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. Last Updated: 07/27/2016

Devyatkin: cure to the Mezh's ills?

The house that Hammer built could have a new lease of life if Vladimir Devyatkin has his way.


But Devyatkin, who took over control of the troubled Sovincentr two months ago, has his work cut out for him. Once famous, now infamous, the complex is plagued by a slew of problems that range from foreign competition to its own bureaucratic quagmire. As a result, Moscow's once-premier business center has a serious image problem with foreigners -- still its prime customer base.


But Devyatkin is out to put this all behind him. In late January, Devyatkin, a reformer from the Ural Mountains, took over the management of the Sovincentr (better known as the Mezh) and its complex of office and apartment buildings, conference center, stores, restaurants and International Hotel.


"We realize that the quantity of our services compares with all international centers, but the quality does not", said Devyatkin during an interview with The Moscow Times. "Maybe in two years you will see a difference".


The complex, built in 1974 for $80 million under the supervision of U. S. industrialist Armaud Hammer, is run purely by Russian management.


Known for its dark corridors, wide array of high-priced stores and restaurants, an extravagant rooster clock in its lobby, ladies of the night and questionable admission policies for women who don't "work", the Mezh in recent years has lost its monopoly and now faces competition from an array of new office buildings and Western hotels.


Critics say it has lost touch with the times.


Allegations of mismanagement and sheer incompetence abound. Sources report that hotel and apartment com-plex occupancy rates are sagging, and traditional Soviet business practices are keeping market forces from penetrating the complex's cavernous wall


But for all its problems everything is not yet lost. The adjacent office building is full and the Mezh remains one of the premiere business locations in Moscow for its facilities and location. But still, Devyatkin seems aware of the difficult task facing him.


First and foremost he wants autonomy. At 56, the general director, an engineer by trade, no doubt will bring some Soviet management techniques with him, but he is also a specialist in taking Soviet companies private, with a doctorate in economics to his credit.


The Mezh, once a Soviet entity, now owned by the Russian Chamber of Commerce and Industry, needs a dose of private initiative if it is to survive and retain its aura.


And Devyatkin has mapped out a plan to bring the Mezh back into the limelight, including privatization, "Russification", and increased links with the outside world.


"We have a very strong and qualified team here", the director general said. "On the level of the former Soviet Union and Russia, it is much higher than any other structure".


Devyatkin's plans include creating new ties with Russian and foreign enterprises, ties which broke down in the aftermath of the Soviet Union, generating commercial marketing and scientific information, luring more Russian businesses, and promoting Russian products for export. As a fully developed international trade complex, the Mezh could keep its edge.


Expansion is also in the works. A new 32-story office building is under construction behind the complex, although the project has been delayed twice by financing woes. Short of funds by some $150 million, the scheduled completion date of 1994 is in doubt.


The Mezh, like many other companies here, is also being rocked by the Vnesheconombank crisis. Devyatkin says the bank still holds $6 million, but expects to be paid back eventually. Insider estimates range as high as $15 million.


Still, the Mezh is working around the crisis, allowing some tenants with funds also tied up to pay rent by credit card. "They are being remarkably understanding", said one tenant.


The center has new banks, Rosvneshtorg and an unnamed commercial bank, and is "looking for an exit" from the problem, Devyatkin said.


Funds for capital improvements are also needed, as evidenced by the fading, tattered rugs in the hotel's lobby and rooms, and inadequate computer and phone systems. The hotel doesn't have an electronic mail system, and long distance calls can't be dialed directly from rooms.


Despite such problems, the Mezh continues to hold an edge in the loc-market since it functions as a trade center as much as a hotel. While the new Western hotels may offer better services, they don't have as many.


"It's good that we have so many competitors now, but at this stage they are not our competitors", Devyatkin said, smiling.


However, tenants and guests speak of a lazy staff, room service which is only accessible eight hours a day, although in principal it is 24 hours, and even petty bribes for the front desk staff to reserve a rooms in the half empty hotel. The Mezh management says it has no proof of such allegations, and would fire any individuals found guilty of them.


There are no plans for Western management, in fact the center wants to become more Russian. For example, the hotel mini bar service, until March run by an American company, is now handled internally.


"This center is a mirror of the nations. I have received a lot of suggestions from the West -- Some compa-nies want to run the hotel, and it could be profitable -- but then we lose our face", he said.


In fact, so far, the Russification program has reaped some benefits.


Three Russian restaurants which once accepted only hard currency, now operate on a ruble only basis. The obvious result has been lower prices and more customers.


"Our Russian businessmen, when they meet foreigners, they can't organize dinners because they don't have hard currency. Now they can", Devyatkin said.


The Mezh has answered many of its complaints, although a battle with the local tenants association in the apartment complex about a rent increase is not yet over, according to a letter issued Wednesday by the association.


The letter claims that the Mezh's management is ducking the issue, does not recognize the association's power and is not answering phone calls. Devyatkin said tenant problems are being worked out.


The obvious question is whether or not the new Russian management has what it takes, and if it does, will it trickle down to the staff of 3, 000?


In the next few months, the center is heavily booked, with a Japanese economic exhibition scheduled for April and an oil and gas expo in May.


Turnover was roughly 5 billion rubles last year, so business in some respects is still booming.


But one is left with lingering doubt at the array of small woes which continue to highlight the differences between the Mezh and its Western competitors.


For example, prime real estate space is now used for administrative purposes and storage. Devyatkin says when the new building is erected such woes will be solved.


For now, an office on the 14th floor sits full, but bears little fruit or revenues. Rather than a Western office bustling with deal making, the space is reserved for a more important clien-tele. Devyatkin hastily says All Nippon Airways, the Japanese airline will move in soon, but for more than three years this prime real estate has been the home of Johnny Walker and Jim Beam: It's a liquor locker.