With almost 16m tourists per annum to Dubai and with that number expected to grow to 20m during Expo 2020, this Emirate has huge potential for hoteliers. Currently we have 690 hotels providing 108,000 rooms. There is so much more growth potential however with attractions like Dubai Parks and Bollywood. And Dubai is also fast becoming a centre of excellence for healthcare, creating potential for the medical tourist market.
Although Dubai is probably reaching maturity in its growth phase, revenue per available room (Revpar: a key metric in the world of hospitality) is still higher than many other international cities. With such a high number of those being 5-star properties, there is more room for the under-supplied 3 and 4-market. They would cater especially for the more budget sensitive business and tourist traveller.
Action Hotels – The Business Model
Soon you will see the opening of a newly built 219 room Novotel Bur Dubai in Dubai Healthcare City. This will be operated by Accor on behalf of owners Action Hotels, which was founded by HE Sheikh Mubarak A M Al Sabah in 2005. With thirteen hotels across six countries, this is an ambitious growth company with revenues last year of approx. $70m and total assets valued at c$0.6b.
Andrew Lindley the CFO outlined the business model to me. Partnering with some of the world’s leading hotel brands, its global strategy is to concentrate on mid-scale hotels. With a focus on the regular corporate traveller, it is building a reputation for consistency, comfort and outstanding guest experience. It is also keen to provide value for money for both corporate and leisure guests exploring destination cities.
There is a common metric in the industry that suggests that a 5-star property requires 1+ employees per room whereas the number is 0.4 employees for 3-star properties. Therefore, it’s obvious that the level of service cannot be the same in both. Andrew Lindley and Bruno Fischer (the newly appointed General Manager) appreciate the importance of great customer experience. Their intention is to punch above their weight and to ensure that guests have the best experience possible. That is quite an ambition and it requires a great team.
In a market with such a high number of hotel rooms, differentiation is essential for all hoteliers, regardless of the star-rating. This Novotel in Bur Dubai will have a natural price differentiation as it is a 4-star in an under-supplied market. However, in my experience working with a range of iconic brands across many sectors, I don’t believe that differentiating on price alone is enough anymore.
The Business Challenge
It’s a cliché, but people are indeed the greatest asset for any organisation. Every business shares the same three ambitions. We want our customers to buy from us today. We want them to come back again in the future. And in an age where social media review sites weave such influence, we also want our customers to refer us positively to a friend. You won’t be surprised to know that customer experience is the key driver of those three outcomes.
Customer experience is influenced by a combination of 3Ps. That is great product/services, great place and great people. I regularly use a 3-legged stool analogy to re-enforce this. But of course the weighting given to each leg of the stool will vary in different sectors and at different times. But remember this: it’s been proven over and over again in almost every sector, that people are the greatest significant driver of customer satisfaction. After all, customers will remember how they were made to feel for a lot longer than the product or the place.
This hotel business is starting in this location from scratch and therefore has a great opportunity to create and build a really strong team. But rather than just going to the market to find people with a hotel background and a CV, I believe there is more to it than that.
How to secure an effective team in a new business
- Before you start interviewing for your team, be sure that you have a clearly defined North Star for your business. For example, the way you run a 4-star hotel is very different to a 5-star. Hotels have a slight advantage over most other industries, as the star-rating itself tends to have very clearly standards already. Nevertheless, there is more to a North Star than just a star-rating. Every company should consider its ambitions for the long term and develop a Vision and Mission statement to articulate that ambition.
- Consider what culture you want, in order to deliver on your stakeholder’s wishes. Remember that culture eats strategy for breakfast! Culture is like the software of the mind, in other words it’s all about how your people behave with customers and with each other. The property, the equipment, products and processes are the ‘hardware’ of the business. just like your personal computer (hardware) is useless without the right software to drive it.
If you want your people to be totally focused on customers so that you build a reputation for excellence in customer experience, then that should be reflected in your culture. Furthermore, if you want your teams to be fully accountable and to show respect to all people, this too should be articulated in your culture.
- Develop an organisation chart that shows the key roles and their reporting lines. For each box on that chart, write a job description. That should outline what the roles and responsibilities are for each. Then list the criteria for each, such as what knowledge, skills, experience and qualifications are needed.
- For each criteria, decide which ones are essential and which are desirable. For example, Disney is very particular about its dress code. It makes it very clear at the recruitment stage that body piercing and tattoos on employees cannot be visible. Even if they get a star recruit that ticks all other boxes, it will reject a candidate that is not willing to accept those terms.
- When you start to meet prospective employees, the CV is of course an essential discussion document. But be sure to check for fit with your desired culture.
- Once you have hired your team, be sure to bring them through an intensive induction programme. This is where you will impress on them your ambition, your ethos, your culture and your expectations.
If you too believe that customer experience is the new battleground, watch this space for future articles on how to build consistency in customer experience. That is all about having the right culture to support your ambition and your business strategy.
We recently completed a customer survey and employee engagement audit for a client. The results were shocking. Customers slated this company for its poor service, especially in their interactions with employees. In contrast with that, employee engagement scores were also very poor. That is very telling and you don’t need an MBA to work it out. High levels of employee engagement improve the likelihood of high customer satisfaction. And that starts with creating and building the right team in the first place.