Friday, April 29th
President - EHMA
President of HOTREC, Hotels, Restaurants & Cafés in Europe
Chief Operating Officer
President at Hermitage Hotels & Restaurant Consulting
Paul M. White
President and Chief Executive Officer
Professor of Strategic Management
Thursday 5th May 2011
Friday, April 29th
Educational Day "From Crisis to New Growth"
During the Educational Day, participants had the opportunity to listen to the interventions of keynote speakers such as Paul White, CEO and President of Orient Express Ltd., Kent Nyström, President of HOTREC, Brussels and Professor Gabriele Piccoli, sent by Cornell University, Demian Hodari, Professor of the Ecole Hôtelière de Lausanne, moderator of an intensive and constructive panel discussion.
Yulia Pashkovskaya, Chairman of the Organizing committee and Peter Bierwirth, EHMA President, set the tone with their Welcome Address and Opening Remarks.
Following the introduction, Marina Dunaeva, First Deputy Chairman of the Committee for Investments and Strategic Projects at St Petersburg Government, took over.
Saint Petersburg is rightfully considered to be one of the most beautiful cities in Europe and one that has a special style and unique atmosphere. It has been included in the list of the world heritage sites of UNESCO, and is an important European centre of tourism. Each year, about 4.8 million tourists visit Saint Petersburg. The leading international hotel operators functioning in Saint Petersburg are Kempinski, Corinthia, ACCOR (with the brands Novotel and IBIS), Rezidor SAS (with the brands Radisson SAS and Park inn), Sokos Hotel, Marriott (with the brand Courtyard by Marriott), Reval Hotelligrupp, and Starwood (with its brand “W”), Orient Express Hotel, Best Western, Rocco Forte Hotels, and InterContinental Hotels Group. There are 631 hotels in the city with a total of around 27,083 rooms available.
Tourism is an actively developing field which has a significant impact on many other branches of the city economy, and which contributes to an improvement in the quality of the urban environment as a whole. In 2004, the city government accepted the program for the development of hotel infrastructure of St. Petersburg, the main objective of which is to increase the stock of hotel rooms to create an effective hotel industry. A special hotel project support system has been established in St. Petersburg to provide help to those investors who are in the process of building items of hotel infrastructure.
• the possibility of the targeted provision of a city owned object;
• provision of a special investment estimate;
• provision of a longer period for the project execution upon the condition that it is acquired in a tender held by the OJSC “The Property Fund of St. Petersburg”;
• availability of a strategic project status, meaning that the project is supported by the Committee for Investments and Strategic Projects.
The primary objectives of the portal are:
• to provide current and complete information on the hotel real-estate business of St. Petersburg;
• to clarify the procedures the investor has to follow during the project execution with reference to the state authorities of St. Petersburg.
In 2005, the government of the city passed a development program for Saint Petersburg as a tourist centre. The purpose was for the development of tourism and for an improvement in the tourist infrastructure in Saint Petersburg, its popularization as a city with an attractive touristic image with active support of the Tourism Department, which is part of the city’s Investment and Strategic Projects Committee.
The range of responsibilities of Ms Marina Dunaeva include forming investment policies for Saint Petersburg, increasing the investment attractiveness of Saint Petersburg, monitoring the information and analysis regarding the activities of the Committee and managing strategic investment projects in Saint Petersburg including the development of the hotel infrastructure of the city.
She said that one of the key steps in the project’s evolution is the development, reconstruction and operation of Pulkovo airport, the main gateway of St. Petersburg, to make it an international world-class hub. A new, modern passenger terminal, complying with the highest international standards is being built and put into operation. The existing airport’s infrastructure will also be refurbished. The key target for the consortium, for the entire 30 years of the concession, will be to provide top class service to both passengers and airlines. The initiative is of strategic importance for the Russian economy. The Pulkovo project will enable the development of St Petersburg as a world business and tourist centre, facilitate investment flows and strengthen international affairs of Russia.
We have found the following useful resource about St. Petersburg (source: BUSINESS MAP BUSINESS MAP OF RUSSIA 2010, http://ev.spb.ru/dk/leningrad_2010_en.pdf)
Stabilizing the economy and reviving the business travels mean St. Petersburg will be able to compete on a par with global giants: right now, the northern capital of Russia is able to host international events of various levels of organizational complexity.
It is estimated that the business travel market in Russia is gradually expanding: its turnover is up to USD 2-billion per annum. And although during the past year and a half, it “dropped” by 25–30%, in the long term (until 2020), the volume could grow five-fold. St. Petersburg is thus quite capable of competing for a significant slice of the “pie”.
St Petersburg accent
According to the “Center of Evaluation and Consulting of St.Petersburg”, the local area of rooms suitable for business meetings is over 43,000 sq. meters (over 80 sites). About a third of them are small rooms (up to 50 sq. meters), while the halls of 1,000 sq. meters make up only 1% of the premises.
An important characteristic of business tourism market of St. Petersburg is that the 3 categories of rooms are in demand of the customers. These are conference rooms, located in business centres and hotels (ranging from 50 to 200 sq. meters), modern grounds of 300–500 sq. meters of size, and large congress halls with the capacity of over 1,000 people.
In addition, the local market is characterized by a noticeable seasonality. The average occupancy rate of rooms is still 20–40% only, but in the high season (May–August), it reaches 80%.
The development of business tourism is one of the strategic objectives of the St. Petersburg Government. Its potential is estimated as being very high. Given the simultaneous development of tourism infrastructure (airport, seaport, the emergence of new hotels), it is expected that there will be significant growth in the demand for large conference areas (above thousands of square meters).
Given this, St. Petersburg intends to implement several projects in the near future. And if this can be done, by 2020, the area of specialized facilities will be about 97,000 sq. meters (40,000 seats). The experts consider there will be an onset of multifunctional complexes, where the main functions are accommodating an exhibition, hotel, or offices. It will take 2–3 years to bring the abilities of St. Petersburg to a new level with regard to the organization of business meetings.
Enough for each and all
In 2004, in St. Petersburg, there were only 7,000 hotel beds. After the start of the “555” program, nine major hotels were already put into operation in 2006, then another nine in 2007, and 3 more large hotels in 2008. Hundreds of smaller hotels have emerged in the city.
By the end of 2009, in St. Petersburg there were more than 620 accommodation facilities with overall capacity of almost PAX 27,000 (120 of them were the hotels). 80 of them have more than 50 rooms (totally, about 17,000 rooms). The total PAX number in the hospitality sector of St. Petersburg (including the capacity of mini-hotels) is 56,000.
In 2009, despite economic difficulties, the city on banks of the Neva opened a number of new hotels. Among the most significant new facilities, there are the Congress Hotel Holiday Inn St.Petersburg-Moskovskye Vorota (557 rooms, 3*), M-Hotel (54 rooms, 3*), Grand Peterhof Spa Hotel (37 rooms), and hotel Terijoki (48 rooms, Zelenogorsk). Besides, Moscow Hotel was incremented by 90 rooms at once, while Corinthia St.Petersburg — by 107 rooms. Reval Hotel Sonya was opened — a new large (173 rooms) hotel of level 4*, built to a unique design concept in the centre of the northern capital. According to Maris Properties, right now there are about 5 hotel rooms per 1,000 residents of the northern Russian capital; and if the due pace of constructing the hotel estate continues, in 7–10 years, the average European level may well be achieved.
The largest share of St. Petersburg’s hotels is that of 3* properties (43% of the total). These are followed by economy class (32%), 4* (14%), and 5* (10%). A sign of the times also comes with a rapidly growing interest by St. Petersburg accommodation facilities in participating in global and online reservation systems.
According to the organisation Nota Bena, by 2010, it was possible to book rooms in 233 Saint Petersburg hotels, representing 32% of the total number of all bookable hotels in Russia (by comparison, in Moscow — only 20%). Currently, there are over 30 hotels in St. Petersburg in a construction stage, totalling 6,000 rooms. Several Deluxe hotels could also appear, which may be centred in historic buildings. Investments in such projects as “The House with Lions” on St. Isaac's Square (it will house the Four Seasons Hotel Lion Palace) are promising.
Attract by the events
What is needed for running business meetings? Hotels, conference rooms and meeting rooms, of course. But the transportation services, excursion programs and a number of other services are also necessary.
Recently, Saint Petersburg started to proactively shape its program of events. Among them, there are the City Birthday and “Scarlet Sails”, and a number of festivals, which are held at the highest level.
According to Sergey Korneev, Vice-President of the RST, “a well-organized holiday is an excellent reason to attract tourists not only in high, but in any other season”. Perhaps not by chance, in 2010, during the celebration of the city’s birthday, one of the largest traditional business activities took place in St. Petersburg — The International Banking Congress. And the level of the events held in the city on the Neva River continues to climb. At a scheduled meeting of the Baltic Governors’ Club, Valentina Matvienko motioned to “ring up” the North-West, by implementing the idea of a “Silver Ring” — a project similar to the “Golden Ring”. “Let’s get together and build it”, she suggested to the colleagues. “St. Petersburg will be an anchor city, but Pskov, and Novgorod, and Karelia, and other regions should be included into it. We must think together over its ideology. I am sure that our ring would have no less tourists travelling around than the Golden one.”
“From Crisis to New Growth” - Paul White
Following the introduction, the keynote speaker, Paul White, President and CEO of Orient Express Hotels, took over. He explored the topic of the EHMA Meeting “From Crisis to New Growth” and defined the main terms appropriate to the industry.
What is the difference between managing the crisis and managing growth? Managing a crisis is a series of “NOs” and “NO” is a very easy way to decide. Managing growth supposes making decisions and taking some risks. The macroeconomic issues such as world financial insecurity, the climate cataclysms such as the tragedy in Japan and Arab countries’ revolts will not only delay real industry growth, but also influence the way we are in 10-15 years.
- General Manager: a juggler, keeping in his hands the interests of the hotel owners, the hotel guests and hotel staff
- Guests’ Feedback: The role of the GM is designing and creating every element of the guest experience. It is thus highly important to listen to the customers’ feedback (e.g. “Why do we have these beautiful lamps that are too far from a bed or don’t bring enough light to read?”
- Honesty and Integrity: being clear, being concise
- Strategic vision: Where are we going to go? Do I understand the local customer?
- Pricing and Revenue: revenue comes from a number of sources (e.g. a cup of coffee is the most profitable item in the restaurant. If you sell a coffee to every person, you will increase your profit up to 4-9%).
- Profit and Loss: conversion is a key of the moment. You can reinvest to generate the new growth.
- Hotel guests: people who drive our industry. We make money because we satisfy them and make the service level better.
- Hotel staff: the most important asset and people who talk to the hotel guests every day.
- Management and leadership: GMs should impress and inspire the staff. “When things go wrong the fish smells bad from the head down”.
- Clear and focused objectives: personally, Mr White sets 3-4 goals per year
Mr Paul White finished his presentation by remarking that hospitality is an exciting industry to be involved in, where ambitions are drivers. We are going towards new growth: respect your environment, guests, staff and yourself… and above all, have fun.
Professor Picolli on the Path to New Growth
Cornell Professor Gabriele Picolli expanded on the Keynote Address with his report about Innovation, Information Technology and the Path to New Growth. He began by quoting Ted Teng, President and CEO at Leading Hotels of the World, “Points are pointless. We differentiate ourselves by saying: ‘Points are for tomorrow, how can we offer satisfaction and gratification today?’ Rather than giving guests a commodity than can trade for airline miles, we are going to give something that they enjoy.”
The first evidence of a hotel is Mary and Joseph, who needed bed & breakfast. They spread the word about the service to 10 friends. Now mass communication allows people to talk to many people transforming the way humans interact using technology.
Example: Youtube United Break Guitars
United Break Guitars
Life can be lived through both – the real world and Internet. You can enter and leave virtual spaces. Learning to connect is the doorway to new growth. There is no blueprint for connecting in virtual spaces:
- Social media: the ultimate malleable technology
- You can’t buy or install a social presence
- Your hotel must adopt and adapt
Traditional top-down planning doesn’t fit.
The paradox of virtual spaces:
- It takes time to connect: listen, understand, contribute
- Connecting in virtual spaces takes time
- ROI is very impatient
So what should General Manager do? Foster the right microenvironment:
- Accidents are not a nuisance
- Create a culture of curiosity in your organisation
- Inspire you people to screw around vigorously
- Get involved, these are not technology projects
HOTREC – Kent Nystrom
The next session was devoted to Views from Brussels and was presented by Mr Kent Nystrom, President HOTREC.
More than 80% of national regulations nowadays reflect decisions taken at a European level in the fields of VAT, social affairs, copyright, food labelling, hygiene, consumer contracts, etc. EU rules thus influence all aspects of hospitality business.
In a Union where most of the regulatory measures only become visible once implemented nationally, the knowledge that a measure is under consideration at a European level is of paramount importance. Thus, early awareness allows a prompt and effective reaction at the earliest stage of the decision making process - before it influences the national regulatory environment. This knowledge creates unique opportunities to influence the way rules are shaped in the EU machinery and to anticipate the effect of EU measures, while giving the necessary ammunition to criticise an incorrect transposition into national law. A systematic monitoring of political and legislative developments at a European level is essential to allowing the timely presentation of the views of the hospitality industry at the different stages of the European decision-making process.
HOTREC - the voice of the European hospitality industry
HOTREC is the voice of the hotel, restaurant and café industries on the European scene. It brings together 43 national hospitality associations in 26 countries across Europe - from Portugal to Estonia and from Ireland to Cyprus. Around 1.7 million enterprises, employing some 9.5 million workers, make up the European hospitality industry.
HOTREC activities include:
• Collecting information and intelligence at the source;
• Immediate communication of this information to its member associations;
• Elaboration of common positions; and
• Presentation of these common positions to the European Institutions.
HOTREC also maintains close relations with various groups representing other economic activities related to the hospitality sector. This dialogue enables all participants to coordinate their views and to build coalitions to best defend their common interests.
HOTREC paves the way, but the full support of all national associations is essential for defending the views of the hospitality industry
Mr Nystrom introduced EU regulatory challenges and the hospitality industry
American Insights in Europe
Sujata Bhatia, vice-president of American Express Business Insights, Europe, provided the audience with a clear window into the wants and needs of their target consumer segments. By knowing where different types of consumers are spending money – and conversely where they are not purchasing – merchants can better position their business and develop strategies for growth.
“Our ability to quickly identify and interpret trends across our global network provides our customers with an unparalleled advantage in understanding their customer-base and ultimately helps them to make more strategic decisions,” said Bhatia.
The Strategic Role of the General Manager
After a delicious lunch, Professor of EHL Demian Hodari presented the findings of an ongoing research project into the Strategic Role of the General Manager, which he in undertaking with the support of EHMA and many of its delegates. He then moderated an interactive panel discussion on the Changing Role of the General Manager. For this session Professor Hodari was joined by François Delahaye (Hotel Plaza Athénée, Chief Operating Officer – Dorchester Collection, Paris), Thomas Noll (Hermitage Hotels Ltd. St Petersburg), Reinhardt Wall (Gestion T3 – The Multiple Brand Hotel Management Company, Barcelona), Christoph Härle (Jones Lang LaSalle Hotels, Munich), Rob Hornman (President Worldhotels, Frankfurt).
Vishal Sharma, Managing Director, Diversey South Asia, shared his vision of Sustainable Growth and Diversey’s commitment to the lodging industry. With sales into more than 175 countries, Diversey is committed to a cleaner and healthier future by delivering superior products and solutions to multiple industries, while helping customers create more sustainable enterprises.
Christoph Härle JLL, Hotels gave the attendees JLL’s latest statistics about the hotel situation worldwide with the focus on Europe.
Jens Söderholm, Account Director, Major Accounts at OTRUM, talked about how they are applying innovation to address business challenges in the hospitality.
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