UAE on top of Marriott's expansion plan in region

Dubai is going through its own economic ups and downs but the world should not forget the "phenomenal story" the emirate has created in the past two decades, a top official from Marriott International said.

The US-based hotel giant is all set to manage 500 hotels by 2013, 14 per cent of which will be in the Middle East and North Africa. Its regional headquarters will be opened in Dubai in the first quarter of next year.

"Dubai is very unique in many special ways," said Edwin Fuller, President and Managing Director of International Lodging for Marriott International. "Dubai has really done something that is unique and it is now being replicated in other markets – Abu Dhabi and Doha."

"Clearly Singapore did great works, China is doing evolutionary and revolutionary things and Dubai has to sit there as one of the foremost countries who have done great," he told Emirates Business in an exclusive interview.

Fuller said the financial crisis is a temporary thing and that the trading down of customers to a more affordable tier is nothing but a part of long and non-ending economic cycle. "I've been in this job for 38 years – I have seen several recessions – it's just a part of an economic wave that continues," he said. "Cycles will always happen and we're somehow protected – our whole strategy is also built around to being able to manage in those cycles."

The hotel will more than double its portfolio in the region to 71 properties or nearly 20,000 rooms, majority of which will happen in the UAE where it plans to open 21 hotels with 6,026 rooms by 2013.

"The region is very critical," says Fuller. "It critical from a source market perspective… at the same time, the Middle East is critical for us because of the exposure we get. And guess what? We make a lot of money here too."


How were your hotels in the region affected by the crisis?

We felt some significant downturns in the area of occupancy and average rates in some of our hotels. Each market is so different that it's unfair to over-generalise. Saudi hotels are doing better than last year so they are actually ahead of budget. Some hotels like those in Dubai have seen some decrease in average rates so you go from one extreme to another. This is a unique region because we do have some hotels literally ahead of budget. But as a whole we have felt the downturn and the recession. That is not unusual and we are optimistic that in 2010 we are not going to return to 2007 numbers.

Did you see a double-digit drop in revenue in your operations here?

I don't have that statistical data to tell you because I look at it as a whole international group. We have reported double-digit decline on a global basis and I would assume that some hotels here have experienced that and others have not.

You plan to have 500 hotels by 2012…

That's internationally. We already have 3,300 hotels worldwide today. So we will have 500 international hotels by 2012 – 70 of this we expect to be in place in the Middle East and North Africa.

Have you got any investments earmarked for this? Is there any money coming from Marriott's balance sheet?

Marriott is a management company not an investment company so we don't invest. We in our financial packages occasionally put in key money or some small contribution to the financial underpinnings of the hotel in that respect but 99.9 per cent of our investments are our people, the brand, the resources and the systems. We are strictly a management company in every way.

What is the value of your brand now?

It's tremendous especially in slower times because it gives you the competitive edge in the market and it's not only the brand. The brand is the point of the sword, it is really the systems – the Marriott rewards – that keep bringing customers back. Our internet sales continued to grow even in a falling market. We did more than $6 billion (Dh22bn) last year. These systems along with our reservations systems and sales systems give us the competitive advantage. This makes the brand really move. And then there are our management skills and our associates. That's what brings it all together.

You mentioned $6bn online sales. That's almost half of the $13bn revenues you've reported?

No. In the annual report, Marriott only reports the North American sales. Not included are time-share properties such as Ritz Carlton or international sales. If you take the total gross sales of Marriott-related operations – because we are management company – it's about $22bn.

This region is now becoming a home to home-grown hotels, which like Marriott, are also spreading their wings to international markets. How do you find them as competitors – have they got the edge?

They, like Jumeirah and Rotana, are competitors in this market. I have a great deal of respect for them because they are excellent competitors in their segment but Jumeirah is only in one segment – it's in the luxury segment and Rotana is in the mid-tier segment. Jumeirah competes with JW Marriott and Ritz-Carlton; Rotana competes more with the Courtyard. We think they are good competitors but we also think that we have the competitive edge because of our size, systems and our overall distribution.

You've got a big luxury portfolio. Have you had to cut some stars like other hotel chains did to cope with the economic crisis?

No, not at all. Where we focus our efforts in an economic crisis is what we call the back of the house. This is an area of shared services, which consumers never see. We've been able to leverage in procurement and again be economical there. We work actually with our competitors to buy goods and services. We focused also on the overhead reductions in those areas and the like. We really tried to avoid reducing services for our customers.

Did you have any job cuts?

Oh sure we did, but we were able to move our managers to the international arena to start new hotels, which really reduced the cuts that we made on those areas.

Majority of Marriott's employees are cross-trained so could you not have any job cuts considering you are expanding somewhere else?

It's not that 100 per cent transferrable but the good news is we're opening in Asia and Middle East and that enables us to save most of our managers.

You also stopped issuing printed copies of newspapers in your US hotels?

That was an environmental decision.

Could that be feasible here?

Yes, except that you see in certain places we have given up newspapers and in certain areas where demand is there and customers tell us they wanted it – we kept.

And this region is one of those areas?

Yes, in the luxury product line. And instead of dropping them at the door we ask them what they want when they arrive, which resulted in savings on the paper but that was an environmental decision more than a financial decision.

What are the trends and preferences specific to the Middle East region?

Number one, the focus on quality in this market has been well known. There is more focus on luxury in this market than there is in any market in the world with the possible exception of some markets in Asia. There are certainly some dependence on some products such as oil and oil-related products but Dubai has really done something that is unique and it is now being replicated in markets such as Abu Dhabi and Doha. They are diversifying their mix here. So Dubai, through Emirates airline's efforts to some extent, has been able to bring leisure to a market. When I first came here in 1990, there were just five hotels and Dubai was no real tourism destination. The authorities have done a phenomenal job in creating new businesses. You also have the new education centres – the medical centres and all the other centres of excellence and those, quite frankly are an unique environment. You don't find that throughout the world. It's very special.

Did you find customers trading down to cheaper hotels?

Our brand strategy is designed to do that. So JW may move to a Marriott, a Marriott may move to a Courtyard – that's okay. That works for us because we've gone through cycles all our life. And we will go through another cycle. Cycles will always happen and we're somehow protected – our whole strategy is also built around to being able to manage in those cycles. But at the same time as the customers come back, they move up the cycle. We also know that a company uses a luxury hotel for business and bring their family to a quality-tier hotel or use a quality-tier for business and bring their family to a medium-tier hotel. That is why we have so many tiers. I know this is an economic recession. If you've been through my life – I've been in this job for 38 years – I have seen several recessions – it's just a part of an economic wave that continues.

But this is the worst recession that you've seen?

It's probably the first time it's been as global in nature.

Dubai has been in the hot seat for quite some time especially on how it's been portrayed in the media. What's your take on that?

The good news is that I have been here in and out for many years. I am a proponent of what has been done in Dubai. I've been looking at office space and I've commented on the new rail system – look at the infrastructure built here. Dubai is very unique in many special ways. Clearly Singapore did great works, China is doing evolutionary and revolutionary things and Dubai has to sit there as one of the foremost countries that have done great. Now it is going through its own economic ups and downs but that happens. But look where it came from in 20 years – it's a pretty phenomenal story.

Marriott earlier announced that you would have your headquarters here early next year. Are you expediting that plan to have it by the end of this year?

It's happening right now. We've been looking at office space – we named the new chief operating officer. We're having an office of more than 60 people on the first day – we hope to have the office by February 1. The people are here, they are working on a kind of work-shift environment but we hope that by nest year the office is fully open.

Industry estimates have been implicating an oversupply in the luxury segment, especially with new units coming up in the region. What is your view?

Number one, for 15 years I have heard this and I believe that it's going to happen some day. It is not unusual for it to have happened in some economies after Olympics or after a major event. What is interesting is that in Dubai, people seems to have more demand even though there was a large entry of supply. We're feeling it is a little bit out of balance right now because of the recession but overall there still had been a growth in leisure. The one thing I know is that demand will continue to increase. I've got lot of faith, in Emirates airline in particular, in what they're going to do to bring in the Asian market, bring in more travellers – this will enable us to continue to grow.

Have you been looking at Iraq as well?

I looked in Iraq eight months ago. If I find the right site – which we did not – we would.

How does the Middle East play in your global strategy?

It's very critical. It is critical from a source market perspective. At the same time, the Middle East is critical for us because of the exposure we get. There are lots of people that come to the Middle East for business and leisure and that is important for us. The Middle East is also a jumping point for us to get into North Africa. And guess what? We make a lot of money here too.


PROFILE: Edwin D Fuller President and Managing Director of International Lodging for Marriott International

Based at the company's headquarters in Washington, Fuller has operating responsibility for managed and franchised hotels spanning seven lodging brands and brand extensions outside the United States and Canada, including Hawaii and 68 countries in Asia, the Caribbean, Latin America, Europe and the Middle East and encompasses more than 350 hotels with almost $7 billion (Dh25.6bn) in annual gross sales.

Fuller joined Marriott in 1972 as a management trainee and has held numerous positions of marketing, sales and operational responsibility. These include Director of National and International Sales and Reservations; Chief Sales and Marketing Officer for Marriott International and General Manager of the Long Island Marriott and the Boston Marriott Copley Place hotels. In 1985, he was named Regional Vice-President for Marriott's Midwest region, based in Chicago. Four years later, he was appointed Regional Vice-President for the Western/Pacific Region, based in California. He assumed leadership of Marriott's International Lodging Operations in 1991 as Senior Vice-President and Managing Director. H was later promoted to Executive Vice-President and Managing Director. He was promoted to President and Managing Director – his current position – in 1997. He has been an Executive Corporate Officer since 1997 and chairs the international development committee.

Under his leadership, Marriott International's presence outside the US and Canada has grown from the 16 properties in 1991. Another 130 hotels are scheduled to join the company's international portfolio outside the United States and Canada over the next 36 months.

Earlier in his career, Fuller was credited with establishing Marriott International's original international reservations network and for its sales and marketing organisation in Europe and the Middle East. He served as a board member and chairman of SNR International, a reservations consortium based in Zurich.

Fuller attended Wake Forest University and is a 1968 graduate of Boston University.

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