New Hotels in the Region Ripe for New Management

By Dana Miller, Hotel News Now

Euan McGlashan, global partner and CEO of Valor Hospitality Partners, said his team’s network of relationships has helped spread to the Atlanta-based firm’s ownership, development and management portfolio across the globe.

A deal in the Middle East marks Valor’s latest success in stretching its geographic footprint, and is just the start of the company’s expansion in that region, he said.

In 2022, Valor partnered with the state-owned Investment Corporation of Dubai to operate the 288-room Radisson Blu Hotel Dubai Deira Creek, the 290-room Wyndham Dubai Deira, the 131-room Days Hotel by Wyndham Dubai Deira and the 94-room Super 8 by Wyndham Dubai Deira.

Valor’s global portfolio now stands at 90 hotels, including properties in the U.S., United Kingdom and Europe, South Africa and soon to be in North and West Africa.

McGlashan said he’s confident Valor will reach a minimum of 25 to 30 hotels in its portfolio across the Middle East in the next five years — the majority added through management contracts with new construction hotels or existing owners moving to a franchise.

“I’d like to be more, but again we are assessing where all the opportunities lie,” he said.

How the Deal Came Together

Relationships were key to Valor’s latest deal in the Middle East.

First, a contact who was working on noteworthy hotel projects in Dubai approached the company and said: “There’s a shift coming; there’s new hotels opening up and I do think there’s a play for third-party” operators, McGlashan said.

Also, Valor executives had been in touch with the Investment Corporation of Dubai since before the pandemic, though ICD was courting two or three other third-party companies to potentially take a few of its Dubai hotels from managed to franchised, McGlashan said.

“We kicked [the joint venture] off with taking over four of their existing hotels with potentially more to come,” he said.

Benefits of Franchise Model

McGlashan said there’s no question that hotel owners across the Middle East are realizing the benefits of a franchise model as they learn more about it.

It’s something that wasn’t widely advertised in the region in the past because the brands spent a lot of money setting up the infrastructures and wanted to control the management of the properties, he said.

“Over time, two things have happened. One, the owners and developers have become savvier and understand the franchise is the bigger trading model in the U.S., U.K. and Europe. And two is they want a full-service hospitality management company like us to manage because I think they feel as if they get more personalized attention, more of an emotional connection with the operator and they feel as if they have more control over their asset, whether it’s driving commercial performance or having more of a say in budgets and approval processes,” he said. “It’s a win-win. As far as I’m concerned, our job is to make the brands look really good.”

McGlashan said Valor is very thoughtful about where it invests, and he’s confident there are more opportunities to obtain management agreements in the Middle East.

“The region is exploding,” he said.

However, it’s taken Valor a while to even get to where it is now within the region. The process included meeting with key executives, learning the landscape and learning the types of partners Valor wants to work with, he said.

“You need to be willing to make an investment and you need to be willing to take time because there are great owners and some owners you just don’t want to be associated with,” he said.

Smooth Operations

A key focus at Valor is maintaining strong employee culture, and McGlashan said the company has been successful in extending that culture to the staff at the hotels it manages.

One of the most important things to do is to minimize any fear the staff might have about a new entity taking over, he said.

“When we actually go into a region, we have partners and senior leaders and they get immersed in everything Valor. We get them immersed in our value system, operating philosophy, objectives, goals and mission; we spend a lot of time with them,” he said. “In the case of specifically these four [Dubai] hotels, we have been successful in global resource sharing.”

McGlashan said Valor formed a global task force to train new on-property teams. Included on that task force is Valor’s chief financial officer from the U.K., who’s now chief financial officer for Europe, the Middle East and Africa.

“We just make sure we take a long time to pick the leader for that region, so we’ve got our regional office leader for [the Middle East] now. We weave ourselves into the fabric of what we’re doing there and those hotels have done really well,” he said.

https://www.costar.com/article/1684594896/valor-hospitality-ceo-says-middle-east-full-of-investment-opportunities