Marriott’s comeback: hotel to be sold for 600m but stay in Kazan

Everything goes according to plan

''We switched to the brand Marriott one year ago like we had planned,'' said Director General of the operator company Hotel Company JSC in Moscow Aleksey Karelov told Realnoe Vremya. ''When we entered there, we immediately said we felt sorry Marriott had left it and did our best to get it back. For this purpose, we needed to sign a new franchise agreement and meet all the conditions, which Marriott requires to meet according to its standards. We tried to do it as fast as possible. We have a team that knows all the conditions of Marriott. This is why this became possible even if there were certain difficulties. The collective, especially in Kazan, worked to the max. So everything that was planned to do for 6 months was possible for 2,5 months.''

According to Karelov, the most difficult thing for the hotel's operator was to train the collective for the brand's comeback:

''We've greatly changed the management because we needed people who fluently spoke the English language and had worked in international chains. We had to change FMB, sales department and chief accountant. And the biggest task we had was to train the staff. Why is Marriott famous? Because it has one of the strongest training programmes. This is why the requirements for the specialists who remain to work are very high. We created a hard-working collective, which shows a result!''

According to Karelov, the most difficult thing for the hotel's operator was to train the collective for the brand's comeback

Aleksey Karelov also said the also said it was possible to fulfil the plans to raise the hotel's profitability within a short time, what he had expressed previously. But he told about a 20-30% rise one year ago, while he is saying it's been possible to raise it just by 15%.

'Suspicious' deal

Meanwhile, the insolvency representative of Dynamics Group PLC, which went bankrupt and owns the hotel's building and the land parcel it's on, didn't leave the chances to recognise the owner's deal with the previous operator CY Kazan Hotel Leasing PLC in Kazan invalid. The fight for recognising the agreement to management services invalid goes on in the Court of Arbitration. It's unsuccessful at the moment.

On 3 April 2018, the Court of Arbitration of the Republic of Tatarstan rejected the petition of the insolvency representative Pavel Lesnikov. However, he appealed this definition in the 11 ^th Arbitration Court of Appeal. But it wasn't successful – the Court of Appeal left it in force on 21 June.

''We will try to appeal this deal because it seems invalid,'' claimed Lesnikov to Realnoe Vremya.

In his opinion, the court didn't take into consideration that not the fact of the signing of the agreement with CY Kazan Hotel Leasing PLC was appealed but this agreement's conditions, and this agreement entailed a rise in accounts payable for the debtor – Dynamics Group PLC. In addition, the insolvency representative states CY Kazan Hotel Leasing, which is Dynamics Group's affiliated firm, must have known Dynamics Group was insolvable, consequently, the goal of the signing of the agreement with the operator was to do harm to creditors…

The arbitration representative didn't allow to hope to sell the hotel's building with the land parcel either

As this evidence didn't work in either Court of Arbitration of the Republic of Tatarstan or the 11 ^th Arbitration Court of Appeal, Lesnikov hoped they will be heard in the Court of Cassation.

Cheap and prestigious

The arbitration representative didn't allow to hope to sell the hotel's building with the land parcel either. Initially, it was up for auction for 1,2 billion rubles, but there weren't found purchasers.

Now a new ad has appeared on New Information Services PLC electronic auction platform – with a starting price of 864 million rubles. As Pavel Lesnikov explained to Realnoe Vremya, the hotel could be sold for a much lower price. According to the auction's conditions, if there aren't purchasers, the price will fall by 81 million rubles every two weeks. And if the hotel's building isn't sold by 1 October, it will reach 600 million.

In answer to the question if the hotel's building could be sold, Lesnikov replied:

''There weren't applications for 864 million rubles, and now we expect…''

Neither the arbitration representative nor the hotel operator's director doubt Marriott will remain whoever the building will be sold to.

''It would be stupid to refuse an opportunity to work in Kazan under this brand!'' Aleksey Karelov passionately reacted to the hotel's prospects to work under the prestigious marquee.

Neither the arbitration representative nor the hotel operator's director doubt Marriott will remain whoever the building will be sold to

''Any owner will be interested in working under the brand of Marriott, and we signed the agreement with the current managing company for such a purpose,'' Pavel Lesnikov agreed with him.