from the diary of aPearl diver

Hotel operations in TUI Group are on a path towards growth. The current portfolio contains around 300 properties. Combined with the cruise business, they now account for half the EBIT posted by the tourism group. The focus for this expansion is on destinations in Asia and the Caribbean, where the sun shines 365 days of the year, and on new hotels in Europe. The people who go out and search for suitable land or buildings are called hotel scouts. Their task is to trawl the holidaymaking regions and uncover new projects, be they on the Mediterranean Sea or the Indian Ocean.

600 hotel offers each year

Dieter Kornek has been an expert in this field for many years. He previously worked in project development for Accor, Motel One and Falkensteiner Hotels. He laughs when asked if there is any holidaymaking region he hasn’t been to yet: “In the world, maybe, but I know Europe like the back of my hand.” Since June 2017 the business administration graduate has been in charge of Project Scouting for TUI Group. The department is still expanding, but already the team screens about 600 hotel offers a year which land on their desks. They don’t always merit further investigation, but thanks to his experience, Dieter Kornek has a well-trained eye for the buildings and land with potential. The supreme factor is location. This is the key consideration when assessing whether a property or resort will turn out to be a genuine pearl.

Evaluating the trends

“Apart from our top-performing joint venture, Riu, a major focus of this expansion is on our own brands, like TUI Blue, Robinson and TUI Magic Life. So we work very closely with their executives,” explains Dieter Kornek. The Group’s tour operators also help to assess the market potential of a particular hotel and to calculate appropriate rates. “Drawing on all the information we collate, we put together an initial rough analysis of profitability, Kornek continues. Hotel scouts do not simply surf on the crest of a trend. They do their sums. “We estimate the number of rooms, how many days the facility will probably open, capacity and average rates. Fixed operational parameters like staff costs complement the fruits of our own experience and regional know-how. But inflation and price rises are also factored into these figures. Ultimately we are looking at a period of at least 20 years to take account of amortisation and the usual life cycle of a property.” If the rate of return looks encouraging after this exercise, it’s time for the scout to book the next plane ticket.

A Croatian pearl

While the Croatian coastline reveals spectacular views of Dubrovnik and the landscape around it, Dieter Kornek is eyeing his watch and the milometer in his hired car. He is familiar with this region, but what he doesn’t know yet is the precise transfer time from the airport to the potential hotel. As a scout on the road, he never stops analysing. When he inspects a location, he is not guided by gut feeling, but by the checklists that are always on his mind as he evaluates the site and its surroundings. Distance to airport is one criterion. So are beach quality and general infrastructure. In this case, the latter seems to be the critical issue. He collects the landowner, and they drive the last few kilometres together along a bumpy track. There is no official road yet. This unique location needs to be weighed up against a long list of investments. “We’ll run through the figures and talk to our colleagues,” concludes Dieter Kornek, while the setting sun demonstrates the magical sight awaiting future guests.

Newcomer Montenegro

The next day sees Dieter Kornek crossing the nearby border to Montenegro. The little Balkan state has evolved in recent years to become one of the fastest growing destination countries, thereby qualifying for TUI’s hotel shopping list. The first property to visit is an existing hotel in Herceg Novi. It has a picturesque old town that holidaymakers can easily reach by strolling along the beach promenade. The hotel scout loves the location, but the building itself evidently needs renovation. As Dieter Kornek walks briskly around the winding corridors and steps into the narrow rooms, he soon realises: “This does not come up to our standards. I think it would make more sense in this case to knock it down and build something new.” Not good news for the potential vendor, but he says he is still open to further negoti­ations. Time for the next appointment. Kornek takes the car and then the ferry. In terms of size, the unbuilt land near the port of Tivat would lend itself to one of the Group’s club brands. The scout then discovers a little added bonus: the site has its own beach, and it is not separated from the hotel by a promenade. He outlines the next stage of the process: “When I get back to the office, I will write up my reports and discuss any new details with the executives of the brands concerned.”

The final polish

Before a hotel project can be taken forward to the next round of contractual negotiations, it must be meticulously checked out and indicate sound prospects of commercial success. For this pre-selection, Dieter Kornek taps into his knowledge of construction and contract law, real estate management and project development. The gems that emerge are properties ready for the final polish that will make them a TUI hotel.