Grisha Davidoff was on the winning team of the Hotel Leaders Network Conference Student Challenge.
The Hotel Leaders Network Conference is an annual international conference that regroups the heads of the hospitality industry for a chance to innovate, educate and network. This year, Glion Institute of Higher Education was invited to send participants for the student challenge along with other prestigious universities. Three of our top-students were chosen to represent Glion and one of them was part of the winning team that was selected by a jury of CEO’s from hotel groups such as Accor, Starwood, Marriott, Rezidor and NH Hotels.
Meet our winning student, Grisha Davidoff, of the Bachelor Degree with Specialization in Finance and Real Estate. In this interview, he explains how his team won this year’s student challenge which was a real-life business case study where participants had to reposition the Amsterdam Palace of Justice by creating an innovative, yet financially feasible, hotel concept that will be presented to investors during a bid for the estate that will take place in January 2015.
What was the program of the conference?
At the beginning of the month, Mrs. Jocelyn Schofield, Head of Academic Activities & Events selected three of our top-students, and briefed us in. All we knew at that time was that the case study was designed by PWC consultants and that we were going to present a feasibility study to reposition the Amsterdam Palace of Justice in front of top-hotel CEO’s.
With the mentorship of some of our teachers and with the knowledge acquired in class, each of us elaborated a detailed market analysis and started defining a target market and identifying opportunities for their project.
We arrived in Amsterdam on Tuesday, September 16th at night and by Wednesday, after lunch, we were all assigned into five separate teams with students from the other universities. In the course of the evening, we visited the Palace of Justice for the first time, had the chance to start brainstorming with our teammates about our ideas, and received a feasibility study class by real estate consultants.
On Thursday afternoon, the teams presented their concept and financial plan in front of a jury of hospitality experts and three of the teams were qualified to continue to the next day.
On Friday morning, the three best teams presented their project in front of the CEO’s and a large audience of spectators and the winning team presented again in front of over 150 General Managers.
What was your concept about?
Defining our concept was probably the most challenging part of this conference, especially because we had to do in less than two days what professionals take several months to do. All that we were told was that we had to be a top-hotel and that we had to be innovative and financially feasible from an investor’s perspective. So we started by debating what innovation means and we came to the conclusion that being innovative was about being authentic and different from the others and not only about reproducing trends such as the digital and technology or ecologic concepts that many companies are already doing.
We decided to start developing our concept based on our target market needs and to differentiate ourselves by creating a unique experience for our guests. We all came to the agreement that guests are looking for meaningful moments and unique experiences, stories to share and become part of them.
As the Palace of Justice is an historical building that carries many stories from its courtrooms and cellblocks, we decided to integrate the notion of justice and more precisely of freedom of speech into our concept, which is characteristic of the city of Amsterdam as it is internationally reputed as the city of freedom. Thus we decided to place an entire Blackboard wall in every room, where the guest could create their own story by drawing or writing their feelings and sharing them with the world on social-media.
Similarly, we decided to brand our different F&B outlets based on the same notion by having the “Speak” restaurant, the “Garden of Justice” restaurant where our guests could enjoy Guilty Pleasures and finally the Sins Skyline Bar at the upper floor. In line with this concept of freedom of speech, we decided to create a mini-hotel design for the rooms, so we identified four very different areas of Amsterdam and we used them as an inspiration for our room design with the burlesque Red Light District Rooms, the West Side Story (Typical Netherlands), the Feast in East (Immigrant Cultures) and finally the South City floor (Business District).
All in all, we wanted to pay tribute to the city of Amsterdam and to the Dutch spirit of openness by giving our guests a unique experience where they could truly experience the city and where the initial meaning of the building remained the same. We decided to call our hotel Amsterdam Live, as it was all about living and feeling the city and expressing yourself live as you would when broadcasting.
How did you do your feasibility study?
Doing the feasibility study for this case was also quite challenging as we had no information about the estimated cost of the property, and we did not know whether we were buying the building and the land or if we were going to buy the building and lease the land. Also, since we were remodeling a historical building, many areas were protected and hence we had many restrictions on how we could imagine a future hotel. Hence we had to work with assumptions and be able to justify these assumptions to the investors in only a couple of minutes.
Therefore, we had to estimate the cost of the land by looking into the price per Meter Square in the area, and the building cost by using Turnkey Costs of 5 star hotel market values. Following that, we had to estimate by using industry benchmarks the total cost of renovations, soft area improvements, furniture, fixtures & equipment, and a working capital to start the business. From these figures we had to determine a Capital Structure to assess how much money we were going to borrow from the bank and how much money we had to raise from private equity.
We had to establish a project timeline to set the dates in which we planned to finish renovations, start operating, stabilizing our operating performance, renovate the hotel and than finally sell the building as we were consulting for investors. We then proceeded to forecast an income statement for a period of ten years to estimate our key performance indicators, prices, revenue and of course profitability. Finally, we had to do a cash flow analysis, and equity reversion to value our property after 10 years and to calculate our internal rate of return and net present value and justify that it was a good investment. We also chose the Starwood Luxury Collection as an operator which we justified due to the compatibility of their positioning and the fact that they already have a property in Amsterdam so we could reduce overhead expenses by having cluster management systems. Without having a strong operator, it is hard to convince CEO’s that you will achieve an increasing profitability in the coming years.
How did it feel to present in front of CEO’s?
I will never forget how I felt Friday morning before presenting in front of the CEO’s. After working until 5h30 in the morning on the financial plan, at 7h00 I was suited up and rehearsing on our presentation with my team to present at 8h00.
I believe that our presentation went very well because we managed to explain our concept very well by using many images in our presentation, and by keeping it interactive. We showed a lot of self-confidence when presenting and we went straight to the point with our financials by displaying only our EBITDAR, Return on Equity, NPV and IRR which are the figures that we assumes the CEO’s would be interested to see. Another key moment in the presentation was when we had to answer questions from the CEO’s, who asked very challenging questions about how we obtained our figures and how we could explain them. I must say that we came through this test by believing in ourselves and using our instincts.
All in all, this was one of the most challenging moments and one of the best learning experiences of my life.
Do you feel that Glion prepared you for this event?
Without a doubt the education that I have received at Glion was key for us to achieve this victory. According to the CEO’s, the reason they chose our proposal was because we were the most financially feasible project. I am very fortunate that I have been following Real Estate Finance classes in my program with a great teacher. From all the universities that participated in the conference, Glion is the only one that offers Real Estate Valuation Classes to the students and this without a doubt gave me a very strong competitive advantage.
Also, as I study day-to-day with students from all over the world and we are always doing group projects, it was very easy for me to work in a team with people from different educations and cultures. Our team had never met before we started the project.
This student challenge required us to make decisions quickly and efficiently as we had less than two days to do the entire project. Studying in a university that encourages you to develop your self-confidence, and the previous management experiences that I acquired during my Glion internships, definitively helped me for this. Finally, our soft-skills and presentation skills were also key to winning this student challenge. Although I was absolutely exhausted after 48 intense hours of work and no sleep, I managed to stay smiling and stay convincing in front of a very demanding audience and to stay for a couple of hours to network with different hotel leaders.
What did you learn from this conference?
I was very proud to participate in this conference, and I am very thankful to the school for giving such a unique opportunity. This was an experience of a lifetime and in only 2 days I learned more than I could have imagined. On a personal level, I have developed more self-confidence and I felt very gratified as hard work always pays. As my dream is to develop my own hotel company after going through the industry of finance and real estate, I look back at this experience as what I hope will be an introduction to an exciting and stimulating career.
On an academic level, I realized to what extent the students in Glion learn to think outside of the box and have a very complete education, that allows us to exceed our expectations even in the most challenging atmospheres.
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