Hotelier sees room to grow

Hotelier sees room to grow

After a slow start, competition in the international hotel market in the Baltic states is beginning to warm up. Liene Dambe talks to Radisson Blu regional boss Ronald Smithjes about how the biggest international brand in the Baltics intends to stay ahead.

How long has Radisson Blu been operating in the Baltic states?
The first Radisson Blu hotel in the Baltics was the Radisson Blu Daugava Hotel on the other [Western] side of the river. It has 356 rooms, and it is owned by a US investment company who came to Latvia to build a paper factory and ended up building a hotel.

Soon after we took that over in 1993, we signed a management agreement with investors in Vilnius and Tallinn for managing the Radisson Blu Astorija Hotel and Radisson Blu Tallinn Hotel. So 15 years ago we were present in all three Baltic states. Then in June 2010 we got the opportunity to partner with Linstow, a Norwegian company with a small Baltic hotel chain called Reval. They wanted to partner with an international brand and they could have chosen Hilton or Marriot or any other chain, but they chose us.

Why? More likely because we were already present in all three Baltic states so I think it was a logical step. The Carlson Rezidor Hotel Group, the mother company of Radisson Blu, was already strong in Eastern Europe and also in Russia. So I think it wasn’t just the lucky result of a ‘beauty contest’ but an educated choice.

How many hotels does the Rezidor Group have in the Baltic states now?
Since June 2010 we have been managing 13 hotels in the Baltics, of which nine are Radisson Blu, and four are Park Inn Hotels, our mid-scale or three-star brand.

In terms of hotel chain presence, that puts us in a dominant position. There are local players and in Riga there are some with multiple hotels, but they are all, I would say, non-branded. We know that international chains will come to the Baltics. If you look at Vilnius and Tallinn, there are already more international operators compared to Riga. In Tallinn you have Swisshotel, and they are building a Hilton Hotel which will open soon. In Vilnius they have a Novotel, which is part of the French group Accor, and they also have plans to open a Mercure hotel in Riga. So there will soon be more hotel chains on the market which I think is good, not bad, as it suggests expanded leisure and
business tourism.

Do you have plans to expand the Rezidor brands in the Baltics?
We are a hotel management company, we don’t own hotels but we manage hotels on behalf of managers and owners. We are always looking into new opportunities. So if there would be an opportunity to expand with some possible investors and it makes sense for both the investor and for us, I think we will look into this. We do have some plans in Riga but they’re not very concrete at this stage.

The Rezidor group operates multiple brands [also including Hotel Missoni]. Our Park Inn brand is a mid-scale product, so I can imagine that if there would be a good opportunity to open a Park Inn Hotel in any of the Baltic states that would be an opportunity. With the Radisson brand, I think we have come to a certain level where we have enough Radisson rooms for the market, but again if there would be an opportunity, and if the opportunities were viable for both parties, I don’t think we would say no.

Our most recent opening was the Radisson Blu Elizabete Hotel which was opened in mid - 2008, and we have been consolidating since then, not expanding. We became more present in the market just after the heavy bust, and since then we see a very positive
trend upwards.

How important is business tourism to your hotels?
Leisure tourism for the Baltics is a great piece of our business. But we have to focus also on other segments, like business travellers, individuals and groups. When we talk about the business market we are particularly talking about these big international conferences, and I think it’s very important for all three of the capitals to attract more of these events.

Here in the Radisson Blu Hotel Latvija We have 571 rooms, our sister hotels are in walking distance, and we have a 900 sq m ballroom and 20 other meeting rooms. I think we have a good track record of organising large conferences. We also had our Rezidor annual business conference here in March in Riga, we had 500 of my fellow general managers and people from the six area support offices and corporate support office which is in Brussels. They all travelled to Riga and we discussed our strategy for 2013-2014, in a conference for 400-500 Rezidorians. We have had all kinds of conferences coming here from all sorts of feeder markets, from Russia or the Nordic countries.

Our others hotels in Lithuania and Estonia don’t have the number of rooms we have but for example Radisson Blu Hotel Lietuva and Radisson Blu Hotel Olumpia also have big conference facilities.

What more can you do to promote Riga as a destination for business and tourism?
We are talking to other main stakeholders regularly such as large destination management companies, airlines that have direct flight connections to Riga, the Latvian hotel and restaurant association as well as Riga Tourism Development Bureau, to see what we can do jointly to promote Riga as a destination, there is more that can be done jointly. This year, 2014 Riga is the European City of Culture and that will kick off for what I hope will be a prosperous period for us in terms of promoting the city a destination.

How do you intend to promote occupancy and yield?
We have such a strong brand presence, and such a strong support structure behind us, in terms of marketing, in terms of yield management, in terms of reservation systems, boosting occupancy and yield is basically our day-to-day business. We constantly try to improve our performance and with the help of all these support functions, it comes very naturally to us.

There are publicly available statistics that bear this out. For our group in the Baltics, we see very stable growth of between 8-10% from 2010-11 to 2011-12. It went down hard in the financial crash, revenues dropped between 35-40% in
2009, which gives some context for these growth figures.

How are you responding to the enormous changes to buying channels in your industry?
I think online booking really took off 10-15 years ago. The hotel industry is rather conservative, and I don’t think any hotelier thought that online booking would be such a success. My personal conclusion was that the hotel chains were at that time a bit ignorant about the possibilities that the web provides and allowed other entrepreneurs to dig into that niche. Now channels like Booking.com  have the power, the systems, the technology and the funds to provide us with a big share of our bookings.

Now the industry – not just Radisson but the other big chains – are fighting back and trying to redirect bookings from Booking.com and Expedia to their own websites, that is the focus of effort at the moment.

I concede that we could have done it better if we had been a bit more entrepreneurial 20 years ago when the internet was rising up. We were a little bit negligent of that, and now we have to deal with it. On the other side if you look at the whole phenomenon of internet booking and the share we get from it, we should also be happy because a lot more travelling is happening, it’s easy for people to book online get a package with a hire car etc., the fact that those booking sites take the commission, this is just part of business I would say.

In the past it was the local operators that took the commission and now it is the online travel agents (OTAs). It’s just part of the changing business world. Anyway I think that the market share of those third party websites have stabilised. We saw a huge increase over the past five years. It’s still growing a bit but not at the same pace as it was in the beginning.

So what can you do regain some of the margin that has been lost because of the OTAs?
Our strategy is that our brand website will always offer the same prices like other big OTAs offer and in our communication with customers through different channels we always ask them to the book hotel via our website.

What do you think are the ingredients for managing a successful hotel?
The most important thing you have to keep in mind is that the hotel industry is a people business. We just recently introduced the new company strategy – 4D strategy containing four main pillars – develop talents, delight guests, drive revenue and deliver results. Each of the elements can be a benchmark itself in the business but combining four of them in one we get the maximum stability for our business and satisfaction for our guests.

This is a 24-hour, seven days a week business, so there’s the need for good structure and good communication, and it’s definitely also the team that makes it successful.

A good general manager is a team leader and makes sure everybody heads in the right direction and follows the same strategy to reach the set goals!

Is it easy to recruit in the Baltic states?
I think we are very lucky as a company because when people tend to come and work for us, they tend to like it, and they tend to stay. We have a lot of people working for us who have been here for more than 10 years, quite a big proportion in fact. I had the same in Amsterdam, and it was the same here. It’s important that the staff feels at ease and at home. If you have constant turnover of staff, you can never get the guests feeling at ease.

How do you divide your time between the various Baltic properties?
Going from single property to multi-property management, took a bit of adaption to my personal workload, but now I would say I’m 50% at the hotel and 50% in the other cities. The travelling is OK and it keeps working life interesting. I try to fly as much as possible between the capitals for convenience, and I drive as well but I don’t find it efficient because the roads are not so fantastic, and its four hours when you are not productive. In a plane I can work, a bit.

What do you enjoy about managing the Hotel Latvija?
Markets like Netherlands are more mature and more established. Here there is still some room for being entrepreneurial and adding value to the business as a whole. That was what attracted me. I wanted to go to the Baltic states because I think there is still a lot we can do to improve the business. Radisson Blu Hotel Latvija is a fantastic property, and definitely you feel the buzz of the business here in the lobby bar area.

On a typical Friday morning, we start to get the leisure tourists coming from Scandinavia and the UK, and the bar opens at 11am and people are partying. During the week it’s a meeting point, people meet for business talks. We have the casino, we have the skyline bar, we have the restaurants, we have the ESPA Riga, we have the shopping, altogether it makes it a great venue, a great hotel. I think I would have difficulty finding a similar place with so much going on for my next assignment... Not that I’m planning on moving on, I’m committed here for some time more.

Career at a glance

Dutchman Ronald Smithjes studied hotel management in Maastricht and worked for six years at Hotel de l’Europe in Amsterdam, a 5-star deluxe hotel owned by the Heineken family, ending up as financial controller.

He then joined Radisson SAS as finance manager of the Radisson SAS Amsterdam in 2002, before moving onwards as regional financial controller for Radisson hotels Benelux.

After serving as general manager of Radisson Blu Amsterdam for three years, he was then asked to take responsibility for the Baltics, moving in May 2012 to become general manager of the Radisson Blu Hotel Latvija, and as district director for Radisson Blu hotels in the Baltics.

In his spare time Ronald enjoys cooking, skiing in winter and bicycle riding in summer.