HOTEL DGI HUSET HERNING

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1 HOTEL DGI HUSET HERNING Mathilde Hybschmann Jonathan Brennecke April 2013 English Marketing Graphic Design University College South Denmark

2 _01 INTRODUCTION _02 METHOD _02.1 THE MINERVA MODEL _02.2 THE SMUK MODEL _02.3 SWOT ANALYSIS _02.4 CUSTOMER JOURNEY _03 STRATEGY _02.5 PORTER S FIVE FORCES _02.6 MARKETING MIX THE SEVEN PS _02.7 RESULTS _03.1 ISSUE IDENTIFICATION _03.2 LET S FIX IT! _03.3 SUIT UP! _03.4 COMMEDIATING _04 CONCLUSION _05 BIBLIOGRAPHY _06 APPENDICES _03.5 THE NAME _03.6 THE LOGO _03.7 THE SLOGAN _03.8 THE WEBSITE _06.1 PRESS RELEASE _06.2 SWOT ANALYSIS _06.3 PORTER S FIVE FORCES _06.4 CUSTOMER EXPERIENCE MAP

3 _01 INTRODUCTION Hotel DGI Huset Herning A/S is a newly built hotel and indoor aquatic complex, also offering a fitness centre, wellness- and spa treatments, and a bowling alley (DGI Huset Herning, n.y.). From the limited amount of key figures accessible to us (Proff, n.y.), we can conclude that Hotel DGI Huset Herning is struggling. So far, the company has failed to reach the level of success that will comply with the vast investment put into building Hotel DGI Huset Herning. When researching the company, our main observation was the fact that Hotel DGI Huset Herning is built on a clever idea; however, it has not succeeded in customizing the hotel adequately to accommodate the needs of the customer. Conducting a concise marketing strategy is crucial; thus far, the company has not clearly defined its focal customer group. Accordingly, this report focuses primarily on developing an explicit marketing- and communication strategy that successfully reaches the target group consisting of corporate professionals. Our aim is to optimize the customer journey and brand the hotel for corporate professionals. This will be achieved through an in-depth analysis of the company with the usage of effective marketing models, such as the SWOT Analysis, Porter s Five Forces, and the SMUK Model. With this analysis, we will be able to detail a more profitable future for Hotel DGI Huset Herning. Lastly, the finalized marketing- and communication strategy will be communicated in a press release.

4 _02 METHOD For the analysis of Hotel DGI Huset Herning, we will use various marketing models, which will help us de-termine the present situation of the company, and clarify where improvements and changes are needed. PORTER S FIVE FORCES We will use Porter s Five Forces (QuickMBA, ) to achieve an overview of the competitive situa-tion in which the company currently resides, in order for us to analyze how well-established and powerful Hotel DGI Huset Herning is in the industry. MARKETING MIX THE SEVEN PS The Seven Ps Model (Macdermott, 2011) is a very strong tool that will help us define Hotel DGI Huset Herning s marketing strategy. The four core elements of this analysis are Product, Price, Place, and Promotion. Seeing as we are dealing with a service company, we found it relevant to include three supplementary Ps, since they define the service. SMUK MODEL The SMUK Model (Hvam, Sørensen, 2011) is an essential marketing model which focuses on determining the most advantageous target group for the company. The model consists of four parts that are to be established and evaluated: Size and Growth, Possibilities for Reaching the Target Group, Costs of Reaching the Target Group, and Evaluation of the Competition. SWOT ANALYSIS The SWOT Analysis (QuickMBA, ) will give us a notion of what the company s present situation is, both internally and externally. The analysis will also elucidate the opportunities and threats that Hotel DGI Huset Herning is faced with. MINERVA MODEL The Minerva Model (Holdgaard, n.y.) is a useful tool to define the various types of customers in a market. According to the Minerva Model there are but four classified segments in a market, and this will help us determine which segment(s) we should direct the company s focus towards. CUSTOMER EXPERIENCE MAP The Customer Experience Map (Roberts, 2012) is a very applicable tool for outlining the customer s individual experience with Hotel DGI Huset Herning over the duration of their relationship with the company. We will create a customer experience map purely from the perspective of a particular customer within our chosen target group. This will break down the process into logical sequential steps, and facilitate easy identification of improvement opportunities.

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6 Since opening in 2010, Hotel DGI Huset Herning has not selected a specific target group; therefore, the company has not been able to market its product with a successful result. Presently, the only common denominator consists of healthand body awareness, which is not sufficiently defined to constitute a target group. In order for us to be able to move forward and create a communication strategy for Hotel DGI Huset Herning we need to choose the most advantageous target group to focus on; in doing this, we will make use of both the Minerva- and the SMUK-model.

7 _02.1 THE MINERVA MODEL MODERN In accordance with the Minerva-model, Hotel DGI Huset Herning currently operates in the gray segment, which covers all target groups on the market. Our aim is to direct the company s marketing strategy to-wards one specific and well-defined target group: Corporate professionals. This target group will be far more likely to respond positively towards the relatively high prices, than e.g. families with children who may not be able to afford the room prices (DGI Huset Herning, n.y.). Corporate professionals will also take great advantage of the facilities which DGI Huset Herning offers it would be natural to indulge in one of the many spa-treatments prior to an important meeting for which you need to feel and look your best. Moreover, many corporate professionals have a very specific morning-workout routine, which Hotel DGI Huset Herning can also accommodate (provided implementation of additional features to the fitness centre see Marketing Mix). PRAGMATIC BLUE VIOLET GREEN PINK IDEALISTIC Corporate professionals generally belong to the top area of the Minerva Model; the blue and green seg-ments. This is where we want Hotel DGI Huset Herning to focus their main marketing (naturally, the com-pany will still approach children as a secondary target group, as well). The blue segment consists of confi-dent, sporty, career-minded, and consumer-enthusiastic people. Contrarily, the green segment consists of people who are willing to change themselves, are committed to what they do, environmentally aware, and obtain a vast interest in culture. The aforementioned segment contains many employees working in the public sector. TRADITIONAL Even though the blue and violet segments are materialistic and the green and pink segments are idealistic, they are very different; the violet and pink segments are very traditional in their way of working and living, while the blue and green segments have a more modern lifestyle and work life. Our reasoning for choosing the blue and green segments lies in the fact that these are types of people who care about their appearance and health, are modern, career-minded, and cooperative, which makes them the ideal target group for Hotel DGI Huset Herning.

8 _02.2 THE SMUK MODEL CHOICE OF TARGET GROUP: OCCUPATION: CORPORATE PROFESSIONALS GENDER: BOTH AGE: YEARS OLD LIFESTYLE: ACTIVE, HEDONIST S: SIZE AND GROWTH The target group is of a substantial size, as there are many corporate professionals not only in Denmark, but in the rest of the world, as well. Even though the financial crisis has influenced the labor market nega-tively, the number of employees paying the top tax rate is on the rise (Skovgaard, 2011). This indicates a relatively high number of corporate professionals, which can only be expected to increase within the next decade. M: POSSIBILITIES FOR REACHING THE TARGET GROUP It is fairly feasible to reach the target group via different sorts of media. It would be beneficial to dedicate a large part of the advertising budget towards creating ads for union papers, fairs, and brochures, as the target group is rather narrow, in comparison to e.g. families with children. Furthermore, intellectual newspapers such as Politiken, Berlingske Tidende, Information, and Børsen would reach the target group fairly easily, as their readers obtain a high level of education. A more unconventional way of marketing Hotel DGI Huset Herning could be a TV-commercial composed to present the hotel as a professional venue for both conference meetings as well as overnight-stays. The commercial should also direct the viewer s attention towards the hotel s extra features, such as its well-ness treatments, fitness centre, and indoor aquatic complex. This will differentiate Hotel DGI Huset Herning from their largest competitor in the Herning-area, Hotel Scandic Regina (Scandic, n.y.). U: COSTS OF REACHING THE TARGET GROUP Depending on the main choice of advertising, the costs of reaching the target group will vary. Naturally, a TV-commercial would be vastly expensive; however, the outcome would probably be well worth it. Advertising in e.g. newspapers is a more cost-effective and direct way of reaching the target group. K: EVALUATION OF THE COMPETITION Hotel DGI Huset Herning s largest competitor is Hotel Scandic Regina, also situated in the centre of Herning. However, this hotel does not offer the same facilities as Hotel DGI Huset Herning; Hotel Scandic Regina merely offers a small fitness room and a sauna. For further leisure activities, Hotel Scandic Regina refers guests to the near-by golf course. Although the competitor is lacking in terms of activities available in comparison to Hotel DGI Huset Herning, it has a large restaurant, professional conference rooms, and a clean, simple website (Scandic, n.y.). In connection with our customer- and marketing strategy, we will implement changes that will bring Hotel DGI Huset Herning to the same professional level as Hotel Scandic Regina. This will be carried out while still maintaining the hotel s niche leisure facilities (DGI Huset Herning, n.y.) within the field of hotels mainly created to house corporate professionals. Once the improvements and additions are completed, Hotel DGI Huset Herning will have a substantial advantage in comparison to Hotel Scandic Regina, and the prices will also be much more fitting.

9 _02.3 SWOT ANALYSIS As a result of the SWOT Analysis we conducted, Hotel DGI Huset Herning has a good number of strengths; however, that number is overpowered by the alarming number of weaknesses. DGI Huset Herning includes a large variety of in-house activities and a hotel with 152 rooms (Hotel DGI Huset Herning, n.y.). In our opinion, the potential of the hotel is not being taken advantage of, and that shows in the company s financial key figures (Proff, n.y.). The company s large fitness centre, indoor aquatic complex, and hotel should attract many guests, especially when Jyske Bank Boxen or MCH hold events; however, that is not the case. The reason for this can be found among the company s many weaknesses (see appendix). When assessing the possible threats and opportunities, it was evident that Scandic Regina Hotel and Best Western Hotel Eyde (Best Western, ) are the biggest competitors in the Herning-area. However, these hotels do not offer the same facilities as Hotel DGI Huset Herning their advantage lies in their fair prices. It is now clear that Hotel DGI Huset Herning needs to adjust its product and service to match its prices otherwise it will lose potential customers to the competing hotels. A great opportunity for Hotel DGI Huset Herning is to establish in-house team building exercises, possibly in connection with company retreats. There is a substantial market for team building courses in Herning alone, as it is a medium-sized city housing many companies.

10 _02.4 CUSTOMER JOURNEY Conducting the customer journey by creating a customer experience map (Roberts, 2012) has shown us how a hotel guest would experience a stay at Hotel DGI Huset Herning prior to the hotel having made any sorts of changes. We developed the customer experience map from the viewpoint of a particular corporate professional: An Englishman, between years old, going to Herning to attend a trade fair at MCH. With our customer being English, we also show how a foreigner would experience the process from researching, planning, and booking, to staying at the hotel and leaving for home. As we had expected, the customer journey turned out to be far from satisfactory (see appendix), and it is evident that drastic changes are required in order to optimize the customer s experience when staying at Hotel DGI Huset Herning.

11 _02.5 PORTER S FIVE FORCES THE POWER OF SUPPLIERS THREAT OF NEW ENTRANTS INTENSITY OF RIVALRY THREAT OF SUBSTITUTION THE POWER OF BUYERS THREAT OF NEW ENTRANTS There are not many large enterprises in Denmark that focus on offering team building for companies. We believe that DGI Huset Herning would be very well-equipped and successful in that area. The company has a very large fitness centre, wellness- and spa, a nice hotel with many rooms, and different rooms to work in. All they need to do is offer it. For newcomers it would be immensely expensive to build all of these facilities from scratch, if they were to compete head to head with DGI Huset Herning. However, if the perfect location is found and there is a sufficient amount of capital present, it could be done. THREAT OF SUBSTITUTION All around Denmark there are small companies that offer team building and corporate retreats but that is all they offer. DGI Huset Herning has the possibility to offer those things as well, but they can also offer other services and longer stays where every possible need of the customers is met. The problem is that the smaller companies can offer team building and corporate retreats for less cost. According to our research we have not found any large companies in the city of Herning that offer the equivalent of what DGI Huset Herning is capable of offering. Therefore, the threat of substitution is not particularly pressing in Herning. THE POWER OF BUYERS In Denmark there are only a few large companies that offer these specific services. Accordingly, for a company looking for a team building course (with a fitness centre, hotel, and other facilities) for its employees, the possibilities to choose from are very limited. Following this, the buyer does not possess the power to lower the prices only if the buyer is looking for team building alone. INTENSITY OF RIVALRY As stated earlier, there are few to none companies that are able to offer the same services and facilities as DGI Huset Herning granted the company were to exploit this opportunity; however, since DGI Huset Herning has not entered this market yet, there are significant established competitors already on the market. These competitors do not obtain an advantage in terms of their facilities, but they do in terms of their level of experience and the fact that they have already created a name for themselves and a place in the customers minds. Therefore, if DGI Huset Herning were to brand itself within the field of team building, the company would probably face the issue of customers already having a loyal relationship with smaller competitors. THE POWER OF SUPPLIERS Within this market the suppliers possess very similar products to offer the company, which tells us that DGI Huset Herning is able to switch suppliers. Therefore, the supplier power is neutral. It is relatively feasible to enter this type of market; seeing as there are few companies that offer the same type of service and product, there is but a slight power for the buyer. If a competitor who possesses the facilities and services equal to DGI Huset Herning lowers its prices, DGI Huset Herning will be weakened. Intense competition puts heavy pressure on prices. There exists only little threat in substitution.

12 _02.6 THE SEVEN Ps PRODUCT - Fitness and training instructors - Fitness equipment and training machines - Indoor aquatic complex - Wellness and spa - Café - Hotel - Free Wi-Fi and cable TV - Service - Handicap-accessibility PRICE - Monthly membership price: Above normal - Price for each activity: High - Café prices: Medium to high prices - Hotel rooms: Very high - Companies can purchase memberships for their employees at a reduced price - Special offers - Terms of payment via PBS PROMOTION - Advertisement: Brochures, outdoor-signs, TV-commercials, newspaper-ads, radio-commercials - Sales promotion: Special offers on memberships, competitions, in-house events - PR: Via the internet - Physical: Mouth to mouth, in-house personal sales, high street facing - Events: Team-training, training-exercises, indoor and outdoor (rooftop) activities - Online marketing: Press, newsletters, ads - Social media: Facebook (the company has a semi-active facebook-page), own website (where it is possible to share information on various social media) PLACE Location: Besides DGI Huset Herning, there are seven other facilities across Denmark owned by DGI in cooperation with the cities in which they are located. However, in this case we only focus on DGI Huset Herning, which is located in the center of Herning (DGI Huset Herning, n.y.). PERSONNEL We assume that DGI Huset Herning s personnel is competent, serviceminded and committed to doing its job. We also believe that the staff of DGI Huset Herning is concerned with various areas of responsibility, such as trainers, café, lifeguards, hotel staff, which means that they wear uniforms with the company logo (DGI Huset Herning, n.y.), and have also received courses, training and obtain a degree or are certified staff members. PHYSICAL EVIDENCE After viewing some of the pictures we found on facebook (Facebook, DGI Huset Herning, n.y.), we can assume that the dominant color on the walls of DGI Huset Herning is white. Apart from that, the climbing wall, staircase, etcetera are different colors. Hotel DGI Huset Herning has been designed and decorated by professional interior designers. The interior is also equipped with professional training and workout machines, a huge indoor aquatic com-plex with many pools, wellness area with massage beds and saunas, a bowling alley, and a café. As for the employees, we assume that each employee wears a uniform that matches their position with nametag and possibly company logo. PROCESS We assume that all of the employees have had some sort of training or have attended courses to master their field of work in order to service the customers in a satisfactory manner. The employees follow systems and guidelines created internally in the company to ensure that they pro-vide each customer with the same information. This affects the company s marketing process in a positive way.

13 _02.7 THE SEVEN Ps: RESULTS Our chosen target group consists of corporate professionals who also prioritize a healthy and active way of life. With this in mind, we believe that Hotel DGI Huset Herning should focus on Product and Price, if the company is to change and become more successful. The price for a standard single room in the Hotel DGI Huset Herning is DKK 1,275 (DGI Huset Herning, n.y.), whereas biggest competitors in the area, Scandic Hotel and Best Western Hotel Eyde (Scandic, n.y.; Best Western, ) offer a three-person room and a single double room at the amount of DKK 895. This substantial price difference between the three hotels is a huge indicator of why Hotel DGI Huset Herning is not experiencing the profit and level of success which it was created for. Hotel DGI Huset Herning is basically sabotaging itself; it has all the facilities (expect for a restaurant) that could be desired by a customer the problem is that the prices are through the roof, and regrettably, they do not match the quality of the products and services provided. It is paramount that the company implements the necessary changes and possibly adjusts its prices to accommodate the customers. We have intentionally chosen a target group that is likely to pay the high prices of Hotel DGI Huset Herning. This target group will, however, be prone to use the facilities of the competitors, if Hotel DGI Huset Herning fails to match the product with the price. If and when this is done, the price will comply best with the budget of corporate professionals. The hotel will possibly also be able to acquire a fourth star, leveling it with for example Best Western Hotel Eyde. DGI Huset itself will still be a good place for families and children to do leisure activities, but as a hotel, DGI Huset Herning will have to focus on corporate professionals and up the level of their product or lower the price immensely! Another severe problem is the café and lack of a proper restaurant (TripAdvisor, ). Although, the hotel is located in the center of Herning where there are several decent restaurants (HerningGuiden, ), the guests at Hotel DGI Huset Herning may not always prefer to have to go outside the hotel premises to enjoy a good dinner. Therefore, it is crucial that the hotel builds a restaurant. It would still be an advantage to keep the café for guests of the indoor aquatic complex; however, the menu should be expanded and the prices should comply with the average budget of a family with children. It is important to remember that the target group for the indoor aquatic complex is not the same as the one for the hotel. Lastly, Hotel DGI Huset Herning has great potential in the form of providing companies with team building courses. The only thing left to do is to actually exploit that potential.

14 _03 STRATEGY MARKETING- AND COMMUNICATION STRATEGY

15 _03.1 ISSUE IDENTIFICATION When researching DGI Huset Herning, the hotel stuck out like a sore thumb (Hotel DGI Huset Herning, n.y.; TripAdvisor, ). We immediately identified a number of severe problems, which are the cause of the company s inability to turn a substantial profit (Proff, n.y.). Accordingly, we found it the most relevant to focus our attention on the hotel; therefore, our main efforts went into choosing the most advantageous target group and branding the hotel in view of that. The aforementioned problems of the hotel consist first of all of the prices the rooms are more than overpriced, and the quality is not up to par. The service level is too low, the staff is inconsistent in their helpfulness towards customers/guests, and the café is placed close to the fitness centre which means that guests are eating their meal to the bass from a workout session. Moreover, the café only serves a mere four different sandwiches, and the price is a tad high. Also, the hotel does not have a proper restaurant, so the guests always have to find a restaurant in the city. Furthermore, when arriving at the front desk reception, guests have to carry their luggage through the sweat-smelling fitness-area to the elevator that leads to the hotel rooms (TripAdvisor, ). This creates an unfortunate first-hand impression. The constant presence of loud upbeat workout-music can have a disturbing and stressful effect on the guests, which does not comply with the concept of the accessible wellness and spa-facilities. The problems stated above are the main issues which Hotel DGI Huset Herning needs to find solutions for, in order to reach its new target group. At present, the hotel s target group is undefined and consists of a mix of all kinds of people. Based on conducting the various previously mentioned marketing models, we have established that it is wisest to approach the target group consisting of corporate professionals. Before we can formulate a communication strategy for the company, we need to fix the problems within the hotel.

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17 _03.2 LET S FIX IT! In order for the high prices to work, Hotel DGI Huset Herning needs to offer a product that justifies them. The company has done nothing to create an exclusive and luxurious image, which is the first step of a successful branding process. A typical corporate professional will see the price and accordingly form high expectations of the room-standards, service level, and overall facilities. The rooms need to be welcoming, extravagantly and stylishly decorated, and convenient. The service needs to be immaculate and leave nothing to be desired, if the company wishes to keep its current price level. Otherwise, a price reduction is required. Another issue which many previous guests complain about (TripAdvisor, ) is the way from the reception desk to the hotel rooms. The guests have to carry their luggage through the fitness area where people are sweaty and working out to get to the elevator that takes them to their rooms. This is very un-professional and does not, by any means, meet the expectations of corporate professionals. Hotel DGI Huset Herning needs to build a separate hallway in order to create a closed path, leading the guests from A to B. This will eliminate the noise and smell of sweat from the fitness centre. The café menu requires drastic changes. The selection of food is extremely poor they only serve four different kinds of sandwiches and home-baked bread plus a small selection of beverages (DGI Huset Herning, n.y.). We believe that it would be advantageous to keep the café, as it would (with additional options added to the menu) serve the purpose of offering snacks for customers of DGI Huset Herning. Subsequently, it would be a good idea to provide the café with soundproof walls, as the noise from the fitness area is a repetitive complaint from the previous customers. However, the café will not be sufficient to accommodate the corporate professionals and their need of a cozy restaurant to enjoy their dinner in. There needs to be a full-fledged restaurant that can provide the corporate professionals with tasty, healthy, and varied dishes prepared by skilled chefs. Next order of business is to define the positive areas in which the hotel can rely on for the branding and promotion process.

18 _03.3 SUIT UP! We now need to establish a way of communicating with the corporate professionals to awaken their interest in Hotel DGI Huset Herning. Our aim is to communicate the message that Hotel DGI Huset Herning is a professional place well-suited for business meetings, conferences, relaxation, and physical activities. All of these combined in one will make for an excellent choice when corporate professionals need to book a hotel room. The hotel has a very good location in the heart of Herning, and is surrounded by many companies. It is within a short distance to the MCH Congress Center (MCH, 2012), which the hotel has also exploited by constructing a footbridge to the Congress Center. This will create a feeling of safety for corporate professionals who are attending a late-night event at the Center, as they can merely walk to their room, instead of having to hail a cab, pay the fee, and explain where they need to go. As Hotel DGI Huset Herning has 152 rooms and many different facilities perfectly suited for team building exercises, it is a great opportunity for the hotel to offer team building courses, possibly for company re-treats. This will make it far easier to attract corporate professionals. At present, the hotel receives the larger part of its guests during business events at for example MCH and the Congress Center, so when business events in Herning are slow, the hotel needs to create its own events. Now we need to establish the ways in which we will promote the now finished product to the target group.

19 _03.4 COMMEDIATING Communicating through media - in order for Hotel DGI Huset Herning to reach its target group, the company needs to communicate through various media. Different people read different newspapers, watch different television programs, listen to different radio shows, and visit different websites, so we used the Minerva Model (Holdgaard, n.y.) to establish the right segments to include in the hotel s target group. We found the blue and green segments to be most advantageous. Creating newspaper ads is a highly effective way of reaching corporate professionals, as they tend to be very eager newspaper-readers. We would choose to advertise in the following intellectual newspapers: Politiken, Berlingske, Børsen, and Information. In terms of magazines, there are also quite a few dedicated to corporate readers: Business, Lederne, and Finans. The use of online media has sky-rocketed since 2005 (Karner Blue Marketing, ), and continues to be a very strong and effective tool when promoting a product or a business. Therefore, communicating to the target group could successfully be done through s, newsletters, and press releases. Using the internet itself is a very powerful way of communicating with customers, but social media in particular is indeed an invaluable tool. Accordingly, many companies all around the world make use of social networks such as facebook, twitter, and LinkedIn to communicate with existing customers and more often than not form new customer relations. Other than that, companies use social media to advertise, send out newsletters, press releases, and post offers. This way of communicating would also be an obvious opportunity for Hotel DGI Huset Herning.

20 _03.5 THE NAME Hotel DGI Huset Herning does not exactly have a ring to it. The name is too long and contains four differ-ent words, which makes it hard to remember and pronounce in the correct order especially for foreigners. We have therefore chosen to shorten it by removing the superfluous Huset, and we are now calling it Hotel DGI Herning.

21 _03.6 THE LOGO Hotel DGI Huset Herning and DGI Huset Herning share the same logo. We find it to be rather unfortunate for the hotel, as the hotel logo should exude professionalism and stylishness. This is not achieved through the current logo (Hotel DGI Huset Herning, n.y.). We believe that the logo is yet another factor getting in the hotel s way to success; therefore, we have designed a new logo. We have kept the basic design of the original logo, as we did not want to change it too much (for the sake of recognition), but we have changed the color scheme from green to navy blue. Navy blue is a more serious color and it displays the hotel as a professional business hotel, not a leisure playground. Lastly, we have used a different font which, in our opinion, has a more stylish appearance. HOTEL DGI HERNING HERNING DGI HOTEL Typography: Champagne & Limousines, C = 100 M = 97 Y = 29 K = 45 with an opacity of 33 percent on the reflection.

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