Hilton President and CEO Chris Nassetta is optimistic about the future of the Middle East and his Tru by Hilton brand, but admitted he is concerned about unemployment and labor issues in the hotel industry.
DUBAI, United Arab Emirates—Hilton President and CEO Chris Nassetta has big plans in the Middle East/Africa region specifically in Turkey, where he expects to more than double his company’s footprint from the 130 hotels open today to about 280 within “the next five years or so.”
“We’re optimistic about continued growth in the region,” Nassetta told HNN during last week’s Arabian Hotel Investment Conference. “Our key areas for growth are likely to be in the Gulf Cooperation Council (countries), (and) we’re delighted to have seven new hotels opening in Egypt, which will complement our existing portfolio of 18 operating properties.”
Upcoming mega-events such as Dubai 2020 and the 2022 World Cup in Qatar only add to Hilton’s appetite for the region, Nassetta said.
“Events like these present incredible opportunities for a destination to shine in front of a global audience, and we’ve seen how they help to increase tourism to an area for years to come,” he said. “As a global company, we certainly look at regional and global trends to inform our development strategy, and it’s also important that our brands have core standards that are recognizable in any location.”
Nassetta added that Hilton remains “predominantly in the business of management contracts. … (And in) our pipeline, around 60% of the properties we have under development are with existing owners.”
“There is definitely room for growth in this part of the world,” Nassetta said. “For example, we believe the midmarket sector remains undersupplied in the Middle East, which is why we opened three Hilton Garden Inns in Dubai in 2015 and are bringing Hampton to the region in 2018. We also recently opened a dedicated development office for North Africa in Casablanca, a city where we signed our first hotel, Hilton Garden Inn Casablanca Sidi Maarouf, earlier this year.
“This is a trend we expect to continue for years to come as middle classes around the world grow and the number of global travelers reaches new heights.”
Nassetta added that Hilton also has “experience partnering with owners of independent properties (in the region). While (soft brand) Tapestry is currently focused in the U.S., we opened our first Curio in the region earlier this year, the AlRayyan Hotel Doha, Curio Collection by Hilton.”
Middle East megas
Loyalty and mobile are no less important in the Middle East than in other parts of the world, Nassetta said, adding that in 2016 Hilton saw 15 million roomnights booked through its app, representing a 118% increase in mobile app revenue year over year.
Nassetta said Hilton is focusing on the three power markets in the region: the United Arab Emirates, Saudi Arabia and Qatar.
“Saudi Arabia as a whole is a market full of potential, and we plan to quadruple our presence there in the coming years, (and) as I’ve said, we believe the midmarket sector is undersupplied in the Middle East, and this will continue to be an area of focus for us,” he said. “We’ve made a decision to focus on developing brands organically so we can most closely maintain their high quality, and that’s a model that has worked very well for us.
“While I am not saying we would never consider an acquisition, it is not currently on our agenda. We believe that our current approach best guarantees that we can serve any guest, anywhere in the world, for any travel need.”
Waldorf closes, Tru launches
On the general session stage at AHIC, Nassetta addressed two other issues that have been important for Hilton: The closing of the Waldorf Astoria in New York City, and the ramp-up of the company’s Tru brand launch in the U.S. and Canada.
China’s Anbang Insurance Group purchased the Waldorf Astoria, a New York City icon, in 2014 and closed it in March for two years of renovations.
“The closure was a moving experience, closing it after a 100-year run,” Nassetta said. “I have opened a lot of hotels but never closed a major hotel, and it was heart-wrenching.”
But with tears there often come smiles, too. For Nassetta, that came about with the chance to cook for Hilton staff.
“The staff at the hotel requested I cook, so I did, for 1,400 people, my grandmother’s famous red sauce,” he said. “It was a memorable evening. I was the last person to leave the hotel.”
When doors close, windows open, and such is the case with the ramping up of Hilton’s Tru brand, Nassetta said.
“There have been two years of engineering in it, and we opened our first (Tru) last week, but more than 400 deals have been signed without one dollar of our own investment,” he said, adding that the brand’s expansion outside of the U.S. might come next year.
Urban, micro forms of that initiative would be in the hundreds of hotels, he said, and allow groups of young people, not able to afford normal rates, to pool resources and be in the heart of the action.
Getting young people into Hilton’s hotels is sound business sense, but Nassetta said he is genuinely concerned about the 80 million unemployed youth globally.
“The hotel industry is ignoring millions of millennials,” he said. “There are high levels of unemployment in some markets, which will lead to bad things. We have to make sure that youth understand the opportunities. They do not understand how big the industry is, that it is 10% of global gross domestic product.”
Nassetta criticized that demographic, too, hinting its aspirations were out of step with the reality of the world.
“(Youth) need a line of sight to a better future, as all they see is technology and social media in a 24-hour news cycle,” Nassetta said. “I started literally plunging toilets.”