< Previous50 C EO M I D D L E E A S T JA NUA RY 20 19 BUSINESS | TOP INTERVIEWS 2018JA NUA RY 20 19 CEO MIDDLE E A ST 51 So an integrated approach and a new model to operate sustainably was needed, to transform from a donor agency that just signed cheques. It needed to spread awareness about the organisation and raise additional funds, but, crucially, to understand how the disbursements were being utilised, and if there was progress in the initiatives. So we embarked on a journey to understand the fundamen- tals of the challenges impacting global education, how UN agencies and other stakeholders worked, and simultaneously built our own capabilities as an organisa- tion internally and in terms of outreach. As a former banker, how does measur- ing impact at Dubai Cares compare from your days in finance? Return on investment (RoI) is something both companies and charity foundations have in common-year career at National Bank of Dubai (now Emirates NBD), I looked at it as a business. The differ- ence at a company, however, is that RoI is measured in terms of money. As a ‘re- formed banker’ at a foundation, I now measure it in terms of people. At Dubai Cares the RoI is the number of children educated. In 2017, and that number will grow a lot bigger, it was 18 million chil- dren in 53 countries. Would you ever go back to banking or does your heart now lie with this job? I love numbers. Math was the only subject I ever got an ‘A’ in as a student. And I’ve always been someone that walks into and office happy about getting something done. However, charity has been an important part of our family. And here I walk into the office with a buzz in my mind about how I should help. And I love doing it. HEN TARIQ AL GURG JOINED DUBAI CARES IN 2009, THE ORGANISATION only had three departments. “His department didn’t exist,” he says, pointing to a corporate communications manager sitting across from us. “All we had were programmes, campaigns, and back-office support. But this organi- sation needed to work like a business, with a marketing and communications department, a fundraising function... it needed to be sustainable, and people needed to know why it existed.” Tied since its inception in 2007 to the Millennium Development Goals agreed upon by the world in 2000 – to help al- leviate a global education imbalance, promote gender equality in education, and get governments, donors agencies, UN agencies, and third party providers working closer together – Dubai Cares is bridging an essential gap, especially for a country in the Arab world. “Often we’re the only foundation from the Middle East at an event where the world’s largest donor agencies are pitching their services to us. And it’s all because we have demonstrable results that prove we are able to make a difference.” However, the path to becoming an organisation of its kind, a foundation that works across all areas of global educational development, is one that required a concentrated focus, as he explains. How did the Dubai Cares story begin? It was sometime near the end of 2006 that Sheikh Mohammed [Bin Rashid Al Maktoum, UAE Vice President, Prime Minister and Ruler of Dubai] began an eight-week fundraising drive, calling on the UAE community to contribute to a cause close to his heart. At the time he hadn’t mentioned what that was but high net worth individuals, along with public and private sector entities, contributed $480m to the drive. Then, at an unveiling event, Sheikh Mohammed spoke about the global need to make an impact, and announced that the money raised would go to an organisation called Dubai Cares. This new body would work to break the cycle of poverty by imparting quality education to children in the developing world. And in what was a complete sur- prise he doubled the $480m raised with the same amount of his own. So Dubai Cares began with a remarkable startup capital of $960m. And you joined two years later in 2009? Yes. Dubai Cares officially took root in September 2007. The first six months in- volved simply setting up the organisation with another six months spent study- ing how the organisation could go about its mission and seeing which countries needed the most help. The next year it bought into programmatic interventions in various countries. I joined in 2009 to help the organisation’s work in those countries earmarked for aid, but, more importantly, to make Dubai Cares a sus- tainable organisation that could contin- ue to deliver impact. How did you go about doing that? When I joined Dubai Cares it had made a good start but it wasn’t working be- hind the scenes. There hadn’t been any announcements about the activities it was undertaking, even though it was ac- tive in 14 countries. Also, at the rate that the organisation was disbursing funds in three- to five-year programmes, it would have depleted its startup capital rapidly and left it with no plan for the future. W OVER THE LAST DECADE, DUBAI CARES CEO, TARIQ AL GURG HAS TRANSFORMED THE ORGANISATION FROM ONE THAT SIMPLY SIGNED CHEQUES INTO A MAJOR GLOBAL NGO THAT HELPS COUNTRIES MAKE SURE THEIR CHILDREN AREN’T LEFT BEHIND EDUCATION CAN’T WAIT BY SHAYAN SHAKEEL52 C EO M I D D L E E A S T JA NUA RY 20 19 BUSINESS | TOP INTERVIEWS 2018JA NUA RY 20 19 CEO MIDDLE E A ST 53 growth in the region was the decision to step out of a six-year contract to operate three hotels with the Habtoor Group, leaving a void that competitor Hilton swooped in to fill. “It was a logi- cal step to take, all things considered,” Sorenson says, and the step back hasn’t deflated any of Marriott’s drive to con- tinue working with the entity, with oth- ers, or to grow in Dubai either. “Hotel owners see the value we bring and how we demonstrate returns along with the growth in our brands,” he says. REGIONAL PROMISE Despite losing 1,400 rooms at Al Habtoor City, Marriott will have opened five more properties in the UAE by the end of 2018, an “extraordinarily exciting market that has experienced continued extraordinary growth,” he says, adding that the nation still holds rich promise, despite slower growth in recent years. “What I’ve seen gives me a lot of enthusiasm for the next decade and more,” he added. While Sorenson is bullish on the UAE – and Saudi – markets, he believes luxury brand hotels might have had their time in the sun. n. Marriott has five luxury properties across 15 locations in the UAE, but 70 percent of its development pipeline is for select-service brands such as the Aloft and Element. Sorenson believes the UAE and overall GCC are mirroring a growth trend that gives more credence to why Marriott won’t slow its development portfolio. “The growth of select service isn’t just a Middle East phenemonon,” he says. NDER CLEAR BLUE SKIES STANDS the stark brown residences of the Bulgari Hotel, set against a backdrop of the Arabian Sea shimmer- ing in the sun. Keen eyes will discern camouflaged attendants sheltering from the glare outdoors, and you half expect a pack of Dalmatians to be lounging near a pool amid the lush grounds. It’s at this most pristine resort in Dubai’s most upscale district, that the king of Marriott International’s castle, Arne Sorenson, holds court during an interview with Arabian Business. The company’s global CEO allows us a peak into the mind of the world’s biggest hos- pitality executive, and how he thinks the company can conquer the industry and, along the way, this region. Sorenson is pragmatic, with a disarm- ing sense of humour. He also has carries a relentless drive to grow, a fact he estab- lished two years ago during our last con- versation with him. Fresh after closing a $13.6bn merger with Starwood Hotels in March 2016, he was in Rwanda at the Af- rica Hotel Investment Conference, on the path to creating the defining hospitality group of our time, when he remarked that, “We have just one hotel room in 15 around the world, which is just six percent.” BUMPS IN THE ROAD Today, Marriott is the biggest hospital- ity chain the world has ever seen, yet Sorenson is still gunning ahead. “We’re competing to win, not just today, not just in 2019, but in 2030 and decades from then. We’ve been in business for 91 years and are much more interested in succeeding in the long term than the short term,” he says. The breakneck pace of growth – for some context, Marriott now has over 1.1 million rooms in more than 6,700 hotels worldwide, with another 1,000 hotels to come – hasn’t come without its pains, as Sorenson acknowledges. “It would be nice to keep talking about how the Bul- gari is the leading hotel in the region,” he says. “But the fact of the matter is that a big business like ours will inevi- tably see bumps in the road. The right thing to do is face them, solve them, and move forward.” Sorenson is hinting at challenges Marriott has faced this year. Concerns about declining industry margins in the UAE, where the group currently has 54 hotels, roughly 15,000 rooms and nearly half of its luxury portfolio, “have been ongoing for years,” he says. “Operation- al issues that we didn’t anticipate” also manifested in the form of a combined Starwood and Marriott loyalty and re- wards programme that has yet to bear a name. About the latter, Sorenson has a plan. “The first phase involved the merging of technology systems, call centres, and the much less exciting stuff that yields powerful results further down the line. So we wanted to be ready with all that before the marketing began,” he says. When asked if Marriott now has a name for the programme he speaks with au- thority, “Yes and I know it,” as if to say it will be disclosed when he is ready. Meanwhile, more prominent among Marriott’s bumps on the road toward U DESPITE GROWING PAINS AS A RESULT OF A BREAKNECK PACE OF GROWTH, NOTHING WILL STAND IN THE WAY OF MARRIOTT CEO ARNE SORENSON’S RESOLVE TO CREATE THE GREATEST HOSPITALITY CHAIN THE WORLD HAS EVER SEEN THE RELENTLESS PURSUIT OF GROWTH BY SHAYAN SHAKEELSPOTLIGHT ONE FOR THE TEXTBOOKS A UNIQUE COMPANY PHILOSOPHY THAT TURNS EMPLOYEES TO INVESTORS MALABAR’S EXECUTIVES SHARE THE SECRETS TO THEIR RARE BUSINESS MODEL THAT LIVES THE TALK AND WALKS THE WALK By Megha Merani “WE STARTED AS A SMALL OPERATION IN KERALA WITH EIGHT INVESTORS, FRIENDS AND FAMILY. FROM DAY ONE, OUR CHAIRMAN, MR MP AHAMMED, TRIED TO INVOLVE MORE PEOPLE IN THE BUSINESS AT DIFFERENT LEVELS AS INVESTORS AND AS EMPLOYEES. IT’S LIKE A FAMILY BUSINESS IN A CORPORATE STRUCTURE, WHICH IS VERY RARE” 54 C EO M I D D L E E A S T JA N UA RY 2019 JA N UA RY 2019 CEO MIDDLE E A ST 55 SPOTLIGHT I t’s not everyday you hear executives of a multi- billion dollar company casually mention that one of their organisation’s drivers is also a shareholder in the company. That, in essence, is the philosophy of what has taken jewellery retailer Malabar Gold & Diamonds from its small start in 1993, in the city of Calicut, Kerala, in the Southern part of India, to 250 outlets in 10 countries across India, the Middle East, Southeast Asia and America. As the company celebrates 25 years in the business, Shamlal Ahamed MP, Managing Director, International Operations, Malabar Gold & Diamonds, and KP Abdul Salam, Group Executive Director, Malabar Group, tell CEO Middle East that, in fact, 19.4 percent of the company’s 2,752 investors are full- time employees across different levels of the organisation. Its business model has been based on “the association of many people”, Salam, 59, explains. “We started as a small operation in Kerala with eight investors, friends and family. From day one, our chairman, Mr MP Ahammed, tried to involve more people in the business at different levels as investors and as employees. It’s like a family business in a corporate structure, which is very rare.” The ideology helps in two ways: first, employees remain committed and care about the business that they are working for because they have ownership; and second, to a consumer or outsider entering a Malabar store, he or she is meeting a stakeholder. Front-end operations and store management are run by an inner-circle store head, who is an investor in the company, Ahamed, 37, adds. “That (system) has really worked for the company.” he says, especially in The executives behind Malabar Gold’s stunning growth include Shamlal Ahamed MP, Managing Director, International Operations, Malabar Gold & Diamonds, and KP Abdul Salam, Group Executive Director, Malabar Group56 C EO M I D D L E E A S T JA N UA RY 2019 SPOTLIGHT terms of employee retention and culture, which in turn of course has impacted productivity and growth. “In comparison (to other firms), our employee turnover is very less for the retail industry. “Many employees who have worked with us since we started are still working with us. Our first employee who joined us is both an investor and still works with us. Our driver in our Dubai office for 10 years is also a shareholder.” Equity is open to anyone in the company, but the allotment isn’t automatic. “You don’t get the share just because you work here,” Ahamed goes on to clarifiy, “you should have something to bring to the table.” “Our chairman famously said: ‘Ours is an empire built on trust, teamwork and goodwill. We derive our strength from many. Time from those who have time, talents from the talented, resources from the resourceful, and investment from the people who have the money; some from all our team, and all from some of our driving forces. ’” And for those who have put in their bit so far the investment is set to further multiply. The Indian-born international jewellery brand’s global expansion plan hopes to see the company triple its retail network from 250 showrooms to 750 outlets in the next five years. The Malabar Group has said it aims to achieve an annual turnover of more than $6.85 billion by 2023. About 40 percent of the group turnover is expected to be generated from the company’s operations outside India. It’s plans in the US market include targeting South Asian customers in Chicago, New Jersey, Dallas, Houston and Los Angeles. “We always wanted to expand our reach to become global,” Ahamed says. “With 53 stores in the UAE, we are the largest shareholder here so we don’t want to grow further (here). We hold more than 20 percent - the largest share - of the market in the 22 carat jewellery segment.” So far the plans have seen the group pursue interests well beyond jewellery: from real estate to retail, including hypermarkets, as well as IT services and farming – Ahamed told us in a previous interview that farming was where the Malabar Group’s chairman first started honing his business skills. However, gold jewellery for the masses is where Malabar reaps most from what it sows, something in which Ahamed admits the Group is having to weather a softening market. Market conditions JA N UA RY 2019 CEO MIDDLE E A ST 57 SPOTLIGHT following a plummet in crude prices have affected the business but he is optimistic because currency fluctuations have driven up investment in gold. Malabar has seen a “single digit” decline in sales in comparison to last year, he says. “Consumer confidence is weak. The money is there... it’s not vanished from the market... (but) everyone is cautious and they’re not spending like before. People have reduced their spend.” However, the retailer’s market share grew from 17 percent to 20 percent. And with the influx of tourists this Dubai Shopping Festival (DSF), the implementation of the tourist VAT refund scheme, and attractive promotions, Salam is optimistic about 2019. “Last year we had a very good DSF because of the pre-VAT sale (in 2016),” Salam, also a member of the board at Dubai’s Gold & Jewellery Group, says. “This year it is also (looking) positive because the market is almost recovered. It will not be as good as last year but it will be like back-to-normal conditions.” This year’s promotions include special coupons for diamond jewellery purchases, with weekly raffle draws for a chance to drive away in a BMW. Meanwhile, the company plans to double its headcount from 13,000 to 25,000 employees within the next five years, in order to manage its growth – but while staying true to its original culture and philosophy that has earned the trust and loyalty of customers across the globe. “In each and every shop, we have a person who has invested in the business, representing the owners,” Salam says. “Jewellery is traditionally a business in which you need a lot of trust. Customers don’t want to the know the product, they want to know who is selling it, and a guarantee that they can come back if there’s an issue. Because at the end of the day, they are buying an investment.” Ahamed adds: “You hear about this sort of thing in textbooks, but here we live it.” “MANY EMPLOYEES WHO HAVE WORKED WITH US SINCE WE STARTED ARE STILL WORKING WITH US. OUR FIRST EMPLOYEE WHO JOINED US IS BOTH AN INVESTOR AND STILL WORKS WITH US. OUR DRIVER IN OUR DUBAI OFFICE FOR 10 YEARS IS ALSO A SHAREHOLDER” ْْْْْIn 25 years, Malabar Gold has grown to 250 outlets across 10 countries. By 2023, it plans to have 750 stores and a turnover of nearly $7 billion58 C EO M I D D L E E A S T JA NUA RY 20 19 “THERE ARE TWO TYPES OF PEOPLE WHO WILL TELL YOU THAT YOU CANNOT MAKE A DIFFERENCE IN THIS WORLD: THOSE WHO ARE AFRAID TO TRY AND THOSE WHO ARE AFRAID YOU WILL SUCCEED” RAY GOFORTH “SUCCESS USUALLY COMES TO THOSE WHO ARE TOO BUSY TO BE LOOKING FOR IT” HENRY DAVID THOREAU TALKING BUSINESS “SUCCESS IS NOT FINAL. FAILURE IS NOT FATAL. IT IS THE COURAGE TO CONTINUE THAT COUNTS” WINSTON S. CHURCHILL “THE ROAD TO SUCCESS AND THE ROAD TO FAILURE ARE ALMOST EXACTLY THE SAME” COLIN R. DAVIS NOT TO BECOME A MAN OF SUCCESS. RATHER BECOME A MAN OF VALUE ” ALBERT EINSTEIN “DONT BE AFRAID TO GIVE UP THE GOOD AND GO FOR THE GREAT” JOHN D. ROCKEFELLER “I OWE MY SUCCESS TO HAVING LISTENED RESPECTFULLY TO THE VERY BEST ADVICE, AND THEN GOING AWAY AND DOING THE EXACT OPPOSITE” G. K. CHESTERTON “WOULD YOU LIKE ME TO GIVE YOU A FORMULA FOR SUCCESS? IT'S QUITE SIMPLE, REALLY: DOUBLE YOUR RATE OF FAILURE. YOU ARE THINKING OF FAILURE AS THE ENEMY OF SUCCESS. BUT IT ISN'T AT ALL. YOU CAN BE DISCOURAGED BY FAILURE OR YOU CAN LEARN FROM IT, SO GO AHEAD AND MAKE MISTAKES. MAKE ALL YOU CAN. BECAUSE REMEMBER THAT'S WHERE YOU WILL FIND SUCCESS” THOMAS J. WATSONJA NUA RY 20 19 CEO MIDDLE E A ST 59 SOTHEBY’S EXPLORING DESERT ARTS HUB WITH SAUDI GOVERNMENT THE SAUDI CULTURAL CENTRE WOULD BE ESTABLISHED IN THE AL ULA REGION AUDI CROWN PRINCE MOHAMMED BIN SALMAN HAS SET MULTIPLE AMBITIOUS AGENDAS for his desert kingdom. Turning it into a major cultural destination may end up being one of the highest-profile. For part of the plan, the Saudi government has turned to Sotheby’s, the biggest US auction house, and Allan Schwartzman, the co-chairman of its fine art division. He rose to fame by creating an arts dreamland in the Bra- zilian jungle. The Saudi cultural centre would take root in Al Ula, an archaeologically rich region in the northwest of the country. There, the Nabateans, a for- merly nomadic tribe of skilled craftsman and traders, carved elaborate buildings out of sandstone more than 2,000 years ago. The region contains an ancient city, Mada’in Salih, which was Saudi Arabia’s first Unesco World Heritage Site. The collaboration with So- theby’s is in an “exploratory phase,” Rosie Marsh, a spokeswoman for the royal commission, said in an emailed statement. S PLEASURE CULTURE AND ARTS 2 MILLION THE EXPECTED NUMBER OF ANNUAL TOURISTS TO AL ULA REGION BY 2035 Vital industry The tourism sector is a key part of Saudi Arabia’s Vision 2030 economic diversification plansNext >