People in the Know: The Main Thing is Mutual Respect

In Russia there is still only one hotel that operates under the Hyatt brand. Can you estimate how much of your first experience in Moscow was successful?

We have excellent experience of operating in Moscow and our brand has a rather solid position in the Russian market. We have worked for more than 12 years in countries of the former Soviet Union; we have hotels in Baku, Bishkek and of course Moscow. In the future we plan to develop in Russia therefore our activity in this market is rather great. We have big plans for development in CIS countries.

What are your conditions for signing agreements with the owners of hotels in Moscow?

We do not divulge the details of our agreements; I can only say that it was a contract about management, on the basis of which we manage a hotel. The majority of contracts concluded by Hyatt with owners of hotels are based on administrative management. We also have a portfolio of hotels, which we own. Unlike many of our competitors we do not operate under franchises. Therefore we virtually independently manage hotels, without bringing in a third party.

Do you have some financial terms and conditions for sharing the proceeds between Hyatt and the owners?

There are certain conditions set out in contracts with different hotel owners but we do not divulge these details.

The Ararat Park Hyatt is the only hotel in the world that has the brand Park Hyatt after the name of the hotel. Why?

Yes, it’s not typical for our hotels, but Moscow is not the only case. There are other Hyatt hotels, for example in Buenos Ares, San Diego, and London where in front of the brand there is another name which might be connected with the history of the building or be a reflection of the local area. We have used such branding for more than 10 years.

To begin with the owner of the hotel was Lucine company but after the founder of this company died, the owner of the hotel changed. Is that right?

I don’t know the history of the owner of the hotel so I can’t comment. I work for the Pritzker family, which has owned the Hyatt corporation for quite a while. Last year I started working for Hyatt itself. From the very beginning I outlined my position and principles. Such steps lead to mutual respect. Respect is the key aspect in our work. Being an international corporation we need to respect the guests of the hotels like we respect the owners. Therefore out of respect for the owners of our hotels we do not disclose information about them or details of our agreements. This is characteristic of our conduct.

Recently, several other hotels have arisen in close proximity to the Ararat Park Hyatt. Is there strong competition?

Firstly, as far as I’m aware, not all these hotels are operating. The opening of several is only planned. In the future we will see how we’ll get on. I also want to note that

Although it might seem strange, we welcome competition. We believe in what we do and try to provide a high-level service. The People factor is key in this case. For those come to our company, we provide not only work but also the possibility for career growth. Education is also an important factor. We carry out local training. For this we have a specialist team. It is part of our culture and part of us. In the hotel business unlike other spheres there is a close connection between the staff and the clients. This cooperation defines the brand. This proves again that our staff is our main asset. And we continue to raise the professionalism of our staff in order that our guests receive great service. In this context I welcome competition.

The last time you were in Moscow did you stay in the Hyatt?

At that time the hotel hadn’t opened yet, so I couldn’t stay there. I have been to Moscow two times. The first time was in 1975 and the second was about 10 years ago. Since that time I have not been to Moscow. In those 10 years a lot has changed.

To best understand competition some employees of hotels sometimes stay in the hotels of other companies for comparison. Do you ever do this?

When I travel, I actually visit various hotels. I like to see how other companies operate. If I ask to see the building or room in some hotel it is quite feasible. There is nothing to hide, hotels are public places, but to look at a room, you need to have permission. But as a rule I don’t stay in the hotels of competitors. My managing directors would not be so happy.

Who do you consider as the main competitors in Russia and the world?

We compete with various companies, and in different markets it is different competitors. In Southeast Asia our competitors are different from our competitors in Europe and India. There are chains of the companies, but in each market the situation is different. I think that the majority of hotels on the Russian market are managed by the same companies, as other markets, therefore they are familiar to us. But, as I’ve already said, we concentrate on what we do - on our own clients. We try not to be distracted by what others do; our purpose is to aspire to perfection.

Can you give a specific example?

Simply look out the window: Nearby the Four Seasons is under construction, naturally, this hotel will become our competitor. The Ritz Carlton, operated by Marriott, is also practically just round the corner. There is also the Mandarin Oriental and Intercontinental.

The quality and reputation of hotels depends on the personnel. The selection of qualified personnel in Russia is a problem. Considering this how are staff hired in Russian hotels?

We have values that were generated during dialogue with clients, the skill of communicating with clients. It is important that the people we employ understand and take this into account. It is also important to enable people to have career growth, to let them know, that in this company they have a future. If you do everything correctly in due course you will have a good team.

During the first stages of operation of the Ararat Park Hyatt were there complaints about the quality of service?

As my memory serves me - no. I receive responses from various clients who have stayed there and we receive positive responses from third parties, and not just from people connected with the Hyatt. I mean clients in general. Have you stayed in this hotel? Do you not think there is quality of service? I think you should stay here and assess the service we provide.

How did you choose the building for the new Hyatt in Moscow? Moscow-City as a complex is not completed yet, but there is already a problem - roads and transport in this part of city. Can you comment on this?

Here there are two aspects: a third party is engaged in the construction of hotel, we did not choose the location of this complex. We are responsible for the management of the hotel. From our point of view, the location is excellent. It will be a unique construction with an unusual design. We already have a number of multi-storey hotels: in Shanghai we have a hotel which is located from the 53rd floor to the 89th floor of a building. Also in Shanghai a Park Hyatt hotel is under construction which will be located on the top floors of the tallest building in China. We will have a hotel in the tallest building in India in Mumbai. And, of course, Moscow. It will be a unique hotel with magnificent service. Movement on roads is a problem in many large cities of the world. In Russia, China and India the infrastructure develops after the economy. Many efforts are applied to the construction of roads, bridges, tunnels, and airports to carry out not only the movement of an increasing population, but also business communication. I think this is inevitable, and Moscow is not a unique city and has similar problems. It has historically developed, that we work in densely populated cities. Naturally, additional infrastructure is required, and I think the same in due course will also happen in Moscow.

The majority of sights and key premises in the city are in the historical center whereas Moscow-City is far from this. Will this pose a problem?

We rely on various groups of clients. Some of our visitors will be businessmen who will work in this part of the city. Both businessmen and tourists stay In the Ararat Park Hyatt, therefore, I think around of the Moscow-City complex a new market that will be partially caused by the development of infrastructure around the hotel will develop. We have already observed similar in many cities where there is more than one hotel and where they are created for different categories of clients.

Is the Hyatt corporation financing the construction of the Grand Hyatt hotel in Moscow-City?

No, we manage the hotel.

Do you have obligations to Mirax Group?

Naturally we have contractual obligations as the managing company which we take very seriously, but we are not partners in construction.

Does Mirax Group have an influence over the concept of the hotel?

One of our advantages is our skill in working with the owners so that we can understand and help create both the plan of the hotel, and its design. For this purpose we involve great resources, we have wide experience of such work, we have done it for many decades. Therefore I consider this as cooperation in the development of the layout and design of the hotel.

What plans does Hyatt have in Moscow? Are negotiations taking place for the management of projects with anybody?

We are discussing some projects at present.

The number of buildings suitable for the construction of 5* hotels in Moscow, is quickly decreasing, and accordingly are the number of opportunities to buy them also decreasing?

There are a number of opportunities for the construction of new hotels. The Grand Hyatt will be a new building. That we deal with limited space for construction is not always true. It is possible to find, for example, a building that serves other purposes, and to re-profile it as a hotel. It is one option. Moscow is a big city with various demands and various clients, which come from different countries of the world, therefore there are a lot of opportunities here.

Can you tell us with whom negotiations are being carried out?

No, we do not disclose details of our negotiations.

In Yekaterinburg a Hyatt hotel will open soon. Why has this city been chosen?

Yekaterinburg is a big city, the third largest in Russia. It is a good market for our international standard services. We believe with optimism that Yekaterinburg is a successful choice.

What other regions of Russia are of interest to Hyatt?

We are singling out about 15 large and economically developed cities, almost all of which are million-population cities. For example, Samara, Saratov, Nizhny Novgorod, Tyumen, Novosibirsk and St. Petersburg.

You became the president of Hyatt rather recently. What goals have been put before you by the owners of the company?

As you know, I have worked for the Prittsker family for rather a long time, therefore my arrival at Hyatt was not spontaneous, I already precisely identified my task - to assess the position of Hyatt and the direction in which the company should develop. For me there were three main priorities. First, I tried to select good personnel. It is necessary for us to employ and train more and more people in order to create a qualified team of staff in hotels worldwide. I consider improving the quality of staff and the promotion of leadership as very important factors. The second aspect is that we are presented differently in various markets of the world. And I want to be sure in the clarity of our strategy of promotion of a brand and that we are aim to create various brands for various groups of clients. The third aspect is growth. It is not only pleasant, but also a responsible. I understand that we have certain strengths that are characterized by culture at a top-management level and the personnel of hotel as responsible growth. This culture should be observed to keep service at a high level, and service is our work. So, we should grow, respect and support our culture and at the same time to be assured, that we keep integrity of the trademark.

What regions of the world are a priority by way of further development? Is Russia on this list? What is its position in alignment with other regions?

At us strong positions in Russia and other countries of the former USSR, thus, we show the interest to Russia and to region as a whole. In the near future in region our hotels open some. Now there are various negotiations about management or other form of presence. It is dynamical, developing region and a magnificent opportunity for development, therefore it is for us priority. Similarly to China and India Russia gets in a category of the countries in which the quantity of projects in a stage of development exceeds quantity of already existing hotels.

The reputation of Russia is a little bit negative abroad. Is this reflected in business?

The construction of hotels in the Russian capital specifies a positive attitude to the expansion of the hotel business in Moscow and in Russia as a whole. I look at it as on evolution: there is a precise trend for economic development that is the important signal. Our activity extends to 40 countries, and in each country there are criteria for development, therefore I do not see obstacles, we are adjusted on expansion of the presence.

Are there any unsuccessful projects at Hyatt?

I do not know of one.

Hyatt is launching new brands. What goals do these companies pursue, which category of clients will these brands be directed towards?

We are launching new brands to serve different target audiences. Take Hyatt Place or Summerfield Suites for example. These small hotels with a more limited choice of services are aimed at a certain group of clients. People who don’t usually go to the city center, but to the suburbs or small cities. As a rule, they stay for one night, have dinner, sometimes hold a small meeting, but not a banquet or large event. A spacious well equipped room, high-speed Internet and a comfortable is all they need. These are who these brands are directed at. Recently we have presented a new brand with a full range of services - Andaz. These are deluxe class hotels. We have carried out research worldwide and have discovered a group of clients who want to stay in luxury, but at the same time in a relaxed environment. Not traditional, without overloaded service, and more natural and comfortable. We are optimistic, because there is a large market of clients for this brand. The first Andaz hotel will open in London in September, and we also expect to open two hotels in New York and other cities. The key aspect in this situation is to understand the clients we are directing our service at, and then to try to create a hotel and brand around this.

Hyatt is a private company and also doesn’t reveal its financial details. Does the company have plans to issue an IPO? Public companies are more competitive, as it is easier to trace their activities; does Hyatt have any plan to make its activities open? Is internal reorganization in the company planned to change this situation?

Yes, quite right, the activities of open companies are easier to watch from the outside than closed companies. I think we manage it well ourselves irrespective of whether Hyatt is a private or public company. We prepared for that Hyatt may become an open company, but it is not in our immediate plans.

Do the commercial conditions of cooperation between Hyatt and owners of hotels in Russia and abroad differ? Are Russian conditions less strict than in the West?

That is confidential information.

How strong is your personal experience in the hotel business?

I have worked with the Prittsker family for 18 years, and the last year has been devoted to working for Hyatt. I have been connected with Hyatt on other questions during the whole period. In my previous post I was engaged in the investments of the Prittsker family, managing their companies, and also consulting, I would characterize it as investment-banking activity. Therefore for many years I was able to observe the process as a shareholder or member of the board of directors. I know all senior managers and all business matters. The international corporation was formed in 2004 It took two years to organize everything. My team was involved in this, therefore I learned a lot about the company. In the last several years I have been involved in the development strategy of the company. I did not have any experience of direct management in the hotel business, but the advantage is that Hyatt has a strong team of managing directors. I can introduce to Hyatt the possibility of looking at wider prospects of development and bring wider opportunities of expansion in the future.

Are you engaged in any other business matters of the Prittsker family?

Previously I was engaged in almost all affairs, but today I am engaged in the business of Hyatt.

Can you comment on two scandals that have happened in the past? The first concerns a Prittsker family casino that was fined, and the second a bank in Chicago, half-owned by the Prittsker family, which has been closed. How has this affected business?

In my opinion, it has not affected business. Sometimes things don’t go as planned in a big company. I can say this: working with this family and having been well informed about all events, I can say that the Pritzker family has operated very responsibly and any influence that particular circumstances had, were insignificant.

Mark Hoplamazian is 45 years old. Since November 2006 he has been the President and CEO of Hyatt Hotels & Resorts international corporation. He is a member of the school board at a Latin school in Chicago and is a member of the advisory board of Facing History and Ourselves. He is a member of the Discovery Class club which is part of the henry Crown community at an institute in Aspen. Previously he was acting director of Global hyatt. Prior to this was President of Pritzker Organization where he worked with the investment and commercial activities of the company, which is the chief financial and investment consultancy for many companies of the Pritzker family, including the famous Hyatt corporation from 1989 he worked closely with Thomas Pritzker who was President of the company at the time. He graduated from Harvard and has a masters in business from a business school in Chicago. He lives in Chicago with his wife and three children.

The international Hyatt corporation (Global Hyatt Corporation) is one of the leading international hotel chains offering services in more than 750 hotels and resorts (140,000 hotel rooms) in more than 45 countries. Subsidiaries of the company own and carry out the operative management, including franchise agreements, of Hyatt hotels and resorts and the following brands: Park Hyatt, Grand Hyatt, Hyatt Regency, Hyatt Resorts, Hyatt, Hyatt Place, Hyatt Summerfield Suites and also new luxury class brand Andaz (the first hotel opened in London in November 2007). The international Hyatt corporation also owns Hyatt Vacation Ownership Inc., operator Hyatt Vacations Club, various real estate and also U.S. franchise Systems, Inc. which manages the franchise agreements of premises under the Hawthorn Suites and Microtel Inns and Suites brands.