ETurboNews recently had the opportunity to catch up with the vice president of development for the Middle East and Africa of the Intercontinental Hotel Group, Mr. Phil Kasselis, and with Mr. Karl Hala, director of operations for Africa, during a brief visit to Kampala. Owing to the short timeframe, only a few questions could be asked which are reflected here below:
How many managed properties does Intercontinental presently have in Africa and more specifically in Eastern Africa and the Indian Ocean region?
Mr. Phil Kasselis: Our current portfolio in Africa stands at 18 hotels with about 3,600 rooms, comprising 5 Intercontinentals, 2 Crowne Plazas, 7 Holiday Inn,s and 4 Holiday Inn Expresses. This covers our market from the top scale to the mid scale and includes a resort hotel on Mauritius, incidentally the first in Africa for us. We are, of course, constantly looking for opportunities like in Seychelles or on Zanzibar. Generally, our hotels are, however, located in the capital cities or commercial centers.
It was learned recently that IHG intends to double their Africa portfolio in the near and medium term. Will there be resorts and maybe even safari properties included in this development?
Mr. Phil Kasselis: You are right, Africa is a key area of expansion for us, hence, the reason for the current fact-finding visits. Some time ago, we carried out a strategic analysis of Africa in regard of our markets, and we found that in a number of key cities, IHG was not present or we had been there in the past and should consider re-entry into those markets. Africa has changed in recent years, often driven by a boom in resources and commodities, and we have now determined where we want to be on the continent. The challenges are to understand the countries, understand the markets.
What determines your choice of a location – is it the business market, the leisure market or a combination of both?
Mr. Phil Kasselis: When we are looking at new locations, a crucial factor is political stability. As a globally-operating hotel group, it is of utmost importance for us that our guests and our staff are safe. When we go into a country, it is never for the short term; our average management agreements are between 15 to 20 years in length, so the ability to do business there for the long term is important. Other factors are the location, the right business partners, and it is key to understand the cultural differences from country to country. When we enter a new country, it is normally with our 5-star Intercontinental brand to give our customers what they expect of us – a large property, often with a convention center, multiple restaurants, with all the required infrastructure to guarantee safe operations for guests and staff. Owing to the varying construction cost seen across the continent, it may not be feasible to build a 5-star hotel in a location, because the cost may be prohibitive, so these are all factors taken into consideration. This is more important in today’s financial environment when procuring equity, for some locations may be difficult. In some countries, where average room rates are relatively low, we would consider using our other brands, like Holiday Inn, which is also a full-service operation but towards the mid scale, while our Crowne Plaza brand is another option in the entry level upscale, between 4 to 5 stars. The new Crowne Plaza in Nairobi for instance is [a] modern contemporary hotel located in an emerging business hub outside the CBD, and it is an example for a good upscale business hotel complementing our Intercontinental operation in the city.
About the Crowne Plaza, was that hotel not due to open late last year? What caused the apparent delay?
Mr. Phil Kasselis: We had some construction delays and also suffered some storm damage during a heavy storm a couple of months ago. Procurement of construction materials for projects in Africa and the Middle East is often difficult. In this case, we worked with the owners to manage this difficult phase and focus on the opening now due shortly.
What brought you and Karl to Kampala for this, albeit very brief visit? Is there something happening here, and will we see an Intercontinental brand come up in the city?
Mr. Phil Kasselis: Africa is a key area in our expansion drive, and, of course, I cannot judge opportunities from my office in Dubai, I must and do travel across my area of responsibility to assess new openings, new opportunities. Uganda is part of this strategy as we are looking at spreading our brand in East Africa, so yes, we are looking at Rwanda, Uganda, and other countries to establish what we could bring to those markets and what these markets can bring to us. Right now we do not have any announcements to make; it is too early for that, but we are keeping a keen eye on this geographical area.
Intercontinental is the world’s biggest hotel operator, isn’t it?
Mr. Phil Kasselis: This is correct; we have over half a million rooms in our different brand portfolios, over 3,600 hotels around the world, and we are the biggest 5-star luxury brand with over 150 Intercontinental Hotels around the world.
So where do you want to go from here, being on top that is?
Mr. Phil Kasselis: What is really critical for us is to have the right hotel in the right location, so the actual number of hotels or rooms is not an absolute in itself. Especially here in Africa, it is important for us to know our owners with whom we do business long term. Our heritage in Africa has strong roots for many decades now, in some of the key capitals of key countries. My role is to re-focus on Africa, which we have done over the past 5 years, and where for instance countries like Nigeria or Angola have suddenly emerged with added demand for 5-star hotels.
Which is your biggest growth area geographically – Africa, Asia, the Middle East, Europe, the Americas?
Mr. Phil Kasselis: Our biggest presence is still in the US, but emerging markets like China have driven expansion in recent years, as has the Middle East and Africa. In China for instance, we already have about 100 hotels operating right now, with more in the pipeline, making us the biggest international hotel operator in that country. The Middle East and Africa, too, are considered growth areas and we are, of course, pursuing opportunities to spread the brands.
Will you follow the lead by some other global brands like Fairmont or Kempinski into the resort and safari property market?
Mr. Phil Kasselis: Not really, it is not our intention to branch out into resorts or safari properties. Our main focus remains our existing brands. There are already many challenges in doing business for us in Africa, and we [would] rather focus to have key hotels in key locations across the continent. Safari lodges and resorts would more than likely divert our attention away from our core business, where we concentrate on our clientele from the business and corporate world, governmental, airline crews, and leisure travelers. From the branding perspective, it would, of course, provide a big halo effect, but from a purely business perspective, it does make more sense for us to stick to our main strategy.
You used to have a property in Mombasa, right at the beach, some time ago. Any chance for you to go back there once more?
Mr. Phil Kasselis: To establish resorts in places like Mombasa or Zanzibar would largely depend on the room rate potential, but you are right, we were in Mombasa some time ago, and if an opportunity would come along, we would look at it. It may not have to be an Intercontinental, we could opt for a Holiday Inn or a Crowne Plaza, and what is also important is size. For a company like ours, it is hardly feasible to operate a hotel with 50, 60, or 80 rooms. We are offered to look at a lot of such properties, some of them very fine resorts, but in that range of keys, it really makes not much sense for us. There has to be a cost benefit for the owners, and we would look at a certain minimum number of rooms to achieve this for them. One option here would be franchises, where the owners manage the hotel, and we provide the systems for them, so it cannot and should not be ruled out completely.
What do you think sets you apart from your main global competitors?
Mr. Phil Kasselis: We at IHG have a lot of heritage, a long history going back a long way in the hospitality business, and Intercontinental as a brand, is now over 50 years old. Go back to the Pan Am days when Intercontinental was owned by them, and we developed Intercontinental Hotels wherever Pan Am was flying to in those days. This gives us a global perspective, having been the pioneer of a global brand of luxury hotels. In Africa, we have our operations base in Nairobi, and we have been in Africa for decades, which gives us a lot of experience and insight into the local markets in the many countries we operate in. We understand what it takes to operate in Africa; it is not just to put a name on a building but to create and maintain an infrastructure, train staff, retain them, work with local administrations, and we believe we have an edge over our competitors here.
Where does Intercontinental Hotels stand with social responsibilities as a corporate citizen? Can you give some examples what it is you do for instance in Kenya?
Mr. Karl Hala: Our major focus is on our communities and our environment, wherever we (IHG) work. Last year, we turned our attention to the green image when we dramatically reduced the hotel’s energy consumption through the introduction of state-of-the-art equipment, the total switch to energy-saving bulbs, and by encouraging guests to use electricity sparingly and switch off the room lights altogether when they are out (adds this correspondents that the fridges are not affected by the use of the master switch as recently seen when staying at the Intercontinental Hotel in Nairobi). This is a global initiative, also unfolding in Africa, of course, and it underscores our corporate philosophy and intent to give back to nature. Less energy consumption is good – good for the economy in general and good for the environment. In fact, the Kenyan hotel fraternity has since embraced the concept following our success, so this is good news for us to have spearheaded this initiative. We also have a partnership with National Geographic, and the message from that cooperation is: giving back to communities. This assists to maintain cultural values, uplift and empower them, be it in regard of environmental protection measures, provision of clean drinking water, or other pressing concerns our neighboring communities have.
Compliance with local laws and regulations, too, is very important to us, and, in fact, we adhere to the principle of using best international practice and standards in what we do, and our own internal environmental and safety standards unit is very important in this regard.
Added Phil Kasselis at that stage: We are a UK-based corporation, and our laws and regulations in the UK are very stringent and although trading on a global scale, we are subject to UK laws and respect and implement those wherever we are. Importantly, all our staff understand this philosophy, and wherever you go and ask them, they reflect our corporate values in their answers.
Talking about staff, some hotels have phenomenal staff turnovers. How about your own approach to your staff, and what is your turnover like?
Mr. Karl Hala: Our staff turnover is very minimal. We have in Nairobi a very, very good relationship with our staff, also in other hotels I am overseeing. Our staff are generally happy and content, their morale is high, and we have made this happen because they have career prospects, get opportunities to advance, and our internal training schemes give our staff all the tools and skills they need to do not just their present work effectively and in a motivated way but gives them chances to grow with us. When you have happy staff, you have happy guests, it is very simple.
Added Phil Kasselis: We encourage our staff to stay within the IHG system, and we give them the constant training and incentives to do so. Those interested to join IHG can see at www.ihgcareers.com what we have to offer and how we train and look after their career developments, so this is not just a job but a career choice for life. In fact, much of the little staff turnover we see is actually a transfer of skills through existing staff going to a newly-opened hotel, which is often going along with a promotion. Our expansion in Africa for instance, Karl can use and count on the staff they have trained across the existing hotels when opening new places, we have the infrastructure to doing that, and many other hotel groups find that a particular challenge, because they do not have these options when looking at a new location, a new hotel. Generally, the hotel sector is one of high mobility, and we are fortunate that many of our key staff are remaining with us, especially in Africa where this is so important.
So by creating your own management cadres, you have a pool of very skilled and well educated labor willing to migrate with you to new locations?
Mr. Karl Hala: That is exactly the case!
To what extent are you cooperating with local hotel colleges and hotel schools and what is your own training regime like for job starters for instance?
Mr. Karl Hala: I was an examiner at the Kenya Utalii College some time ago. Training for me, for us, is on the very top of the agenda, has been and will remain so, and our corporate training programs are a good example for our philosophy here. Our internal programs are run by professionals in their fields of expertise, be it on leadership skills, on sales, on any department in the hotel; and our management training program is strongly focused again on leadership, building on the foundations of earlier position specific training. In addition, we work, of course, closely with training institutions, private and public, as the vast majority of our staff originally comes from such schools and colleges. I can single out Kenya Utalii College and the Abuja School for Hospitality training, to name just two. We work with them and their lecturers to develop courses and course content, which benefits us and them, because they can train people who can then seamlessly start to work in a hotel. Once someone starts with us, there are then options to switch for instance from the rooms division to front office for instance, and one can rise through the ranks and become a general manager, so all opportunities exist and those willing to take advantage can do so. Each hotel has its own training department, and so has the group of course overall. In fact, IHG has its own academies now to train staff where they attain certificates and diplomas, which are, of course, recognized not just by us but even other hotel operators. They know the quality we produce there.
Added Mr. Phil Kasselis: Right; we have an academy, for instance, in Cairo developed by one of our owners and run by us, where we train staff on entry-level requirements, working then as room stewards, waiters, cooks, etc. and also offering advanced training for those seeking higher qualifications, of course. We also have a similar academy in China where it is crucial for us to train staff to the standards we think necessary to start working in our hotels, and we are presently looking to establish similar academies in Saudi Arabia, because in the Gulf there is now an affirmative action policy in place to absorb nationals into the workforce, right across the Gulf, so we need to be proactive and provide the facilities to train young people. Mind you, it is the 95 percent of our hotel’s workforce we are talking about here, and that is where the challenges are, to have them on top of their game. As an example, opening a hotel in Nigeria where there is literally no trained pool of labor available, when you open a hotel and need to employ say 600 staff, you almost have to train them yourself, because it exceeds the capacity of local hotel schools. When you open an Intercontinental Hotel anywhere in Africa, and your guests pay upwards of say US$300 a night, they expect nothing short than perfection and the same standards they get anywhere else in our hotels, and it does not work to make excuses that you have just opened or because this is a difficult place to find trained staff. Our clients do not care for excuses. They know when they enter our front door they are receiving Intercontinental standards and service. Those are the challenges we have learned to overcome, maybe better than many other hotels, because of our long relationship with Africa and our heritage in hotel operations here.
Added Mr. Karl Hala: You see, we started to listen to our staff, to be sure when we open a hotel we are ready, the staff are ready, and we got a lot of information from our staff’s observations and recommendations, suggestions made, to improve our services, to be able to open a new hotel when everything is ready for that moment. This has also led to a constant process of evaluations, not just once a year almost as a formality, but here with us this has taken root, because we learned the benefits from it, to be always aware and on top of things.
Added Mr. Phil Kasselis: Most big global companies have diagnostic tools to assess certain issues, performance, etc., and with us it is, of course, not just the bottom line, profit and loss, etc. but also very specifically the human resource reviews; call it 360 reviews or staff engagement surveys, our staff can, through web access, in total anonymity post their own experiences, their own assessments, and their own reviews of processes, so we always have a valuable tool to recognize a potential problem area in a hotel and can react in time to make changes where necessary. So we went beyond just guest surveys and added staff surveys to the menu available to our management to gauge performances.
Thank you, gentlemen, for your time and all the best in your expansion drive for Africa and in particular Eastern Africa where we could do with a few more Intercontinental Hotels, Crowne Plazas, or Holiday Inns.