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Hotelier of the week: Greg Hegarty

ABTN speaks to Greg Hegarty, regional general manager for Park Plaza, about the hotel groups' plans for UK expansion.

Can you tell us a bit about Park Plaza’s history?

Park plaza dates back to 1989 when it opened the first hotel in Eindhoven in the Netherlands. The first hotel in the UK was the Park Plaza at Euston, it’s now a Novotel. Then we sold it and created some cash flow to fund Victoria Park Plaza and Sherlock Holmes. That was absolutely outright owned by our chairman – a gentleman named Eli Papouchado who is a business man. We pride ourselves on entrepreneurism, when we see an opportunity we will exploit it. We’re very dynamic.

When we opened the Riverbank it was probably the first time anybody really risked opening a hotel on the Southbank in London – we were the first operators, definitely within this area and everybody probably thought it was a high risk strategy. It actually just met demand and helped put the Southbank as a location on the map.

After Riverbank we opened the County Hall Park Plaza which is another 400 plus rooms on southbank and everybody thought that was a risky strategy, but we saw the potential – so much so we just opened the Westminster Bridge Park Plaza, another 1,000 plus rooms in the same location.

The company has always been a mix of franchises, part-owned and leased properties. What’s the situation now?

We recently bought out any joint ventures we have, so now the majority are owned. The only one we have which is a franchise is the Park Plaza County Hall and we manage that for Galliard homes, which built the hotel.

Was that your strategy during the recession, to keep investing?

Financing through individual investors is a lot cheaper than financing through banks and after the success of that model at County Hall we decided to offer that opportunity at Westminster bridge and obviously it secures funds and funds can be leveraged on – it really helped us open Westminster Bridge during that downturn. The money’s there, it’s not as if it’s leveraged for years on money that doesn’t exist.

Going forward do you plan on doing more of the same?

Absolutely. We are looking. By the end of next year we would probably have moved forward on our new hotel in Hoxton, which will be the UK's first Artotel property. We’re also looking at another major development that will significantly increase our inventory in London, but that’s quite confidential. As a group we are looking aggressively to build and manage hotels. We’ve acquired a site in Park Royal [in Northwest London], which I can’t let you know too much about. It will be a Park Plaza concept but completely different to what we’ve done before.

What are the properties like – are they all new build?

We have two conversions, which are Leeds and Nottingham. They were both converted from offices into hotels. All the rest are new build. That’s the unique thing about Park Plaza, it really benefits from our chairman who owns our construction company.

How would you describe the Park Plaza brand?

If I were to ask my CEO he would describe the brand as affordable luxury – we do want to make sure we don’t out-price ourselves. We offer in some places a five-star product at four-star prices. Affordable luxury is how we would define ourselves in terms of what we want to stand for and what we want to offer.

I think if you were to look at areas we’re not in, the budget sector could be an area we’d like to start maybe looking at, that intermediary brand between three and four star. While we already have a five star hotel with Park Plaza Riverbank, we never say never. In terms of where our model lies, it’s definitely in the four-star market, and if we were to progress it would be to offer a three star market at a four star price.

 

Does Park Plaza have any more openings planned?

 

We have recently bought a hotel in Thailand, which is completely off our usual map – as I said we’re entrepreneurial. We’d like to have a property in Manchester, Glasgow, and Edinburgh, but one key for us is finding the right asset or area to build. We probably walked away from more opportunities than most brands would.

 

Do you have any firm plans for expansion?

We are looking at the acquisition of a brand, that’s a potential – but it’s about finding the right price because at the moment chains are coming up for sale that are completely outpriced for what they are delivering. But you’ve got large funds buying up the location and paying more for the location than you are for the operating company. So we’re being very shrewd at what we’re looking at.

What are the benefits of being under the Carlson hotels umbrella?

One of the benefits of the Park Plaza brand is that while we’re international, we are Park Plaza Europe so we own and operate within the European region.Park Plaza hasn’t really been an area of development for Carlson. They’ve really allowed us to shape and drive the brand on their behalf as well.

What is your business mix, in terms of leisure and business guests?

All our hotels have an amazing level of leisure but they also have a really good business demand as well. Our businesses all have considerable meetings and events capacity. Looking at the southbank in particular, there is well over 5,000 sqm of business space. We’ve also started taking business from European companies. If you were to have an exhibition in Tenerife or France, we are now really targeting the larger volume businesses – pharmaceutical companies predominantly, and banking as well.

Why do you think the hotels are suitable for the business traveller?

Location is key – being able to get to our properties. Also, our hotels were purposely built, so whilst if you went to a competitor hotel where they try to shoehorn meeting space into areas, all our rooms are purpose built especially for staging and presentations – all have AV systems, we have our own AV supplier on-site in all our major hotels so we’re able to adapt quickly if someone has a problem or a challenge.

All our internet and mobile phone networks are also strong, so even if you’re minus five you’ll get mobile phone signal. We have wifi in all the hotels – we give complimentary wifi to a certain width so if you were downloading your emails, that’s complimentary but if you want to start streaming movies you have to pay.We’ve talked about making it free, but with the amount we invest in technology as people want faster and faster broadband it becomes unattainable to give it away. We give away a basic package to all our guests, which is enough to search, download emails, skype, etc, but as soon as you want to do more I think we probably always have to have a charge.

From a corporate account point of view on the Southbank, our competitors have a real tough time competing on products – one because they’re brand new, two because the design of our businesses are very modern and dynamic. If you were to look at a lot of the inventory around us a lot of it is traditional.

Are you updating your properties regularly?

We’re currently refurbishing our Leeds hotel, where we’ve refreshed the public areas but the main guts of the refurbishment has been the rooms. We’re also renovating floors in Victoria – it’s only five years old and it’s already been through three refurbs. We continually stay on top of our refurbishments. It includes soft furnishings but also carpets and light fittings, giving the whole business a fresh look. At the moment the major investment is development of the new hotels, but what we do internally is put around 30% of our income in refurbishment every year. Victoria and Leeds are underway, Nottingham starts in January.

How did the business perform during the recession?

I think we performed extremely well in the downturn, a lot of properties are purpose built so we weren’t haemorrhaging cash out of assets that require a lot of work – we actually relied on our businesses without having to have significant capital expenditure within our buildings. And I think the quality of our products versus our competitors really helped us as well, because whilst you were seeing competitors dropping rates, occupancy in London became a little looser so people decided to shop a little bit more. Due to the quality of our products and the location of our assets, we actually weathered the storm very well.

Park Plaza is a very up and coming entrepreneurial brand that wants to give the customers a good stay. It’s affordable luxury and the opportunities ahead for Park Plaza are very strong in the coming years.

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