The Warsaw Voice » Business » Monthly - April 30, 2018
Business & Economy
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Regional Leader
   
Gilles Clavie, President and CEO of Orbis S.A., talks to the Voice’s Juliusz Kłosowski.

Orbis delivered record high results for 2017. The same as in 2016 and a couple of years earlier. Looks like you have an excellent strategy. What are its main points?
For the last four years, Orbis has been realizing a strategy focused on delivering sustainable, long-term growth to all its stakeholders – employees, investors, business partners, hotel owners and our guests. This growth is dependant on three pillars: people – employees and guests, portfolio – profitable hotel assets and performance – through operational excellence. These three pillars are correlated with each other. In regards to people, Orbis has been undergoing a cultural change that has affected our talents in a positive way as we simply let them be themselves, we support them more in their professional growth and let them be more authentic. That’s what guests really enjoy – authentic hospitality and we clearly see it through hotels’ reviews. By portfolio, we mean asset management – keeping the highest possible valuation of Orbis hotel assets by proper management, technical maintenance and appropriate modernization. In order to keep a proper profitability level for the entire portfolio we monitor all our hotels from the operational perspective as well as their financial needs for product improvement. Some of them did not match our strategic goals and therefore were made available to investors who at the same time signed a long-term franchise or management agreement with Orbis. Proceeds from such transactions are re-invested into projects that can contribute a higher return for the company. We allocated this capital to more promising markets and brands. The third pillar is performance. Here, we focused on the improvement of RPS (reputation performance score), on the increase of operating results through growth of the RevPAR and on maximising the EBITDAR margin. Besides this consistent strategy, we have to point out that Poland and all the countries of Eastern Europe where Orbis operates hotels are registering positive macro-environmental results especially in business and leisure tourism and this has a strong impact on Orbis results too.

In the context of Orbis excellent 2017 results, how would you comment on the situation and perspectives of the hospitality market in Poland and the CEE region?
The GDP growth in this part of Europe is one of the strongest worldwide but demographic and generational challenges have increased, along with fast digital changes making competition in the hospitality field very tough – but we see it as part of the game. Poland hosted the UEFA football cup in 2012 and the world discovered a modern country with an improved infrastructure. Tourists visited sites that inspired further travels and events and above all – discovered a great sense of hospitality and exceptional destinations in terms of value for money. There is also competition between destinations in that part of Europe. For example, Budapest is leading the way as the city has done a lot to promote and to host the biggest MICE events but Prague isn’t left much far behind, neither Warsaw nor Katowice which is welcoming this year COP24 in December. Honestly, we do not see any “black” cloud ahead.

Orbis is an absolute hospitality market leader in Poland. What is the situation in other countries of the region? What are your plans regarding those markets?
Indeed, we are a leader here but don’t forget that already 40% of our turnover is generated outside Poland. With its almost 40 million inhabitants, Poland is for sure the place “you must be present” but Romania – where Orbis already has the leading position, has recorded a very positive trend for a few years now and it’s a very attractive country to develop, not only in Bucharest but in some secondary cities. Budapest and Prague are an absolute must too. Orbis strategy consists also of the fact that if we’re entering a new country, a new market, we definitely want to rapidly be a leader there. Orbis is also the leader in the Hungarian hospitality market and we’re close to the first position in all the other destinations too. We have the means – the brands and the people, to make and sustain AccorHotels network as the strongest player in Eastern Europe.

Is there a space to develop Orbis network in Poland? What are your plans here?
Besides development of Orbis through an asset-light strategy based on franchise and now more on management contracts, we are ourselves also hotel investors. Orbis has just bought a real-estate property in Kraków nearby Mercure Kraków Stare Miasto and we’re finalizing analysis in regards to the brand. We’ve been constructing in green BREEAM certification, an ibis Styles in Warsaw adjacent to the ibis Budget Warsaw Centre; we’re in Vilnius with ibis and actively looking for project opportuniites as Orbis has a new brand in its portfolio – Adagio, the No. 1 brand for aparthotels in Europe. The cash position of Orbis is strong and we are open to different opportunities whether with individual hotel investors or with institutional ones.

Orbis has quite a long business record as a company established in Poland since shortly after WW I. Now it’s closely related to the leading global hotel group AccorHotels. Would you please tell us about Orbis current ownership situation?
Orbis will be celebrating its 100th anniversary in 2020 and has never been so strong and dynamic as today – we understand the hospitality business. AccorHotels is – since 2000, Orbis’ strategic investor from which we can take what’s most attractive for us – for example the robust digital plan and the actual optimization of the strong Le Club AccorHotels loyalty program that enables us to personalize our services offered to guests, the key corporate customers or the effective CSR (corporate social responsibility) program that makes us more resilient to non-financial risks. Orbis has a very strong support from a world leader in hospitality when entering a new market and I truly believe that being part of AccorHotels is a strong component of Orbis’ success story. On the other hand, Orbis has the freedom to shape its strategy locally, to focus on what’s the best for us. Definitely, it’s a win-win situation for both companies. Considering the recorded values of Orbis’ shares lately and the total return on shares since introducing the strategy based on three pillars: People-Portfolio-Performance, our investors are satisfied. Orbis has been named for a second year in a row as one of the top 20 most efficient companies on the Warsaw Stock Exchange.

Since 2014 you are Orbis President and CEO, but your connection with the company goes back to 2011. How has Orbis changed since then in terms of business?
A big part of the restructuring work – especially regarding the non-hospitality assets part, was done by my predecessor. Since mid-2014, Orbis deployed a new strategy focused around the 3 Ps but it was a company operating only in Poland and in the Baltic States. Then, in early 2015 we took over a network of 38 AccorHotels in Eastern Europe. At first, this transaction wasn’t very much appreciated by the equity markets but we knew it was perfectly in line with Orbis’ strategy and has contributed to our growth in the region, gathering momentum. Results came very fast. Orbis has significantly expanded the scale of its operations from less than 70 hotels located mainly in Poland and partly in the Baltic States at the end of 2014 to more than 126 hotels across Eastern Europe today with a robust pipeline secured for the next three years. Orbis is today the sole licensor of AccorHotels brands in 16 countries i.e. in Bosnia and Herzegovina, Bulgaria, Croatia, Montenegro, the Czech Republic, Estonia, Latvia, Lithuania, Macedonia, Moldova, Poland, Romania, Serbia, Slovakia, Slovenia and Hungary. We switched from a local player to a European hotel operator & investor. Today – for the equity market, Orbis represents a reliable and long-term investment. The sleeping company turned into a highly performant one.

The main asset of every successful company are people. What is Orbis approach to the question?
“Treat others the way you would like to be treated” is the Orbis motto which we apply to our guests and employees alike. For the last two years, we have made every effort to ensure that employees feel well in our organization and utilize their passion, talent and commitment to everyday work to build a socially responsible business – to build positive hospitality, because CSR and ethics are increasingly key important for the youngest generations. We listen to their views and we analyse the results annually through the “Employee Satisfaction Survey” undertaken by Aon Hewitt. The survey had a very high participation rate in 2017 – over 90% of employees took part in it. The engagement level was also high – 68%, and indicates that the cultural change in Orbis has been heading in the right direction which makes me feel confident.