The FINANCIAL — By Steve Horvath, Area Director Revenue Management Eastern Europe, and Rene Mooren, Area Director of Sales and Marketing, talked to The FINANCIAL about developing their business in Georgia and about developing Georgia’s marketplace.
Q. Marriot has 3,500 hotels around the world. Last year the company announced its plans to expand in Georgia and open a third Marriot in Tbilisi. Is the Marriot really going to develop further in Georgia?
Rene Mooren: In general, we are looking to double the size of Marriott hotels. When I talk about Marriott I am talking about a multi brand; not just the Marriott hotel, but also the Courtyard by Marriott, Renaissance, and the rest of the brands that we manage. We are probably looking at doubling our size by 2015. That includes all the markets we are active in but also the markets where we are new. We have been active in Georgia for almost ten years and now we are also adding new hotels in a market like Azerbaijan, which is completely new to us. I can’t say at the moment that a third Marriott hotel is soon going to be opened. But it is true that we are looking at additional hotels in Georgia, Armenia, and Azerbaijan, almost all of the Eastern European countries in my area.
Q. Mr. Horvath, you have a large amount of experience from working as the General Manager at Residence Inn by Marriott Vancouver. What are the main differences you see between Canada and Georgia in terms of business travel?
Steve Horvath: I feel as though I am trying to learn the complexities of business travel in Georgia. The first thing that pops to mind is distribution. Canada is one of the largest countries in the world and we have very few Marriott products across the landscape. In Canada nowadays things are growing aggressively just as they are in Europe. I don’t think it’s specific to Georgia. The number of hotels we have in Canada is bigger than in Georgia. In Canada the economy is linked to the processes in the US. Oil is a big part of economy deals. Everything is different between these two countries – the economy, the conditions. I can’t make too many comparisons, but the first one that comes to mind is the opportunity growth we see in Canada and that which we see in Georgia.
Q. As Georgia is a small marketplace, do you believe that there is still sufficient room for development?
Rene Mooren: If you ask me what we need in Georgia, in Tbilisi we have to look at the location and look at what sort of project we need here. Of course we have had some new competitors in the city recently, but I’ll give you one example: we also have in our portfolio long stay brands which are typical products for people who arrive in Georgia for more long-term purposes and would like to stay in the capital. Those rooms are typically bigger, we’re also offering shopping services. That type of product doesn’t exist in the market. We certainly could look into how to edit different hotels and add different projects in Georgia, in Tbilisi.
Q. Is there a large number of those who arrive in Georgia for more long-term purposes and would like to stay in the capital? And in general, what is the statistic of guests here? Has their number increased or decreased and by how much?
Rene Mooren: I don’t have a number or statistic off the top of my head. But I can truly say that demand has increased here. Tbilisi is the only Georgian city we’re operating in right now. When I compare 2010 to 2011 we are seeing more guests coming to Tbilisi. The demand for a hotel in this place is increasing. Because of this fact, we are staying in Tbilisi and aren’t going to open a hotel in Batumi or another place in Georgia. We are very careful about the location of our hotels. There are so many hotels that have opened in Batumi that I don’t think the opening of a Marriott hotel there would be a good idea.
Q. What is the average occupancy rate at Marriott hotels in Eastern Europe? Which country is the most profitable?
Steve Horvath: In general, we’re very satisfied with the operational results in the region. We’re doing better than last year in Eastern European countries. It’s hard to compare and say which country is the most profitable. There are so many ways to look at ‘profitable business’. Definitions of the word ‘profitable’ can be so different; it can be defined hundreds of different ways.
We are sometimes asked why we have a hotel here. Because it may seem an exotic location no one would ever think of opening a hotel there? And sometimes those hotels do very, very well for us. In big cities, big centres, a profit opportunity perhaps isn’t as great. We need to have hotels in both sorts of places.
Q. What are the current trends in business and leisure tourism? How are the Marriott hotels expected to change in the coming years?
Rene Mooren: We are happy to see that people are travelling a bit more both on the business travel side and leisure travel side. We see that people instead of long vacations far away are going for many more short trips, so called City Breaks. It has turned more specifically to our area that people also want to discover more unknown, maybe new destinations. We all know London and Paris, but more and more people are going to Eastern European destinations. Even in Georgia we are seeing an increase in leisure tourism compared to last year. This isn’t only good for us, but for the economy of the country as well.
Q. How much is the guest satisfaction index here in Georgia? Has it increased or not?
Rene Mooren: In Tbilisi guest satisfaction is at one of the highest levels in comparison to in other Eastern European countries. The guest satisfaction index is impacting the service we’re providing. Of course there are problems in our service too. We are human beings and problems can always occur. But our goal is to try and solve them. First of all, you need to statistically find out what the most frequent problems are. Then the team should decide how to avoid them. This is the role of the satisfaction index.
As we have an international audience, the guest satisfaction index is almost the same in every country in this region. Moreover, I don’t see a difference in Marriott guests in general.
Q. What changes caused the entrance of Marriott on the Georgian market?
Rene Mooren: You can look at this issue in different ways. Again, when you look at this building, it was completely destroyed in the past. The Marriott, together with investors, brought back a very nice hotel setting new standards in the city and bringing life back to this fantastic building. I think this is a huge contribution that we have made to Tbilisi.
The Marriott helped increase tourist numbers. When people don’t know a country, but know that we have a hotel there, they think: “There is an American hotel, so there must be a reason to go, let’s check it out, let’s go!”. This is one way that the Marriott is impacting on leisure tourism in Georgia. The other thing is that when we make advertisements of our hotel in Georgia, we don’t only promote the Marriott hotel, but the whole city as well. Tourists first choose a destination and then choose a hotel. If we want tourists to come to the Tbilisi Marriott hotel, first of all we need tourists to choose to visit Tbilisi. It’s additional money that we spend, to promote the destination and this is directly helping tourism to develop. These are two ways that we are trying to develop tourism in Georgia.
Steve Horvath: When a tourist is going to travel and discovers that Marriott Hotels are in those places that he/she wants to go to, it makes their decision to visit the area easier. But just to let them know where Marriott hotels are, we need to promote these countries. This is a chain reaction.
Q. Do you think that the entrance of the Marriott brought businessmen and investments to the country?
Rene Mooren: Honestly, I don’t think that a business traveller chooses to go to Tbilisi just because there is a Marriott there. We aren’t the purpose for a visit. There is a business reason why you need to go to Tbilisi. We just give them a place to stay here. I would love to hear businessmen say, let’s go to Tbilisi because there is a Marriott there. I would be so proud, but I don’t think that’s the case. The business purpose is the purpose of visiting Tbilisi or the surrounding area. One way we could bring additional business here is that when we brought the product here, it hadn’t previously existed. Then other hotels came to the Georgian market, because they saw that it was possible to invest in the Georgian market.
Q. What was the influence on the Marriott’s operations after international hotel brands entered the Georgian market?
Steve Horvath: We watch each other very closely – who is opening a hotel and where. We’re all competitive. We have competitors and when we see our competitors going into a market no one else has gone to, it raises interest and they have the desire to go there too. Everyone is looking for growth. Demand isn’t going down in the market. This is very positive whilst the market is getting larger. In spite of having new competitors to compete with we also have new opportunities, because demand is continuing to rise.
Q. What constant growth do you see in Marriott’s work here each year compared to the previous ones?
Steve Horvath: Basically, we are looking for growth opportunities, new hotels, and new markets. Together with our owners and franchises, we’re taking the Marriott to a new level of global growth, launching innovative new brands, expanding in emerging markets and solidifying our position as a world-class hospitality company.
Q. To bring more and more tourists to Georgia political and economic stability and development are vital. Please could you assess this situation?
Rene Mooren: If there is no political or economic stability in the country, that would be negative for the country and for us as well. We’re not into politics, but everything which helps us to make it easier to travel to Tbilisi is helping us. We could of course voice our opinions in the discussions. We are experts in the hospitality business, we aren’t politicians but we can give our input in comments about the things we think will help.
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