INTERVIEW: Ritz-Carlton Riyadh’s GM spells out two-fold challenge for Kingdom’s hotel industry

Illustration by Luis Grañena
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Updated 15 March 2020

INTERVIEW: Ritz-Carlton Riyadh’s GM spells out two-fold challenge for Kingdom’s hotel industry

  • Hotel manager’s career trajectory reflects an almost-military discipline instilled in him by his father, a major general
  • "To run a hotel properly you need discipline, smartness and attention to detail,” says GM Mohammed Marghalani

DUBAI: For a few weeks in late 2017, the Ritz-Carlton in Riyadh became probably the most famous hotel in the world when it was used to accommodate people involved in Saudi Arabia’s high-profile anti-corruption investigation.

But ever since, it has been “business as usual,” according to the general manager, Mohammed Marghalani  — taking care of the visiting presidents, heads of state and business leaders that make up most of the luxury hotel’s clientele, as well as the occasional honeymoon couple or affluent tourist family wanting a bit of up-market rest and relaxation in the Kingdom’s capital.

“I’ve worked at several big hotels in the Kingdom, but the Ritz-Carlton is different. It is the major hub for all government events in the capital. I was here when President Trump visited, and for events like GCC summits and the Future Investment Initiatives (FII), and have seen a lot of Hollywood celebrities here. There is nothing quite like it in Saudi Arabia,” he told Arab News.

Anybody who has spent any time at the monumental structure northeast of downtown Riyadh, or the equally imposing King Abdul Aziz Conference Center next door, would surely agree. In fact, it is arguable that there is nothing quite like the Ritz-Carlton Riyadh anywhere else in the world.

Whereas most luxury hotels will have a presidential suite for the use of elite guests, the Ritz has 49 “royal suites,” each designed to head-of-state specifications; it has 48 executive suites that would be classed as “presidential” in many five-star establishments; and it has 396 deluxe rooms.

If you get lucky on the “dynamic rate” system used by most hotels, like airlines, to match demand with supply, you might get a deluxe room at the weekend for a bargain SR1,000 ($270) per night; but a royal suite can cost anything between SR15,000 and SR45,000.

It has one of the biggest all-day dining restaurants in the world, the Al-Orjouan, which can seat 450 guests at a time, as well as other fine-dining establishments with European, Asian and Arabic cuisine; it has a luxury swimming pool and spa complex; and it has the Strike bowing alley, popular with families at weekends.


BIO

Born: Riyadh, 1982

Education: 

  • Prince Sultan College for Tourism and Management, Abha KSA
  • Glion Institute of Higher Education, Switzerland.
  • Ecole hoteliere de Lausanne in Switzerland, MBA

Career

  • Manager in training, Four Seasons KSA
  • Chief accountant, Fairmont-Raffles-Swissotel, Riyadh
  • General Manager, Ritz-Carlton Riyadh

Set in 52 acres of landscaped gardens, it was originally planned as a luxurious “guest palace” for official visits, but management of the hotel was soon handed over to Ritz-Carlton as a profitable commercial proposition.

Marghalani joined the Ritz-Carlton in its pre-opening period in 2011, after stints at Fairmont and Four Season properties in the Kingdom, focusing on the financial side of hotel management. He was appointed general manager at the beginning of this year.

His career trajectory reflects an almost-military discipline instilled in him by his father, a major general in the security forces. “All my friends at school were focused on engineering, management and medical careers, but my father told me to get into hospitality and tourism when I left high school in 2000. He told me I would be a pioneer, and now I value his vision,” Marghalani said.

“The hotel business has some similarities to the military, I’ve noticed. To run a hotel properly you need discipline, smartness and attention to detail,” he said.

After a spell in the Prince Sultan College for Tourism and Management in Abha in the Kingdom, he graduated in hospitality and tourism management in 2006 from the Glion Institute of Higher Education in Switzerland, followed by an MBA from the Ecole hoteliere de Lausanne in the same country. 

A few years later, the hotel and tourism sector in Saudi Arabia would take off under the Vision 2030 strategy to diversify away from oil dependency, which placed great emphasis on two big initiatives: Providing leisure facilities at home for Saudi citizens more used to spending leisure time abroad; and encouraging foreign tourists to come to the Kingdom.

By 2030, tourism is expected to grow to 10 percent of the Kingdom’s GDP, worth about $100 billion, and provide 1.5 million new jobs for the young workforce serving the needs of a projected 100 million visitors per year. It is an ambitious program for a country mainly accustomed in the past to catering for the needs of religious pilgrims to the Two Holy Mosques in Makkah and Madinah for Hajj and Umrah.

There is a big number of international brands looking at developments in some of the mega- projects, like Neom, the Red Sea, AlUla and Qiddiya.

The challenge for Saudi Arabia is two-fold, Marghalani believes: First, in providing the right number of hotels across the market range; and second, in equipping Saudis with the skills to run them to international standards.

“From all I’ve heard in the industry, I know the pipeline for new hotels in Saudi Arabia is there, even just over the next three years. There is a big number of international brands looking at developments in some of the mega-projects, like NEOM, the Red Sea, AlUla and Qiddiya,” he said.

But the immediate need is for accommodation to house the thousands of attendees to the G20 summit in November, when the leaders of the most important countries on the planet will be arriving in the Kingdom for their annual power gathering, along with their significant entourages and thousands of media representatives.

“All the studies I’ve seen show that we have enough capacity in the five-star space, with existing stock and planned openings. There is probably a need for more mid-range hotel accommodation, which I am sure the authorities and investors are looking at seriously,” he said.

On the question of Saudi manpower for all those new establishments, he pointed to the success of the Tahseen program developed in partnership between the Kingdom, the Marriott International hotel chain — which owns the Ritz-Carlton brand — and Cornell University of New York, which trains young Saudis in hospitality skills and is now entering its third year. Some of the big megaproject developments, such as Qiddiya and the Red Sea Development, have their own schemes to assist Saudis in training for the hospitality business.

The customer profile of the average Ritz-Carlton guest is rather different from most other hotels in the Kingdom, Marghalani said. About 45 percent of its business comes from what he calls “special corporate” — the consultants, executives and bankers who travel to the Kingdom for business during the week, when the hotel is usually full.

Roughly the same proportion of revenue comes from government groups and events, the most notable being the FII annual gathering when, again, the hotel is full.

The remaining 10 percent are made up of Saudis visiting Riyadh from other cities, or from “honeymooners, weekenders, transients and normal tourists” who want a bit of Ritz luxury during a holiday in the Kingdom.

“I think this last category will grow in 2020 with the opening up of online visas for foreign tourists. We saw a big increase in this sort of business at the end of last year for the Riyadh Season and the WWE wrestling event. When Qiddiya opens, it will be another boost for us — it’s only a short drive from the Ritz-Carlton,” he said.

But the big event this year will be the G20, although the main venue for the event has not been decided yet. The leaders’ summit are so big and well attended that few venues can expect to stage the whole event, while security also demands some segregation of the elite from rest of the delegates and media.

“I’m not sure where the main event will be, that is up to the G20 authorities. But the Ritz-Carlton is usually the main hub for similar events to the G20, like FII,” he said.

There has been some speculation that the FII event, usually staged in October, might be postponed because of the G20 event coming just a month later, but Marghalani saw no issue. “FII has been held here for the last three years and each time it has been better and more successful. I can see no reason why there might be a conflict with G20,” he said.

For an establishment that has become inextricably connected with the Saudi and global elite, the hotel has an active program of social and community engagement — giving uneaten food to the Riyadh needy, recycling water in the grounds, and charitable programs in the Holy Month of Ramadan.

“And we have all LED lightbulbs throughout the hotel,” Marghalani said. With so many grand chandeliers, that must run into the tens of thousands, and make for a considerable energy saving.


Make or break days for global oil ahead of OPEC crunch meeting

Updated 08 April 2020

Make or break days for global oil ahead of OPEC crunch meeting

  • OPEC, led by Saudi Arabia, were on Thursday scheduled to take part in virtual discussions with non-OPEC members, led by Russia, about a possible deal to revive the OPEC+ alliance
  • On Friday, energy ministers from the G20 nations, under the presidency of Saudi Arabia, will convene in another digital forum that will bring in the third part of the global oil equation – the US

DUBAI: The global energy world, in the midst of crisis as demand slumps to unprecedented levels due to the coronavirus disease (COVID-19) pandemic, faces two days that could make – or break – the oil industry for months to come.
Leading producers from the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, were on Thursday scheduled to take part in virtual discussions with non-OPEC members, led by Russia, about a possible deal to revive the OPEC+ alliance that fell apart in Vienna at the beginning of last month.
Then, on Friday, energy ministers from the G20 nations, under the presidency of Saudi Arabia, will convene in another digital forum that will bring in the third important part of the global oil equation – the US, currently the biggest oil producer in the world.
If no deal is reached from the two days of oil summits, the immediate prospect looms of a further fall in crude prices and, with global storage facilities already filling rapidly, the possibility of major exporters “shutting in” oil fields, jeopardizing future production.
Energy experts say the purpose of the meetings is two-fold: To reach agreement on how to limit the vast quantities of oil that are still being produced even as demand collapses; and to present some kind of united front in geopolitical terms in the face of the biggest economic recession since the 1930s.
The most visible immediate sign of any success from the meetings will be an increase in the price of crude oil on global markets. Brent crude, the Middle East benchmark, has lost nearly half its value in the past month.
The first aim – to try to balance oil supply and demand – is the more difficult. Global demand has fallen by at least 20 per cent from the usual daily consumption of around 100 million barrels, oil economists have calculated.
But, following the collapse of the OPEC+ deal that was putting a lid on supply, all producers have been pumping more crude. Saudi Arabia is producing more than 12 million barrels per day (bpd), a bigger volume than at any time in its history. All OPEC members, as well as Russia, have said they will increase output.
In this stand-off, US President Donald Trump intervened last week to say that he had spoken to Saudi and Russian leaders and that he “expected” a cut of 10 million, possibly even 15 million, bpd.
That looks like wishful thinking. For one thing, it would not rebalance markets. Anas Al-Hajji, managing partner of US-based Energy Outlook Advisers, said: “The amount of the cut is relatively small given the major drop in demand.”
There are also some difficult relationships to smooth over in the OPEC+ alliance. Saudi Arabia and Russia exchanged angry statements last weekend, each accusing the other of starting the oil price war. Iran, with big reserves but hampered by US sanctions from exporting in large quantities, said that it might not take part in the conference.
The choreography of the two meetings also presents hurdles. The US will not be present at the OPEC+ meeting, but American Secretary of Energy Dan Brouillette said he would take part in the G20 event.
Because it is a free-market industry, America cannot order its oil producers to reduce output, but most analysts are agreed any attempt to rebalance global supply would be impossible without a US contribution.
By going first, Saudi Arabia and Russia are “playing blind” without knowing what the Americans are thinking. Neither would want to agree big price-restoring cuts only for US producers – under big financial pressure at current levels – to swoop back into the market.
This week there have been some signs that the Americans are considering their own versions of cutbacks. The biggest US company, Exxon Mobil, said it would reduce capital expenditure on future projects by 30 percent; the US Energy Information Administration said oil production would fall by nearly 1 million bpd this year, in response to falling demand and financial pressures.
But even if the Saudis and Russians cut substantially alongside other big OPEC producers such as the UAE, and the Americans enter a long-term pattern of falling demand, it is still hard to see how cuts could reach the 10 million barrels Trump “expects,” let alone 15 million.
J. P. Morgan, the big US investment bank, said that it expects OPEC+ to come up with combined cuts of about 4.3 million barrels, most of that coming from Saudi Arabia, Russia and the UAE. “If it’s 4.3 million it only puts off the day when global storage gets filled completely,” said Robin Mills, CEO of Qamar Energy consultancy.
Storage facilities are nearly at the brim. Malek Azizeh, director of the premium facilities at the Fujairah Oil Terminal in the UAE, joked that he was going to hang a sign on the terminal gates: “Thanks, but no tanks.”