Baltic hotel operator Mogotel plans further expansion in CEE | Property Forum

Latvia-based Mogotel Hotel Group is the largest hotel operator in the Baltics and it continues to expand outside the region, having recently entered the Hungarian market. Development Director Ivans Dokicians unveiled the company’s ambitions and plans in Hungary and the whole of Europe in an interview for Property Forum.

Which big hotel chains were on your radar before you choose Accor to enter the Hungarian market with?

We are actively working with all the biggest franchise providers, such as Accor, Wyndham, Hilton, Marriott, IHG, Choice Hotels, and Louvre Hotels Group. Accor has a very strong presence in the Hungarian market, so we already knew that entry will be smooth with such a professional and experienced partner, as they are.

Will Mogotel concentrate on Budapest exclusively or will you try to seek opportunities in the countryside?

Our primary focus is city hotels, mostly mid-scale/upper-midscale and up-scale properties, with a good location and a large number of rooms. For now, we want to strengthen our presence in Budapest as we are negotiating another 4 properties, although recently we were evaluating a hotel in Győr, so we are open to different good opportunities.

How will you strengthen the conference and business events arm of the Novotel Budapest Centrum?

Conference and business are very important in our strategy and there is a personal approach required for this part of attracting sales. The explanation for Mogotel’s success is based on the fact that we follow all changes in the market 24/7. Being first, not missing an opportunity, and reacting immediately is the main principle of the company and we try to follow all events and conferences every day.

What is your way of maximizing ROI at your assets in CEE and Germany?

ROI is an important factor while working with the funds, the best way to maximize ROI is to increase the profitability of the assets and the main point for that is to encourage improved service quality. That’s why our main focus to expand in CEE, for now, is to do it only as a white-label operator. We work together with world-known franchise partners, to find the best decisions together for rebranding, or development, which will allow optimizing our costs, and make hotel performance more effective.

Tell us about the cooperation with the state-owned development financing institution ALTUM.

The capital fund has concluded an agreement on an investment project with Mogotel Development Holding for the expansion of its operations in European countries. The financing of the capital fund in the form of a loan will enable Mogotel to adapt to the new market situation and implement a business model that will help to implement further development plans and expand operations abroad. The total amount of allocated funding is planned to take up to €10 million for the takeover of new hotels in Europe.

Would you recommend hotels as an investment product in these turbulent times? 

Since the start of Covid-19 and the war in Ukraine, construction costs have risen a lot, same as labour costs and energy prices. So, investors should understand these aspects and the fact that the market has changed a lot during this time. Nevertheless, it’s a good time for investors to acquire existing properties with great potential locations, for a fair market price.

What is the impact of the war in Ukraine on the SkyLoft Hotel in Kyiv, operated by Mogotel?

When the war in Ukraine started, our main goal was to find a way to provide support from our side. After a meeting with the owner, we agreed to create a press centre for foreign journalists and provide rooms for those that are ready to objectively cover the war. If the situation in Ukraine stabilizes, which we hope will soon, the tourism sector will start recovering as well, but currently, we think a full recovery would take at least three years.