People in the Know: Belgian Pioneers

In November 2007, Rezidor Hotels Group officially opened a head representative office in Moscow. It is the first office opened by the international hotel management company in Russia. Michel Stalport, regional vice-president for Russia, the CIS, the Baltics and Turkey of Rezidor Hotels Group, talks about plans for work in Russia and about new projects.

The company has worked in the Russian market for more than 10 years, but there has been no hurry in opening a head representative office in Moscow. Do you think it wasn’t the time? Or were there other reasons?

We have been in Russia for a long time, our work started long before the opening of our representative office in Moscow. First we managed Rezidor hotels, and then in 2004 the company opened an office for the development of business across Russia and the CIS in Moscow. In two years of work many contracts were signed. We in practice have felt that work develops more successfully and effectively if the employees of the company are directly in the country where we develop the business and when the management of all the working processes is carried out from Moscow instead of Brussels. For our Russian partners it is also favorable and much more convenient to meet and discuss arising questions in Moscow.

At the start of 2006 Rezidor Hotel Group managed three hotels in Russia, and also opened two franchised hotels in Sochi. It was at this time the company took the decision to open a head representative office in Russia.

In July 2006 I was appointed head of the project to open a branch of Rezidor Hotel Group in Moscow, which would carry out the same functions as our head office in Brussels. Since then I have selected an office premises, brought across some of our experts from Brussels and employed staff in Moscow. Now our branch is already working, and I think the time has come to talk about it.

What criteria were you guided by in choosing the location of your office?

Our company is known all over the world, we manage five brands of hotels, from the middle quality segment of the market to the de luxe category, therefore for us it was essentially important to find an office in a building with an advantageous location, or as it’s said in the West, an AAA location. It, of course, had to be in the center of Moscow. The second important point was the quality of the office and the building in which it was located. Our representative office is located in the class A Sheremetyevsky business center on Nikolskaya ulitsa, near Red Square.

How do the functions that are carried out by your head office in Belgium differ from the functions of the Moscow branch?

The head office in Brussels specifies the direction, develops the development strategy, establishes the parameters which different divisions should reach, and, of course, defines standards. Our Moscow branch takes these directions and standards and introduces them. The Moscow branch also carries out analysis of the market and advises the head office on the features of the Russian hospitality market and ways of developing them.

How do you assess the hospitality market in Moscow?

First of all I want to note that in Moscow there are not enough modern hotels, and demand is very big. This concerns hotels of different levels: both expensive, average and low price segments. And I think that in the future business activity and tourism in Moscow will develop, and will require a lot of places in modern hotels. But for this the procedure of issuing visas needs to be sped up. Today it takes 10 days to get a Russian visa, which by the rhythm of life in business is a very long tine to plan trips. The second problem is that in the construction of hotels in Moscow, in particular receiving and approving the design documentation, takes a lot of time, therefore the length of time it takes for them to come onto the market is often moved back. For example, if in Europe a contract on the construction of a hotel is signed, we incur obligations to open it within 24 months. In Russia this is impossible.

What departments of the company work in the representative office in Moscow and what do they do?

We have three departments in Moscow - the first opened in 2004 (the department for business development, Arild Hovland, vice president for Business Development heads it). The task of the division includes opening new hotels under the control of Rezidor Hotel Group in Russia and the CIS. The second is the technical help department, which renders services to hotels that are at the construction stage. Its functions also include control over the observance of international standards for the construction of hotels and Rezidor Hotel Group’s standards. The third is the Operations department, which is engaged in the optimization of incomes of hotels, carries out regional financial control of already opened hotels, and is engaged in consulting with hotels by way of optimizing expenditures, marketing, sales, etc.

Are there any hotels in Moscow you like? On what criteria do you assess hotels?

I like the Radisson SAS Slavyanskaya. It has always been a center of business activity. Any time you go there business life is in full swing: conferences, congresses, meetings, negotiations are being held. In the hotel there are all the conditions for people to be comfortable. Rezidor Hotel Group develops a system of training personnel, which is called Yes I Can! It is a culture of service, a philosophy of service. In Moscow I also like the Metropol, its architecture and location in the city center is interesting to me.

Rezidor Hotel Group operates hotels under different brands. Are there any special requirements for the buildings of the hotels, their equipment and location, in order to correspond to the positioned class?

The most important characteristic is the location of the hotel. Depending on the category of the hotel the requirements of the location vary. For example, hotels of our The Regent brand (luxury, 5* +) can only be located in the most prestigious places (ААА). In Moscow this is the historical city center, near Red Square. Hotels of our Radisson SAS brand (5*) can be in the centers of business activity, in readily accessible places. For the location of hotels of our Park Inn brand (3* and 4*) the choice is wider, but an obligatory condition is close affinity to transport highways, and zones of business activity.

As regards the buildings of the hotels, the placement of business centers, restaurants, conference halls, boutiques in them will depend on the brand of the hotel. The minimum size of the rooms also depends on the brand. The main technical requirements for all hotels operated by Rezidor Hotel Group, is excellent sound insulation, air-conditioning with controls in hotel rooms, and Wi-Fi covering the whole hotel. The furniture should be good quality, corresponding to fashion tendencies and trends. In meeting and conference rooms a modern central air-conditioning system should be installed, there should be a sound system and the Internet and it is desirable, that there is an interesting open view from the windows. As for the food in the hotels’ restaurants it is important that fresh and healthy food is provided.

Your company has announced development in the capital. What projects are you now working on? Tell me about them.

At the moment in Moscow three hotels under the Radisson SAS brand are under construction. All of them will open at the end of 2009. Radisson Belorusskaya is estimated to have 264 rooms and Radisson Riverside 200 rooms. Construction of Radisson Olympisky with 375 rooms will start in the spring of 2008, but as it is not necessary to demolish anything on the area allocated for the hotel, its construction should also be completed by the end of 2009. Work on all three hotels is an example of excellent cooperation between the technical department of the company and architects and developers of hotel projects. We can offer visitors advanced rooms equipped with the latest technology and a very high level of comfort.

You have a lot of experience in consulting developers that are building hotels in different countries, is your opinion always shared by Russian developers? For example, whether it is necessary to place shopping rows in 5* hotels?

I admit there are difficulties. Very often it is necessary to convince Russian developers that it is necessary to observe a precise balance of the requirements shown in the construction of hotels, offices and shopping centers. Depending on the brand of hotel any combination of the listed formats are possible, but if we’re talking about de luxe hotels it would not be difficult to combine a hotel and small boutiques under one roof, but a model where a large shopping center is located on the first floor and the hotel is under it is not possible.

But, for example, in Park Inn hotels, in one building there will be both a hotel, and a shopping center. Our practice of work in Russia has shown that Russian developers very often want to combine premises of trade and a hotel, but it is not always possible. We try to convince them of standard international principles.

Does the attraction of foreign investors in your projects help in Russia? Do you already have such experience?

Yes. We have already brought two international investors and partners into Russian projects. These are private companies - investors, in particular Norwegian company WenEas Group invested in hotels in St. Petersburg. For investment funds, it is much more difficult for institutional investors to adapt to conditions of the Russian market.

What are the main complexities that developers building hotels in Moscow come across?

In my opinion, the main difficulty is in receiving all permissions to construct and approvals to connect to communications.

All three new hotels that your hotel chain in Moscow will operate are new constructions. Do hotels after reconstruction interest you? What does an old building need for you to place a hotel from your chain in it?

Of course, existing premises are interesting for us. For example, the historical facade of the building of the Radisson SAS Royal hotel in St. Petersburg on Nevsky prospekt has been completely restored. It was previously a palace. For an old building to be interesting for our hotels, it needs to have architectural value and a historical facade. In those cases the building is reconstructed under the standards accepted by Rezidor Hotel Group. Boutique hotels under the Radisson brand have recently opened in historical buildings in Paris and Vienna.

Why is the company itself not engaged in the development of hotels, when in fact you have such wide experience in consulting for developers?

We are strong in managing hotels, we know this business, therefore the company’s management thinks that Rezidor Hotel Group should develop in the direction in which it is [strong and] professional. Development is not our business, therefore we leave it to companies that specialize in the development of projects and management of construction.

What are your immediate plans for development in Russia and Moscow?

Today I can say with confidence that we have gathered certain experience in opening and managing hotels in Russia. In total in Rezidor Hotel Group in Europe, the Near East and Africa we have more than 309 hotels in 48 countries, which is more than 63,000 hotel rooms, under management. Of our most recent premises in Russia is the opening in 2006 of the first middle class hotel with 160 rooms under the Park Inn brand in Yekaterinburg. In 2008, in Rostov-on-Don we will open the Radisson Style Hotel with 100 rooms, and in 2009 a Park Inn hotel in Ryazan will be put into operation. This will include 200 rooms, eight conference halls, two restaurants, and a swimming pool. In 2010 a hotel in Tyumen should be constructed (225 rooms), and a hotel of the Radisson chain with 175 rooms should also open. A distinctive feature of the hotel is that it will be part of a multipurpose complex, including a shopping zone. And I have already named the three hotels whose openings are planned for 2009 in Moscow. In total in Russia there are 15 hotels currently under the management of Rezidor Hotel Group or at the stage of construction. We are holding negotiations on a number of projects, a few of which are planned to open in Moscow. We think that in Moscow it is possible to open hotels under four of our brands - Regent, Missoni, Radisson and Park Inn, and these are our plans. The strategy of our company is that we talk in more detail about projects only after contracts on their management have been concluded. Rezidor Hotel Group plans to open new hotels in Russia and, in particular, in Moscow, this is the strategic direction of the development of our company. Research shows that hotels in Russia have very high profitability.

What cities of Russia are of interest for your company?

Currently there are 50 cities with populations from 300,000 people in Russia and the CIS in the zone of our interest.

How long does it take to recover your outlay of a hotel operated by your company in Europe, and how long does it take, by your calculations, in Moscow?

In Moscow it is 2-3 times faster than in Europe, but in Russia there are more risks.

There were rumors that the owner was going to sell the Radisson Slavyanskaya in Moscow. Do you anything about its intentions?

I also learned about it from a newspaper and have now called the representative of the proprietor of the hotel. He told me that he knew nothing about a sale. Rezidor Hotel Group is the managing company, therefore we do not participate in negotiations on sale. And the contract on the management of the Radisson Slavyanskaya has been concluded for 20 years.

Does the pricing policy of the same brand differ depending on the country? What prices will your rooms in your new hotels in Moscow have?

Prices for hotel rooms are formed by the market, therefore we do not have fixed prices for rooms in hotels working under the same brand worldwide. I can confirm that the real prices are different. For example, the price of a room in the Radisson in Moscow, Paris, London may be $500, and in a hotel working under the same brand in Brussels, Nice, Marseilles or Berlin, may be just $300. The prices for rooms in hotels under construction in Moscow will be appointed depending on the market situation at the time of their opening. But in view of the fact that they will be new hotels of international level with very high modern standards, the prices for rooms will correspond to the maximum segment of the market.

Will all three hotels in Moscow be 5*?

As a rule, international companies do not classify hotels by the number of stars. It is said that in different countries there are different standards and requirements for hotels. But if we assess the hotels under Russian market standards our hotels correspond to the international 4* and 5* level.

When you travel, do you prefer to stay only in your hotel chains or does it not matter?

If our hotel brands operate in the city then I prefer to stay in them. First of all I am sure of the services, of faultless service. For me as a businessman, it is important to stay in communication, and as I have already said, in all our hotels there is free-of-charge Wi-Fi in every room. I very much like the Nespresso coffee-machine that is installed in business class rooms, and the fact that fashionable new generation hotels have interesting interior design. If there aren’t any of our hotels then for me the most important criteria are location, high international standards of management and the presence of modern communication technologies, in particular Wi-Fi.

What arguments would you give to a client in favor of staying in a hotel in your chain?

We always guarantee a high level of comfort and convenience for our clients. Therefore the quality of our product concerns the hotel rooms, restaurants, and conference rooms and they are all very high. Research carried out by well-known company J.D Power and Associates serves as proof of my words. In 2007 two brands operated by the Rezidor Hotel Group had the best results in the European index of visitor satisfaction. According to the research, Radisson SAS came first among the highest category hotels, and Park Inn headed the ratings of middle class hotels. I want to note that the research was based on the responses of 11,728 visitors that stayed in our hotels from June to September 2007. This shows that our Yes I Can! philosophy and new Business Class concept by which we are guided, is very successful. We are a modern company with a constant high level of standards for all our hotel brands, and this is pleasant for our visitors. We notice it in their smiles when they leave our hotels, and when they come back to us again and again.

Michel Stalport, vice-president of the region of Russia, the CIS, the Baltics and Turkey at Rezidor Hotel Group, has more than 35 years operational experience in the hotel business. After graduating from the Namur Hotel and Catering School he continued training in the prestigious Hotel and Catering School in Lausanne (Switzerland).

In 1979 he begun work in the Hilton International Hotel in Brussels, and in 1983 became responsible for the technical and economic parameters of several projects, and also was deputy regional director for food and restaurant services in Western European and Northern African countries. In 1988 he became the regional director of the Hilton chain across Europe, Africa and the Near East, where he calibrated the quality of service and work of 52 hotels, and was also engaged in the development of new projects in Cameroon, Spain, Cannes and Algeria. Later as director for the development of the power supply system and restaurant service he worked in the European Disney group of resorts, and was appointed general managing director in the Cheyenne hotel. In 1993 he held the post of general director of the Radisson SAS hotel in Brussels. In 1997 the management of the Radisson SAS hotel in Nice was entrusted to him, and three years later he became one of the general managing directors of Montfleury Hotel in Cannes where he supervised the renovation and restoration of the building of the hotel. In 2000 he became the regional director responsible for the south of France, and in November 2002 the regional director for the whole of France. Before being assigned the position of vice-president of the Russia, CIS, Baltics and Turkey region of Rezidor Hotel Group he held the post of regional director of Rezidor Hotel Group in France and Tunisia.

Rezidor Hotel Group’s profile includes 302 operating hotels or hotels under construction (more than 62,000 numbers) in 47 countries. It manages the brands Radisson SAS Hotels and Resorts, Regent International Hotels, Park Inn and Country Inns and Suites in Europe, the Near East and in Africa. Rezidor has signed an international agreement with Italian fashion house Missoni on the development and management of the Missoni lifestyle hotel chain.

Since November 2006 the shares of Rezidor Hotel Group have been on sale on the Stockholm stock exchange. With a share holding of 41.7 per cent, Carlson Companies is the main shareholder. The headquarters of Rezidor Hotel Group are in Brussels, Belgium. The company has 15 hotels in Russia under its brands (23 hotels in the CIS). Rezidor Hotel Group has worked in Russia for more than 15 years. The first hotel belonging to the group was in Moscow, then hotels in Sochi, St. Petersburg and Yekaterinburg followed. In the last decade Radisson SAS and Park Inn hotels have opened in many countries of the former USSR: in Latvia, Lithuania, Estonia, Kazakhstan, Azerbaijan, Uzbekistan and Ukraine.