• "Hotel Owners Are Not Looking for Long Term Return."

  • Adil Khan is the managing director of AMS Hospitality Group, a privately held provider of hotel brands, solutions and services. Established in 2008, AMS’s brand portfolio spans a range of hospitality segments, from premier economy, to select service properties, mid-scale hotels and resorts. AMS has been managing the Hub Hotel, which was opened in December 2018 in Addis Ababa. EBR’s Ashenafi Endale sat down with Khan to learn about AMS’s activities in Ethiopia and elsewhere.

    Why did you choose to invest in Ethiopia?

    Ethiopia is a hub, and the entrance to Africa. It is highly important for our advance into the African market. We have a presence in Ghana and are working to enter Nigeria, Angola and Uganda. We fully support the African hospitality industry, because there is opportunity in it. There is highly lucrative business.

    I know global hospitality from all sides, as a manager, brand owner, contractor and consultant. I have 30 plus years of experience in the global hospitality industry, so I know where to save money, the challenges, how to close deals, how to train people and how to build. I can contribute a lot to emerging markets like Ethiopia.

    What are the unique attributes you bring to Ethiopia?

    I bring experience and understanding. In any new market, first you should understand the culture, and people, and build the business around it. I do everything, starting from training. That is the only way I can maintain the same brand standard and service quality in Ethiopia. If you take owners of big brands in Addis Ababa, they sit in Dubai, Johannesburg, or London.

    Ethiopia is a center of Africa. There are 135 embassies in Addis. These members of the global community need high level service. Look at Sheraton or Hilton or other big brands. Hilton is deteriorating and that is not the standard of Hilton in other countries.

    The key thing is to transfer knowledge, technology and skills. We are small and not comparing ourselves with anybody else but driving our own car. We are doing the right thing, because we have the right philosophy, principle, plan and experience.

    Hotel consultants are now bringing many international hotel brands to the country. But these hotels fail to maintain the same quality as the original brands.

    First, they are brokers, not consultants. A true consultant says what the owner has to do to maintain the brand and more. They do not tell hotel owners about maintaining a brand, the initial cost, the ongoing cost as well as the royalty fees and marketing and human capital expenses.

    Even though many new hotels are opening, the price for a room in Addis is still expensive. Why?

    Rooms are expensive across Africa. Addis is expensive only when compared to the United States or Asia. The reason is because they can. For instance, a newly opened hotel in the capital charges USD270 a night. But the price of a hotel room of the same standard in the United States is not more than USD170.

    There is an emerging market in Ethiopia but the reality is it is a cash based economy. In a cash based economy, you want to spend only once. You invest and build a hotel and then you want make money the rest of your life. Hotel owners are not looking for long term returns.

    My initial investment was high. But I rent a room for USD99 while suites cost USD160 per night. This is reasonable. We are far less pricy than Sheraton, Hyatt, Hilton, Golden Tulip and so on.

    Is there a mismatch between the demand and supply in the hotel industry?

    No. Right now, the number of hotel rooms is growing but the demand is stuck at the same level it was years ago. The major factor is low tourism flow. The hotel industry cannot grow without tourism.

    But hotel managers are saying the occupancy rate has been increasing lately.

    I can answer this question from two perspectives. The market is not different. It is all about perception. A few hotels might be busy, but you cannot judge a market like that. The availability of rooms has been changing every six months as more hotels open.

    But the revenue has not improved across the industry.

    What has really improved is business related to conferences in some hotels. This is only one business segment, which does not represent the industry. Not all hotels consider it a major revenue generator and it is not year round. The people who are saying the hotel business is improving are either hotel owners, or so called hotel consultants because that is their job. You should visit all the hotels to make a real assessment.

    Everybody is saying the hospitality industry is coming around. It is not. The truth is, the industry revenue and occupancy has been buckling. So many hotels are bankrupt. The hotels and banks who supplied those loans just keep saying it is reviving to comfort each other.

    Your hotel didn’t go through the grading process in Ethiopia. Why?

    The star rating is an international rating program. It involves 105 standards, which are available online. The issue I have in Ethiopia is that the government put in place different requirements and standards. Some of the requirements also overlap.

    I have issues with the people trained to grade hotels. I do not think they are doing justice to the industry. They should undertake the rating assessment every year. But they don’t. They say they do not have the financing to do so. How are they going to maintain standards in the industry without funds?

    There is a limited number of professionals in the hotel industry, so many new hotels snatch experienced staff from existing hotels. Did you do the same?

    We have 58 employees to start. But that number will go up to 80. I myself interviewed over 350 applicants, but recruited only 50. Only two of them were looking for a career while the rest just wanted a job.

    Every student in developing countries is raised being told to become a doctor or engineer. I understand this because it is the same culture in Pakistan. They join the hospitality industry only when they fail to succeed in one of the two and become unemployed. Nobody asks students the right questions to know and guide their true passions. That is why there are few Ethiopian general managers, supervisors and chefs.

    Under these circumstances, either you hire many people to do different jobs, or train a few people very well to do multiple jobs. There are a lot of smart people. They are really fantastic. But they need somebody who can teach them the right things.

    I always look for three things when people come looking for a job: honesty, loyalty and passion. I can teach everything else but those three. So we must find the right people and put them in the right place.

    What kinds of curriculum do you recommend for Ethiopia?

    Hospitality courses should be taught by dedicating 40Pct of the time to theory and 60Pct to practice. This is not happening in most higher education institutions. This is why I agreed to collaborate with Jimma University on several projects including in the preparation of syllabi and guidelines.

    Your hotel is close to the hotel under construction by Ethiopian Airlines, which just opened. It [Ethiopian’s hotel] will take all transit customers. Do you think your hotel will be affected by this?

    I do not need such business. We already have our own market network, especially with embassies. The hotel is providing service to the Kenyan and United States embassies this week, for instance. We also have a strong online presence and aggressive marketing strategy. This hotel purposely serves business meetings.

    Anyway, we welcome competition. But the absolute judge is the customer. The power of customer is completely ignored in Ethiopia. The customer makes or breaks you.

    What support did you get from the government?

    Nothing. And I do not need anything. But I brought a lot of expertise. I am happy if I can make a small difference in the industry.

    What are the biggest challenges you experienced?

    I expected the worst, when I came. But I was not ready to hear anybody who tells me this is how things go around in Ethiopia. Besides, we have good partners. The only challenge is that industry revenue is coming down and everybody is facing that. The demand is also declining. I know everything is a challenge in Ethiopia. But I am confident we will provide our partners a good, stable and long term return.

    You used to manage major international hotel brands. Why did you stop?

    We have a total of 250 hotels globally. I used to own and manage international brands like Crown, Plaza, Holiday Inn, La Quinta, Red Carpet Inn Orange, Hampton Inn, Best Western, and others in major global cities. But it is difficult to own big brands. The royalty fees and marketing charges of these brands are high. Then I started using my own brands such as Westfield, Fairview, Numa and Sona. The royalty fees and membership charges of these brands are 50Pct less than international brands.

    What are your plans?

    We are looking into projects in Mekelle, Hawassa, Bahir Dar and Jimma in addition to expanding our hotel in Addis. We have a total of six brands, we brought four. Westfield is the four plus star. Fairview is also a four star brand while Sona is three star. We are also planning alcohol free hotels in the Middle East. We focus on Middle East, Africa and Asia.

    The owner of the hotel constructed the hotel and we brought our brand and manage the hotel. We will make our own investments in 2021. We are strategically looking at which African country the investment will be.