Q-1: Mr. Potter the first thing that one notices entering the Hilton Hotel in Buenos Aires is the remarkable architecture style. Could you tell us a little about the design and the choice of the Puerto Madero as its location?
A-1: Well, the choice of Puerto Madero is because it is very near the new area for office developments and urban developments in the city of Buenos Aires after many years of it being concentrated in the mostly referred to microcentro, the business center of the city. This area of the city had gone into decay in the 50's because the ships could no longer come through the docks and so on. In the early 90's the federal government of Buenos Aires decided to redevelop this area. They did an urban plan to create a balanced urban area which included various residential areas, commercial areas, office buildings, and also cultural areas. So, they created a company called Cooperacion antiguo Puerto Madero to be in charge of this semi-public organization and it is their function to actually provide the infrastructure, roadwork, services and so on. The first phase was the side of the docks facing the city, the second phase is the side which we are on which is the river side of the docks, which started right about two years ago. There are four different docks in Puerto Madero and they are mostly office spots with apartment blocks, parks and things. Dique 3, which is facing the Casa Rosada, the government building of Buenos Aires, was purchased by someone called Alberto Gonzalez, who sold his interests in cable television in Argentina and decided to invest in this area of the city. It belongs to the area called Madero, it includes three office blocks, Hilton Buenos Aires, Hilton Buenos Aires residences, the old grain silos which are going to be converted into offices also. They have to retain the original shape of the silos to maintain the character of the area. There will also be a shopping mall, and a maritime museum which is donated to the city. Equally he is donating a pedestrian bridge which will reach across the docks to the shopping mall which is being designed in Spain by a Spanish architect specialized in bridges. So already we are part of this development on Dique 3. We have as neighbors Repsol-YPF, which is the main petroleum company. They are going to start building the new office block in the month of June. That is going to be designed by César Pelli, the same architect who did the Petronas Towers in Kuala Lumpur. Amongst the neighbors that we have in this area are Ericcson, Intel, Nextel, AT&T just to name a few. So there is really a concentration of new technologies and developments of companies who had office buildings in the old quarter of Buenos Aires and who are looking for better facilities. When the Cooperacion Antiguo Puerto Madero did the urban design, they established certain building codes to retain a harmony. They drew a line down the center of the box and took the angle of the warehouses on the city side and used it for reference of all new buildings on the riverside. So while we only have nine floors, there will be taller buildings. The architect for the project is a very well known Argentine architect called Mario Roberto Alvarez. He is 86 years old but he is one of the referential architects in the city. He has done buildings such as the San Martin Theatre. He did the American Express building as well as office blocks such as the Edificio Le Parc. He particularly enjoys designing with a lot of light, very linear contemporary design, volumes within the building, he proposes a very large sense of space--all of the guest rooms in this hotel are 42 square meters each. There are large, high ceilings. It's really a very contemporary design in a city that has fairly traditional hotels as reference. Most of them are classical and we are contemporary. It's a real eye opener for us.
Q-2: Could you tell us a little bit more about the investment structure behind this hotel and who was involved?
A-2: The hotel is part of the Madero Este project. The investments across the whole of the project goes over 700 square meters, it also includes 1,500 car park spaces, and it also includes the Parque de las Mujeres Argentinas. All the street names have women's names, and so the park is called Parque de Mujeres Argentinas. And the Madero Este group has also got maintenance of the park plus the car parking spaces there for 25 years. The approximate investment I believe is in about a range of about 170 million Pesos. It's the largest urban development project in Argentina. The investment for the hotel was 85 million. It's fully funded by this single investor. Hilton International was willing to put in capital investments, but he didn't feel it was necessary and he wanted to maintain full control of the project so we have a purely managerial contract with them in this project. We have two buildings which is the hotel space and the residences which are in construction. He has several financing brands for other projects in the development, but the hotel is fully funded by himself.
Q-3: What is the connection of this hotel to the Hotel Conrad in Punta del Este - Uruguay?
A-3: Conrad is a brand which was originally developed by Hilton Hotel Cooperation in order to develop hotels outside of the US. The agreement between Hilton International and Hilton Hotel Cooperation was that it could use our brands to develop properties outside of the United States. Two and a half years ago the two companies came to an agreement whereby we can now develop brands, the Hilton brand, anywhere we feel necessary. The Hotel Conrad in Punta del Este build a 320 room hotel with a very large casino. It's really a casino in a hotel. They got very good conditions in terms of support by the Uruguayan government. They use the Conrad brand. Since then Hilton Hotel Cooperation separated the gambling and gaming side and developed a new company and put it on the Stock Market and called it Park Place. And the Conrad company is now part of Park Place because of the importance of gaming within the hotel. We are ready as cooperate cousins to refer business to them, they refer business to us, our sales teams are in regular contact. It's a excellent product and there is a lot of complimentary work that can be done together but we have no cooperate affiliation as such.
Q-4: This hotel here is a very young hotel compared to some of the other more traditional hotels. In Buenos Aires you have to compete on a highly competitive battleground, what made you so confident to be among the World Investment News Ltdrs”?
A-4: Hilton had a project in Buenos Aires back in 1970 which was on the Plaza San Martin and next to the foreign relations, foreign ministry, and at the time the government asked if the property which belonged to Hilton International could be sold to the Argentine Government. They paid the market price for the property so we weren't able to develop a hotel at that time. Hilton International continued to review projects in Argentina and finally came to the decision on this property here. We would have liked to have been here a very long time ago, however we now have an excellent opportunity and this area of the city has enormous potential. We have an excellent product and an excellent location. It's not through lack of desire that we took so long, it was more a question of when opportunities became available. The other thing was that the Hilton Hotel added 20% room inventory to the executive segment of the Buenos Aires hotel markets and Buenos Aires had an excellent occupancy and average rate over the last 5 to 6 years. That was dented as result of the recession over the last 24 to 30 months. We came on the market October of last year. We positioned ourselves as an excellent hotel on the upper segment of that market. We have excellent meeting facilities and we have a very good location, a location that will strengthen as the development of Puerto Madero continues.
Q-5: What would be the main client group that you are targeting, I assume businessmen make a great share, considering your neighbouring companies?
A-5: This building is really looking to the future fast. Every room in the hotel and every meeting room has got a high speed cable with a j45 jack so we can put in video conferencing and high speed communications into every room. In the area near Puerto Madero, there is a high concentration of technological companies, including Cisco systems and AT&T, and a very high proportion of our guests and the meetings which take place in our hotel are technologically related. We are currently finalizing an agreement with one of the leading companies in communications to provide high speed internet access in all of our guestrooms. That should be ready we hope within the next month. 50 % of our market is US, about 30% is European, and about 15 % is South American. There is mostly the cooperate individual, but the guest list today includes 60% related to Internet, communications and data. | Q-6: What have your occupancy rates been since the soft-opening in April 2000?
A-6: There was an initial resistance to actually use a hotel which hadn't been fully completed. 2001 will be the first referential year that we will have. One critical fact is that from the very outset because Buenos Aires is a competitive market and because it was suffering a bit from the recession we concentrated on service standards. We have had a very high retention of first time guests who have returned to us. It is fundamental for us to start with a good product both services and physical.
Q-7: Would you say this is a beginning for expanding to the rest of the country?
A-7: Hotels must first of all be present in the core market. We are looking now at the chances for franchising brands that Hilton has now, be it Hilton Garden Inns, Hampton Inn or Embassy Suites.
Q-8: My intention with this question was to draw a comparison between Hotel Hilton and the Sheraton, which is pursuing an aggressive expansion policy in Argentina. And of course to know how developed the Hilton project in Cordoba is by now.
A-8: Well, it is very important when we sign new management agreements that they are both beneficial for the investor as well as for the hotel. The project must be realistic and suitable for the market. Some of the hotel developments that have gone on in the cities of the interior of Argentina haven't necessarily been very successful because there probably isn't the cooperate market base that is adequate. We are very wary. It is very important that the investor and the hotel company feel that it is a successful operation. So it's very important that the property which is developed provides good returns. And that's why we're looking at different opportunities within the interior. It's a question of the right products in the right place. If you go to the Sheraton in Cordoba, you'll probably find that they are not particularly happy with the results of the hotel because Cordoba is suffering and also probably the location is not suitable. So that's why I refer to the right product and the right location. We do look at the opportunities. I have been to Cordoba to look at developments, but again I wasn't satisfied with the overall project and the possibilities of that prospering. There are rather secondary markets within Argentina, cities which have potential probably for re-flatting or actually finding investors and putting up new hotels. There are different ways of going about it. Some companies have gone in and put up flats in different cities of the country and probably their financial results is not what they expected. Partly because of the recession in Argentina, and partly because you have to make sure that the market is there to sustain property of those characteristics.
Q-9: Where do you expect to see Hilton in 2 or 3 years from now, not only concerning Argentina but as well the neighbouring countries?
A-9: Hilton has a very strong commitment to South America first of all. At the moment we have a site being developed in Sao Paulo which is fully funded by Hilton International with a sum of 80 million dollars in a new financial district in San Paulo. We are looking to expand more in Brazil and in Argentina. We are looking at projects in other capital cities in South America. I'm not in development itself, but I do look for opportunities and refer the opportunities to people in charge of this area. This week for example I will be travelling for a second discussion on a property in South America, and so we are actively looking for developments in South America in key business cities--that's our main interest.
In Buenos Aires we have the residences which today look premature. People look at it and question if there is an actual demand for our hotel and for the residency, and we certainly think there is. We have suffered a very tough recession , but things have to move forward and the characteristics of the residences for example are ideal for people coming here on missions, people coming on transfers, people looking for more space to work in groups, and we feel that there is a potential. And as Puerto Madero has a balanced mixed of residential area, shopping, evening restaurants and things it provides the opportunity for people to find a good location to base themselves in Buenos Aires. We've also looked at other properties at the greater Buenos Aires urban district where we think there is potential.
Q-11: Where do you position yourself among other hotels in Buenos Aires?
A-11: There are two distinct types of hotels in Buenos Aires. For instance the Hotel Alvear Palace, then there is the Hyatt, they are comparatively small hotels. They only have about 160 rooms, so they are not very big hotels by most comparisons. And then you have the larger hotels like the Sheraton, Marriott and Intercontinental which are larger properties. We have positioned ourselves between the smaller hotels and the larger hotels because we have an excellent product, a very good location, in particular for the future. Our aim is through our executive floors to secure business from the smaller hotels and our other rooms which are excellent rooms to go for the executive traveler that doesn't require executive facilities but who wants an excellent product at a good price. So we are very clearly positioned and know exactly where we want to go on the market.
Q-12: Could you tell us more about the Hotel Hilton training programs here in Argentina where the personal is usually already very well educated and highly qualified.
A-12: First of all there was an enormous amount of candidates available because there are very good hotel schools in Argentina. Secondly there is a recession on the market so there was a lot of people looking for jobs and the general level of human resources skills is very high in Buenos Aires. We made particular emphasis on staff selection--the people with good personalities, people who wanted to assume a challenge, and people who had the dynamics that we felt were necessary for hotel developments. Over the last three months we have sent staff to Puerto Rico, Tobago and to Dubai, for example to assist other hotels and so far the references that we have got back from those hotels have been excellent. We also see the staff as excellent potential transferees to other hotels around the world. Training as such has been concentrated now initially at this first stage in life safety, in corporate image and product knowledge and setting the standards for guest services in the hotel so we all work on the same platform. The second stage of human resources development is going to be devoted to development of people, career paths, and motivation of staff. It's very important to keep the motivation going and on a regular basis to review our standards and get them to put some input and see where we need to make adjustments. We feel that through good communication with staff we will be able to adjust our product.
Q-13: Finally we would like you to share a little more about your personal background with our readers, Mr. Potter.
A-13: I went to study in England in 1973 because of the difficulties in Argentina at that time. I spent five years there and I worked in Europe for a year and a half individually in hotel business doing different jobs. Then I started with Hilton International where I worked in Belgium, Sri Lanka, Venezuela, Puerto Rico, and Brazil. This is the fourth hotel opening that I have done, so I've gained incredible experience in meeting challenges and getting an operation going.
NOTE: World Investment News Ltd cannot be held responsible for the content of unedited transcriptions. |
