Park Inn Ekaterinburg Managed to Reap Heavy Cream

31.07.2009 — Analysis

Park Inn Ekaterinburg - the first international chain hotel in the Ural capital - had seen the years of booming hotel market before the world crisis set on. Lydia Wisniewska, General Manager of the hotel, told RusBusinessNews about how to keep your clients when you are surrounded by hungry competitors.

- Mrs. Wisniewska, the resources to build the Park Inn Ekaterinburg hotel were provided, as far as I know, by Scandinavian pension funds. It is surprising that they were not afraid to invest into the tourist industry of our country, whilst the Pension Fund of Russia is forbidden to do so. How justified, do you think, were these investments?

- Our hotel was opened in March 2006. The key rule of marketing is, it does not matter who is better, it matters who is the first. It is important to be the first in the fast developing countries, in Russia in particular. This is relevant to all sectors of economy - not only hotel business. First players seize the market within a very short time and earn profit - the heaviest cream. If you wait for the market to become mature enough for the international level, there is a risk of being late.

- Has Park Inn reaped the cream in Ekaterinburg?

- Yes, we have achieved very good results during the past three years due to the fact that Park Inn was the only international chain hotel in Ekaterinburg.

- Have the investments in Park Inn Ekaterinburg paid off already?

- Not yet. Hotel business investment is long-term - 10-15 years, depending on the size of the hotel.

- In 2009 several international hotels opened in Ekaterinburg. Do you feel you are losing customers?

- Yes, we do. We are an international 3-4 star economy class hotel. Recently an international 5-star hotel opened in Ekaterinburg, it offers a higher service level. A certain part of our clients now choose to stay there. This is quite normal and predictable.

However, new hotels started appearing in Ekaterinburg as the world crisis broke out. If they had opened when the market peaked, as it was last year, the loss of a part of the clients would not have been so critical. Therefore, the situation remains complicated so far.

- Who are your target customers?

- Approximately a half of them are Russian corporate clients. The other half is foreigners, predominantly engineers and technical experts. Industrial enterprises of the Urals are going through an intensive upgrade, and purchasing new process lines from Western companies. Thus, specialists from Germany, Italy, Austria, Spain and other countries come to Ekaterinburg to assemble and commission the equipment. As a rule, such work takes a year or two.

Besides, there are a lot of foreign delegations who simply come to study the local market in various spheres - from heavy industry to food industry.

- How are you going to keep your customers?

- Before booking into the hotel, a client makes a phone call. It is very important that at the other end of the line our potential client hears a voice that is pleasant and gentle. Then the choice will be made in our favour.

The only option to keep your customers with is a high service level. A gentle voice on the phone, smiling personnel at the reception desk, the ability to solve any problem when a client contacts receptionists for assistance. Many hotels offer the same range of products - rooms, a conference hall, a bar, and a restaurant. The difference is in the quality of service. For example, I often come out to meet conference organizers in our hotel and tell them: "Hello! How are you doing? Is everything all right?" It is very important to establish this friendly atmosphere.

- Does the Park Inn chain plan to extend its presence in the Urals?

- There is a plan to build a hotel in Chelyabinsk. They also consider building a Radisson hotel in Ekaterinburg; however, there are still several issues regarding the allocation of the plot of land in the city centre.

- Does the Russian and the Urals hotel business environment differ from that in other countries?

- The difference is a more complex and bureaucratic process. This applies not only to hotel business. Every entrepreneurial activity in Russia is enlaced by the system of control, supervision, certification, limitation, etc. The system considerably slows down the development. In Italy, for example, there is no sanitary-epidemiological monitoring. Meanwhile, no one thinks of a possibility to suffer from poisoning in this country.

Not so long ago hotels received letters from the Federal Antimonopoly Service of Russia with a request to provide information about competitors and pricing methods. The answer is simple - prices are set by the market. The higher the demand, the higher the prices. It's business. Why should FAS focus on that?

RosPotrebNadzor (Federal Service for Supervision in Consumer Rights Protection and Human Welfare) goes as far as to make construction companies specify the composition of metal the crane is made of! What's the good of it?

- Does the stronger government control make the hotel service prices go up?

- Yes it does, because I have to pay to people who do paper work. Not a single hotel in Western Europe has a lawyer on staff; here, you need a lawyer everywhere. You also need a driver to deliver the documents. We bill all the customers for our services; to do so, 7-8 documents need to be prepared. Accounting department in Polish hotels has 3 people; here, you need 8.

- How do Park Inn hotel prices in Ekaterinburg differ from those in the branches abroad?

- It would not be quite correct to compare. There is a Park Inn hotel in Germany where one can get a room for 60 Euro per day. In Ekaterinburg the price is higher.

- How would you assess the quality of hotel personnel training in Ekaterinburg?

- There is no such training at all. In the beginning of 2009 our chef, who came from Lithuania, took part in the City Chefs' Contest. They were not even given knives. There were no interpreters available for foreign experts involved in the contest.

When we employ hotel personnel our major criteria is the knowledge of English. The rest of the training is given in-house - client servicing and booking of rooms. If a person is inherently appealing and respectful of the person he or she is taking to, after two-three months of training he or she can become a member of our staff.

- Your worked in Saint-Petersburg before you came to Ekaterinburg. Can you compare your experience of working in these two cities?

- Petersburg is a very beautiful city; it is a genuine centre of Russian tourism. There are much more hotels there and it is possible to find a trained employee. It's very important.

In Ekaterinburg, business trips prevail. If there is no business reason for a trip to the Urals, the trip won't happen. A big distance to Western Europe plays an important role. Europeans like short two-three day trips. They can easily travel to Petersburg, which is not the case with Ekaterinburg. The city is simply too far away. However, groups of Europeans travelling via Ekaterinburg down the Trans-Siberian Railway book in our hotel during summer time. The rouble went down significantly in its value to euro, and that is why such trips attract travellers from Europe.

- How do you see the outlook for hotel business development in Ekaterinburg?

- As the crisis goes, on the number of hotel rooms available in Ekaterinburg is quite sufficient. We are concerned about the winter period when the number of clients is traditionally smaller. The worst type of competitor is a hungry competitor. The time will be tough for all of us.

In the long term, however, hotel business in Ekaterinburg will see a new development. As I am from Poland, I can give you an example of Warsaw. 12-15 international brands, owners of 4 and 5 star hotels, are present there. Furthermore, all theses hotels have 250 to 500 rooms. They all develop successfully. I am confident that the same will be true for Ekaterinburg.

I think that local authorities should position Ekaterinburg as a regional conference, assembly, and exhibition centre that works not for the Urals region alone but for the neighbouring states of Middle Asia and China as well. The scale of business activity in Ekaterinburg makes it difficult to compare the city with any European megacity. Maybe Frankfurt; however, this city is Europe's financial centre.

- By the way, a lot has been done in this area, in particular - the June 2009 Summits of the heads of the Shanghai Cooperation Organization member states and BRIC. Has the hotel business benefited from these events?

- Frankly speaking, no. Neither Ekaterinburg Administration nor the Sverdlovsk Oblast authorities have had any experience of hosting such summits. There was certain panic as to making sure that all participants are accommodated in the hotels. They booked the entire hotel from the middle of May till the end of June. At the end of the day, we weren‘t full up. Several hotel ended up completely empty. Moreover, a lot of people who were not involved in SCO and BRIC summits had to postpone their conferences, and chose not to come to Ekaterinburg. The operating schedule of Koltsovo airport in Ekaterinburg was not disclosed until the very last moment. We lost many customers.

Nevertheless, these international events have been crucial in terms of long term development outlook and branding of Ekaterinburg as the regional business centre.

The interview has been prepared by Pavel Kober