Hans C. Sebesta is the managing director of the Hotel Baltschug Kempinski. He's been here since the market opened up to the outside world and has used what he describes as his "European expertise" to make his hotel into one of the city's premier accommodation facilities. He described his years of working in Moscow as "wonderful and exciting," and added that he was "grateful to his destiny," for bringing him to Russia. He shared some of his market insights with The Russia Journal.

The Russia Journal: Tourism to Moscow declined following the '98 crisis. How did this affect your business? Have there been any positive changes in the last couple of years?

Hans Sebesta: Moscow doesn't exist as a tourist destination the same way as St. Petersburg and we don't rely so much on leisure travelers. Not more than 15 percent of our guests are tourists; the rest are mostly business travelers.

TRJ: Are business travelers coming here like they were in the early days?

HS: Not like in ‘94 or ‘95, but they are still coming. There is not as much of a market as there used to be when we started. On a positive side, there has been a leap of business activities since the last presidential elections and a visible improvement in the investment climate in Russia. There has also been an increase in the number of leisure travelers, both from individuals and group tours. In our opinion, Moscow is becoming a renowned destination for business meetings. So, in comparison to 1999, the situation has improved and the occupancy rates are going up.

TRJ: How have your occupancy rates been this year?

HS: It's up 52 percent from last year.

TRJ: How long does it take for a four- or five-star hotel to become profitable in Moscow?

HS: In general I can't say, but we were profitable as of the first month of operation, which isn't typical. There were several reasons for our success. I think it was the right decision to start in the early ‘90s. We had good relations with our shareholders and I think my European background helped as well. I came to Moscow and I not only knew what McDonald's was, I knew how to spell Pushkin and Gogol.

TRJ : How do you keep your hotel competative in the Moscow market?

HS: It's important to remember that the Russian market is not any different from the rest of the world. The economy here works the same way as anywhere else. Obviously, you have to do different things in different locations. What you have in the business world is hardware and software. Hardware depends on how much money you're going to spend, but software is changeable. It's the people, the service, the culture and so on. It's motivational skills. We try to take advantage of the highly educated people in Moscow.

We have a very developed way of leadership. I try to get the best out of people. We use our brand name to keep a high-profile image.

TRJ : Who are your clients? Are they mostly Russian or foreign?

HS: Most of our clients are foreigners: 60 percent Europeans, 15 percent Russians, 15 Americans and 10 percent other nationalities.

TRJ: What do you think of the present hotel market in Moscow and Mayor Yury Luzhkov's Golden Ring development program?

HS: I think at the moment the hotel market is definitely a little over-developed. I know that some of the Golden Ring money was marked for refurbishing already existing sites and hotels. I think this is correct. But if you invest the money, you have to raise the room rates a little. And then, the people who are coming to Moscow now will stop coming, or go to other hotels. What Moscow really needs are more centrally located three-star hotels for budget travelers.

TRJ: What tendencies do you expect for your hotel and for the Russian hotel business in general for the 2001-04 period?

HS: When it comes to our hotel, I hope we stay as good as we are. We want yield, not occupancy, to rise. We're focused on quality. But overall we expect steady growth, as both the country and its hotel business have got a tremendous potential. Of course, it all depends on economic and political stability. To stay successful you need to continue offering good facilitiesin order to attract your clinets, such as breakfast, a bar and so on. But it's becoming harder and harder, as smaller competitors are opening up around the city. So we need to expand into services such as catering and banquets.