Park Plaza Hotels and Resorts is set to become one of the biggest upscale brands in the capital, so Rosalind Mullen caught up with the company's UK regional general manager
Can you kick off by giving us some background on Park Plaza Hotels & Resorts?
The company has made a multi-million pound investment in London. Tell us about it
We opened Park Plaza Waterloo on South Bank just before Christmas. This 494-bedroom, design-led hotel has been converted from the former Central Office of Information building and has a restaurant and bar, café, spa, gym and swimming pool, and is well placed for guests wanting to explore the capital. We've also just opened Park Plaza London Park Royal, a new-build, 212-bedroom property close to Wembley, with a restaurant, bar, gym and meeting rooms. It is close to the Tube and has easy access to Heathrow airport and the West End, so it will appeal to business travellers and value- conscious leisure guests.
And you are extending Park Plaza London Riverbank and the adjoining Plaza on the River?
Yes - the extension will add 155 bedrooms across six floors, making a total of 616 bedrooms. We are also adding an executive lounge - which is a great USP - that will offer panoramic views of the London riverscape.
The aim is to maximise the hotels' location on the Thames, so there will be suites and terraces with views of the river and the London Eye, Big Ben and so on. We've moved the Chino Latino restaurant up to the first floor into what was the Thames Suite banqueting room, and we've remodelled the lobby to be along the lines of Park Plaza Westminster. We've noticed the power of the escalator in reception - it entices people to see what is going on upstairs where there is the restaurant and bar. Sometimes, if guests can't see the restaurant, they don't bother, but at Westminster, nine times out of 10, people will want to see it.
What will happen after Brexit is still unknown, but London is clearly important to the company - how important?
London is a resilient market and is key as it contributes most of our revenue. In the first half of this financial year, for instance, the UK contributed £66.4m to PPHE's £111.6m total, with the balance from Germany, Hungary, the Netherlands and Croatia. UK occupancy was 81.7%.
So, talk us through the impact of your expansion plans in London
With the two new hotels at Waterloo and Park Royal, we will have eight hotels within the M25. Along with the extension at our Riverbank property, that gives us 3,158 beds, which makes us a major player in London. The line-up is Hilton, DoubleTree by Hilton, then Park Plaza. It gives us the critical mass we have always wanted.
Why is the South Bank such a focus?
We were one of the first hotel companies along the South Bank. When we built Riverbank in 2005, it was an entrepreneurial decision because at that time there was nothing there.
Adjacent to the four-star Riverbank is the Plaza on the River, so it is essentially two hotels in one asset. Its location near Westminster meant it became popular for conferences and meetings with government, local organisations and companies. As well as the restaurant and meeting rooms, we could hold events for 600 in the ballroom and 550 in the Plaza Suite.
In 2008, the company opened the 398- bedroom Park Plaza County Hall under management contract. Its location on South Bank again meant we had affiliations with government and it was close to the head- quarters of companies such as Shell.
On top of this, South Bank has been growing as a destination [ALVA figures show the Southbank Centre was the fourth most-visited attraction in the UK last year] so we have ridden on the back of an uptick in leisure as well as conference and business demand.
Current developments in the area include the US embassy, which is moving south of the river to Battersea, and there is a huge amount of development going on in Vauxhall to create offices and high-end residential properties. The proximity, not just from a bed but from a restaurant point of view, is significant.
So the hotels feed business into each other?
Yes. When we opened Park Plaza Westminster Bridge in 2010, it really put the company on the map. Everyone said we were going to rob one hotel for the other, but Westminster helped establish Park Plaza as a brand.
Westminster fed into the demand along the South Bank, and when people had great events there, they then also looked at Riverbank. At Riverbank, we had been turning events down because we didn't have enough bedrooms. We started sharing events between the two hotels - 200 rooms at one hotel and 200 at the other, so it didn't displace other business. Clients liked bouncing between rooms and hotels, so that became another USP.
We could now compete globally for events. We could host 1,000-bedroom conferences and book everyone into a Park Plaza. We gained a lot of confidence from that, plus the uptick of demand on the South Bank. And occupancies were in excess of 90%, which led us to believe there is more market potential out there. When the opportunity came up at nearby Waterloo, we took the plunge and purchased an asset there.
Is there a fear that Waterloo is one too many?
No. Our hotels benefit when we aggregate them - it just means we are able to fish in another direction. South Bank has a different band of business. Westminster and County Hall are upscale corporate business hotels. Waterloo will go for a different premium. We are going for that mid-tier, four-star bit of business in the area.
Our hotels also provide amazing value for families. They get a 26 sq m suite for a family of four, so they don't need to buy two rooms. And the hotels are in great locations, which is why we are seeing success at County Hall and Westminster.
We also understand the importance of the swimming pool. Westminster already has one and we have one in Waterloo - not many hotels in London have one. We also operate our F&B outlets, such as Chino Latino, Tozi and Brasserie Joel, as separate entities. We give people something that's different but affordable.
So you're set up for seasonal changes?
Yes. When London switches from corporate to leisure, our hotels do well. There are different seasons when hotels tend to see a lower average daily rate, but we see a good level of revenue per available room at £109.
The leisure market is driven by tactical promotions - deals that make it as cheap for families to eat dinner in the hotel as out. Chino Latino has lollipop chicken on its menu and we hire entertainers during the holidays. At Christmas, we bring in Santa or a choir, and when meetings aren't booked, we put up a big screen and show a film for the children and create a soft play area.
It seems that Park Plaza's success is linked to the South Bank success story?
Yes. With our latest openings, we are contributing to the South Bank area. We will have generated 300 jobs in the area. We have worked hard with BIDs [business improvement districts], such as We Are Waterloo and Vauxhall One, and we have good links with job centres and Lambeth College.
What are your recruitment policies?
Some 75% of the executive team at Waterloo, for instance, has been grown from within. Axel Krueger will move into Waterloo as general manager, while Richard Clogg will step in at Park Royal - they have notched up six and two years respectively at Park Plaza.
As well as holding recruitment days, we take our chefs from the apprenticeship scheme. Chefs are a big challenge. We have eight chef apprentices and we will take on more next year. We also have a security personnel apprenticeship and so the team is 100% our own.
We are proud of our engagement with local organisations and we retain staff by making sure everyone feels they are part of the team and being listened to. A key objective in the next 12 months is to introduce new team members to manage talent within the business. An important KPI for each general manager is retaining a percentage of identified talent within each hotel.
How does PPHE approach expansion?
We are the only hotel company to grow and grow in London. Our strength is that every time we build something new, we ask ourselves what was right and wrong in the past. We look at what customers are saying, the quality of maintenance, perception and appearance.
Phase two at Riverbank will see the addition of a gym and spa next year. There will be a full upgrade of the bedrooms, too, as we don't want guests to check into an older room when the new extension has been built. Our policy is to provide consistency of product. Park Plaza has grown because the brand isn't tired - we continually invest in it.
And the company has refinanced recently to reinvest in its hotels
In May, Westminster announced a £182.4m refinancing deal with AIG Asset Management Europe over 12 years and in April, Park Plaza Victoria announced an £87m, 10-year refinancing deal with Cornerstone Real Estate Advisors Europe. Our assets are important to us. We are becoming more valuable for our shareholders.
With so much action on the South Bank, where does Park Plaza Park Royal fit in?
It is not a location we would usually have gone into in London, but we saw an opportunity to operate a four-star hotel in a market where there is a high saturation of three-star hotels. The area embraces Wembley and, with the third runway at Heathrow, we will get overfill. Our research indicates the area will grow. We've taken the best concepts from all our hotels, so there are large rooms, the outlets and bars are progressive, and there is a gym.
Any other plans you want to share?
We always look for opportunities in the UK, but they have to be right. We are looking at future growth through management contracts and through acquisition.
PPHE's art'otel London Battersea Power Station is expected to open in 2019 and will be the first management contract for the art'otel brand in the UK. The art'otel london Hoxton is expected to open in 2019. The art'otel in Battersea was going to be a W, so we were thrilled to get that management contract. It will be a 160-bedroom lifestyle hotel with a rooftop pool and bar and a signature restaurant.
What about the provinces?
We have hotels in Cardiff, Nottingham and Leeds. The provinces have recovered over the past three years with good levels of growth in line with the market. Nottingham has just had a full refurbishment and we added a second restaurant, Oaks Nottingham, with the aim of attracting an external clientele and a new market.
The man behind the job
Greg Hegarty gained a BTec National at North Tyneside College and started his career as assistant F&B manager at a Thistle hotel while he studied. By 26 he was the hotel manager at Thistle Brighton and, in 2004, he won an Acorn Award and became general manager at Thistle Selfridge.
In 2006, he joined Park Plaza as general manager of the Sherlock hotel, London, won Esprit General Manager of the Year and was pre-opening general manager at County Hall.
In 2007, Hegarty moved to BDL Hotels as group operations manager. He started his MBA, which he completed on return to Park Plaza as general manager in 2009. Since 2010, he has been regional general manager UK for Park Plaza. He is also a Master Innholder.
About Park Plaza Hotels and Resorts
PPHE operates the Park Plaza brand under exclusive licence from Carlson Rezidor Hotel Group
- Park Plaza Riverbank and Plaza on the River - being extended to 616 bedrooms
- Park Plaza County Hall (management contract) - 399 bedrooms
- Park Plaza Westminster Bridge - 1,019 bedrooms
- Park Plaza Sherlock Holmes - 119 bedrooms
- Park Plaza Victoria - 299 bedrooms
- Park Plaza Waterloo - 494 bedrooms
- Park Plaza London Park Royal - 212 bedrooms
- Park Plaza Cardiff (management contract) - 129 bedrooms
- Park Plaza Nottingham - 178 bedrooms
- Park Plaza Leeds - 187 bedrooms
Interim results H1 2016 for UK
- Total revenue: £66.4m
- EBITDA: £21m
- Revpar: £109
- ARR: £133.5
- Occupancy: 81.7%