“The problem that we have today is with operators. They're becoming too big. Basically, if you're an owner today, you're worried because they have so many rooms to fill. Are they [the operators] going to service you as an owner properly?” the sheikh said.The hotel chairman cited Marriott’s acquisition of Starwood as an example of operators becoming too big. The 2016 merger created the world’s largest hotel company with over 5700 properties and 1.1 million rooms, representing 30 leading brands from the moderate-tier to luxury in over 110 countries.
“They become like ‘the Walmart of brands’. They don’t want to manage anymore, they want to franchise or they want to focus on the big ticket five-star luxury brands where they make the most fees,” he said.“They're becoming only operators of brands and making fees, that is worrying for an owner. Do they have enough personnel to manage this? That's our problem.Do they have enough general managers to run the hotels? Today operators need to focus on people, not on brands. They are buying brands and not following the people and this is the biggest problem we have.”
Action Hotels currently has 13 hotels across the Middle East and Australia and two in the pipeline. The hotelier was a pioneer in bringing the midmarket hotel segment to the Middle East.With the proliferation of more and more hotel brands, the sheikh said he has never shied away from renegotiating contracts with operators if they are not delivering, or even switching to another one if the revenues are not up to scratch.
“We have done that, yes of course,” he said. “I cannot discuss the details. We have done that in the past, yes. If you don't perform, subject to the contract between us, yes you can change them.So how much leeway do hotel owners have to scrap an operator they are not happy with it? “It depends on the contractual agreement between the two parties,” he said. “But usually if they underperform contractually, we will remove them. You have a right to remove them and this happens.”