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March 2015 Newsletter

Editorial

What next for the Sofia hotels?

The Kempinski Hotel in Sofia finally has new owners after many years of trying. The new owners are the Victoria Group who already own other resort hotels in the country such as Elenite resort, Hotel Pamporovo and hotel Maritza in Plovdiv.

The key question now though is when and indeed if the hotel will be given a much needed refurbishment? Estimates are that some 40m Euro will ne required to bring it to a true European five star level, a factor that is likely to be a tough business call for the new owners. At risk is also the Kempinski brand name which currently only has a couple of months to run and the rumour mill has it that the Kempinski name may follow that of its predecessors, the  Intercontinental whose time at the same facility also halted abruptly.

Funnily enough, at the same time, local media were also reporting that the owners of the Hilton and Radisson were also baulking at the fees the respective hotel management companies were wanting from the owners. Just for the record; hotels are usually owned by one entity and managed by staff of a hotel management company i.e. Hilton, Radisson, Kempinski etc.

Of course, in the case of the Hilton and Radisson, the owners going to the press can simply be a negotiation technique whereas the in the Kempinski scenario its rather different. For any hotel owners who think they are big enough and capable enough to go it alone without the support of a big name brand, they should perhaps think again. Business hotels are frequented by business people and business people don’t look at self designated and questionable star ratings, they book via brand recognition and brand reputation. That’s why particularly the Hilton and the Radisson have been pretty successful in Sofia.

 

Snow Fall

This seasons snowfall seems to have compensated for last years absence of the stuff. With any luck the ski season this year will extend well into April; whether there are sufficient tourists to keep the pistes busy in April is another matter.

Whilst the snow has been good this year, the same statement might not be applicable to the levels of tourists overall. Whilst some hotel facilities have done well, many have not. In Bansko for example, during the last two weeks of February and the first weekend of March with the national holiday, one could see many accommodation facilities closed completely and most of the ones that were open seemed only to have one or two light on during night fall. Everyone knows Bansko however that Bansko has a 50% over supply of beds whilst Borovets can almost nowadays be classed as an ‘’old resort’” with ‘”old infrastructure’” no matter that the skiing is actually decent.

No doubt the season end government statistics will state that the winter was a successful one with record tourists; hotel and restaurant owners know differently however. The facts are in their decaying bank accounts.

 

Mark Thomas

Managing Director

HRG Bulgaria

 

 

Bedding it in Rio

The 2016 Olympic Games will be upon us before we realise it and for anyone unsure of which venerable city will play host; its Rio, the city that also hosted the 2014 World Cup Final. In so doing, Brazil will have played host to the worlds two biggest sporting events in just a two year period.

Of course we all know that air fares will increase for flights to and from Brazil at the time of the Olympics, just as they did during the football world cup, as well as on domestic flights within the country. It will also mean hotel rates getting hiked once again as hotel owners try to cash in on this once (or twice) in a lifetime opportunity.

Perhaps surprisingly Rio claims only to have 34,000 hotel beds at the moment, a figure which must have prevailed during the football world cup though with our TV’s showing what appeared to be like hundreds of thousands of football fans converging on the worlds football ‘”capital’’ it begs the question ‘”where did they all sleep?’’  The Olympic committee say they need 48,000 beds for the 2016 event and there are presently 15,000 hotels beds under construction. Of these, 10,000 are located in immediate purpose built area where the Olympic games will  hosted and there layeth the problem: what to do with these beds – plus indeed the hotels they are in – after the games finishe? No-one seems to have thought about that as yet. What may well happen is that the extra beds makes the supply of beds in the city outstrip the demand for them, prices slide downwards and the hotels lose money and (longer term) shut down.

Think Athens Olympics where the purpose built arenas and infrastructure are now a desolate wasteland.

If there was ever a good, aka cheap time to travel to Brazil, it will almost certainly be immediately after the 2016 Olympics.

 

Germans face more challenges

In news that will send the ever increasing blood pressure levels at Lufthansa rising further, Ryanair has announced that it is to open a base at Berlin Schonefeld Airport later this year. 16 new routes will be started making the total operated 22. 6 aircraft will also be based in Berlin,

Lufthansa have started to struggle to deliver the expected profit levels recentlty and are being squeezed both on their short haul flights within Europe as well as on the more profitable long haul flights where Turkish, Emirates and Etihad have grabbed a substantial chunk of the what was once ‘’their ‘ business.

 

Bedding in

What do you do when there are no more airlines left to buy or conquer? The answer may be to buy hotels. Cash rich Qatar Airways has purchased its first hotel outside of the Emirate with the acquisition of the Sheraton Skyline Hotel at London Heathrow Airport.

As a business case, this makes sound sense for Qatar; why pay to put your guests in someone elses hotel when they can stay in yours? There may however be a gap in the standards as Qatar’s Airline is a five star product and the Sheraton Skyline most certainly ‘’isn’t!’’ though it would not be impossible for the airline to throw a few tens of millions at the hotel to bring it in line with its own star rating.

 

Map that

Never trust your car GPS is a re-occurring message we are all told. Pity then that a Belgian bus driver did just that when he drove a bus full of skiers from Belgium to La Plagne in the French Alps. Except that is, he programmed in La Plagne in South West France, close to the border with Spain. The distance between La Plagne where they arrived and La Plagne where they should have been is 600 kms.

The Belgian bus driver is not alone as an American couple visiting Wales decided also to trust their car GPS system and tried to drive to an island called Caldey Island. the place is indeed an island but that didn’t stop the couple from trying to drive across the sand and water to it; they didn’t get far however. The line on the GPS was in fact a ferry line but it was winter and the ferry doesn’t operate in winter.

 

 

Drawing the lines on Germans

You have to admire the Singapore Authorities, having discovered that one of their pristine clean trains had been sprayed with graffiti, the Singapore police traced the culprits to being a German Couple that had since moved on to Malaysia. The couple were deported by the Malaysians back to Singapore and have now been sentenced to three lashes of the cane and nine months imprisonment.

Top marks to Singapore.

 

When the boot is on the other foot

Certain sectors of American business are not overly keen on a free market economy when it seems they will become second best; this is most certainly applicable to the American aviation industry. Their latest winge is over Emirates two for one offer where two people can travel for the price of one between the USA and Dubai.

The complaint of ‘’un fair trading’’ comes just days after the same people accused Gulf based carriers from benefiting from 40 billion USD in government subsidies.

It should be remembered by those doing the winging, that the majority of American airlines would have been declared totally bankrupt and closed down over the past couple of decades or so in a truly free market economy had it not been for state intervention and indirect state aid.

 

Big Bucks

The US aviation sector has reported a combined profit from its top ten airlines of 7.3 billion USD in 2014, a drop from the previous years record of 11.6 billion USD, though still the fifth year in a row when a healthy profit has been recorded.

However would be investors are still shy to invest in the sector when you consider that the actual net profit is a meager 4.6% of gross revenue. In the big world of commerce there are far better returns for your money elsewhere.

 

 

Summer Train

Planning to travel by rail this summer? Tickets can now be booked for most of the TGV operated services within France and connecting France with Italy and Switzerland.

Remember, the smart people travel by train within France; its faster, easier and certainly more relaxing. Oh yes, there are far less trade union strikes on the ground than in the air also!

 

Strike Out

There are not many things worse than finding your travel plans disrupted by strike action. Usually, notice of strike action is given well in advance of the actual event and sometimes one just knows what will happen before it actually does e.g. Greek Air Traffic control strikes in August.

The Lufthansa/Austrian group are heavily relied on by Sofia based travellers so last years debacle where strike after strike affected many peoples travel plans went down like a lead weight. We all hoped that it was a case of ‘’that was last year but this is this year’ with the Lufthansa group strikes, alas not. This past weeks strike by the group not only came with very short notice but it also rolled on unexpectedly day after day, causing not only huge amounts of extra work for the likes of ourselves but also for the travellers who were having to re plan and re plan again their meetings and work schedules.

Lufthansa are being attacked full on by the gulf carriers at the moment and are losing territory with every passing month, they would be wise to end such strikes as they may lose the only friends they still have. Equally their shareholders will also likely not be amused if such a scenario continues.

 

That’s America

Americans traditionally have a strange understanding of geography so perhaps it should not be a surprise that an American couple cancelled an 80,000 USD safari tour of South Africa and Mozambique due to the Ebola outbreak 3000 miles (4,800 kms) away in West Africa.

Of course they had to sue someone and that someone was their travel agent for not selling them travel insurance for 4000 $ which they said they would have bought. Oh yes they also want 30,000 USD damages from the agent as well for no apparent reason other than they want to.

 

BA brand tops

British Airways has retained its title as the UK’s leading Superbrand. Rival airline Virgin also made it into the top 20 this year for the first time.