SNAPSHOT

Name: Mihail Popov.
The job:  Managing director of Bora Consult.
In brief: Bora Consult owns and manages hotels. DIT Hoteli owns a 50 per cent stake in the company. DIT holds 100 per cent and 50 per cent stakes, respectively, in Evrika and Majestic hotels in Sunny Beach on the Black Sea. Their joint bed capacity is 3500. Both hotels have been awarded Thomson’s gold medal in the Best Summer Sun Accommodation category. Unlike Riu Evrika, whose management has been delegated to Spanish hotel manager Riu, the Majestic Hotel is under Bora Consult’s management. DIT Hoteli plans to build another hotel in the Caribbean, at the moment they are still at the stage of purchasing land. In the long term, DIT wants to develop a hotel in Sofia.

This land of the third world still remains a “terra incognita” to many Bulgarians. Not, however, to Mihail Popov, the managing director of Bora Consult, a company that owns and manages hotels. He, at the request of company shareholders, ventured on a “re-discovery” of this remote location in the hopes it would be the right location for the first ever Bulgaria-owned hotel in the Caribbean. It is a big ambition, but the preliminary research, the managerial know-how to reach the end-point and readily available financing from banks are all looking favourable.

And there is the daring. To the owners of Bora Consult riding the wave of a burgeoning market opportunity is not new. Over a 15-year time span, they bought Plevensko Pivo brewery, restructured it and then later sold it to Belgian brewer InBev, formerly Interbrew. They set up the Bankia mineral water bottling company, built a top-notch water bottling factory from scratch, made Bankia a premier natural water brand in Bulgaria and handed it over to Coca-Cola Hellenic Bottling Company.

Popov was there to witness all of this and took part in conceiving the third direction for the business. Shortly after the new millennium festivities, the company tuned onto market trends and opted for tourism, hotel ownership and management, in particular.

Tourism on the horizon
DIT Hoteli, the 50 per cent shareholder of Bora Consult, runs Riu Evrika and Majestic Hotel & Residence, both positioned in the high-end price range for Bulgaria, both in Sunny Beach, both on the seafront.

Their combined bed capacity will be 3500; after the extension at Riu Evrika is complete, it will add 117 rooms to the hotel. This, Popov says, is the size of 10 average hotels in Bulgaria. Despite the different architectural design and management pattern (Riu Evrika is run by Spanish hotel manager Riu, Majestic by Bora Consult), both hotels are heavily reliant on greenery, entertainment facilities, swimming pools, more than a handful of restaurants and kindergartens, among other facilities.

And both are award winners in the Best Summer Sun Accommodation in Europe category of tour operator Thomson, a major partner of Bora Consult. While Riu Evrika received the accolade two years ago, the Majestic’s is new. Popov received the award on behalf of Bora Consult at Thomson’s annual award ceremony on November 13 in London.

Thomson, which is owned by German travel group TUI and was recently merged by the group with UK First Choice to create TUI Travel, uses questionnaires completed by package tourist on their plane back home to compile its rankings. Questions refer to the overall assessment of the holiday, quality of food, service and maintenance, complex equipment and facilities, reception, bar service, room comfort, daily activities and recreation, among others. Majestic was one of Bulgaria’s three award winners this year. Thomson works with 39 hotels in Bulgaria.

At the time of the interview, Popov was about to fly off to finalise the purchase of a two-hectare plot of land in the Dominican Republic’s most developed region, Punta Cana.

With its 500m of coastline and good logistics, the region is only 10 minutes away from an international airport, it will make a perfect location for the future 720-room hotel, DIT Hoteli’s third.

Why not Bulgaria
There were many reasons behind the decision to choose the Dominican Republic over Bulgaria or any other location, Popov explains. On the one hand, we are following the international trends, he says. Renowned European hotel management companies such as Riu, Barcelo, Iberostar, all from Spain, have stopped developments in Europe because of concerns of over-construction and have moved to untapped locations elsewhere in the world.

DIT Hoteli, through Bora Consult, has followed the same market logic, he says. The company, who considered potential sites from the Bulgarian coastal and winter resorts to as far away as Costa Rica, picked the Dominican Republic because “it has few but strictly observed rules on construction” and “has yet to become a hotspot for real estate speculators”.

While Costa Rica proved a no-go because of the second condition, Bulgaria fell prey to both, Popov says. Costa Rica, just like Bulgaria, has seen real estate investors throughout the world inflate land prices to levels that have driven the cost of hotel development all too high and have extended the period required to see a return on hotel investment beyond expediency.

Returning to the first condition, the continual circumvention of the rules on issuing building permits in Bulgaria and the resulting hyper-construction have prompted DIT Hoteli to curb construction plans in the winter resorts of Pamporovo, Bansko and in the spa town of Sapareva Bania.

“More than a year ago,” Popov says, “I went on a trip to check the site at Pamporovo. I felt pity for this resort. At that time alone, there were four sites under construction with 400 apartments each!”

He adds that the largest hotel in any Austrian resort, for example, comprises 150 rooms at most. “Developments in Pamporovo defy all winter resort construction logic,” he says. The same problem plagues Bansko and other resorts under Bora Consult’s scrutiny, according to him.

Sofia, he said as he continued analysing the pros and cons of building a hotel in Bulgaria, is already an attractive location with its good hotel rates. The Bulgarian capital is already on DIT Hoteli’s waiting list. The sole problem is that of land consolidation, Popov says. The company has bought an attractive area of land in downtown Sofia, off NDK. However, it still needs to resolve relations with owners of individual plots of land within the site before it begins construction.

Building another coastal resort would hardly prove profitable, Popov says. “The cost of sealing a hotel for the winter costs hundreds of thousand of leva alone, as does unsealing it in early spring,” the manager says.

Yet finding staff remains the largest problem. “It is a pain to recruit nearly 400 staff each March,” he says, adding that each hotel can afford to keep only management, 200 people, on a full-year payroll for six-month work. Besides, German and UK operators have been reducing their charter flight schedules by the year. While in 2005, Thomson’s flight programme lasted for 155 days, this year it was only 129 days and the trend is set to continue, Popov says.

What is more, the number of tourists to Bulgaria from Germany and the UK, the nations who travel the most for holidays in Europe, has been on continual decline in recent years. Popov recalls that Bulgaria as a tourist destination was ranked last (12th) in a poll among Europe’s 30 most eminent tourism experts. The Destination Check ranking, published in the June edition of German travel magazine Touristik Report, came alongside Thomson’s announcement earlier this year to stop its operations on Bulgaria’s northern coastline and limits work on the southern.

“To undertake such a radical step, a tour operators’ performance in these regions must not be that good,” Popov says. “If it is not good for them, it means it is hardly good for us.”

Thomson will extend its contract with DIT Hoteli, however. Hopes are that it will fly tourists to DIT’s hotels anywhere in the world, Popov says.

In view of all the above considerations, DIT decided on an year-round destination as is Punta Cana in the Dominican Republic. The pros: return on investment is expected to be four times as fast as in Bulgaria with its full-year active season versus the local four-month one. Moreover, the staff problem would no longer be on the agenda. And Thomson, with its annual 10-million tourist base and sound air fleet, is likely to fly tourists to Bora hotels wherever their location. On November 13, Popov says, Thomson announced the purchase of 23 Boeing 787s, which can fly direct to Australia with no stop-overs. Bulgaria, as a nation contending to be a tourist destination, has no company with planes available for charter.

Price woes
The above considerations and the latest example is just one of the many results of an erratic and inefficient governmental policymaking on tourism. In what is the best illustration of the consequences, Bulgaria has not moved an inch from its “price destination” image in the years of transition. DIT Hoteli/Bora Consult does not depend on Bulgaria’s standing to raise its prices. Rather, it relies on its own achievements, say, Thomson’s accolade, as an tool to influence negotiations on pricing with foreign tour operators. DIT/Bora has more than 100 per cent occupancy in high-season months, 36.3 per cent in pre- and post season months and an overall average of 76 per cent. Therefore, it is looking to get a true, monetary, appreciation of the value it provides rather that a higher tourist flow, Popov said.

Work on ways to ensure visibility of Bulgaria’s tourism offer, through promotion of the country at expos and spots on global TV stations; to develop it to take on international interest in spa, cultural, historical tourism has reached a dead-end due to continual dissension among long-time professionals in the sector. The best illustration of this interpersonal bickering is the industry’s top placement in terms of the number of tourism associations, “all claiming to be representing the interests of the industry”.

“This has been the reason why Government and Parliament do not regard seriously the request for a budget increase by Anelia Kroushkova, the head of the State Tourism Agency, because she can hardly claim she has the backing of the entire tourism industry,” Popov says.

Hence the Government’s reluctance to finance tourism promotion internationally, as its general apathy toward building a quality tourism product.

These developments have caused Popov, previously a co-founder of a tourism organisation, to turn down four offers to participate in newly-coined tourism organisations or partake in exhibitions where Bulgaria has rented pavilions.

“In my opinion, which I don’t claim to be representative, it is inter-personal bickering rather than professional dissent on the future of Bulgarian tourism that hinders industry progress,” Popov says. “Bulgaria is not in its best development period.”

As for hoteliers, they reap the “negatives” of this situation. To reverse it, Bulgaria needs to stabilise as a destination, according to the manager.

“Existing hotels have their future. They will position themselves in their respective price categories provided that construction does not deface the resorts,” he says.

Regulations matter
Returning to the Dominican Republic, Popov says this country’s rules are very simple but efficient: no developer can build a building higher than a palm-tree and all buildings are four floors high at most. In Bulgaria, the architectural plans of 99 per cent of buildings in resorts use regulatory loopholes to build extra two floors and dub them as sub-roof space or remove a lane from a road to build a parking lot, Popov says.

All the more, development projects in contravention with city or resort master-plans get a building permit in return for an apartment for an official from the respective authority.

The manager’s advice is to make the procedure on the issue of building permits as cumbersome as possible to make bribery too costly an initiative. “If developers with ‘skewed-to-fit’ master-plans have to pass through 20 instead of one authority, it might become difficult to pay 20 officials,” he says.

“In addition, there might be one in 20 who might have his son and daughter with a place to live already, say he needs no payment and refuse to sign a paper he should not,” Popov says.

Control might prevent the real estate boom from scaring resorts and give the tourism industry the chance to recover.

“Governmental reports that the tourist inflow is at all-time highs are misleading,” Popov says, “The fact is that the number of Macedonian tourists gets reported but the decline in UK and German tourist numbers, who bring in the highest value for money, is not.”

Bulgaria should look at Turkey’s example, which has been consistently climbing the tourism rankings to reach the runner-up position in Europe, second to only the Mallorca-Minorca island strip.

So does team play
Turkey is united. So are Bora Consult and DIT. Popov hears all the proposals that are considered. And work on making them reality never stops. DIT’s two hotels had 380 000 overnight stays the past summer season, compared with the 40 000 of an average coastal hotel. He even avoids staying at hotels under Bora’s management because his sharp eye notices dents in mouldings and the tiny stains on lamps and wants them fixed. Whether this will make Thomson’s double gold become a triple with DIT’s yet-to-be-built hotel is still to be seen.