Inflight Magazine of Brussels Airlines

Business trends

Boyd Farrow rounds up what’s happening in the business world across Europe

Why are we here?
Queuing outside the Acropolis

The new €120m glass-and-steel Acropolis Museum, 300m from the ancient Acropolis, has finally opened after years of delays and heated debate surrounding the cost, the layout and the discovery of remains of an early Roman village under the site.

Piling on the controversy is the fact that the collection of 4,000 artefacts, many of which have been returned from museums around the world, doesn’t include the Elgin Marbles – parts of a 160m frieze that once decorated the Parthenon – which remain in the UK. Now all the Greek government can do is watch the queues form – encouraged by the special admission fee of €1 available throughout December.

And, boy, is the government excited by the prospect of an expected 2.5 million new visitors to the country. Greece is one of the world’s 20 top holiday destinations, attracting 15 million tourists and earning €12bn each year. This is nearly 20% of the country’s GDP and one of the main drivers of its €250bn economy.

In June, however, an industry body said tourist numbers were down 7.3% in the first four months of 2009, as sun-deprived but cash-strapped Germans and Brits cut back on their discretionary spending. Athens, however, is gaining ground as a business and upscale leisure destination, and the Acropolis Museum is viewed as the biggest boost to the capital since the 2004 Olympics. Just get used to the queues…

Radar
Keeping internet pirates at Bay

Europe’s governments might be huffing and puffing about internet piracy, but they’re not getting far in defeating it. In France, the Constitutional Council has just ruled as unconstitutional proposed laws that would have forced internet service providers (ISPs) to identify and help prosecute users who illegally trade copyrighted material. The next big test is likely to come in the UK, where the government and many media companies have set out a plan for illegal downloading similar to the French laws.

However, the anti-copyright movement may be gaining strength. In June, Sweden voted a member of the Pirate Party to the European Parliament. The party is named after Stockholm-based file-sharing website The Pirate Bay, whose founders were imprisoned for a year for “assisting in making copyright content available” and were fined SEK30m (€2.7m).

“Most parties think of [the internet] as a kind of computer game you can take away from kids when they’re naughty,” says Pirate Party’s deputy chairman, Christian Engström. Ironically, the games industry is desperate to defeat piracy and is lobbying for games that can only be played when connected to a central server that checks the product’s authenticity.

Not really…
Fashionable

Financiers tend to tighten their grip on the fashion industry in economically challenging times. PPR Group wouldn’t indulge Tom Ford’s Gucci vision forever, Prada wouldn’t cede complete artistic freedom to Jil Sander and Valentino “retired” after his company was taken over by private equity giant Permira.

But Donatella Versace (pictured) is clearly cut from a different cloth. The 54-year-old figurehead of the Versace Group has ousted her chief executive Giancarlo di Risio following the meltdown of their relationship after a disagreement over cost controls. Ms Versace believes it’s important to spend lavishly on promotional events and parties, and the disagreement intensified when first-quarter revenues fell 13.4%. Di Risio also objected to the hiring of analyst firm Bain & Co to draw up a strategy document on cost controls, store opening policy and financial targets – all areas where he had operational control.

Versace is owned by Donatella, Santo and Allegra Versace, the sister, brother and niece of the late designer Gianni Versace.

Di Risio’s replacement, the luxury goods veteran Gian Giacomo Ferraris, is said to be skilful at managing the largest fashion industry egos.

Drawing board Bearing fruit again

The Royal Opera House, restaurants and people pretending to be statues – why wouldn’t tourists love London’s Covent Garden? But it’s a long time since the area was regarded as a cool shopping destination, losing out to a revitalised Mayfair, a buffedup Regent Street and even gratuitously grungey Shoreditch.

However, this finally looks set to change. Property giant Capital & Counties (Capco), which bought the Covent Garden Estate in 2006 for €500m and now owns around

70,000m2 of land in the area, says it intends to make the piazza a shopping hot spot once more. In order to do so, it has created Covent Garden London, headed by former Selfridges marketing director Bev Churchill, and is working on developments including St Martin’s Courtyard, a 25-unit enclave that has already attracted H&M sister brand Cos and will house US fashion retailer Banana Republic’s second store.

The grander plan is to bring independent fashion brands to the north side of the market area and have Bond Street-style boutiques at the other end. Capco is coy about which brands are heading for the piazza, but there are rumours of an Apple store – fitting, considering Covent Garden used to be Europe’s premier fruit and vegetable market.

Traffic report
House of cards

The growth of global credit-card spending fell from 14.4% in 2007 to 10.8% in 2008, while consumers are turning their backs on status purchases, according to MasterCard Advisors’ SpendingPulse survey. Credit card spending in the US rose by 3.5% in 2008, compared with 10.5% in 2007. In Europe, the expansion rate was static at a reasonably high 16%, while Asia Pacific saw its total increase by 3% to 20%. However, luxury spending in the US fell by 24.6% in April compared with the same month in 2008, a situation mirrored across much of Europe.

MasterCard’s survey of “high net worth individuals” in the UK and Russia also revealed many are eschewing ostentatious purchases. George Greer, head of MasterCard’s European consumer products, said 75% of Russia’s wealthiest consumers and 70% of their British counterparts are “spending less on luxury goods” and “are compromising”. Moreover, he said: “Staying in… is the new going out, even for the wealthiest consumers.”

However, not all countries have seen sizeable drop-offs in discretionary purchases. Poland and Hungary are not “feeling the squeeze” and remain “buoyant and are a still in a growth mode”.

Many European consumers are keeping their cards in their wallets

Upgrade your trip…
Business hot spot

Brussels-based hotel group Rezidor has opened two new properties in increasingly important central European business destinations.

The new Park Inn Krakow has 152 rooms and the “buzzing 120-seat RBG Bar & Grill” that promises “a memorable, red-hot dining experience”. Perhaps more usefully, the hotel has a 1,000m2 conference centre, which can host up to 600 delegates in five meeting spaces, including an impressive 348m2 ballroom.

Meanwhile, the refurbished Park Inn Prague, which is situated in the Czech capital’s new town, also has conference facilities for large corporate events or smaller gatherings, with five meeting rooms offering a total conference area of more than 400m2. Like the Krakow property, the hotel boasts an RBG Bar & Grill but this one, apparently, is merely “versatile” rather than heat-generating.

Growing gains
Passport, ticket, ingot

Business travellers to Frankfurt can now play the commodities market without leaving the airport. Stuttgart-based TG-Gold-Super-Markt has installed a vending machine that dispenses gold bars in weights ranging from 1g to 10g, costing around €30 to €245. Prices are updated every 15 minutes, and although the machine rates are roughly 20% higher than the market price, you do get your investment in a gift box labelled ‘My Golden Treasure’.

A prototype Gold to Go machine was installed in Frankfurt’s main railway station in May and has done well enough for TG-Gold-Super-Markt to plan 500 machines across Germany, Switzerland and Austria. Thomas Geissler, the company’s owner, dismisses this as a marketing gimmick. “Gold is a good thing to have in your pocket in uncertain times,” he says. Indeed, retail demand for gold worldwide reached an estimated 108 tonnes in 2008, up from 36 tonnes in 2007.

Anyone thinking of shaking the machines for a freebie should be aware they’re armour-plated and covered by CCTV. But even at €30, gold is still far better value than a Toblerone from duty free.

Traffic report
Screwed by the economy

Like all professions, the world’s oldest has been hit by the economic downturn.

This is particularly true in Germany, where prostitution is legal and there are around 450,000 working girls.

Marion Detlefs, from the German prostitution advocacy group Hydra, says more people are turning to the profession as they lose their jobs, which has led to increased competition at a time when client numbers are low owing to fewer business travellers. In an attempt to carve out niches, Berlin clubs and brothels – where 97% of the city’s 10,000 prostitutes work – are increasingly marketing themselves either as high-class exclusive spas or as the carnal equivalent of Lidl or Aldi. More women are opting to work in the latter for a guaranteed flat daily fee of €100 to €250. According to unions, visitors to brothels in Hamburg have also dropped by up to 20% since last September, with regulars limiting their dalliances to once a week.

Meanwhile, in the Czech Republic, up to half of all sex establishments outside the capital, Prague, have closed in the past 12 months, according to outreach group Bliss Without Risk.

Radar Russian roulette

Moscow’s city government is claiming a mere 10,000 jobs will be lost following its controversial ban on casinos, which became law on 1 July. However, the Russian Association for Development of the Gambling Industry claims around half a million people in the capital will lose their jobs and other insiders say as many as one million will be affected. One hotel alone, the Korston – home to one of Moscow’s largest casinos – says it has had to fire up to 1,000 employees.

The Russian government has been determined to exile the gambling industry, traditionally influenced by Georgians, from the capital for a number of years. The law was first proposed in October 2006, at the height of a spy row between Russia and Georgia. Casinos run by Georgians were raided to look for business violations and conduct document checks. All gambling facilities must now move to four zones – the Azov Sea region, Kaliningrad, Altai and Vladivostok – even though some of these don’t even have plumbing and gas.

Deputy mayor Sergei Baidakov says 70% of Moscow’s 29 casinos and 500 slot halls plan to become consumer markets or retail space. Some have suggested they become licensed poker clubs, which are still legal. But many are sceptical about a surge in poker – even in a recession.

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