Oliver Kuhn is the General Manager of Kempinski Hotel Khan Palace in UlaanBaatar. He has previously managed hotels all over Europe and Asia.
In this interview he talks about the logistical and branding challenges faced by hotels and the hospitality sector in Mongolia. Insights are provided with respect to staff and produce management as well as a note on pricing and timetable considerations for tourists visiting Mongolia.
Enkhzul Orgodol: Kempinski Hotel Khan Palace is a subsidiary hotel of Kempinski Hotels, one of Europe’s oldest luxury hotels headquartered in Geneva. Mr. Oliver Kuhn is the general manager of the U.B. based hotel, which won Mongolia’s Hotel of the Year title from World Travel Awards last year. So Mr. Kuhn, welcome.
Oliver Kuhn: Thank you.
Enkhzul Orgodol: When I was looking at your personal profile, I noticed you’ve been appointed, or you’ve come to Mongolia three times, first in 2008, next in 2012, and last time in 2015. For the first two times, I noticed those were for the same employer, Terelj Hotel, but the last one is for Kempinski Hotel, as we can see now. Please tell us, besides professional reasons, there must’ve been some personal reasons that kept you coming back to the country. Please share some of the reasons, the main reasons that have been attracting you to the country.
Oliver Kuhn: It’s a very challenging country, and I am a person who actually likes challenges. I could not work in Berlin or Hamburg where you have all the infrastructure in place and logistics in place. Here’s something very, you have actually really challenges which you need to tackle, which you need to find solutions, and that’s what I like. That’s why I always work in countries where it’s still more challenging than to work in Europe like some.
Enkhzul Orgodol: I can name, in terms of the tourism sector, the biggest challenge would be low infrastructure development, I think. What other challenges can you name?
Oliver Kuhn: I believe the country lacks a bit in education and development. I believe our main task when we come to the city to work for is to educate the people, to train the people, and to bring them on the next level.
Enkhzul Orgodol: Is it correct to understand that the hospitality sector, not only the hotel but hospitality sector in Mongolia, might be lacking the professionals, the qualified manforce to develop the industries, is that what you’re saying?
Oliver Kuhn: I would say so, yes. All though the country is already coming on to a good way, they are now a couple of hotel schools in the city where people can actually learn the field. Also we have many trainees in the summertime, and in the wintertime as well, which we can train, which we can educate. So the country is moving, now, into this right direction. But four years ago it was more challenging.
Enkhzul Orgodol: Your track record shows me that you have exceeded planned objectives for revenue and profit in almost the hotels you’ve managed here and elsewhere. What are your three key business principles in running a hotel successfully, maybe in this kind of market?
Oliver Kuhn: I will say the first one is respect. You need to respect the culture, respect the people. You cannot just come like me, as a German with his own way to push it through, it just wouldn’t work. So we always need to find a compromise to talk to the people, to respect the culture.
The second one I would say is trust. You need to build trust, you need to say what you do. You cannot do promises which you don’t keep. And the third–
Enkhzul Orgodol: Trust to your employees? Or–
Oliver Kuhn: And to the community as well. To everyone. You always need to say what you do. You cannot lie or give wrong information.
And the third one I would say is development. If you come to a country like here, you always need to train people. You need to develop them because that’s the main motivation for them, and that’s these main reasons why we are here, to train the people.
Enkhzul Orgodol: You have mostly worked in the former Soviet-influenced countries, namely Mongolia, Kazakhstan, and Russia. What do you think are the biggest similarities and disparities in doing business in former Soviet-influenced countries like the ones I just mentioned?
Oliver Kuhn: I believe very similar is still that due to the Soviet influence, and people are more used to an autocratic system, which means they need to receive straight orders, and as well every thing is very much in paperwork. You always need to sign so many documents while in Europe most of the stuff is already electronic, so here it’s a lot of paperwork.
Differences, I would say that especially Russia and Kazakhstan had quite good development over the last 20 years, especially if you look to Astana, it’s a beautiful new city, it’s very different, new universities, education came to a new level. And I believe this is where something here, Mongolia is still lacking.
Enkhzul Orgodol: Right, right. In terms of the external and internal factors, the countries do have similarities like you mentioned and disparities as well. I would say one of the biggest differences may be the population, the number of population. And you’ve run hotels in much more populated countries, like you mentioned, as well as Australia and some other European countries I believe. How is it been like running a hotel in a small market like Mongolia, which is also challenged by external factors, like the cold weather, low infrastructure development, et cetera?
Oliver Kuhn: I believe here it’s very important that you find your niche where you are very special and where you stand out from other hotels. I would say the city has an oversupply of hotels, in the wintertime especially, but every hotel is somehow finding his way. I believe we have beautiful hotels, like the Shangri-La, the Best Western hotel, they’re all very nice. But we’re here focusing purely on quality and on personalized service because we are quite small, we just have 99 rooms, and I believe we are the only hotel where our customers get really greeted with the name if they come a second time, where they can interact with the team. Our team speaks many languages so they can really interact with international customers and gives them a good experience.
Enkhzul Orgodol: Besides the customer service, what are the benefits, maybe advantages and disadvantages, of being a part of large multinational hotel chain like Kempinski?
Oliver Kuhn: I wouldn’t say any disadvantage to be honest, because if you’re a part of a group, first of all, it’s the brand what you have on the hotel, on the roof, which is known worldwide. Then you have the support from the group, especially in sales and marketing, in PR, and most of all in training. We have many trainings which is involving all our team and for service, for sales. We also have cross-exposures that we send some of our team members to other properties over the world where they can learn for couple of months. In return, we take team members, for example from China or from Germany, also to us for a short period of time. This cross-training is very helpful.
Enkhzul Orgodol: But how about as a leader or as a general manager of the organization. Do you sometimes feel like you would like to do this, but you know that might not fit under the operational plan of your hotel chain? Whereas maybe in the smaller hotels like Terelj, I assume you had the authority to make decisions on your self.
Oliver Kuhn: At Kempinski Hotel we call ourselves a collection of individuals, which means we are actually very free to do our own business way how it should be, as long as we have certain standards which we have to meet, which is mainly based on quality, and certainly also on revenue and profit. We are quite free to do our way.
Enkhzul Orgodol: That’s good for you!
Oliver Kuhn: Yeah, it gives us more ways. For the Terelj Hotel, if you are not linked to an international group, then your property need to be very outstanding. The Terelj Hotel isn’t very outstanding product. It’s very remote, it’s a very nice boutique hotel. Although it’s linked to an international association of just called a small luxury hotels of the world just to get the sales support, to get also known internationally.
Enkhzul Orgodol: You mentioned about some of the benefits included in this sales support for being in the chain of hotels. How much does the Kempinski loyalty program or things like that help your Ulaanbaatar-based hotel?
Oliver Kuhn: It does help a lot, and Kempinski has its own program called Discovery, which was founded by Kempinski, and the subdivision is called Global Hotel Alliance, where we have many hotel chains in the world taking part of. Customers can get very fast and upgrade up to the black status, which is our highest status. If they have this they can actually get very nice benefits, like a complementary upgrade to the room. They can get some so-called local experience, which means that they can choose out of a catalog some, for example, a small trip to a local family where they can experience how it is to live there, or they get a free airport transfer, all those things so it’s quite beneficial.
Our market share is coming mainly from Japan, and the second ranking is from Germany. I believe due to the Kempinski brand, that’s where we attract many German customers because it was founded in Germany 120 years ago. And due to Japan, because we are part of TavanBogd Group, and TavanBogd has very good relationship with Japan and just helped us a lot with our Japanese customers.
Enkhzul Orgodol: As hospitality industry being an essential part of tourism industry, how would you rate the tourism industry players in Mongolia, particularly vis-à-vis tour operators and transportation service providers like airlines?
Oliver Kuhn: There are certainly some unprofessional companies on the market, but there are also some very good ones. For example, Juulchin Travel is a very good company where we cooperate quite good. This market is now coming much better than before. In view of airlines, I believe the biggest challenge we have because it’s a monopoly between Aeroflot, MIAT, and Korean Air. The ticket prices are just too expensive. The clients which come to the country are not coming to visit Ulaanbaatar because, to be very honest, the city has not much to offer for people to come. They all come to see the beautiful nature, the countryside. Those client usually are low-budget tourists, I would say. It’s like backpack hostel, it’s like people who just want to make a trip. If they need to buy an airplane ticket with such high cost, it’s simply too expensive.
Enkhzul Orgodol: How about railway?
Oliver Kuhn: Well, you can also go with the train from Moscow to Ulaanbaatar, but it’s simply too much time. People in Europe have maybe two weeks vacation, three weeks vacation. If they take the train, it’s almost 10 days, almost half of the time is over.
Enkhzul Orgodol: As a foreign business leader, as well as an expert in Mongolia, which kind of opportunities do you see for the Mongolian tourism industry by looking at these kind of challenges, as well as comparing the challenges to the potentials and the opportunities that the country has?
Oliver Kuhn: I believe when the new airport is opening, which hopefully is happening this year, then they need to attract new airlines to come. They need to have shorter flights coming with lower price. They need to find a way to organize the transportation from the airport to the city, which I believe is not actually done yet. There need to be a shuttle bus system because otherwise the transportation cost of the taxis is too expensive for the clients. The city need to somehow work on the traffic solution in the city because the traffic, the low infrastructure, then all these uncompleted construction buildings is not really helping to make the city more attractive. There’s all so much things to do.
Enkhzul Orgodol: But you are located maybe on the edge of the downtown of the city, so you do have to find your advantages, or your niche to stand out. Besides the Kempinski name, the brand name, as well as your good costumer service, what do you think that can attract your clients who are not maybe coming through the Kempinski loyalty program, but who are finding you on themselves? Say the main reasons for them to attract.
Oliver Kuhn: I believe that the main reason why a costumer come is purely because of the brand and because of the costumer service. People nowadays checking all these online review portals like Trip Advisor, bookings.com, and so on. They’re checking the reviews before. It’s not that normal that people call the hotel and make a reservation. Now actually 80% comes from online. People really check the reviews, see that it’s a good quality, and come. That’s the main reason.
Enkhzul Orgodol: Right. Besides the costumer service and everything you mentioned, I find myself the location of the hotel very important when I’m deciding on which hotel to stay in anywhere I travel to. How do you find your location? To me, honestly, it’s not in the downtown area. It’s not in a walking distance to the main parts of the city. Do you find that it’s a challenge, or you find a compromise for that?
Oliver Kuhn: Many people tell me it’s a challenge. I try to see it more as an opportunity. Despite we are not located next to the Sukhbaatar Square, we are actually more out from the city center which makes it easier for people to travel to the airport because to go outside the city they don’t need to cross the central square. One of our newest pieces is this big parking place that we have outside. From security point, we have a quite good set up. Our property is quite good secured with a fence, with two exits, one in the back, one in the front. That’s why we have been the main portal for all the head of states before because of the location not in the city and the two exits.
Enkhzul Orgodol: That’s a very smart way of looking at the positive side of what maybe might seem as a disadvantage to many. Earlier you mentioned about training your staff, preparing your professionals. How have you found retaining those talents or professionals after training them?
Oliver Kuhn: This hotel is very unique. The hotel is now open since 10 years. We still have almost 20% of our employees here since 10 years or even more. We have quite a very low turnover. Certainly sometimes people just leave because the season is over or a new hotel is opening on the market and they just want to try it out. We have many people who have left but then they just came back because we really take care of our employees, all the social benefits, these interactions we have for the team outings. It’s quite a good package.
Enkhzul Orgodol: I see. You mentioned the respect for the locals or the local culture as one of the top business principles of your leadership. Can you name an example or two about the kind of costumer, the kind of cultural aspects you had trouble when you first came to Mongolia, but then you had to get over it because it was part of the culture you could not escape?
Oliver Kuhn: I believe, this biggest challenge, what I see here is the timing. If someone’s supposed to come, let’s say, at 12:00 or you have a party that’s supposed to start at 12:00, people not coming at 12:00. They’re coming at 1:00, 2:00. Something which would not work in Europe. Here, you just need to get used to it. You need to prepare your kitchen team that the food comes out a bit later. You obviously need to communicate with the client. That’s how you overcome.
Enkhzul Orgodol: I see. Many people complain about such a challenge, the punctuality. I also find it quite frustrating when I’m doing business here as well. I think hopefully, you know, especially among the professionals it’s getting better. On the other hand, there are a lot of people who explain it with regard to the mindset of the Mongolians who have been nomads for centuries. They say, especially if you are traveling in the countryside then I’d like to tell you, there are only three hours during the day- there is morning, afternoon, and evening, right? Do you still find that?
Oliver Kuhn: It’s getting less. It’s getting less. In 2008, it was very, very often that it happened like this, but now it’s getting much, much better.
Enkhzul Orgodol: You mean in the city? Or …
Oliver Kuhn: Both. Both. In the countryside and in the city. Now, it’s almost solved, but people still come late. We just need to get used to it.
Enkhzul Orgodol: Based on your personal observation, as well as maybe some in-depth discussions with possibly some other foreigners or experts living in the country, which kind of tours do you think are lacking in the country? Or the country has the potentials to develop more?
Oliver Kuhn: I believe what is missing is an infrastructure in the tourist destination. Like to have some hotels in Lake Hovsgol, for example. Or have some hotels close to Khatgal that people can actually stay longer there. Then maybe some small airports in this region, some train connection, or some proper road connection. This could also help to actually gain more tourist revenue.
Enkhzul Orgodol: You commented mostly on the logistical side, but as an expert in the hospitality sector which kind of … You know, if someone tells you or asks you to plan a lodge or hotel in one of the destinations you just mentioned, what would you have in mind? Could you describe a bit?
Oliver Kuhn: It would be something mixed. It would be something with usual hotel service, like a good restaurant, a spa, maybe some entertainments in there like a cinema, shopping mall. But you also need to keep its local touch. People still want to live in a ger. If tourists come in from Paris, from London, they should at least have the opportunity to stay one or two nights in a ger. All these new hotel concepts should have main building plus some extra gers on the site to give this opportunity.
Enkhzul Orgodol: I know in Terelj National Park, which is the nearest national park to the city they do have very good facilities, including the Terelj Hotel you managed. You’re suggesting to have similar facilities provided in the more remote areas?
Oliver Kuhn: Yes, but less in quantity. I mean the Terelj Park is a very beautiful formed nature, with this river floating there, all these animals running around. In my opinion, it’s already too much built. It’s just destroying this landscape.
Enkhzul Orgodol: Where, for example, again if you were asked to developed these concept or tour hotel in one of these destinations you mentioned. Maybe not in the destinations you mentioned, maybe elsewhere, where would you pick?
Oliver Kuhn: To have it as a tourist destination, I would choose Lake Khuysgul as first option. Me personally. To make it as a business concept, I would choose Khanbogd because it’s not far from the OT project. I believe this could bring potentially in the future that it could start with a small hotel and entertainment center to keep all these OT workers there onsite. That they don’t need to fly always to Ulaanbaatar. In the next stage, maybe even extend this project. If you plan to open a hotel in Khuysgul for example, you should have a base in Ulaanbaatar, which means you should have actually two hotels. Then you can swap your team. Because the seasonality at the moment for the tourists is the summertime only. Still Khuysgul is very nice in the wintertime, so we can still have a base business there, but then you can swap your team members from the summertime in Khuysgul to the the wintertime in Ulaanbaatar. There you have all the social events, all these New Year parties coming and they still need your team members. So you don’t need to release them, you can just swap them.
Enkhzul Orgodol: I see. And Khuysgul actually they do try to keep the tourists coming in, even in the winter time by organizing different events like ice festival, and I believe like reindeer festival and things like that. You must have visited Khuysgul by yourself haven’t you?
Oliver Kuhn: I was there once and it was a very beautiful region. It’s very different. When you talk about seasonality actually since we say that there’s only season in the summertime, I believe this is only because we accept this. Because there is still potential to have even a winter season, it’s just not yet developed. For example, if you look at Harbin in China, we have a Kempinski hotel in Harbin. In Harbin is always organized this winter festival, this ice festival you have maybe heard. Still, people don’t come to visit Ulaanbaatar as a city because the city is not that attractive. They come to see the countryside. In the wintertime, even if Ulaanbaatar is polluted and the traffic is disastrous, people still go out to the countryside. They just need to be out.
Enkhzul Orgodol: You’re suggesting that the winter tourism can be actually promoted, not only to international tourists, but also to the domestic tourists as well?
Oliver Kuhn: Yes. Certainly, it will come mainly from the international market since domestic market is very small. But it attract both of them.
Enkhzul Orgodol: I see. I wonder if you promote or offer uniquely Mongolian products to your customers that they can find only in Mongolia? Maybe such as, I don’t know, cashmere blanket, or artisan cheese made by local producers.
Oliver Kuhn: Well, we sell a lot of cashmere products, and we also give for our top clients which are part of this program cashmere scarves, cashmere hats, and such things. Really much appreciated. We tried the cheese. There are some cheese factories close by with the local cheese. But the feedback was not that good so we stopped it again. But the cashmere works very well.
Enkhzul Orgodol: I see. What other local products would you like to see in your team, in your hotel, to be offered to your customers?
Oliver Kuhn: We would like to be as much local as possible, with local vegetables, with local meat. We try to buy as much as possible from local producers. Certainly cashmere is a big topic here. Since we are also linked with TavanBogd to Gobi and we have a good source, we really good play with this.
Enkhzul Orgodol: You said that the feedback on your cashmere gifts, for example, by your customers had been positive. I see. As an international professional, do you think the Mongolian cashmere products, and maybe other textile products, yak wool I know, some camel wool as well, do have the potential of becoming an exportee to Mongolia?
Oliver Kuhn: Yes, for sure. It already is I believe. Cashmere, and also yak wool, camel wool, is a growing demand in actually Western Europe, China. I believe this has good potential.
Enkhzul Orgodol: We previously discussed the seasonality aspect don’t only result in decreasing number or fluctuating number of incoming tourists due to the cold season, but also shorted your availability of fresh food ingredients which seemed to be very important in your business. How have you been tackling this issue?
Oliver Kuhn: I believe Gatsuurt farming became quite big the last years with local products, which is very good for us. Even to buy vegetables in the winter months. If it’s really not possible to get something local, fresh, we just fly it in fresh.
Enkhzul Orgodol: From Russia?
Oliver Kuhn: From Russia, from Korea, from China.
Enkhzul Orgodol: I see. I see. But then do you find it challenging to keep the freshness of the product you’re using?
Oliver Kuhn: If you fly it in, it’s here in between 24 hours. It’s still fresh. It’s very good. In the summertime, there is no problem at all. We get almost everything on the local market. Fruits, vegetables, meat, this is fine. In the wintertime we mostly cover with flights.
Enkhzul Orgodol: Right. Right. That would be reflected in the increase in your cost side though, right?
Oliver Kuhn: We compensate. We don’t increase our prices in the wintertime. We keep our prices stable because our customers expect quality. It’s up to us how we handle this without increase the price.
Enkhzul Orgodol: The way you handle this kind of seasonality is to plan ahead? To be prepared for different scenarios. Is that what you’re suggesting?
Oliver Kuhn: That’s correct. We have sales agents in Korea, in China, who are actually always on standby if we need something. We will have it later in 36 hours.
Enkhzul Orgodol: Let’s put Airbnb aside. What other kinds of threats, or challenges do you see that might affect your business negatively in Mongolia? What kinds of actions are you planning to go around those kinds of potential risks?
Oliver Kuhn: I believe that the biggest risk I see is the infrastructure. Is the traffic, the behavior, how people drive. This is not something we can actually solve, we as a hotel. We’re part of the BCM, Business Council of Mongolia. We actually using groups in there to actually address to this government to find solution. We have working groups in there, we have training sessions, so this is really something where we hope we find a nice word with this government to find a solution.
Enkhzul Orgodol: I mean, of course once you are operating in the market or any country, everything in the country affects your business, regardless of the size of your business. The kind of challenges you’ve names are mostly related to the country-specific problems, I can see. In terms of the hotel , when I’ve talked to a number of business leaders for these interviews, many of them were complaining how the economic situation hit them hard over the past few years. Was it something you also observed for your business? Or you were able to go forward because of the multinational chain you had that could support you?
Oliver Kuhn: You obviously have pros and cons. The actual downturn of the economy resulted that the Togrog was quite lost in value. We actually compensated this because most of our customers were coming from approved pay and hard currency, so we actually had benefits because the Togrog was actually lower so we received more Togrogs. There are always pro and cons. The Kempinski brand is very strong in sense of marketing so we have a very good client base which is coming. We actually show an increase in revenue and profit over the years, despite there was the economic crisis so I would not complain about it.
Enkhzul Orgodol: I’m very glad to hear that. I think it’s important to try to look at the positivities of something negative happening. Whoever can do that survives at last. That’s what I believe. Earlier you mentioned a couple of times how being a part of a big corporation like TavanBogd Group helps your business. Besides the kind of benefits you mentioned, of course with regard to the cashmere factory, as well as the TavanBogd Group’s good relationship with Japanese. What other types of advantages can you name?
Oliver Kuhn: Well, TavanBogd is a very professional company and we work very good with them. I believe our, except these points what you already said, I believe our largest benefit is the knowledge of the market. They’re all very professional businessmen and we can actually learn from them, as well, how this market goes, how to get contacts, how to solve problems. It’s a good partnership.
Enkhzul Orgodol: I see. I see. Okay, Mr. Oliver Khun, thank you very much for your insightful talk and I’ll be looking forward to see you raising standards of hospitality sector through all the programs you are delivering to your staff, and more.
Oliver Kuhn: Thank you very much.
Enkhzul Orgodol: Thank you.