sub-Saharan Africa. Then you have the team here in Dubai, including a fellow Greek, Costas Verginis, dedicated 100% to the Kingdom, as well as a team looking after the rest of the region."

 

Emotional investment

On a personal note, Kyriakidis estimates that 70% of his time is spent out on the front lines, meeting with owners and developers. Amid these stakeholders, he cites a marked shift in the profile of those entering the market and the way business is conducted, drawing on his previous life as global managing partner for hospitality and leisure at Arthur Anderson, and then as Deloitte’s global managing director for tourism, hospitality and leisure, for context.

"Ten years ago, when I was working with a lot of owners in the Middle East, it was a lot more emotional," he says. "High-net-worth individuals were keen to own a beautiful asset, but once the deal was signed, the extent of the interaction between owner and operator would amount to visiting the hotel with friends or family.

"Today’s investor is significantly more involved; most of the major players have highly sophisticated asset management teams and some are absolutely world class – as sophisticated as anything you’d find in New York, Paris or London. That brings opportunities and challenges; expectations are extremely high, but we know that if we respond to the requirements, we’ll get the chance to manage more hotels."

The fact that a number of these owners are not just regional but global also presents opportunity. Kyriakidis cites the Abu Dhabi Investment Authority’s recent purchases of New York, Miami and London Edition hotels as a prime example of having forged lasting and valuable relations with key players.

"Nurturing those relationships is value-generative for us in MEA and around the world," he says. "It’s also those conversations on the front line where you hear honest feedback and unearth the possibility of new opportunities. Frankly, our lowest hanging fruit for growing the business is our existing owners, and we cannot lose sight of that."

 

Protean learning

In sub-Saharan Africa, things look slightly different, with the branded hotel market still in its infancy. Kyriakidis sees the high-net-worth, emotional asset owners beginning to emerge, and acknowledges that a process of education is required on the part of Marriott and its competitors in order to manage expectations regarding what is required in these markets and the nature of the owner-operator relationship.

The regional president also admits that, having first looked to expand in Nigeria and South Africa through the organic growth that had served the group so well in Egypt, the UAE and Saudi Arabia, it soon became apparent that a change in strategy was required.

"We recognised that these were sensitive markets, committed to domestic brands," he explains. "Our thoughts quickly turned to acquisition."

This led to perhaps the headline event of Kyriakidis’s tenure thus far: Marriott International’s acquisition of South Africa’s Protea Hospitality Holdings for around $200 million in April of last year, almost doubling the group’s African footprint and establishing it as the largest player on the continent.

"It means we now have 20% of the branded market share," he explains. "A year ago, we had no South African hotels; now we have 80. In Nigeria, which is significantly underdeveloped in terms of branded hotel rooms for a country of 180 million people, we now have three operating hotels and a strong pipeline."

All properties will be brought into the Marriott Rewards programme in October, with the overall integration process scheduled for completion before the end of Q4. Kyriakidis has also alluded to the possibility of Protea making its way to the Middle East, which is perhaps indicative of a wider regional trend: the growing significance of mid-tier hotel development. By the regional president’s estimation, Marriott International current portfolio is "skewed 80% towards upper upscale and luxury". Over the next five years, however, that balance is set to shift markedly.

"We’re looking at much closer to 50:50," Kyriakidis reveals. "Taking rough numbers, we currently have 25,000 rooms in operation and a further 15,000 in the pipeline. That means between now and 2020, we need to find another 30,000 rooms, with a significant chunk of that number being positioned within the quality tier, where you find Courtyard, Residence Inn and Protea.

"Markets such as Dubai have already determined that they need to diversify, with Sheikh Mohammed making it very clear he wants priority in the development of three and four-star accommodation. In sub-Saharan Arica, the customer base is overwhelmingly domestic – 99% in Nigeria, 95% in South Africa – and an emerging middle class is beginning to travel. The opportunity there is not for JWs and Ritz Carltons; it’s quality-tier brands that appeal to an emerging market segment."

 

National identity

In Saudi Arabia, Marriott International is pursuing opportunities across all market segments, and Kyriakidis makes no effort to hide his enthusiasm regarding the potential the Kingdom offers over the coming years.

The group’s flagship brand made its Makkah debut this July, and there are 19 Saudi properties in the pipeline. The managing director cites a growth in business travel and the need for greater infrastructure to supply the demand for religious tourism as two of the major factors for optimism, but also points to the emergence of a young, increasingly affluent customer demographic, eager to travel within and outside of the Kingdom.

"That pent-up demand again lends itself very much towards the quality tier," Kyriakidis believes. "It’s something we’re seeing across the Gulf, an increasingly significant chunk of our guests being drawn from the GCC."

These are also the demographics that Kyriakidis and his team will need to appeal to if they are to underpin substantive growth with requisite human capital. Marriott International is not alone among international operators in declaring ambitious expansion targets for MEA, and the war for talent is fierce. The employment landscape is also evolving.

"We need to respond much more to nationalisation within the GCC," Kyriakidis declares. "A number of countries are demanding that a certain percentage of our workforce must be home nationals. We need to convince Saudis, Kuwaitis, Bahranis, Omanis and so on that the hospitality industry is a legitimate career. This demands a new way of thinking, and we have some extremely exciting plans that will be announced soon."

In sub-Saharan Africa, the challenge is somewhat different but no less immediate.

"To open the hotels we have in the pipeline over the next four years, we’ll require 10,000 new associates," Kyriakidis explains. "You can’t simply enter the market and announce your intention to recruit from the existing industry – outside of South Africa, there isn’t really a hospitality industry to speak of.

"It’s demanded that we think outside the box, starting partnerships with local institutions, targeting young people and bringing them to the Gulf, where we have established hotels and training systems, before sending them back in time for opening."

The managing director cites a recent example from Rwanda, where Marriott will debut early next year. In partnership with the Akilah Institute for Women and with support from the country’s tourism ministry, Marriott has recruited 20 associates and brought them to properties in Dubai and Doha. They will return to Kigali to head up departments upon the property’s launch.

It is a story that highlights the stark differences between markets across the region and the potential for leveraging synergies within it. A RevPAR lift of almost 8% in 2014 and pronouncements from Kyriakidis that Marriott International is already "looking at another strong year" suggests that the roadmap laid out in 2012 continues to lead in the right direction. Predicting the future might be an impossible task, but Kyriakidis and his team are certainly doing their utmost to shape it