Hotelier of the Week: Heiko Figge (Sep 6)

After working for Thistle Hotels in the 1980s, Heiko Figge has "come home" as the chain's new chief operating officer. He talks to ABTN about his plans for the chain which operates 33 hotels, including 10 in Central London and two in Malaysia and is part of Guoman Hotel Management (UK) Limited. He was previously with Marriott and Paramount before re-joining Thistle  

Heiko Figge

What attracted you to the job at Thistle?

It felt a bit like coming home. In the 1980s I spent some time running Thistle properties, and I always felt that with a bit of investment it could do very well. It's a fabulous estate and I always felt it could do significantly better than it has done in the past. There are a great bunch of owners who are committed to investing funds in them. Twenty are owned by CIT, some by individual owners and some we own. We have 31 outright Thistle Hotels, and another two in Malaysia. Of the ones in the UK, 21 are run under management contract to two different owners, 10 are owned and managed and we have the two in Malaysia. Guoman properties are separately owned.

There's quite a radical rebranding going on at the moment. It seems like the Thistle brand is being pushed into the background.

Absolutely not. The original name of many of these hotels is just being put back to where it should be. Some years ago the decision was made to prefix everything with Thistle but I believe the properties have such a strong local following in their local community that they will always be known as the Noke in St Albans, for instance, or The County in Newcastle. So it seemed right to go back to the original names but with Thistle as the umbrella. It's not the case for all of them. The property in Glasgow has always been The Thistle Glasgow. But for properties such that in Exeter, it is now The Rougement. I think there's been a bit of brand fatigue out there and we have to ask whether the brand adds the value we think it does. We have some great properties in fabulous locations in the heart of the community, where you want to do business. Whatever you call them, they are the same hotel everyone in that community knows by its name.

So what does Thistle add?

You have certain expectations to what comes with the Thistle brand and we need to exceed those expectations. Properties have some very specific brand standards. So there has to be wireless connectivity in all of our bedrooms, for instance, and flat screen televisions. And we have very specific standards for meeting and events rooms, in terms of what has got to be offered. So the insurance you get with the hotel is that it's compliant with Thistle Hotels.

Will the Thistle portfolio expand in the UK?

We have gone on record as saying this group will grow so we are actively looking for opportunities. That was one of the attractions of the job. If you want to develop a brand and have brand presence, you have to have a certain number of properties. The locations are obvious: if you put pins in the map you can see there are some parts of the country where we would obviously like to have a Thistle hotel. They could be outright purchase or management contract. I don't think this is the right time but the time will come. There are individual properties that we have interest in but the price has to be right.

How well known is the Thistle brand abroad?

We opened a couple of properties in Malaysia to test the brand internationally and while that won't make us an international brand, it will be interesting to see if what we are doing the UK it works in Asia. We have always had an international presence, particularly with companies which have worked with us for many years. For the UK, international travellers are attracted to key centres such as London, where we have a strong presence, and then possibly Edinburgh, Glasgow Liverpool and Manchester. In London, international travellers make up 15% of those staying with us. We'd like to grow international traffic, but not at the expense of domestic traffic.

The County Hotel, Newcastle

Will you start a loyalty programme?

We are considering if we want to. More often than not it's the right price for the right product at the right location that will determine whether someone stays with you. I think we sometimes kid ourselves that loyalty will be the key driver of whether someone says with you. Instead we make sure that we have the right offers for our commercial clients and we have spent a significant amount of money to upgrade our web presence, making it easier to book with us. And we are working very hard with our suppliers to make sure we are reflecting the market conditions out there. We also have fewer than 50 properties and we aren't professing to be a global brand. So for us it has less relevance.

This decision to invest £100m across the portfolio was made before the current recession. Did you cut it back once things became difficult?

No, it's a great time to invest. In some of the locations, London for example, invariably when you try and work your way through a significant amount of the inventory some disruption or even displacement takes place. Well that has been taken away from us. In addition, our owners have been very supportive, despite the fact that business has been tougher to come by, and they have stuck to the agreed the schedule of the investment.

You have to invest to be competitive in a very competitive market. There is an element of catching up to be done in the Thistle estate but clearly if your inventory is better than your competitor, you have the opportunity to charge more. Right now you might not be able to but you either take a short term view on it or a longer term view.

Describe the Thistle brand

Great locations, based where you want to be, where you would want to do your business, with 150-200 bedrooms, likely to be a location where you want to do business. They are full service quality hotels with restaurants.

Have you changed the restaurants?

Yes. Just as our room rates have to reflect the current market conditions, so you have to look at other services such as food and beverage. We need to keep it real and recognise what our customers want from us. When I joined I thought it was strange that we were trying to do a food and beverage that wasn't appreciated by our customers. When business travellers arrive at the destination they might arrive late and have business the next day. What was strange was that in all of our hotels we had these incredible but formal restaurants which offered a menu choice which was not appreciated by the majority of the guests who wanted to relax, graze and refuel, not have someone standing in front of them offering 15 different types of bread rolls. So when I joined I took a trip around the estate and saw that a lot of our guests were dining in the lounges rather than the restaurants. So while we have, for instance, one of the finest restaurants in Middlesbrough in our hotel, it wasn't helping us either with national or local business. So we completely revamped and simplified our menus and focussed on simple food and the results are stunning. Where in the past a lot of our business would go out and dine we have practically doubled our sleeper and eater ratio, from 10 or 15% to 25 or 30%.

What part do meetings and conferences play?

It is a significant part of revenues. It depends on the configuration of the hotel, but in London we have 460 rooms in the Barbican, for instance, and Glasgow has 300 rooms, and one of the largest banqueting facilities in that city with a 1500 seat ballroom. Aberdeen, one of our strongest market places, is completely refurbished and has big meeting and banqueting facilities.

How do you stimulate demand in times like these?

What you can do is be true to the model and put some keen pricing in place. Our business week has shrunk. The commercial activity has shrunk from four days to Tuesday and Wednesday night. They are virtually full on those nights and for that you pay the prevailing rate. So what we can do is stimulate the demand onto those other nights. So we can say ‘If you come and stay on a Monday or Thursday night we can offer a better deal, particularly on the meeting and event side'.

Have you cut costs?

I joined in September 2008, and by then it was clear things were tough and not likely to get better. So we took the decisions in terms of our resourcing very early by December. Currently we have just over 2500 staff and we have been working within our means from the early days.  We didn't have to go through second and third phases so we were able to concentrate on driving revenue rather than other things. But it's not a cost issue. it's purely a revenue issue. If you want to operate in the full service sector, it's non-negotiable. You can't close your restaurant, you can't get away with one person as the receptionist. Instead it's about managing revenue and optimising our profitability as opposed to maximising it. If you max you switch off the lights everywhere and have people sitting in the dark, Optimising is having the very clever motion sensors. But that work is largely concluded.

Where will we be in 12 months time?

If you listen to the analysts what they predicted the summer and spring to look like, I think they got it wrong. Business is not as bad as everyone said, particularly in London. We will bump along the bottom for a little while longer but I do think that when the economy took a turn, there was a number of companies which wanted to be seen to be doing the right thing, to restrict travel. But they are coming back into the market and they are now seeing the value of getting back together. In six months time I don't think we'll see a significant improvement but I don't think we will see a significant deterioration either. And in 12 months time we will be over the worst.