Mellow Mood Group continues its recent expansion, outpacing even the ’big players’ of the market by conscious brand-building and opening 4 star hotels. The essence of their strategy is to make business decisions in accordance with demands and to rationalize their wide-ranging activities in every aspect.
At first the Jordanian-owned Mellow Mood, only dealt with booking accommodation in youth hostels and took small steps forward; the operation of hostels and 3 star hotels was only undertaken after confirming that all places could be utilized. However, they have been monitoring the market since 2000 in the hope of expansion on a larger scale. Their spectacular expansion can be best understood by examining the complex activity and economic operation of the group. Profits remain within the group
Their operation covers all aspects of travelling from accommodation to incoming travel agency services, including transfers and arranging programs, so that profits of these activities are channelled back into the group. The number of hotels operated by them will grow to 13 properties by 2007. In addition, the travel agency dealing with the incoming and outgoing travel services of Mellow Mood Group not only takes care of hotel bookings but also undertakes the organization of incentive programs, conferences and excursions as well as offering car rentals, flight tickets and maintains contacts with event- organizers in Budapest.
Today they are not only sought by those looking for cheap accommodation, but their beauty travel department (which has its own website) takes advantage of the opportunities offered by cosmetic and dental tourism.
Since purchasing the minibus section of MÁV (Hungarian National Railways) at the beginning of 2005 they have provided transfers between the airport, railway stations and the hotels with their own fleet of 10 minibuses (carrying 9-14 people) and 2 vans (carrying up to 7 people). Airport pick-up and shuttle services are represented separately in the quotations as an extra service and minibuses may also be rented. Taking advantage of low-cost flights
Mellow Mood has profited greatly since the appearance of budget airlines. This period has brought sudden growth for the group. The composition of guests has also changed accordingly: while they had previously received guests mainly from the USA, today the list of arrivals is topped by the UK, Italy, France and Germany. The proportion of guests from the USA is still significant and the number of guests from Australia and the Far East is also increasing dynamically. Apart from tourists, the business segment is also becoming increasingly important. Mellow Mood is making overtures towards this market segment through the part-ownership of Európa Congress Center, Aparthotel Európa and Hotel Rege this spring.
The Year 2005 with its 150,000 overnights brought outstanding success to their hotels. In the very same year their portfolio was supplemented by two 3 star hotels while the pace of growth also remained: the number of guests increased by 7.5% within the first 8 months of this year. Fishing with the world wide net
One of the keys to their success is sales, which they have always attempted to provide with their own resources and shape it to the travelling habits of their customers. Great emphasis is placed on inexpensive online sales. 18-20 webpages are linked to their main website, every hotel has its own webpage and the different categories are also covered by the portal sites. 70% of bookings are received via internet and 40% of this is arranged through their own webpages. As the majority of their guests prefer organizing their trip themselves with the help of the internet, they typically only book accommodation and transfer in advance; or the Budapest Card, which may be purchased in all of their hotels and offices and is rather popular.
Their wide-ranging capacity enables flexible prices and bookings within the group. Dormitories are also rented for the summer and New Year’s Eve, whose places are sold to the many backpackers on hostel price. In case of overbooking the customer is sent to one of their other hotels, this is taken care of at the online booking as the certain websites are connected. This is the reason why they lose a very small number of guests and even then they are sent to another hotel with commission.
Human resources are also dealt with in the same, economic way. Only those tasks are taken care of centrally that require uniform action or representation such as marketing, HR and building websites. They don’t have a central sales department. Directors of the hotels enjoy freedom with respect to sales with regular checking with each other. Part of marketing and economic matters are also within the capacity of the hotel directors, but every hotel has a salesperson as well. Frame1:City Hotels owned by Mellow Mood
The Hungarian-owned Dare group purchased the whole, 20 billion HUF worth portfolio of Taverna at the end of September. Since the new owner is not an investor in the hotel industry they allow the hotels to be run by professionals: the 3 City Hotels and their restaurants will be rented by Mellow Mood Group for 20 years starting from January 2007.
The director of the three hotels will be László Hajnal, previously working for Domina Inn Fiesta, who is already coordinating the supervision of the hotels – commented Mellow Mood. The observation of the state of the buildings has already been carried out. After the reception of the hotels only the most necessary renewals will be covered, the rest will be completed in smaller steps while the hotels continue operating. The existing contracts with employees, partners and suppliers will be supervised within a strict deadline; for the decisions to be made until the middle of October the new owner allows free play.
The number of employees must be rationalized, but the main activities will not be outsourced, for example they insist on having their own housekeeping. According to the new portfolio the prices will be renegotiated in the contracts of the suppliers and the suppliers’ activity will be standardized. The most favourable quotations are chosen in every hotel, which means it is possible that all supplier activities of the group could be covered by one of the suppliers of City Hotel.
But one thing is for certain: the well-ringing names that fit perfectly into the group’s portfolio will remain the same. Further plans of brand-building
Their portfolio, supplemented by the newly purchased three City Hotels, will be introduced to the market with a new, unified image, brand by brand. The new brochures of the company have just been published as we go to press, with a renewed image. Their offers will be presented on a separate stand at the MIT in Paris, WTM in London, FITUR in Madrid and BIT in Milan.
Based on the capacity utilization indicators and demands the decision was made that they will also concentrate on the class higher above: two 4 star hotels will be opened at the same time in 2007. Atrium Fashion Hotel, owned by Mellow Mood, close to Blaha Lujza Square will open with 57 rooms in March 2007; Boutique Hotel Cosmo, owned by a Hungarian investor, will open with 51 rooms from July 2007 at the beginning of Király Street. It is also common knowledge that their first 5 star hotel, the Italian-owned Klotild Palace at Ferenciek Square will also start operating from the summer of 2008.
The company remains loyal to the well-defined concept that has worked so far: focusing on hotels within the city in the future as well. They plan to renew their existing hotels while continuing expansion: in 2007-2008 five more 4 star hotels are planned to start functioning and similar negotiations are taking place in the major cities of neighbouring countries.
Accommodation No. of rooms
- Atlas City Hotel 136
- Baross City Hotel 50
- Délibáb City Hotel 34
- Fortuna City Hotel 31
- Star City Hotel 48
- Domino Top Hostel 26
- Marco Polo Hostel 47
- Mellow Mood Central Hostel 33
- Total in 2006 379
- Mátyás City Hotel 85
- Pilvax City Hotel 32
- Ring City Hotel 39
- Atrium Fashion Hotel 57
- Boutique Hotel Cosmo 51
- Total in 2007 643