+359 2 943 3011 office@bg.hrgworldwide.com

July / August 2015 Newsletter

Editorial

Location Location Location

The choice of location very often influences whether a business is successful or not; bars, restaurants, supermarkets and even shopping malls all are heavily influenced by location. The same principle is also most definitely true of hotels; the hotel with the best location will always win vis a vis the same standard hotel with the not so good location. Thus the news – yet to really break into the local domain – that premium hotel brand Swissotel is to open a new Sofia facility in 2018 will initially have caught the attention because Sofia, as a capital city of an EU country, is somewhat lacking in premium hotels now that the Sheraton and Kempinski have waved goodbye. What will however have raised the eye brows is the fact that that the planned location is in the outlaying Mladost neighbourhood. The notion of location being of a prime consideration for a premium aka 5 star product, either has not or has been (badly) considered.

Hotel Groups such as the Swissotel are not stupid and they will have a sound logical business plan to go with this proposed opening. Other cities across Europe have seen once neglected neighbourhoods become a hotbed of commercial or urban activity complete not just with new business but with housing, shops, restaurants and bars etc etc. Mladost has indeed had a significant rejuvenation over the past years thanks in part to it being one of the first neighbourhoods linked to the excellent Sofia underground system. Many new businesses are located in the area and new housing has followed from this. Its proximity to the country’s main airport means that most parts of the neighbourhood are little more than 10 mins from the airport terminal. Thus Mladost ticks a lot of boxes. However, five star premium hotels in theory expect five star paying guests and it is highly questionable if a) the types of business people that are in Sofia generally let alone in Mladost are five star paying guests, also b) five star hotels in Country capitals and especially in a country like Sofia are far better suited to a central location where the events and meetings business is easier to sell, something that a hotel in Sofia such as the Swissotel will have to achieve in order to justify itself.

The Turkish developers of the huge Grand Kanyon development where the proposed hotel will be based obviously have sold their project well. Similar projects have worked well in the suburbs of Istanbul. Sofia though is not Istanbul and one size or model does not always transfer well.

There is a however a sting in the tail to all this! The Swissotel brand is currently up for sale and indeed may be bought by the IHG Group (Holiday Inn etc) and any potential new owners might have a rather different view of this project.

 

Mark Thomas

Managing Director

HRG Bulgaria

 

The Mystery Continues

It finally looks like a part of the mystery surrounding the missing MH370 flight is about to be answered. Just as we go to press, the authorities are expected to announce that a part from the missing plane has been found in Western Indian Ocean on the coast of La Reunion. A suitcase possibly from the plane was also found nearby. That some remains of the plane have been found here are not such a great surprise as oceanographers have, as one of their numerous suggestions, indicated that this is the area where debris may be washed up.

Only a small part of the mystery though looks like being solved and many more arise from it.

Immediately after the plane disappeared, numerous islanders in the Maldives claimed they saw the plane (they described its logos) flying very low over the islands in a south westerly direction at the same time that the plane had gone missing from its original flight path. These people were normal people and not some unreliable drop outs. The witnesses were so many in number that what they had seen had to be believed. Live reporting also evidenced this fact. Just why the authorities across the world choose to ignore this hard fact is indeed “strange”. A rush of alternative chaotic explanations and justifications driven by pings and pongs off satellites has subsequently been proven (and admitted privately) to be absolute nonsense.

It’s almost as if someone wanted the search for the plane to be well away from where it really and obviously was flying towards.

The conspiracy theories will continue for some time yet and all theories are at least as good as the official theories. Just for the record, La Reunion is south west of the Maldives; Diego Garcia is also in the same direction and much closer.

 

 

Fancy a Greek Island?

Greece’s reluctance to sell off some of its assets to pay its national debt and instead tax business’s who try to make money, could have backfired. Footballer Cristiano Ronaldo has apparently bought a Greek Island as a wedding gift for his long time friend and agent Jorge Mendes.

Greece has apparently put a number of its islands up for sale with prices ranging from 3m Euro to 50 Million Euro.

Perhaps the moral of this story is make sure you invite Mr Ronaldo to be best man at your wedding.

 

Back to Normal!

Things might just be getting back to normal on Greece after the country almost went bankrupt. Greek Air Traffic Controllers are going on strike on the 5th August. One assumes this can’t be for a pay rise?

Not very long ago the surety of Greek Air Traffic controllers striking in August was the same probability as the sun shining on the Greek Islands during the same month; you could set your watches by it.

 

Bed & Breakfast with History

The (in) famous London Police HQ of Scotland Yard has long offered bed & breakfast of a sort to its various ‘guests’; though the visitors were usually not there of their own free accord. The original building was closed in 1890 when the Police moved to a nearby new HQ but now this original building is to be turned into a premium 5 star hotel with suites costing around 10,000 GBP (12,000 Euro) per night.

Some might argue that potential guests who can afford that may end up staying twice: once voluntary and once involuntarily.

 

The vulnerability of travel

As the travel industry evolves to one that is driven almost exclusively by technology, ample proof of the threat that this causes has been evidenced several times recently. LOT Polish Airlines admitted hackers had stolen flight plans which caused its whole operations to be shut down for five hours in Warsaw. United Airlines also was forced to shut down its operations for two hours in early July when its technology mysteriously ‘crashed’.

The word ‘mysteriously’ is not to be understated for United has also apparently been hacked by Chinese based hackers previously in June when flight manifests and other data was stolen from the airline.

One can hardly say that technology is making the travel industry safer no matter how much easier we think the services being offered to us have become. Perhaps there is the trade off: a less than safe industry brought about by more and more technology that the public apparently demands…….or is that ‘technology that the airline wants to force onto us’?

 

 

Middle of the road for Hilton

The Hilton Hotel Chain has announced it is to introduce yet another brand to its portfolio. The as yet ‘un-named’ brand will be a mid scale brand targeting ‘value orientated guests’ some may translate this to ‘budget’ guests (or indeed any other appropriate description for cheap).

The move is being driven by the fact that Hilton is somewhat under served in this market segment yet in the USA alone, it covers 40% of the market; a very large market not to be currently targeting (successfully).

 

Disney Mickey Mousing with EU laws

Europe is proclaimed to be largely a single market. This however fly’s in the face of many countries and many European based business’s. The travel industry is rife with prices adjusted for sale in different markets which can in turn be controlled by restricting their purchase to credit or debit cards issued only in that country where the offer is being made. Hertz was the subject of such a legal case when it was found to be breaching EU law by restricting access to pricing in different EU markets.

Now Disneyland Paris has been caught offering massively different prices for the same product in different countries. The sample given was 1346 Euro in France, 1870 Euro in the UK and 2447 Euro in Germany for the same package. What seems to be illegal is that you cannot buy these products if your card is not registered in that particular country.

The EU will surely hit Disney hard no matter how much they protest and it can only be a matter of time when this practice is ruled to be totally illegal.

The Bulgarian market was guilty of two tier pricing (foreigners v Bulgarians) for many a year before it rectified (largely) the problem. It would however, be unrealistic to have expected Paris based Disney to disadvantage the French market. EU rules only apply to the French when it’s convenient.

 

 

Etihad in a large problem

Gulf carrier Etihad is being sued by one of its passengers who claims he had to sit twisted and contorted for long periods which resulted in him suffering a back injury after he was seated next to an obese passenger. After more than five hours the passenger was allowed to change seats on the flight from Sydney to Dubai but he had to return to his original seats 90 mins before landing.

Etihad have tried to have the case thrown out arguing that it was nor unusual for overweight passengers to take up ‘too much space’. A Brisbane court refused to throw out the case and has asked the passenger to take a medical examination.

One cant but help think that the Etihad legal response was not just weak, it was plain stupid and invites punishment.

 

Delta Tops

This may surprise you: US airline Delta is the worlds largest in terms of passenger numbers but Ryanair carries more passengers on international routes than anyone else. Last year Ryanair carried 86.3 million passengers, well ahead of Easyjet who carried 56.3 million.

Delta carried a huge 129 million but this is domestic and international traffic combined.

World’s Top airlines for total (domestic and international) traffic in millions

  1. Delta  129,433 m
  2. Southwest 129,087 m
  3. China Southern 100,683 m
  4. United Airlines  90,439 m
  5.  American Airlines  87,830 m
  6. Ryanair  86,370 m
  7. China Eastern 66,174 m
  8. Easyjet  62,309 m
  9. Lufthansa 59,850 m
  10. Air China 54,577 m

 

 

Aeroflot sells off planes

Iconic (!) Russian National Carrier Aeroflot seems to be suffering from the same economic woes as the rest of the country. It has announced that 43 of its fleet of planes are to be sold. This represents some 27% of its total fleet!

Whets more surprising is that Aeroflot are not getting rid of its old flying stock but rather some of its most modern planes including Boeing 777’s and Airbus A321 & A320’s.

Usually when planes are sold, it’s the oldest ones in the fleet with the reason or excuse that newer planes will yield better performance and hence reduced costs. That Aeroflot is doing just the opposite leaves the text book theory of sound business practice somewhat in disarray.

A spin off from this is that any airline that is desperate for some new or relatively new planes can now get them at a hugely discounted price from Aeroflot rather than wait for more expensive ones to come off the Boeing and Airbus assembly lines sometime in the future.

 

Big to get bigger

Hotel group giant IHC (Intercontinental, Holiday Inn etc) is reportedly on the prowl and after saying it is now not considering a merger with the Starwood Group (Sheraton, Westin etc.), it is seriously eyeing both the Fairmont and Movenpick Groups.

Movenpick are Swiss owned whilst Fairmont are owned by a US Group who have been trying to sell their portfolio of hotels for several months. Included in this portfolio is the premium Swissotel brand, which might have a sting in the tail for Sofia (see editorial)!