Tom Engel, TR Engel Group, talks about the nuances of doing business in the Middle East.
During extensive business travel to Europe, the Middle East and Asia meeting with investors and clients, I have experienced, and learned, to carefully adjust to different business etiquette and customs. Conducting business in the Gulf States particularly requires taking time to observe and work within the framework of appropriate business practices and important nuances.
For example, the norm with Western investors is to operate in a more “circular” fashion—start something, finish it, and finish it as quickly as possible. Middle Eastern investors are more “linear”—whereby conducting business and closing a deal takes more time and patience. While you may have pre-arranged times and dates for a specific meeting, those are just, well, targets…moving targets.
When planning a business trip to the Middle East, for example, we have learned it’s best to arrive over the weekend, check into the hotel with meeting schedule in hand…and then simply wait for the client’s confirmation call. Monday can become Tuesday; Tuesday becomes Wednesday; etc. You must be patient, tenacious, and keep lines of communication open because once your business agreement is approved, a switch is flipped and one is expected to get it all done quickly and properly.
The most essential piece of cultural advice to share with those who have business to conduct in the Middle East is that you cannot be “suitcase advisors.” One should not just be there Monday through Thursday. You have to become a stakeholder in the country to be taken seriously.
Today Middle Eastern investors are sorting and choosing with whom they will engage in business, as determined by whether individuals are deemed to be real versus superficial investors. Those who are the sources of capital set the rules, thus you must possess property there and be a true stakeholder in order to be trusted. This is true even if the investor seeks to purchase assets in the United States. It contributes to your image and the relationship.
Proving oneself as a real investor in the region is essential and necessary for building partnerships with influential development businesses and authorities such as the Qatar Finance Authority. Relationships stemming from this are invaluable.
In 2016, the United States experienced a record proportion of offshore capital investment.
Investors from Abu Dhabi, Saudi Arabia and high net worth families from Qatar have been among those investing most heavily in American hospitality assets. Over the last 12 to 18 months we have helped these families find assets to acquire and negotiate deals to manage their businesses. No question that relationships are what allow entities to successfully partner with interested parties from this region of the world. While Middle Eastern countries continue to invest heavily in US hospitality assets, the globalisation of hotel ownership impacts Europe and Africa as well.
According to the latest hotel investment outlook by JLL, the Europe, Middle East, Africa regions are expected to see global hotel sales volume grow to US $22.5 billion from US $20.5 billion last year. Institutional investment is expected to stay steady this year, while private equity buyers will become more active. Adapting our Western proclivities to the needs of these buyers will be essential to obtain a share of this market forecast as we work together via cultural collaboration.
Tom Engel specialises in transaction services and project and asset management for hotels, convention centres and mixed-use commercial real estate. As investment advisors, T.R. Engel provides due diligence and buyer and seller know-how for the sale of hotels in North America, Europe and the Middle East.
