What to expect?
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[00:00:00] Gorjan Lazarov: Currently, our platform, orea.cz, is generating about 60% of our revenues. When I entered, it was literally zero. And I said it in our staff meetings and internal debates. It's like, "Wow, guys. You have been walking around a lake. It's full of fish, but you never cared to actually catch them."
[00:00:28] Matt Welle: Hi, everyone. Welcome back to another Matt Talks Hospitality. And today, I have a guest from the Czech Republic. Gorjan Lazarov is joining us as the CEO from OREA Hotels and Resorts, a Czech hotel group that he's been leading since 2016. And he started his career in hotel operations. During that time, OREA has grown the portfolio to 20 hotels today across the Czech Republic, and he's introduced a bunch of technology to support that growth, all the way from robot concierges to contactless check-in to real-time pricing. When I met Gorjan, I immediately knew that he was a very special hotelier because in the Czech Republic, I've met many hoteliers in the 17 years that I've lived there. So, I'm really excited that you took the time to speak to us.
[00:01:09] Gorjan Lazarov: Hi. Thank you for the invitation. It's a real pleasure to be with you.
[00:01:15] Matt Welle: So, when we had breakfast, I don't know if you remember this, but we very quickly talked about breakfast buffets. One of the things I always cringe about when I see people in the breakfast room, they grab a croissant, wrap it in a napkin, and then they hide it in their bag as they walk out of the breakfast room. And you said something that changed my brain around this topic. You said, "We provide them with paper bags." Can you talk about that?
[00:01:36] Gorjan Lazarov: Yeah. And I guess that's hospitality. Right? I mean, that's how, at least we at OREA approach hospitality because we are trying to see what guests need, and we're trying to build a relationship with the guests and provide value. Not really thinking the old way, in my view, which is basically the transactional way. So, if I look at it, the change at OREA started actually on the breakfast buffet with coffee. Usually, hotels give the worst coffee at breakfast, so that you go to the bar, spend money on coffee, and it's a high-margin item, right? But we said, "Okay, why don't we change this? Why don't we provide what people actually need?" They need good coffee when they come in. And we even introduced a live barista that is making the coffee, which is a wow for a four-star hotel level. So, we developed this concept even further when we said, "Well, if people have the need, and we are a brand that is very much talking to families, and if they have the need to take something from the buffet, they're doing it anyway. So, why don't we just enable it?" So, we printed out bags. Customers love it. And from a costing perspective, it's not really something that is a game-changer. So, all in all, it is something that works for both us as a provider and the customers.
[00:03:10] Matt Welle: I love it. I think it instantly shows that you understand what guests actually want from the hotel, and you're leaning into it. I think it's really powerful. How do you think about the fight that you have with your accountants who are battling for every last cent, who are saying, "Well, this costs extra money," like the barista, that's an extra salary, the beans instead of the cheaper coffee that I have to put in the machines? How do you have that conversation with your financial controller?
[00:03:35] Gorjan Lazarov: Well, I think that it is a culture, right? And I will say that in OREA we managed to build a people culture that is really around the guest and really around our four values that we are communicating since 10 years I've been with OREA, which are around care, passion, trust, and innovation. And we're saying, "Okay. So, let's not be the same. We can't be the same. Let's really go back to the basics in terms of what a brand means and what it stands for." And in my view, when you get the customer back, it means that you have his trust. When the customer speaks about you and recommends you, you have built a brand. And the brand means that you're standing for some values, and this needs to be internally and externally. So, if our approach has been, and this has changed because, very much the approach of OREA was accounting-driven. When I joined, actually, the check-in was for a few minutes because the system, at that time, was Opera, and it was so slow because it was running audit reports in the background.
[00:04:53] Matt Welle: Yeah, I remember that.
[00:04:54] Gorjan Lazarov: Right? So, how crazy that is, right? But even special backgrounds are designed to control, right? So, we said, "Okay. Let's really focus on the customer. Let's really focus on the value and the perceived value that we are bringing to the customer because at the end of the day, this is what customers are willing to pay for afterwards." Price is only a reflection of the value.
[00:05:20] Matt Welle: Yeah.
[00:05:21] Gorjan Lazarov: And in addition, you're able to create a relationship with the customer. I say usually we want to build the brand in the Czech Republic that has the biggest sales force, that is not even in our payroll, right? Because we're so good that people talk about us and recommend us.
[00:05:41] Matt Welle: I love that because you've been there for 10 years, and you've clearly been able to put a stamp on OREA. I remember it when I came to the Czech Republic, where it is today, and it's a very different brand because of the stamp that you've put onto it. To someone who doesn't know OREA today, if you walk into an OREA hotel, what makes it unique? What are the things that make it stand out?
[00:06:01] Gorjan Lazarov: I think even customers are saying it. In the beginning, when I started, one of the first things talking to the employees internally and to some customers and basically, they were saying, "Well, we chose OREA because of the location." Obviously, now if I look at it, it evolved into wow people, and that's the answer to your question. It's our people that are different, and I think that the culture makes them different. The culture of empowerment, the culture of actually allowing mistakes, learning from them, but always having the guest in focus. So, basically, the only mistake we don't tolerate is if the guest is going out of the hotel and you just choose the ‘do nothing’ option, which is always an option, right? Many times, the easiest option but we don't want that. We want our people to take ownership, and they do. And basically after COVID, the restart, I started hearing, like, "How is this possible? What do you give to the people? Because they're different." I guess it's the evolution of the culture. The customer is really strongly embedded in our company culture. Everyone knows that that's the one single most important priority. And I think that's what makes us different to the others.
[00:07:27] Matt Welle: How do you build that culture over that 10-year time? Because it does take a long time to make sure that you've got the right people, that you train them. How do you make sure that everyone lives the culture?
[00:07:39] Gorjan Lazarov: It is a whole process, obviously. I think that the right fundamentals are something that obviously you cannot build if you don't have them. So, in my view, it comes back to our incentive system, where in 2017, we simplified it, and we said, "Okay, the whole organization, we're just incentivizing and worried about guest experience." And we had staff service at 7.4 at that time. Today, we have it at 9.5 almost.
[00:08:13] Matt Welle: And where can that metric be measured? What's the platform you're using to explain that?
[00:08:16] Gorjan Lazarov: Basically, at that time, Booking.com, because that was our main channel, as we wanted to see real guests and a real number that we can benchmark and we can evolve. But currently, our platform, orea.cz, is generating about 60% of our revenues. So, basically orea.cz and Booking.com, we use these two platforms to get this number.
[00:08:47] Matt Welle: That's incredible. What was it like 10 years ago when you entered the direct business?
[00:08:52] Gorjan Lazarov: Almost zero. Actually, when I entered, it was literally zero. And that was probably the first quick fix. And I said it in our staff meetings and internal debates. It's like, "Wow, guys. I mean, you have been walking around a lake. It's full of fish, but you never care to actually catch them." You know? And it really allowed us to do these things because of the fact that we were under-indexed on revenues.
[00:09:20] Matt Welle: Yeah.
[00:09:21] Gorjan Lazarov: We had to be under-indexed on costs. So, we had a lot of debt from a product perspective, from a people perspective, but you are not able to do anything if the top line is not coming. And we were lucky enough to have owners that were looking into the long term and sharing basically the same passion of bringing hospitality or raising the hospitality level in the Czech Republic on a different level. And with this, we took the long approach where we said, "Okay, so let's really balance between the stakeholders," and the beginning years were really investing into the customer and into our employees.
[00:10:04] Matt Welle: Because I think it's really unique to have a hotel brand that drives 60% of their business directly, unless you have some big corporate global brand that might drive a lot of the business in a city center location. What was the first thing you tackled when you came in? You said, "Okay. This is the most burning fire that I need to put out to try and get that zero up to like 10%."
[00:10:24] Gorjan Lazarov: Yeah. Well, I would say that, and this comes to our previous conversation. Today, people in Czech Republic, when I meet them on events, I very much hear the "love brand" hashtag. You've built a love brand. And this is a thing that I'm proud of, the team is proud of, because people love us. We have the biggest brand awareness in the Czech Republic. So, we are way above the big brands. Obviously, it is given due to the setup. So, we have a lot of resorts and spa hotels where actually the business comes from the Czech Republic. But if I compare it to pre-COVID levels, it was one-third of the business coming from the Czech Republic. Today, it is two-thirds of the business coming from the Czech Republic. So, I think that we've been able to develop the brand in the market. But basically, back to the question, the most burning thing was really the culture, and this over-controlled culture, combined with old processes and technology. And that's a killer because then, really, as an employee, it's not your fault, right? You can't do anything about it because you need to go through such approvals. It's so complicated that basically it's normal that on the front desk, when you're talking to the customer, actually you say, "Well, I understand you, but there is nothing I can do about it." And yeah, that was the biggest burning issue.
[00:12:01] Matt Welle: And when we met, I think the thing that stood out for me was not just that you're such a passionate hotelier, but also that you knew technology. Like, we could go very deep on technology very fast, much deeper than I would normally do with a hotelier. Where does your passion and interest for technology come from?
[00:12:15] Gorjan Lazarov: Oh, it comes from, I'm originally from Macedonia, and it comes from high school, basically. And I think probably I was one of the first people in the country that had a PC, and I know how to program, and basically, you know, this is the background. I went, and I started in finance and revenue management in hotels, and then I worked with Oscar and Vodafone, which was basically at the time the third mobile operator. So, I was exposed to a telco, which is, let's say, I mean, it had the opportunity to become a tech company, but I think that the pipe model remains stronger, or, obviously, it is stronger. So, I think that was a missed opportunity and an opportunity for many startups around to use this pipe and add value on top. So, I think that I have always been passionate about technology. And this was actually, if I look at it, how my career sped up; that was actually due to technology. Because at these early times, my first, you know, I stood out in the Marriott accounting department, but actually automizing a VAT report that a lady was doing for two weeks. So. I just did it. Or basically within the Marriott world, I connected the Marsha system to Excel because then I was promoted after one year to system revenue manager. I got an office. I got two screens, and my job was actually to retype from the Marsha, from the DOS system to Excel. So, after a month, I said, "Okay. Either I'm going to get crazy because this is not creative, or I need to think about it." So, I found the software, WinTask, whatever it is, and I connected the whole thing. And suddenly, I could do other things and focus on revenue management and inventory management.
[00:14:11] Matt Welle: And do you, as a CEO, still today think deeply about technology, or are you too busy being a CEO and you're far away from the technology in the business?
[00:14:19] Gorjan Lazarov: CEOs shouldn't be busy, right? You know that. At least what they say. But no. I think about technology. I think this was as well one big move we made during COVID, because when COVID struck, we had, actually, some reorg plans. So, on the headquarters level, we actually invested. We brought people with a technology background into the company because we didn't have it. And I'm very happy that OREA today has a great tech team. It's led by my former colleague at Vodafone, who was heading the online, Tomas Holland. And I think I always enjoy the conversations with him in terms of what we can do to add value to the guests, to free up our people to do meaningful work, and to just make life easier for the customer and for our employees.
[00:15:23] Matt Welle: What was one of those, like you mentioned earlier in your career, that you had this accountant who was manually doing this consolidation? What's something that was very painful post-COVID in your operation that you were able to automate through technology?
[00:15:35] Gorjan Lazarov: I think that there were and there are still a lot of painful things. I think that, as an industry, we are in the beginning, and it's great what you guys at Mews are doing because I think that that's the right approach. I would say that our most burning issue after COVID was actually data, as we say, the base of everything. What do we measure? How do we measure? What do we do about it? And obviously, with the appearance of AI, this is even more important. So, how do we actually give the tool to our front office, to our front lines, that actually is saying, "Oh, this is Matt, and he has been in our hotels three times, and you know, he likes this, or he complained, or he had a problem with this last time." And this was probably one of the first things that we started implementing. And, obviously, we started digitalizing the guest journey with online check-in, online checkout, because I strongly believe that you don't have the need to show your ID when you enter the hotel, and that you don't have a need to wait in queue in order to enter the room. So, hopefully, this year, we should get into closing this process. So, we have check-in, checkout, and now we're implementing mobile key.
[00:17:03] Matt Welle: In city center hotels, it's mostly about getting guests into the room and out of the room as fast as possible because there's such high turnover in a city center hotel. However, in resorts, people stay for possibly a week. How do you engage them digitally throughout that week? Do you have an app that you've built yourself where you engage them?
[00:17:18] Gorjan Lazarov: We have basically a platform which is called MyOREA, where basically you have your profile, you can log in, you can do your bookings, and we want to evolve this into a very personalized relationship with the customer. The team is working on developing this. And through this app, you're able to book, let's say, other things, and we are able to offer you other things. It is still for my taste on a basic level, on a Pareto level, so I would be the happiest when we get to the point where everything is proactive, where everything works more or less the Amazon way. Whenever I go to buy a book on Amazon, I don't know whether I'm a passionate reader, but basically, I end up buying 5 books because the recommendation works so good that you're like, okay, so
[00:18:09] Matt Welle: I haven't read most of my books behind me, unfortunately, but I just, it's Amazon. Yeah.
[00:18:13] Gorjan Lazarov: Yeah. And so relevant that at the end of the day, I'm happy. I know that you know, they make money, but at the end of the day, I get value. And at the end of the day, it saves me a lot of time, basically, they anticipate the needs, and I'm happy for it. And I return back. So, this is the end game that we should be able to deliver as hoteliers, right? And I don't even, and it's debatable in which kind of setting and everything. But even the F&B part, it is a question of, is there really a need that someone comes to you with a menu? Or is there a need for a different kind of conversation? So, I think people should not be excluded from the tech discussion. I think it's an enabler. It's not a replacement for people. But as I said, it's just making…
[00:19:10] Matt Welle: What would that experience be like if he didn't show up with the menu?
[00:19:13] Gorjan Lazarov: Well, you have your profile. You have the menu here. Right? I know you. I can actually push the things and the specials tailor-made based on you.
[00:19:23] Matt Welle: Appreciate that.
[00:19:24] Gorjan Lazarov: Yeah. I think that it will come eventually, but I think that currently, all hotels, all hotel brands, the issue is data and building the data platform that, afterwards, you would be able to personalize the experience for the guest.
[00:19:45] Matt Welle: Because what data do you put into your data lake? I guess there's so much data that we collect, but what's the most relevant data to you as a CEO to operate the business?
[00:19:54] Gorjan Lazarov: Well, I mean, there are tons of data. And obviously, from a top line perspective, the web data and how customers behave and how you measure what is happening on the web in terms of the offer that you're giving and the behavior of the customer, through basically to how customers or what they spend, how they spend their time within the hotel and what they spend money on within the hotel.
[00:20:27] Matt Welle: And you have a point for that because most hotels, like, it sounds like really easy, but I don't think most hotels have access to that kind of data.
[00:20:34] Gorjan Lazarov: Well, I think most hotels have access to data. What they don't have is the information, right? And again, we are really in the beginning process. But with AI, let's say, then it is the internal part, and this is the internal part of data where we say, "Well, how can we optimize the experience?" If I'm able to predict, and currently, we have built a model which is able to predict arrivals with 90% exactness on hourly slots. So, basically, then I can really plan the shifts accordingly. I can maybe try to build teams that are multi-trained so that they can...
[00:21:20] Matt Welle: They can go from the breakfast buffet to the checkout.
[00:21:22] Gorjan Lazarov: Yeah. Exactly. As the tsunami moves through the hotel, you're able to fill in the gaps needed within different areas. I think that's where hotel operations will move as we become more data savvy and as we begin measuring more things. Because if you don't measure it, then you don't know it. And then the easiest answer, and you don't have counterarguments, is basically, "Oh, we've always done it like this.” Like, you know, you can't do it a different way.
[00:21:54] Matt Welle: And you mentioned AI briefly before. How active is the AI culture across the hotel? Or for you specifically, like, are you trying things out with AI to build things? What's the future of OREA with AI?
[00:22:07] Gorjan Lazarov: We have even a small AI team, but we are in the beginning. We see the potential, but we are taking the baby steps. I'm very much pro-AI. I have my digital twin. I am trying to even fit some decisions into it so that I can share it afterwards with the team, so that they can talk to me before.
[00:22:31] Matt Welle: Like, what do you mean by the digital twin?
[00:22:33] Gorjan Lazarov: Digital twin means that basically, if you upload everything about you to AI, then AI is able to create a profile that is more or less behaving like you, or even talking like you. When I was building, I was on vacation in Greece, and I tried it with my wife. So I said, "You know, ask me something." And I recorded it, and then I played the answer from the AI, and it was pretty much as I would be answering.
[00:23:04] Matt Welle: And you would use that for hotel team members to kind of question, saying, "What would Gorjan do in this particular situation?"
[00:23:10] Gorjan Lazarov: That would be the objective. We're not there yet. I'm still testing myself.
[00:23:17] Matt Welle: And I heard you have a robot. I was in one of the hotels, but what's the story with the robots?
[00:23:22] Gorjan Lazarov: Oh yeah. Well, the story with the robot is an old story basically. We launched this in 2017. So, at the beginning of the journey, it was a signal for us. It was a signal internally that we want to change, and we want to really pursue this. We're really serious about this innovation pillar inside. And then we said, well, actually, this concierge robot, because this is what it was, right? It was a concierge that could say "hi", and it could recommend something to you in the city or at the destination where you are. It's a nice icebreaker with the guests. But then people take over. Then we moved further. So, now we have robots that are actually delivering food to your table in the resort. So, you know, you order and then the food or the drinks are being delivered by a robot.
[00:24:19] Matt Welle: The kids love that.
[00:24:20] Gorjan Lazarov: Yeah. Kids love that. And actually, there were people that would tell us that they booked the hotel just because of that.
[00:24:30] Matt Welle: Love that.
[00:24:31] Gorjan Lazarov: So, and then as well in our hotel Pyramida, in Prague, which is a big 360 congress hotel, we were able to introduce room service by a robot.
[00:24:42] Matt Welle: How does it go about the elevators and pressing the buttons and those things?
[00:24:46] Gorjan Lazarov: It's all connected with the elevator. Actually, we have as well, a housekeeping robot going public cleaning with the elevator. So, it goes in front of the elevator, calls the elevator, elevator knows, and then goes to the next floor.
[00:24:57] Matt Welle: Wow.
[00:24:58] Gorjan Lazarov: Yeah.
[00:25:00] Matt Welle: That's incredible.
[00:25:01] Gorjan Lazarov: It's pretty cool.
[00:25:02] Matt Welle: So, does it have a return on investment? Because it sounds expensive to buy all these robots. Like, does it pay itself back, or is it more of a gimmick that people will remember to change a different experience?
[00:25:12] Gorjan Lazarov: It is two things. Again, I think that it has an ROI as well. But we are not doing it to save costs. We are really doing it to provide a service. In a four-star hotel, you don't have room service. So, we say, "Okay. So, can we use technology in order to break this barrier?" Because, yes, that's the standard. In a four-star hotel, you don't have room service. Why? Yeah. So, you have the kitchen. Then it's the staff. Then it's not profitable because then you have one person waiting for the order the whole day, right? And that's the old way of hotel thinking. But if you're able to use technology, then you're able to catch a niche, and it's not that expensive. It is more or less, let’s say, if you would launch room service, it would probably be 4 FTEs in order to be able to get to the service, and this is probably a cost of 1 FTE.
[00:26:15] Matt Welle: Recently in the news, I saw that you have acquired the Angelo's Hotel. I used to live next door to it, a very large hotel, very different culturally to what the culture is that you have. How do you bring an existing hotel with an existing team into a portfolio and really get the culture right, get the systems right? What's your approach to that?
[00:26:37] Gorjan Lazarov: Yeah. Angelo is, we just basically took over January 1st.
[00:26:42] Matt Welle: Correct.
[00:26:43] Gorjan Lazarov: We took Angelo in 2016, and it was managed by Vienna House. And then during COVID, we took over. And in the takeover of Angelo, we actually saw that the cultures of the companies were similar to a certain extent in the Pareto way. So, it's not really that you need to do something completely different. You just need to evolve something. And this is the way we look into the Angelo’s acquisition as well. We have a great general manager at Angelo that we want to continue to work with. We're not planning any team changes there. I think that they are doing a great job. And I think that once we introduce these new things, these customer-focused, driven initiatives that we have, we will move this culture even further in the direction of the customer.
[00:27:47] Matt Welle: Nice. So, if you look forward to this coming year, we're just right at the start of it. What's something that you're excited about, hopefully deploying or technology that you've started working with last year but are really looking to double down on this year, because you think it's gonna get real traction?
[00:28:03] Gorjan Lazarov: Basically, last year, we started doing online checkout, and I love the process because you get a push notification, you can check your bill, everything, you just pay, Apple Pay, and it's done. And currently, the level of online check-in is higher than online checkout. So, I would expect that this level should be actually the same if we do it right. So, this is one thing. And then the second thing is the launch of the mobile key. So, being able to really do everything digitally and not needing to go to the reception for basic things.
[00:28:46] Matt Welle: Yeah. Love that.
[00:28:47] Gorjan Lazarov: And basically, if we are able, and this would be the basics of converting the reception from a desk to a welcome zone, and allowing the people at the front desk, feeding them with the right data at the right time, and being able to allow them to do what they do best. And this is welcoming the customer, being able to make these small tweaks, but sometimes in hospitality that small things really matter and they create the bond with the customer.
[00:29:23] Matt Welle: And if you look forward in the next few years, anything you can share in terms of what the growth is? Are you sticking with the Czech Republic because you still have so much space to grow in the Czech Republic? Are you looking to go international at some point?
[00:29:35] Gorjan Lazarov: Basically, the dream is international, right? So, having a Czech brand that will grow internationally. We, with the team, have spent a lot of time discussing different strategic options in terms of growth because we are all passionate about growth, and we think that we've built a platform that can be multiplied. At the same time, we don't want to lose your spirit and soul, because I don't think that in the game with the big people, we are able to do the same thing just faster. I don't think that's the answer and the approach. So, we are going to take a very calculated approach to growth in terms of trying to make the company grow, but not losing the touch with the people. Obviously, you know, in the Czech Republic, I think that we have a lot of value that we can bring to independent hoteliers. And I think that they are realizing it, and we already have a pipeline of hotels we're discussing to add to our platform. But hopefully, international growth will come one day as well.
[00:30:50] Matt Welle: Thank you for joining me today. 20 years ago, when I landed in the Czech Republic, I don't think I ever considered OREA as a brand I would stay at. And now I'm excited to actually experience, and I'll come stay with you next time I'm in Prague because I actually really enjoy seeing hoteliers that think out of the box, and it feels like you are one of those very rare people in our industry that thinks out of the box and keep pushing innovation. So, thank you for sharing all of your stories with us.
[00:31:15] Gorjan Lazarov: Thank you, Matt. Thanks for the invitation. It was a pleasure. And basically, thank you for, I think it's the same passion that you're providing lots of hoteliers with the right tools to do the right things that matter for the customers and for their employees. Thank you.
[00:31:33] Matt Welle: We're trying. We're trying. Thank you.
