Interview with Michel Stalport, Vice President Western Europe, North & West Africa , Carlson Rezidor Hotel Group

Today I am in charge of around 40 hotels in operation, 26 under management and around ten in franchise, four upcoming hotels including the Radisson Blu in Nantes and the Park Inn in Sousse, and around ten in the nearby pipeline. All this spread around France, Benelux, Spain, Portugal, Italy, Greece, the Maghreb and West Africa, up until the Ivory Coast.Carlson Rezidor Hotel Group calls itself the fastest hotel developer at the moment, is this title justified?In the less than twenty years that I have been within the group, I have seen the number of establishment go from 29 in Europe to over 350 in the EMEA zone, which is in Rezidor’s capabilities. I well believe that we have good reasons to claim this title. We are a particularly dynamic group when it comes to new openings.What would be your particular advantage when nowadays all hotel operators depend on property owners and external investors to increase their portfolio?I would say that we have two major assets: the first is real flexibility in our approach to management and franchise contracts. We are capable of using our imagination to finalise the deal when the letter of intention has been signed. It’s often in this period that difficulties arise and negotiations collapse. We have a mid- to long-term vision of the shared interests between the landowner and the operator. We are capable of taking short term risks because we believe in the final result. Moreover, we have access to institutional investors which are able to make predictions, anticipate real estate price rises, set themselves objectives for investment returns…but want to be detached from operations. We have a good management reputation, with a rapid rise in power of our hotels, bringing value added to the business that is created and which belongs to the landowner.Is it true that development operations get very complicated?A new project is more often than before a tripartite operation with a developer that has found the land, a hotel operator who sets out the plan and a financier who takes the risk of carrying out the operation. The combination of each player’s interests indeed becomes more complex; it’s here that our flexibility in negotiations is often decisive. Moreover we are able to facilitate financing, thanks to our reputation and our current owners network.You seem also to be pleased with more complex but equally emblematic operations such as transforming the Law Courts in Nantes into a four-star hotel…It is true that finalising the Nantes project was a bit complicated and that the contract took long to formalise. We nonetheless maintained a relationship of trust with our partners who have enabled us to be tenacious. It’s indeed an atypical project, just as we like them, with a very strong architectural character making the difference. We are looking as much as possible to move away from the classic shoe-box hotel. Is this not taking pointless risks at a time of difficulty?We wouldn’t be at this stage of development if we didn’t agree to taking risks. It’s an attitude within Rezidor Group’s genes since the arrival of Kurt Ritter that maintains this approach. We are looking for something different in the hotel projects we are developing and their locations. In Marrakech, we are not going into the palm grove but into the business district. The Park Inn by Radisson Lille Grand Stade is an original product, situated in a sporting complex. We had to dare to take the risk. At the Amsterdam Schiphol, we are converting an office building into a hotel. I am convinced that an hotelier must keep his adventurer spirit. Taking a risk implies there is the possibility of failure, but also excellent returns on investment and gains to be made when the risk pays off. In this we have been rather successful.Is it this adventurer quality which is leading you to developing in Africa?The groups is indeed rapidly developing its presence in Sub-Saharan Africa, Nigeria, Mozambique, Sierra Leone, Rwanda….but also Gabon, Senegal, Ivory Coast and Mali. In the 70s and 80s many high-quality hotels have been developed in most capital cities. The situation, both political as well as economic, has progressively driven to the complete decline. The market deserves the appearance of a new generation of hotels. We must take the risk of going there. It’s a limited risk because investors are local, but they need to count on groups such as us to accompany them in situations that are not always stable. We have taken over the flagship Mammy Yoko hotel in Freetown in Sierra Leone, which is going to be completely refurbished in order to display the colours of the Radisson brand. The same operation is going to be launched in Libreville with the Okoumé Palace to transform it into two establishments under the Radisson Blu and Park Inn by Radisson brands. We have landed with new products in markets where practically nothing had happened in the last twenty years as a result of a lack of funds for maintenance and development.Does the risk commensurate with what is at stake for the Carlson Rezidor Hotel Group?Like I’ve said, the financial risk is small as we are resting on local investors. On the other hand, it is necessary to have a solid team, sometimes true warriors, to guarantee the management work. It is not easy to keep a hotel running in Bamako at a time of crisis, but it’s a responsibility that we assume for our benefit and for that of the landowner, whose investment we are protecting. For this it is necessary to have men of courage, used to crises. Within our organization we have a vice president for Safety, 24/7, whose job it primordial. We set up an emergency response unit as soon as a situation gets complicated, as was the case in Bamako. The link is permanent to assure the safety of the teams, local and expatriated, with a lot of decisional autonomy for the director over there who evaluates the situation. We are lucky to have men and women of that calibre and it’s an important point for convincing investors that are aware of the fact we will protect their interests as well as ours. So you haven’t rejected or decided to take a break from developing in the Maghreb, also undergoing a period of strong political stability?Not at all, we have several projects underway, in Hammamet, Sousse and Djerba in Tunisia, and in Marrakech in Morocco. These unrest are waves, amongst which some are certainly beneficial if we don’t fall into religious extremism, which is the only true worry. In Tunisia, the democratic revolution was necessary. The level of education and development leads us to think that freedom will be well carried out. But even there, we must know how to be fatalistic in the short run and bear the brunt. It is true that our hotel in Djerba has just lost one after the other several conferences which have been cancelled as a result of the political instability. But tourism is so essential to the country that it will definitely resume shortly.For this, do you have the support of your shareholders?We are listed on the stock market, but a large difference between us and other companies is that our major shareholder is a tourism and hotel group, which totally supports our cause. Carlson is also the owner of our brands and understands the work that we are doing in order to develop and ensure profits. We have never been “dropped” by our shareholders even in periods of difficulty where the number of openings has sometimes put our operating account under pressure The life of a hotel group is not a long calm river and we are lucky to have been able to demonstrate that audacity pays off, with exceptional returns on investment that measure up to the risks taken. This being the case, I must say that with a portfolio that now surpasses 300 hotels, we have a tendency to settle down to avoid taking blows.How do you interpret the alliance formed between Formosa to redevelop the Regent brand in your territory?The development of Regent by Rezidor Hotel Group has been done in the “adventurer” spirit which I mentioned earlier. We have taken risks to establish ourselves in Europe, like in Berlin, with costs that were certainly too high. At a global level, Carlson has had the same idea which has driven it to sell the brand to Formosa. Two years later, I see the signing of this new strategic alliance as recognition of the great work we have done. We are respected thanks to our good cost management and production of solid EBITDA. Formosa counts on us to pursue the work in cooperation with their teams.What can be said about the development of Park Inn in Western Europe and in Africa?It’s a brand that complements Radisson Blu very well, and which has taken some time to set up. The concept is original, full of freshness, and works entirely through new constructions. Development is not easy at the moment. But through the creation of an identified business unit, a task given to Eric de Neef, development has restarted in new products, such as in Lille. How do you value the state of the markets in your different zones?Up until now the activity has been solid and we are making progress from last year. But the experience up until now shows that the crisis ends up having an impact on the hotel industry with a time lag of six months. The first signs of worry are manifested in the seminar and events markets, which represent a net fall. We gain market share with individual clientele, but the slump in activity in hotels specialised in MICE markets has more and more of an impact.So far, there seems to be no wave of panic. Have you learnt from previous crises?Since the summer of 2008, we have felt the first effects of the financial crisis and straight away for cutbacks to confront the approaching storm. The restructuring plan was not in the end applied until a few months later, but since then we have not put weight back on the structure. Upscale activity remains cyclical and we are armed to face it. Hoteliers have finally understood that the commercial war was not attracting clients that had no professional reason to move. The marginal gains in frequentation from tourism clientele do not justify cutting prices. Today we know how to adapt commercial supply without shaking up tariffs. The rapid development of the Club Carlson has helped us also to stabilise activity, especially as members spend on average more than “normal” clients.Will Hubert Joly’s resignation from his position as President of the Carlson Rezidor Hotel Group have an impact?Hubert Joly arrived at the right moment to oversee the transition of management at the highest level when Marylin Carlson chose to step back. His action has had a great importance putting in place all the organisation which is ours today and he launched the Ambition 2015 plan. There is no reason why the movement should be slowed down by his departure. He’s a man of challenges and he has just accepted an important one with BestBuy in the United States.