Home/Magazine /Interviews/ Investment Insights For The Muslim Travel Market [interview]

Investment Insights for the Muslim Travel Market [Interview]

Jul 2018

1.  What  makes  the  Halal  tourism  sector  so  attractive  for  investors?

 In  business  school  you  learn  how  to  find  a  gap  in  the  market  and  fulfil  the  needs  of  your  target  customer.  You  learn  that  the  more  differentiated  your  product  is, and the  more  niche  your  market  is,  the  higher  the  chances  you  have  of  succeeding  and  creating  sustainable  returns.  Obviously,  niche  does  not  mean  small.  Niche  means specialised.  

 The  Halal  tourism  sector  has  the  same  business  parameters  for  success.  The  Halal  niche  is  not  only  specialised,  it’s  also  very  large  as  we  have  all  seen  from  the studies  by  CrescentRating.  One  would  therefore  expect  the  investment  community  to  be  very  interested  in  tapping  into  such  market.  Unfortunately,  investors  have  been a  little  shy  until  now  while  some  have  only  started  showing  interest  in  the  last  few  years.

 Shaza  Hotels  is  a  good  example  for  being  a  pioneer  in  the  field.  The  company  was  launched  in  2010  to  provide  travellers  with  a  very  high-quality  hotel accommodation  within  a  respectful  environment,  offering  the  appropriate  facilities  and  amenities  for  Muslims  that  would  make  their  stay  comfortable  and  compatible  with their  needs.  Shaza  is  currently  the  only  international  hotel  brand  crafting  its  offering  for  the  Halal-conscious  market.  No  other  hotel  operator  of  our  standard  and  with our  expertise  is  doing  this.  

 Now  the  question  is  why  did  it  take  investors  so  long  to  realise  the  potential  of  the  Halal  tourism  industry?  Why  are  we  seeing  this  as  a  recent  phenomenon?  One of  the  reasons  could  be  attributed  to  the  boom  of  the  travel  and  tourism  industry  in  the  last  decade,  and  hence  there  has  been  more  focus  on  this  large  overall market.  Another  reason  could  be  that  the  travel  market  is  now  saturated  with  mainstream  hotels  and  other  components  of  the  travel  chain,  so  investors  have  started to  look  for  other  unique  and  differentiated  markets  that  would  allow  them  to  generate  higher  returns  rather  than  compete  in  a  very  busy  market  place.  With  this, Halal tourism  has  emerged  as  a  very  promising  investment  sector.  So,  it  is  probably  a  combination  of  many  reasons,  but  despite  the  potential  of  the  market,  the  investors’ appetite  remains  surprisingly  low. 

2.  Do  you  think  the  current  investment  climate  into  the  Halal  travel  space  is  adequate?

 Unfortunately,  it  is  not  as  adequate  as  one  would  expect.  Despite  the  staggering  numbers  and  the  immense  potential  of  the  Halal  travel  space,  investors  remain cautious.  They  are  adopting  a  wait  and  see  attitude.  They  want  to  see  how  other  -  more  entrepreneurial  -  investors  perform  in  the  sector  before  joining  them.  

 I  often  share  with  others  how  challenging  it  is  for  a  visionary  group  like  Shaza  to  see  the  potential  in  developing  hotels  that  are  Halal-friendly  and  yet  few  investors have  entered  this  space.  We  know  there  is  demand.  The  problem  is  that  there  is  very  little  supply.  My  role  is  to  continuously  promote  our  brand,  find  the  interested investors,  convince  them  to  entrust  Shaza  with  their  asset. 

3.  Why  should  established  brands  in  hospitality  and  tourism  industry  pay  attention  to  the  Muslim  travel  market?

 A  small  part  of  me  is  hoping  that  they  don’t,  so  that  the  pie  remains  bigger  for  Shaza  Hotels!  Jokes  aside,  the  industry  needs  more  players  fulfilling  the  needs  of Muslim  travellers  and  offering  a  more  diverse  product  across  various  segments.  The  market  is  large  enough  for  hotel  brands  to  enter  the  space  and  help  us  increase aware-ness  about  Halal-conscious  hotels,  especially  in  non-Muslim  countries  like  France,  Germany,  Spain,  the  UK  and  even  Japan.  This  will  also  encourage  more investors  to  enter  the  Halal  space.  

 Hotels  always  seek  to  attract  a  diverse  market  to  fight  seasonality  and  maintain  sustainable  RevPAR  levels.  The  Halal  market  will  do  just  that,  and  all  it  takes  for existing  hotel  brands  is  a  small  effort  to  ensure  that  the  basic  needs  of  the  market  are  met.  What  makes  Shaza  stand  out  is  the  fact  that  the  brand  is  focusing  only on  Halal-conscious  travellers  in  all  our  hotels  worldwide  and  we  are  not  satisfied  with  only  offering  the  basic  needs.  We  spent  several  years  studying  the  market  and developing  a  product  that  is  authentic  in  its  experience  and  contemporary  in  its  delivery.  I  can  proudly  say  that  we  are  the  first  international  hotel  group  that specialises  in  this  market.  This  has  allowed  us  to  gain  a  strong  competitive  advantage  in  terms  of  market  understanding,  penetration  and  brand  recognition.

4.  In  your  opinion,  which  service  sector  stands  to  benefit  most  from  the  growing  Halal  tourism  industry?

 Restaurants  may  have  been  amongst  the  first  businesses  of  the  Halal  tourism  chain  to  provide  Halal-certified  food  in  non-Muslim  countries.  Travellers  have  often researched  whether  such  places  are  available  before  even  choosing  a  destination  or  a  hotel.  They  want  to  ensure  that  they  can  find  Halal  food.  Many  airlines  have followed  in  recent  years  by  offering  Halal  dishes  on  their  menu,  and  some  hotels  have  started  adapting  their  offering  to  provide  essential  amenities  or  different operating  times  of  their  restaurants  during  Ramadan.

 Booking  platforms  and  travel  consultants  have  also  emerged  like  HalalBooking  and  Serendipity.  So  various  components  of  the  travel  chain  have  started  to  come together,  but  in  my  opinion,  there  is  still  room  for  growth  in  the  Hotel  sector.  Some  travellers  will  no  longer  be  satisfied  with  hotels  that  simply  provide  basic amenities.  There  must  be  a  deep  understanding  of  the  customs,  cultures  and  beliefs  in  order  to  offer  a  service  that  is  respectful,  knowledgeable,  and  genuine.  Hotels must  offer  a  tailor-made  experience  and  this  is  what  Shaza  is  doing.

5.  How  important  is  innovation  in  the  Muslim  tourism  space?

 Innovation  is  important  in  any  tourism  space.  Take  technology  for  instance.  Tourism  is  about  creating  memorable  experiences  and  in  today’s  world  experiences  are often  dependent  on  technology.  Whether  it  is  technology  to  share  those  experiences,  technology  to  live  those  experiences,  or  technology  to  facilitate  those experiences.  

 The  Muslim  tourism  space  is  no  different,  especially  when  you  realise  that  the  largest  part  of  the  Muslim  popula-tion  that  will  dominate  the  Halal  travel  sector  is  the millennials.  Technology  to  this  generation  is  an  essential  part  of  life  and  any  component  of  the  tourism  chain  must  embrace  this  fact.  What  makes  innovation  even more  important  to  Muslim  tourism  is  the  fact  that  this  space  is  new  and  growing  fast.  People  have  only  recently  started  paying  attention  to  that  market  and  like anything  new,  the  industry  starts  first  by  focusing  on  fulfilling  the  basic  needs  before  looking  at  innovation  and  more  advanced  needs.  So,  there  is  room  for  growth. 

Shaza  has  recently  launched  its  upscale  brand  Mysk  by  Shaza  to  specifically  cater  to  the  Muslim  millennials.  A  Halal-friendly  accommodation,  young,  vibrant,  focusing on  smart  technology.  The  brand  has  been  very  well  received  by  the  investment  community  and  we  have  already  opened  our  first  Mysk  hotel  in  Muscat,  Oman,  and signed  two  more  in  Dubai  and  Kuwait.  We  are  also  in  advanced  negotiations  for  a  Mysk  resort  in  Indonesia  as  we  are  now  actively  seeking  to  enter  the  South-East Asia  markets. 

6.  As  the  Muslim  travel  market  continues  to  mature,  when  is  the  right  time  for  investors  to  get  on  board?

 I  believe  the  time  to  get  on  board  was  10  years  ago!  Luckily  for  those  who  have  just  started  inquiring  about  the  market,  there  is  still  a  great  opportunity  to  do  so since  very  few  investors  have  tapped  into  the  market  in  the  last  decade.  

 As  I  said  earlier,  there  is  demand  but  little  supply.  If  you  look  at  the  hotel  investment  cycle,  it  takes  sometimes  one  year  to  negotiate  hotel  agreements  with  an operator,  six  months  to  design  a  hotel,  and  two  and  a  half  years  to  build  it.  If  an  investor  wants  to  enter  the  hotel  business  today,  he  is  actually  fulfilling  a  need  in 2021.  The  investment  returns  begin  to  appear  only  four  years  from  now.  It  is  of  course  faster  to  acquire  an  existing  hotel  or  convert  a  building  into  a  hotel  that meets  the  needs  of  the  Halal-conscious  traveller,  but  we  have  often  seen  that  building  hotels  that  are  purposely  designed  to  have  the  right  facilities  and  configuration for  our  market  is  usually  the  preferred  route  of  many  investors.  

 At  the  end  of  the  day,  Halal-friendly  hotels  should  not  be  only  about  Halal  food  and  not  serving  alcohol.  Any  hotel  can  do  this.  For  Shaza,  it  is  about  privacy, experience,  guest  flow,  respect.  These  principles  can  only  be  achieved  in  a  tailor-made  hotel  programme  that  must  be  purposely  crafted  for  the  Halal  market.  

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