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In order to bring a stable income, commercial real estate must comply with current trends and requirements, as well as always be relevant to the consumer. Works aimed at changes can take several years, but without their further development is impossible. Vadim Subbotin, deputy general director of the WTC Moscow for finance and commerce, talks about the large-scale renovation program for hotel and office facilities.
Please tell us about the investment program 2017-2018. What objects were renovated and redeveloped?
It is incorrect to talk about renovation concerning 2017-2018 period only, since we have started it much earlier. In 2014, a five-year strategy for the World Trade Center development was adopted, which provided for a significant investment program focused on assets updating and services’ quality improvement. We have started to implement the program in 2015 and 2017-2018 were the years of the most activity. So in 2017, we completed the largest amount of renovation work regarding rooms and reception desk in the main building of the Crowne Plaza Moscow WTC hotel, although we have started in 2015. By the beginning of 2018, all 527 rooms have been completely renovated. In 2018, for the FIFA World Cup, we completed the renovation of the “Soyuz” hotel complex, moving it under the Holiday Inn Express brand.
Besides within 4 years we have upgraded two office buildings with the longest service life (the first office building located along 1905 Goda street and most part of Mezhdunarodnaya hotel), and we also have renovated the Congress center.
It is important to point out that renovation work at all facilities except the “Soyuz” hotel was carried out without decommissioning. Although, when starting the renovation program, we were considering the option of buying a new building to substitute the income when closing for repair work, but the economic and market conditions at the end of 2014 changed, and the step by step renovation of individual areas became the most economically beneficial, although very difficult from the technical point of view. For example, rooms, corridors and adjoining public areas of Crowne Plaza were closed on each 2 floors, and work was carried out in blocks depending on the rooms occupancy on the floors above and below. According to the results of 2017, the hotel received the Golden Bag Award in the nomination “Renovation of the Year”.
In order to improve the quality and diversify our services, in 2016 we reconstructed our sports and fitness center, which had previously been leased. The premises were completely dismantled. The work on the pool bowl and the replacement of utilities and treatment systems turned out to be the most complicated, but as a result we even managed to increase its capacity.
We started to run the newly opened, modern, state-of-the-art fitness center under our own management - in such a way we could not only maximized the income from its services, but, what was not less important, took control of the quality of the services and their compliance with our high standards. Together with the main fitness center, we started to run a small sports club located in the other part of the complex, thus widening our range of services with a more democratic segment. For two years now, both sports clubs have been successfully operating under the WTC Fitness brand; for example, participants in the FIFA Confederations Cup and the World Cup trained in them.
You have formed your own hotel cluster. What exactly was included in this project? What audience is it intended for, what additional services are offered to guests?
What we had in 2014: we had the largest five-star Crowne Plaza hotel in Europe, the hotel rooms in “Mezhdunarodnaya” building and a separate asset in the north of Moscow - the Soyuz hotel complex. In the beginning, each of the objects worked separately. In 2007, the Crowne Plaza business hotel was opened under the control of the WTC under the franchise of the international hotel chain IHG. (The World Trade Center was the first to bring the Crowne Plaza brand to Russia in 2007). In “Mezhdunarodnaya” building, apartments were used in two ways: someone rented them as long-term housing, someone stayed for a night or two. And it was difficult to predict which room in which format will be used, so we could not call it a hotel in full sense. The “Soyuz” hotel complex has been managed by our affiliated company for many years, and PJSC WTC had a certain influence on its operational activities and daily load.
For all the objects a certain number of questions has to be answered. At Crowne Plaza, the time has come to renovate the hotel rooms: furniture, decor, engineering systems - the high load over the years has naturally contributed to wear. And the growing competition and the opening of new hotels in Moscow encouraged us to more decisive action - to create a new product that exceeds the current quality level of competitors. Thanks to the renovation we have upgraded the basic category of rooms from “standard” to “business”.
Following the market trends, at the “Mezhdunarodnaya” hotel, we noted a growing interest in apartments in the hotel format - more and more often, when traveling, people choose not just rooms, but fully equipped apartments with kitchens where you can cook yourself. Our Crowne Plaza hotel is a five-star hotel, and realizing that not everyone can afford to stay in it, we began to consider the apart-hotel as a good addition to the hotel services line.
To this end, based on our 10-year experience in working with hotel products and under the international hotel chain standards, we have isolated blocks of rooms located next to each other so that they do not mix with long-term rental apartments and office premises, developed new room design and new approaches to the level of service and made renovation. In 2017, the “Mezhdunarodnaya” apart hotel received a 4-star rating. And today, continuing the development of this direction, we are rebranding the apart hotel to strengthen its position and promote it on the market.
The “Soyuz” building, as well as the WTC complex, is 40 years old. In 2014-2015, we noted a decrease in load and demand, as well as competitive pressure in the 3-star hotels’ segment. We had to decide what to do with it. We could do cosmetic repairs and continue working in the same format, but decided to choose conceptual way. Having experience in working with an international chain, we noticed in the line of its brands the one that corresponded both to our location and to that category of customers who did not go to the WTC premium hotels, but seek quality service and comfort. This is the Holiday Inn Express brand - the most modern and dynamically developing in the InterContinental Hotels Group. Every year the brand is updated, new “generations” of design and service level appear. And we took as a basis the most advanced version, based on which we made a complete renovation, completely replacing or adding up-to-date engineering systems, installed central ventilation, air conditioning, heating, security and access control systems, audio-video signals, equipped a space for people with limited mobility and etc. We also managed to increase the number of rooms from 158 to 171. Today, the hotel fully complies with modern requirements for the concept of "hospitality." Holiday Inn Express Moscow Khovrino is directly managed by the World Trade Center. Although we engage our affiliate company for current activity, all sales processes and commercial development issues are under WTC control.
As a result of renovation, today we have a whole range of quality hotel services for different categories of customers and, receiving requests from customers, we can offer them various solutions: they don’t have to pay extra money if they need a good three-stars service or they don’t have to stay in a hotel room if they could go to the apartment with a kitchen. Diversification of our offer allowed us to imply our own high standard of service and at the same time the possibility to coordinate marketing and sales.
How has the office space in WTC changed? Is there any extra space now?
In the World Trade Center itself we did not create new office space, but we significantly improved the quality of services in the available premises (first of all it concerns the assets of 1979 year of construction). The layout of the first office building (22 thousand square meters), which I have mentioned above, allows us to create small open spaces, split the area into separate small blocks or rent the entire floor at once. For this, the solutions were found that made it possible to keep an attractive format of the premises, while making the complete modernization of the ventilation system and renovation of public areas, which helped to improve the quality of services for tenants. In confirming the correctness of our actions the load increased from 75% to almost 100%. And now we are adding guests already to the waiting list.
We are consistently updating the part of the “Mezhdunarodnaya” building not included in the hotel block: by changing somewhere the configuration of office premises or corridors, by replacing engineering systems. Also in this building the “prime office” service is introduced - a short-term lease of fully equipped small rooms. They are most suitable both for those who do not want to invest in the arrangement and for those who are in the process of moving. Here we also can see the increase in load, and there is the demand both among Russian and foreign companies.
Within the process renovation of the “Soyuz” hotel complex, we have expanded our office space offer. We carried out redevelopment of a part of the complex. Previously in the vast stylobate part there was a restaurant with a large-scale by today’s standards kitchen premise and many halls - that time there were other catering technologies that required large spaces, zoning, etc., that were not needed for a modern restaurant production and catering. Instead of it a multifunctional center with 12 standard rooms was formed on a total area of almost 1000 sq. m. (with windows overlooking the park area), with spacious corridors, a restaurant, a conference room for up to 220 people, and other infrastructure. A big bonus is a large guarded parking lot and access to the recreation area - not every office center can offer something similar to its tenants.
How has the Congress center changed?
The Congress center has been renovated for several years - from 2015 till 2017. Changes were made step by step in the seasons of the lowest business activity - as a rule they occur at the end of July and the first half of August. In these short “windows” we modernized the appearance and technical equipment of the halls and foyers of both the main congress center area and the congress halls in the Office building-2 (situated along Krasnopresnensky park). We have seriously diversified the capabilities of our large congress hall (accommodates 1,500 people), thanks to new engineering solutions we have facilitated the construction of the ceiling, modernized the system of winches and hangers for decorations and updated the stage lighting. The audiovisual system has been switched to digital mode that facilitated the process of work with sound and video while holding the events as well as the transmission of high-quality signal which is important at the events with an intense program.
The Ladoga hall, located on a separate floor, and the “Continental” banquet hall were significantly renovated.
Together with the Holiday Inn Express, we have created a new multifunctional congress and banquet hall with a large welcome zone. It is designed to hold events of various formats - from seminars and trainings, to conferences, business breakfasts and banquets. The organizers of wedding parties and celebrations will also like it not only because of its combination with the hotel, but also due to own WTC high-level banquet service. The hall quickly transforms into event formats and seats up to 220 people.
It is supposed to have different types of events – from seminars and trainings to breakfast meetings and buffets. It will also be good for weddings and other holidays not only due to connection with the hotel but also to its own buffet high-quality service of WTC. The hall can be quickly transformed according to the different event formats and accomodates up to 220 persons.
In April 2019 a multifunctional business complex with Holiday Inn Express Moscow-Khovrino was presented to the market. Tell us please, what was the reason to combine hotel and office areas in this project?
The market trends themselves suggested in which direction we should move. The main trend here is multifunctionality, not only on the commercial real estate and redevelopment market, but also in the MICE industry. It is not a secret that in Moscow the most part of the multifunctional complexes is situated in the Central administrative district and only 17% - in the other districts. Little by little price policy, logistics and transport accessibility in the city center started to lose to its other areas. Now the market is showing interest in other locations, and decentralization in the construction of the city’s infrastructure facilities is expected to increase in the coming years. In addition to this, the Government of Moscow in recent years has been developing recreational areas and transport hubs in various areas of the city, which makes them often more attractive than the Central district. By the way, the Khovrino district itself, where the business complex is located, is now actively developing: already the metro and several itineraries of ground transport are operating there, one of the largest transport hubs in Moscow is going to be completed, the public space is rapidly developing.
The chosen combination: hotel, offices, restaurant with its own catering, meeting hall is the optimal set of opportunities for creating package services. For example, while holding a two-day event in the conference hall organizers can accommodate participants in a hotel. Tenants can use the hall for their own events or the welcome zone for negotiations, or they can also provide hotel accommodation for business partners from regions or other countries. However, they do not need to worry about logistics or probable unexpected situations that arise when moving between objects in different parts of the city. Everything is very convenient.
The renovation and reconstruction work is not completed. What is going on now, what are you planning for the future?
We are continuing renovation in the WTC complex. In mid-April we have opened the renovated Bar24, situated in the atrium of the Crowne Plaza Hotel. It is decorated in the same style as the reception desk. The appearance of the atrium itself and the "Mall Street" - the central artery of the complex, where we completely replace both the flooring, wall covering, lighting and decorative elements, is changing. We are replacing elevator groups, including the famous panoramic elevators - the very first in Russia, they have been working properly for all 40 years. At the same time, we carefully work out each project - we can’t lost authenticity of our complex doing renovations and we should include the historical details into a new context. For example, we decided to leave the historical railing in the form of steel pipes, but gave them modernity by designing the space under them.
We go on working in the Mezhdunarodnaya hotel building and are considering the development of the Club building of the Crowne Plaza hotel. It was built relatively recently. It is modern, but we want to add exclusivity to it. We are also working on options for the further development of the territories of our assets: on the basis of the Prominexpo complex, we are creating a technology park, studying the potential of the territory and the World Trade Center itself.
In further development, we want to make an accent on the implementation of the new technologies. Today's client needs the services “here and now”, and we try to make all the functionality as simple and intuitive as possible. For example, today a lot of people got used to make orders via mobile phones. At Crowne Plaza, we have created a specific network which helps to make orders through smartphones: the information goes directly to certain staff member and as a result it is realized as quickly as possible.
The next step is the introduction of a voice assistant supported by Yandex. And this is not just an order for hotel services, but also all the opportunities of Yandex services. This is an interesting innovative solution that will be attractive not only for advanced users, but also very convenient for various categories of guests including people with limited mobility.