SEATTLE — The boss of Rezidor, the parent company of the Radisson hotel chain, recently announced plans for hotel expansion in emerging markets. Wolfgang Neumann, insisted that the company will not be deterred from its business strategy despite last year’s Islamist attack in Mali. The attack occurred inside of a Radisson hotel, and it killed 22 people.
The company plans to open hotels in Iraq and Libya. “Obviously in these markets you have different additional safety and security procedures in place than in the more mature markets,” Neumann said.
Despite the security risk, Rezidor is pursuing emerging markets. “We are very focused on the emerging markets in our growth strategy,” said the Rezidor chief. The company currently has 106 hotels in development, primarily in Africa and the Middle East.
Africa, for instance, is high on Rezidor’s priority. The continent boasts a large workforce, improving infrastructure and a growing middle class. All of these factors add up to a huge potential market.
The company shows its faith in Africa with its 50 hotels in 22 countries. To help with hotel expansion, Rezidor partnered with four Nordic funds to help fund growth in Africa. The “Afrinord” fund will help finance and develop local businesses in the hopes of increasing the area’s attractiveness.
One reason for Rezidor’s risky business strategy is to shield itself from market volatility. Currently, there is not as much money in emerging markets as there is in the West. This means profits are not as high, but they are consistent.
By focusing on emerging markets, Rezidor avoids the boom and bust cycles of the mature markets. The company was not hit as hard as others in the 2008 recession. Instead it opened 16 hotels in the beginning of 2009.
The company’s strategy of focusing on emerging markets has the added benefit of creating jobs for the local population. A hotel requires people for construction, maintenance and hospitality, all of whom will be receiving a steady paycheck. Also, it helps increase tourism bringing foreign money into the emerging market’s economy.
According to the company’s press releases, in 2010 Rezidor created 2000 new jobs for the Africa and CIS (former soviet bloc) regions. The majority of these new hires were from the local population.
In addition to job creation, Rezidor’s emerging market strategy has helped alleviate youth unemployment through its Youth Career Initiative. The YCI is a 24-week skills program that aims to train young people for a career in hospitality.