Malta-based CHI Hotels & Resorts, formerly known as Corinthia, is known for being a leader in countries that are just developing their hospitality industry. It was one of the first luxury players in Eastern Europe and Libya. And the company has a partnership with Wyndham to operate its Wyndham and Ramada brands in Europe, Africa and the Middle East. Hotels editor Jeri Clausing talked with CHI's managing director and CEO, Tony Potter, about the company's expansion plans and the challenges of operating in the current global economic downturn.
Q: How has the economic crisis affected your business?
A: It's kind of mixed. One could talk good news, particularly in the Arab world. And I could talk very strong numbers in Libya, but there are not good numbers in Europe.
Q: What about discounting of rates? Are you seeing a lot of that around the globe? And how do you respond?
A: In our five-star business we are trying to hold price, which is not easy. But we are not taking services away. We just flatly refuse to do this because we feel service is what constitutes five-star. So we are adding value. We are introducing a business floor and a business lounge. We can go into a sales call and say, what are you looking for? We have products that we can tailor to that.
In some locations, competitors are beginning to cut rate. But we are not seeing it with the really big, genuine five-star operators. They generally are following our approach.
Q: Here in the U.S., luxury hotels are being hit hard by what is referred to as the "AIG effect," a public backlash against companies that have been given bailout funds spending money on meetings at resorts. Is luxury being hit as hard in other countries?
A: I don't think we are seeing it at the same dramatic level.
I am worried about the leisure side of it. We're not seeing a big drop-off, but I'm worried that we are going to see that happen. So on the leisure side we are putting together some pretty good packages, again trying to package rather than slash room rates. ... What we are in the process of doing now is more group negotiations. We are waiting to see what is the perspective of the operators. We hope the operators take a responsible view of this.
Q: CHI is known for its aggressive development. What markets do you see as emerging right now?
A: Libya is doing extremely well. Libya is one of the growth areas of the region. Corporate traffic is really heavy. We are having a lot of sellout nights. ... Clearly there is going to be a growth pattern of more hotels coming on the market. In my view there is absolute sustainable growth for the next five years or so.
We are also hearing good news out of parts of north Africa. We are developing in Tunis.
Q: What projects are in your pipeline?
A: We are involved in our first project in London. That's going to be a top-end, five-story, deluxe hotel. We are doing a resort in Sharm al-Sheikh, which opens at the end of this year. The first part is the Corinthia Beach Resort.
We have a lot happening, a reasonable pipeline. We have two projects in Abu Dhabi, one in Dubai. We are trying to put our first Wyndham in the ground in Europe.
We've signed a couple of good contracts recently, one for a second hotel in Budapest. We are just in the process of completing investment in Russia; in St. Petersburg, we will open a completely remodeled and refurbished project in April.
We've got a lot to keep us busy. But I think it's going to be a difficult year.