As Egypt’s hospitality sector sees a remarkable recovery and becomes one of the top performers in the region, with the business landscape maturing at a fast pace, foreign hotel chains are starting to bring in new concepts and models to the local market. Invest-Gate conducts a one-on-one interview with CEO of Kerten Hospitality Marloes Knippenberg, one of the newest brands that has taken the hospitality industry by storm with its state-of-the-art boutique hotels and international-scale expertise. Knippenberg shares the main drivers behind the company’s decision to tap into the Egyptian hospitality sector, while giving a scoop of its domestic planned investments.
What factors do you initially consider before deciding to collaborate with any developer or penetrate a new marketplace?
As a leading mixed-use development specialist, Kerten Hospitality has identified Egypt – with its strategic location and booming hospitality sector – as being ripe for expansion. The most important factor when operating is seeking owners with a vision, who can foresee where the world of living/ hospitality/working is heading and can determine how they will be intricately connected in the future, while having the drive to create a destination that actively addresses that. As I often say, those with large capital, funds, or lands are easily found, but it is those with a vision who can seal the deal.
Kerten Hospitality develops projects that give the best return on investment (ROI) for any owner – something that really adds to the possessed real estate product, and the only way to do so is through collaboration. Currently, we are heading east and are looking forward to expanding into new emerging markets, which have no saturation in the lifestyle segment and hold a high proportion of young adults under 30 years old. More significantly, we grow in places that have the foremost investors for us, ones who share our long-term vision.
In Egypt, specifically, we respect our partners’ efforts to support and encourage entrepreneurship, in addition to those focusing on boosting the local economy and creating local jobs, whilst bringing a world-class experience to the anticipated project.
What are the main challenges that Kerten Hospitality has encountered in the MENA Region’s hospitality industry, and what are the strategies you propose to resolve these issues?
By far, the greatest challenge is bringing something new to the market, where global brands are – or were – traditionally preferred, and where being the “first” is not the drive, but rather being the best to get one’s feet on the ground. But, once that wheel gets going, it goes faster than anyone could ever expect.
Other shortcomings that remain looming are legislations and technology adoption. Each MENA country has different rules; for example, heavy security and bringing off-the-shelf tech products are a hassle. Simply put, replacing a desk in the lobby with a kiosk check-in can be challenging. However, with the combination of our global expertise and our partners’ understanding of the local market, we always find an effective solution.
Lastly, multi-tasking is still an issue in many markets we are expanding into. Although this will improve over time, empowering people with the skills required to operate across a multifunctional destination remains time-consuming.
How do you think the MENA region, especially Egypt, is reacting to your new brands?
There is plenty of untapped potential in the region, even among already thriving markets such as Egypt. Additionally, we see an appetite among owners and investors for concepts that challenge market expectations and meet the ever-changing needs of next-generation travelers.
I believe there is no better time than now to introduce our mixed-use approach, which combines luxury and mid-market hotels, branded residences, serviced offices, and food and beverage (F&B) concepts to create advanced hubs that meet the needs of the local community as well as foreign visitors, while enabling guests to create, network, or retreat.
Since first launching our hotels and serviced apartments in Turkey, we recently entered the Middle East and opened doors to the region’s first “Ouspace,” a modern workspace and business club, located in the dynamic city of Jeddah, KSA. Our second move is to soon open the 114-key “The House Hotel Jeddah,” a luxury boutique property that is part of a prestigious mixed-use destination operated by Kerten Hospitality.
Our portfolio comprises aspirational and lifestyle-driven brands that have been purposefully designed to meet the needs of a well-connected, savvy generation of travelers. For instance, the fast-growing luxury boutique brand, “The House Hotel,” offers guests authentic customized experiences, while “Cloud7” is an inventive and affordable mid-market brand, focused on locality and culture.
What is different about our approach is that although each brand works well on its own, it also shares a seamless connection that blends and assorts all trademarks within a single building or development. The projects we are delivering in Egypt epitomize this approach with a combination of fully-furnished serviced apartments, as well as, hotel rooms and lofts brought together in a way that creates exceptional venues for communities to connect through the different means of living, working, and recreating.
What did fuel your decision to tap into Egypt?
With consumers’ expectations and desires changing significantly in recent years, Egypt stands as a key destination, and working with the right people is the first and foremost priority for us when seeking new collaborations. We absolutely see the North African country as a destination for luxury boutique brands, fueled by a demand for customized experiences that attract guests to local communities. Meanwhile, we look for partners, who really embrace and reflect our personalized approach.
We have found this with the Egyptian real estate company, Tatweer Misr. In this particular case, we have built a shared connection over some time. In fact, when both parties first started exploring the idea of teaming up, we were infancy, but we are now growing together and are creating mutual benefits. Indeed, I cannot wait to see where the future takes us!
What do you have in the pipeline for Egypt or the Middle East?
We are excited about what we are working on in Egypt, with a strong pipeline of projects coming up. We are tailoring eight new hotels that cater to a diverse set of travelers across two of Tatweer Misr’s flagship projects, namely IL Monte Galala in the Red Sea resort of Ain Sokhna and Ras El Hekma’s Fouka Bay, situated on the North Coast.
With our hotel developments, we are creating innovative spaces for working, living, and socializing, with a combined total of 2,350 guest rooms and serviced apartments. Depending on the project’s location, each property will adopt its own unique interpretation of our brands to meet the dynamic demands of the connected generations and varying cultures.
Our first launch will be “The House Hotel and The House Residence Ras El Hekma,” which is set to open in Fouka Bay by 2021. Other properties in the same destination are “The House Hotel and The House Residence Royale Ras El Hekma,” “Cloud7 Hotel and Lofts Ras El Hekma Lagoon,” and “Cloud7 Hotel and Residence Ras El Hekma.” These hospitality spots will span a total built-up area of 121,000 square meters, with 1,000 keys of fully-furnished serviced apartments, hotel rooms, lofts, complemented with an array of lifestyle activities and F&B options.
Meanwhile, IL Monte Galala comes as part of a visionary master plan that includes the “Cloud7 Hotel and Lofts Sokhna,” “The House Hotel and The House Residence Sokhna,” “Cloud7 Hotel and Lofts Sokhna Lagoon,” and “The House Hotel and The House Residence Sokhna Cliff.” All in all, we will maintain 1,350 hotel rooms, serviced apartments, and “The House Hotel” branded villas.
How do you think Egypt’s hospitality sector can be boosted further to lure more investors?
Primarily, there is a need for more global visibility of what Egypt has to offer, which is critical in repositioning and reinstating the country on the global tourism map. It is about more than just increasing visitor numbers and changing people’s perception of such a nation.
The country should be promoted as a choice for long-term stays so as to appeal to the growing number of visitors who prefer to rent or own a holiday house in a “bleisure” destination, where business and leisure meet. That is why our branded serviced residences in Egypt will provide long- and short-term rentals, together with the opportunity to own a “home away from home” in a fully-serviced destination.
What is your forecast for Egypt’s hospitality sector?
We keep our fingers on the pulse, in spite of seeing Egypt evolve over the past few years and enter into a new phase of growth. The numbers say it all, with around 11 mn tourists visiting the country last year, leaving out that recent reports from the International Tourism and Travel Council (WTTC) showed growth of four times the global average – or 16.5%; all of which are extremely positive signs.
Today, the industry accounts for 20% of Egypt’s gross domestic product (GDP) and with a political climate that is favorable for new entrants like ourselves, we are extremely optimistic that the country is back on the world travel map and is here to stay. In effect, Kerten Hospitality plans to increase its footprint further in this fast developing market.
Read more about Kerten Hospitality’s vision as well as its future plans in Egypt on pages 22-23 at Invest-Gate’s November issue.