Outside the box
Hotelier Awards multi-winner Doha Marriott looked beyond its own walls to find new business opportunities. Departing general manager John Hazard tells Hotelier Qatar’s Rob Willock that those initiatives have exceeded all expectations
Room sales dominate the revenues of most hotels, with other meaningful top-line contributions coming from F&B, spa and leisure, and conferences and events.
There can’t be many properties whose trading statements include line items for industrial laundry, royal palace facilities management (FM) and jet-boat parking.
And yet all those features are on the books at the Doha Marriott. What’s more, its external business interests have now overtaken its hotel activities.
“Our outside services are now worth $15m, while the hotel does $14mn; and this could rise to $22mn-$25mn this year,” reveals GM John Hazard, whose diversification plans helped the hotel to win a hat-trick of trophies at last year’s Hotelier Awards.
They say that necessity is the mother of invention. Well the necessity came from six consecutive years of revenue decline and eight years of missed budgets at Doha Marriott. As the city of Doha developed around it, the oldest 5-star hotel in Qatar found itself in an increasingly unfashionable, secondary location, albeit with a loyal ex-pat customer base.
And the invention was a change in strategy – to drive revenues and maximise profits. Hazard and his team moved the hotel away from a rate-based approach and secured key volume contracts with companies including Qatar Airways, Gulf Drilling and Al Jazeera.
“From 2013 to 2014 we achieved a 23% growth in occupancy and a 21% growth in REVPAR,” Hazard says, suggesting that he didn’t sacrifice too much margin while driving the top line.
There was F&B success too with the creation from scratch, in answer to new licensing restrictions, of The View Poolside Restaurant in only five weeks in Q1 2014. This resulted in a 110% year-on-year revenue increase, representing more than $1mn in additional un-budgeted revenues and the bar returned the full investment within one week’s trading.
It was while Hazard was busy putting the hotel business back on track, a new and ultimately bigger opportunity presented itself.
“We were originally contacted by the owning company [Katara] to take on some services at its HQ, an 11-storey tower in Lusail. And we quickly realised that could be quite profitable – a lucrative way to drive sales forward,” recalls Hazard.
Since those relatively humble beginnings, Doha Marriott has developed a number of contract service businesses, including an industrial laundry operation, which takes care of high-value accounts such as Qatar Airways, the Palaces of the Emir and other international hotel chains.
Coping with laundry volumes on that scale – currently running at 36 tonnes a day – was always going to require a bigger facility than the usual hotel basement lavoir.
Five years ago, the Doha Marriott invested in a site on a Doha industrial park for a ‘full, standalone commercial laundry’.
“The laundry uses the best German equipment from Kannegiesser. It’s all computerised, and so complicated that when it goes wrong we have to fly in an engineer from Germany,” remarks Hazard, himself a regular visitor to the site, having personally overseen equipment and technology upgrades.
Hazard’s laundry expertise has all been learned on the job. “I came here as a hotelier from London,” he says, “and had certainly never run a laundry. Hotel laundries normally comprise four dudes folding towels in the basement – usually mostly terry. And everything else we’d send out.”
This is on a different scale. And still it grows. Hazard reveals: “We’ve just won a new three-year contract with Waseef to providing laundry services for workers covering three big, heavy grids, which will involve having people full-time on site.”
And even though the Qatar Airways work will eventually decline – “as they have built their own new laundry” – Doha Marriott Laundry Services is quickly reaching capacity.
“So we’re expanding the existing facility at a cost of $548,700 (QAR2mn) with a new garment finishing line.
And we may next year expand the basement of the facility.”
Don’t be surprised if you see Marriott dry cleaning implants start to appear in Doha’s supermarkets soon.
Another important, if less reliable, revenue stream for Doha Marriott comes from its outside catering service.
“It’s more sporadic, compared to the laundry business, which is 24/7,” admits Hazard, but it can be very high profile. Doha Marriott is catering for Al Shaqab – one of the biggest equestrian events in the world. It’s a five-day event that requires a five-day set up. And last year it brought in US$1m for Doha Marriott Catering Services.
“Plus we do catering for private villas and beach parties. In fact we’ve just signed exclusive deals with Café del Mar and Pacha for three events each in the first half of the year. Hopefully we’ll do the same in the second half.”
The outside catering team has a core of 12 staff and can call on additional resource from the hotel’s F&B team for large events. Plus, Hazard has a deal with a local casual-labour company, on the understanding that it provides same people each time for the sake of operational knowledge and consistency.
That degree of staffing flexibility is not always an option. Doha Marriott provides FM services, from housekeeping to maintenance support, to three royal palaces. “We have 126 full-time staff in the main palace, including 68 in housekeeping, and 25 in engineering, plus back-office admin,” says Hazard. These have to be dedicated teams, as palace staff are subject to strict airport-style security checks.
Marina and marine dry parking
The final ‘outside service’ provided by Doha Marriott is actually on-site. The hotel’s marina provides secure in-water berthing and dry parking facilities for local boat owners.
“The new trend is jet boats,” says Hazard. And they can’t be left in the water because of the risk of barnacles fouling the hull and jet pump. So within 20 minutes of a customer’s jet boat returning to the marina, the Doha Marriott team will land it, wash and park it in a space formerly used as the hotel’s staff carpark. “It’s a great stream of revenue – that old staff car park is now full of jet boats!” remarks Hazard.
With all these additional money-spinning commercial activities, Hazard admits that there was a risk that the hotel management team would take their eye off the core business.
“The hotel is still the mothership,” Hazard insists, whose final act at Doha Marriott was to recruit a focused, dedicated team to run the outside services business.
And that will be essential, because the hotel itself is about to embark on a major renovation project, in Q1 2017 if all goes to plan, Hazard reveals. “The hotel is going to be put back to today’s vision of the original 1970s design – with a new blue tower to mirror the other tower. We’re using an Italian design firm – and the plans are pretty stunning.
“The spa will be rebuilt in a new place. And the pool will waterfall down to a resort pool below. There will be villas in the garden. And we’ll rebuild the marina with a new restaurant.
“It may as well be a new hotel,” he adds.
The hotel will probably close, for as long as two years. “It’s a major renovation and they’ll be excavating four stories right outside the front door to create a new three-level car park,” he says, as the hotel will be losing its top car park, which will become a public road.
“By early 2018 this part of town will be in full redevelopment for the World Cup. And the city will become very territorial – you’ll have Lusail, West Bay and the Southern Corniche (this area). The main World Cup stadium will be next door along with a theme park, an Olympic rowing lake and road tunnels to the airport and other parts of town.”
Assuming the hotel does close, its outside services businesses will again come in handy, allowing hazard to redeploy displaced staff for the duration of building works. “Most hotels would send associates home, but we will move them all to the other side of the business,” says Hazard.
Hazard says the outside services are protecting the Doha Marriott from a very tough operating environment, which he claims is affecting all the hotels in Doha, thanks to a softening of the market just as a glut of new rooms hits the city (from the Westin Doha, Hilton DoubleTree, Rotana City Centre, Shangri-La Doha etc). “There’s a rate war going on out there. And it looks like every segment of our hotel operations will be down this year, with the possible exception of the spa.
“Outside services will be our saviour this year.”