Q&A: Back on track

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In its nearly 20 years of operation, Birchwood Hotel and O.R Tambo Conference Centre has made a name for itself as the go-to venue for large corporate or government conferences. But the times are changing, and so is this stalwart establishment. Kevin Clarence chatted to Dylan Rogers about what’s been happening at Birchwood over the last 18 months.

Q: How has the conferencing landscape changed in the last 10 years?
A: In 2008, the market in conferencing was extremely strong and 80% of our occupancy was generated through conferencing. We didn’t have to worry about focusing on the corporate market, or any other market for that matter. In 2009 the numbers started to dip. There was a spike around the 2010 World Cup, but after that occupancy numbers have never really recovered to the highs of 2008. Our occupancy is sitting at about 55%. However, we’ve continued to rely solely on the large groups’ conferencing market. In 2012, we studied our model to find ways of increasing our occupancy. We looked for ways to bring back the loyal corporate market that supported us in our early years of operation.

Q: And what was the answer?
A:
We needed a product to compete with the new offerings from the likes of City Lodge and Protea. So we launched Silverbirch; we refurbed 235 rooms and increased our service offering for the more discerning corporate audience, both individual travellers and smaller conference groups.

Q: What other solutions are you implementing?
A: We’ve recently taken 92 of our small rooms and gone to the market with a reduced-rate accommodation option. Our ValuStay product is ideal for the price sensitive traveller, with no frills and no fuss. The room rate includes free airport transfers, free wi-fi, and access to all of the facilities on the property. The only difference is the size of the room and the fact there isn’t a separate bath and shower in the bathroom.

Q: Is ValuStay a response to a general belt tightening in thecorporate travel space?
A: Absolutely. Birchwood as a brand appeals to different market segments within single companies – senior management on conference stay in Silverbirch, a large conference group that needs the Birchwood product, and perhaps field operators that simply need to be close to the airport who will book into ValuStay.

Q: Are there any trends in the corporate travel space that is affecting your offering?
A: We have 82 Silverbirch Premium rooms that are more luxurious than even our standard Silverbirch offering, being charged at a higher rate, and there are corporates that want this product. There are companies that are performing well and have money to spend, while others are struggling and cutting costs wherever they can, and we can now provide for both needs.

Q: Is this part of Birchwood’s diversification process?
A: Traditionally we’ve been reliant on the government business for large conferences, so yes, Silverbirch and ValuStay are both diversification products. Prior to opening Silverbirch 18 months ago, we had over 600 rooms tied to large groups’ conference business – a single market segment, the majority of which was government. These two new products, which comprise half of the hotel, are not reliant on this single group.

Q: Are you concerned about the latest budget speech statement that government is going to cut back on conferencing spend?
A: Definitely. The government sector was the biggest contributor to our top-line revenue. However, it’s a trend we’ve seen coming, which is why we’ve invested $3.6 million in capital expenditure over the last 18 months to bring our product to a competitive level with other strong brands in the corporate market.

Q: What challenges do you face in the near future?
A: The challenge is now delivering a service to the standard expected by the client. The business is out there, but people have become more discerning. They want more bang for their buck. In eight years, our prices have barely changed, but customers still want free transfers, free wi-fi and seven sports channels in their rooms. Customer demand has escalated, but we haven’t been able to raise our rates and our costs have soared.

Q: Have you noticed any trends in the conferencing space?
A: There is a trend towards the smaller, more repetitive training requirement in the corporate space. Although it’s hard to say if this trend is because we’ve only recently started offering a product for smaller groups, or if it’s a trend in the general conferencing space.

Q: Going forward, what’s in store for Birchwood?
A: In the short-term, we want to build on these brands we’ve developed and make sure that each product appeals to the market segment it targets. We want to improve our occupancy rates, something I hope we will achieve in the next 12 months. Moving further into the future, we want to continue improving on each of our brands. To take the ethos, the culture, of Silverbirch and build it into the Birchwood brand, as well as to filter it into ValuStay. To have three solid products providing outstanding customer satisfaction.

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