Fu­ture-proof­ing hos­pi­tal­ity with Dr. Martin Ber­lin, PWC


Hospitality News Middle East - - CONTENTS -

The Mid­dle East, like the rest of the world, is rid­ing an un­prece­dented wave of global mega­trends. World­wide de­mo­graphic shifts, a rise in pop­ulism, cli­mate change and re­source scarcity are just some of the com­plex and chal­leng­ing trends the re­gion must nav­i­gate in the years to come. Against this back­drop, Dr. Martin Ber­lin, part­ner at PWC, con­sid­ers how best to en­sure the re­gion’s many huge pro­jects stand the test of time The Mid­dle East is show­ing sig­nif­i­cant growth mo­men­tum. Its eco­nomic di­ver­si­fi­ca­tion am­bi­tions are pro­pel­ling a growth spurt that has seen the GCC hos­pi­tal­ity project pipeline val­ued at USD 147 bil­lion this year.

In the UAE, in par­tic­u­lar, hos­pi­tal­ity con­struc­tion ac­tiv­ity has ac­cel­er­ated in the march to­ward Dubai’s World Expo 2020 mega-event. Mean­while, in Saudi Ara­bia, a rad­i­cal so­ci­etal trans­for­ma­tion is un­der­way as the King­dom’s am­bi­tious Vi­sion 2030 takes shape. Many strands of the Saudi Ara­bian econ­omy are be­ing over­hauled, lib­er­al­ized and in­jected with bil­lions of dol­lars in in­vest­ment and pri­va­ti­za­tion, in­clud­ing the hos­pi­tal­ity in­dus­try.

Mega hos­pi­tal­ity project ex­e­cu­tion

To date, the GCC has bro­ken ground on nu­mer­ous bil­lion-dol­lar mega-pro­jects, in­clud­ing the Hos­pi­tal­ity District in Dubai's Mall of the World in the UAE, and Phase One of the Red Seas Touris­tic De­vel­op­ment in Saudi Ara­bia. Oman fol­lows the UAE and Saudi Ara­bia, with the third-high­est value of hos­pi­tal­ity in­vest­ment, thanks to its Tourism Re­sort project in Duqm, which is val­ued at USD 20 mil­lion. The ques­tion is this: how can the re­gion en­sure its mega-pro­jects stand the test of time and be­come com­mer­cially vi­able amid such a rad­i­cally shift­ing global land­scape? To­day’s mega­trends are mov­ing at such a fast pace that the Mid­dle East won’t be af­forded the lux­ury of a de­layed or in­ef­fec­tive re­sponse.

Our an­swer is to fo­cus on the near-term man­i­fes­ta­tions of the chal­lenges con­fronting us, us­ing a frame­work dubbed ADAPT. It ad­dresses in­creas­ing wealth dis­par­ity (asym­me­try), dis­rup­tion of busi­ness mod­els (dis­rup­tion), de­mo­graphic pres­sures on busi­nesses (age), in­creas­ing na­tion­al­ism (pop­ulism) and the de­clin­ing trust in or­ga­ni­za­tions (trust).

So what do th­ese mega­trends mean specif­i­cally for hos­pi­tal­ity?


Around 10 per­cent of the pop­u­la­tion now ac­counts for 61 per­cent of global in­come, which is cre­at­ing com­plex­i­ties in both hos­pi­tal­ity em­ploy­ment and prod­ucts. How will the re­gion cater for a chang­ing em­ployee and cus­tomer base?

To­day’s mega­trends are mov­ing at such a fast pace that the Mid­dle East won’t be af­forded the lux­ury of a de­layed or in­ef­fec­tive re­sponse In the case of a huge trans­for­ma­tive na­tion such as Saudi Ara­bia, which is fun­nel­ing bil­lions of dol­lars into the tourism de­vel­op­ment of over 50 Red Sea is­lands, will the fo­cus be on in­ter­na­tional or do­mes­tic tourism? And will na­tion­als be en­cour­aged to de­velop a ser­vice mind­set so they can be em­ployed in large num­bers across the tourism sec­tor?


Dis­rup­tion is be­ing caused by tech­nol­ogy and the im­pact of re­source scarcity. How long will it be be­fore Dubai or Saudi Ara­bia face the kind of wa­ter-use re­stric­tions Cape Town is cur­rently im­pos­ing, with tourists asked to re­strict show­ers to 90 sec­onds and swim in the sea rather than in pools? Now is the time to cre­atively think how the hos­pi­tal­ity in­dus­try can be­come sus­tain­able as it grows – a shift that re­quires align­ment from gov­ern­ments, ho­tels, tourist fa­cil­i­ties and the tourists them­selves – and in­no­vate.


For the re­gional hos­pi­tal­ity in­dus­try, de­mo­graphic pres­sures bring a wide range of both op­por­tu­ni­ties and chal­lenges. Saudi Ara­bia’s Crown Prince Mo­ham­mad Bin Sal­man has re­sponded to young peo­ple’s call for more en­ter­tain­ment, sport and tourism, open­ing up huge po­ten­tial in ev­ery­thing from theme parks to cin­e­mas. But it will take care­ful and man­aged trans­for­ma­tion to get the po­si­tion­ing right and avoid mixed mes­sages. For ex­am­ple, does a Red Sea re­sort sit well with her­itage and re­li­gious tourism?


In the Mid­dle East, the chal­lenges of na­tion­al­ism and iden­tity are turbo-charged. In the Gulf coun­tries, at least, ex­pa­tri­ates make up a large por­tion of res­i­dent pop­u­la­tions. How open will re­gional coun­tries be to vis­i­tors and what will the visa re­stric­tions look like?


For the tourism and leisure in­dus­try, mov­ing to­ward greater trust in a na­tional vi­sion and con­sen­sus is es­sen­tial for con­ti­nu­ity and growth. How will gov­ern­ment au­thor­i­ties re­act to the chal­lenges posed by the global mega­trends?

Tak­ing ac­tion

The world of hos­pi­tal­ity has be­come end­lessly di­ver­si­fied and a one-size-fits-all ap­proach is doomed to fail­ure. If the re­gion wants to con­tinue to es­tab­lish it­self as a global tourism hub, it will need to cater for an even big­ger range of of­fer­ings and cus­tomers.

In terms of the re­gion’s megapro­jects, it is im­per­a­tive that hos­pi­tal­ity lead­ers ‘glo­calise’ their as­sets and seek to find global USPS for their lo­cal at­trac­tions. For ex­am­ple, Saudi Ara­bia or Oman may choose to use their re­spec­tive her­itage and culture to at­tract leisure tourists.

It also goes with­out say­ing that com­pa­nies need to im­ple­ment dig­i­ti­za­tion strate­gies – as fast as they can. Hos­pi­tal­ity firms should fo­cus on end-to-end dig­i­ti­za­tion and cy­ber­se­cu­rity.

Fi­nally, for any hos­pi­tal­ity strat­egy to be ef­fec­tive, it must be drilled down to all the rel­e­vant au­thor­i­ties to cre­ate align­ment across stake­hold­ers. Saudi Ara­bia is lead­ing the way in this re­spect, by en­sur­ing hos­pi­tal­ity is high on its di­ver­si­fi­ca­tion agenda.

If re­gional coun­tries are able to take on board the prin­ci­ples of the ADAPT frame­work, there is ev­ery chance that they will be able to ad­dress the chal­lenges of global mega­trends in the right way and within the re­quired time­frame.

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