Luxury Institute News

The economic crunch and a respect for America’s great outdoors have rekindled travelers’ passion for camping

March 11, 2010
magazine.wsj.com

Sleeping in the wilderness is at the root of American culture. It’s tied to the very notion of the country’s identity: rugged, self-reliant and free. As people drastically rethink the way they travel in light of economic-as well as environmental-pressures, it’s reigniting a return to this simplicity. “It’s a rewiring of the wealthy consumer’s mind,” says Milton Pedraza, chief executive of Luxury Institute, a New York-based research company, of this decrease in materialism. “People are uneasy staying in marbled and gilded temples of opulence, even if they can still afford it,” he says.

This isn’t the first time the Great American Camping Trip has taken a detour. In the late 19th century, the U.S. Census Bureau declared the end of the American Frontier, noting that there were so many settlements, a line no longer existed. This caused alarm about the pace of industrialization and launched a back-to-nature movement. While President Theodore Roosevelt was in office, he enacted legislation establishing five national parks and 150 national forests, as well as protecting dozens of sites and monuments (including the Grand Canyon) under the far-reaching Antiquities Act of 1906.

Read the full article at http://magazine.wsj.com/hunter/nomad/back-to-nature/

By SONIA KOLESNIKOV-JESSOP
The New York Times
Published: January 22, 2010

SINGAPORE - International hotel brands are stepping up their investments in the Asia-Pacific region because of its outsized growth prospects. So it would seem almost counterintuitive for luxury hospitality brands based in Asia to be opening hotels in Europe, where growth is slowing.

Yet over the coming months, several well-known Asian brands, including Raffles Hotels and Resorts, Shangri-La Hotels and Resorts, and Meritus Hotels and Resorts, will open their first European properties.

The focus so far of most luxury Asian brands seems to be France, where the biggest-spending tourists are Chinese, according to an industry survey released this week. This summer, the five-star Royal Monceau in Paris is set to reopen as a Raffles property after a refurbishment that took 20 months and cost 100 million euros ($141 million).

The first European Shangri-La Hotel will open near the Trocadero, in what was once the palace of Prince Roland Bonaparte, Napoleon Bonaparte’s grandnephew. In 2012, Peninsula Paris will open in the 1908 building that currently houses the Centre International de Conférences.

Shangri-La also has projects in Vienna, London and Moscow, while Meritus is working on its first European foray in Frankfurt. Banyan Tree Hotels and Resorts and Six Senses Resorts and Spas are heading to the Mediterranean, focusing in on the Greek coastlines. Banyan Tree will open Angsana Corfu in 2011 and Angsana Santorini in 2012. Six Senses is planning to open a Soneva resort, its superhigh-end brand, on the island of Milos in 2012.

With more Asian tourists, especially Chinese, traveling to Europe, Asian brands, which have a reputation for high-end service in their own backyard, are hoping to capitalize on their name recognition. And they are also hoping the European outposts will become “feeder” outlets for their hotels in Asia.

Like all tourism-related companies, the Asian chains have lost revenue during the economic downturn. In 2008, Banyan Tree Holdings had sales of 427.9 million Singapore dollars ($305 million), nearly double that of 2004, attesting to its rapid expansion. In the third quarter of last year, however, the Singapore company’s revenue fell 14 percent from a year earlier. But its operating profit increased 70 percent, reflecting strong performance in hotel management and investment.

Mandarin Oriental operates 25 hotels, including 12 in Asia, 8 in the Americas, and 5 in Europe and North Africa. It has 16 more under development. In November the chain issued an interim management statement saying that weak demand from both the corporate and leisure segments continued to put pressure on occupancy levels and average room rates in all regions. But conditions in Europe were better than in Asia and the Americas, it noted.

Ho Kwon Ping, executive chairman of Banyan Tree Holdings, said the projects that were about to open would have been decided on as long as three years ago, at the height of a tourism boom - “when everybody was toppish about Europe,” he said. “What you’re seeing now is the outgrowth to that.”

Mr. Ho said he believed Asian brands’ decisions to move into Europe reflected the confluence of two things: “First, European developers are looking toward the Asian market, and also an Asian kind of hospitality, to distinguish themselves from the European brands. Second, Asian brands themselves are looking toward extending to other parts of the world, partly to satisfy the demand from Asian tourists traveling more and more toward other parts of the world.”

Economic indicators suggest that European markets are unlikely to recover as quickly as Asian markets. Worldwide international tourist arrivals fell 4 percent last year amid the severe global economic crisis, and Europe was hit harder, according to the United Nations World Tourism Organization. European arrivals declined 6 percent on an annual basis, compared with a 2 percent decline in the Asia-Pacific region and a 5 percent slide in the Americas.

Hotrec, a trade association of hotels, restaurants and cafes in the European Union, recently said that hospitality business trends across Europe were still very worrying and that a recovery was currently not in sight in many European member states.

“Occupancy rates of hotels in all major cities in Europe went down between January and August, compared to the same period of 2008,” Marguerite Sequaris, the chief executive of Hotrec, wrote in an e-mail message, adding that the rates for major destinations such as London, Paris and Rome fell by less than five percentage points but that the overall picture was showing a more severe decline.

“Most participants to the general assembly reported calamitous business trends in their respective countries,” she added, “and most consider that the recovery is not in sight yet, as 2010 will probably be on the same level as 2009.”

Tourist arrivals in Spain, one of Europe’s top tourist destinations, fell 8.7 percent last year on an annual basis, according to a recent report on the sector by the Spanish secretary of state for tourism, Joan Mesquida. According to Eurostat, the statistical office of the European Union, the latest figures available for some of the European countries, for September and October, still show a decline in occupancy rates.

But Asian brands are pushing ahead with global expansion plans.

“This is part of the group’s growth strategy to extend our presence to key cities and sought-after resort destinations where there is demand for luxury travel and dining experiences,” said John Johnston, president of Raffles Hotels and Resorts.

Milton Pedraza, chief executive of the Luxury Institute, a research company in New York, said that Asian brands’ reputation among wealthy Europeans for providing top facilities and highly rated customer experiences gave the brands fairly high chances of success.

“Mandarin Oriental has already proven its viability in competitive markets such as London,” he said. “As long as they stick to a few major cities or locations in Europe, the Asian brands have low risk of becoming too ubiquitous.”

George Morgan-Grenville, group managing director of Abercrombie & Kent, a high-end travel agent and tour operator based in Britain, said he believed that Asian brands would be “warmly welcomed” in Europe in part because they were “built around an intrinsic service culture.”

“What Asian brands seem to grasp more profoundly than their Western counterparts is a more holistic approach to a guest’s stay, from remembering names to dealing with the smallest detail,” Mr. Morgan-Grenville said.

“Of course, when brands migrate West, the danger is they face some tough competition from established hotel brands who already know how to operate effectively under Western economic conditions,” he added. “But the fact remains that, culturally, the Asian brands have been quick to grasp consumer needs in the 21st century.”

Hotels.com, 4/15/2009 9:30:00 AM

Despite the ongoing global economic crisis, Small Luxury Hotels of the World (SLH) has bucked the trend with the addition of 25 hotels in the first quarter of 2009. This follows close on the heels of the addition of 66 hotels at the end of last year, which represented a net growth of 10% over the previous year. SLH now comprises more than 500 of some of the world’s finest small independent hotels in more than 70 countries.

“Contrary to what you would expect in an economic downturn, we have received an unprecedented increase in the number of inquiries from luxury hotels wanting to be part of the SLH brand,” comments Paul Kerr, CEO of Small Luxury Hotels of the World.

“We believe that part of this is due to the fact that hotels look towards a brand like SLH to provide them with a safe haven when conditions are challenging. In spite of the large number of inquiries, standards of excellence remain core to SLH’s success and our selection criteria therefore remain as strict as ever,” he adds.

In terms of the geographic spread of the news hotels, Europe, Middle East and Africa (EMEA) remains the strongest area of development with an intake so far of 13 hotels across seven countries. In the Asia Pacific region, eight new hotels joined the brand across seven countries; while the Americas added another four hotels in four countries in the first three months of 2009.

As part of its development strategy, SLH continues to identify hidden gems in destinations where it is yet to have a presence. As such, the first quarter of this year has seen a number of notable additions to the brand. Of particular significance is the addition of Hoshinoya Karuizawa, which marks Small Luxury Hotels of the World’s first foray into Japan. Also new to the brand and definitely worthy of note is Han’s Royal Garden,

the brand’s first hotel in Beijing. This, together with an additional hotel in Shanghai (Pudi Boutique Hotel), brings SLH’s China portfolio to eight hotels.

Other firsts include Taunovo Bay Resort & Spa in Fiji, and in Aruba, the luxury boutique resort of Canucu Arubiano adds further depth to SLH’s Caribbean portfolio. A further demonstration of the diversity of the individual hotels within the Small Luxury Hotels of the World brand is the addition of Blow Up Hall, in the Polish city Poznán. Designed by Tadao Ando, and based on a project by Rafael Lozano-Hemmer, the aim of the hotel is to allow guests to experience and participate in the creation of art.

Everything about this hotel shouts ‘cutting-edge design’ - from the high resolution, interactive display in the lobby to a personal i-Phone, which amongst other things electronically opens your room at the touch of a button. The UK also has been a strong area of growth for SLH, with the addition of four hotels in the first quarter of the year. These include Pennyhill Park Hotel in Surrey, whose restaurant has just been awarded its first Michelin star; South Lodge Hotel in West Sussex whose restaurant has recently been awarded three AA Rosettes; Lainston House

Hotel in Hampshire and The Feversham Arms Hotel in North Yorkshire. Since the start of the year, Small Luxury Hotels of the World has received close to 100 inquiries a month via its dedicated website www.joinslh.com, representing a 20% increase over last year. There has been a particular increase in enquiries from Eastern Europe, South America and China. However, SLH believes that the strength and credibility of the brand is dependent on the quality of its individual hotels and as such strict controls are applied to ensure that only the very best hotels with the highest standards are accepted. As a result only 5% of inquiries are successful.

To ensure that these exceptional standards of excellence are maintained, SLH has a carefully monitored ‘mystery guest’ program, which relies on valuable reviews from inspectors who importantly are also consumers. As the brand continues to grow, SLH will recruit additional inspectors.

Demand to be part of the SLH brand continues to be driven by heightened global brand awareness resulting from accolades such as being named ‘No. 1 Luxury Hotel Brand’ by the New York-based Luxury Institute for the second consecutive year, and also the luxury hotel brand that is able to deliver the ‘Best Customer Experience’. In Asia Pacific, SLH has for the third consecutive year been named ‘Best Brand Management Company’ at the HM Awards for Hotel & Accommodation Excellence.

January 29, 2009
Campden FB

To some, it may sound like an odd pairing. Owner of the family-controlled Marriott hotel chain Bill Marriott is jumping into bed with king of the hipper than thou boutique hotel Ian Schrager. Their new $2.8 billion joint venture, recently named Editions, is a chain of fashionable, affordable hotels which promises not to look like a chain and has made a commitment to environmental responsibility.

While Schrager will lead the charge on concept, design, marketing, branding, food and beverage, Marriott is overseeing the development process and will operate the properties. Hotels are planned for Los Angeles, Washington, Chicago, Miami, Costa Rica, Madrid, Paris and London and could eventually extend to 200 locations.

With around 3,000 properties and 500,000 rooms spread throughout 70 countries, the Marriott empire spans the gamut from moderately priced chains like Courtyard and Fairfield to the sumptuously luxurious Ritz-Carltons.

Meanwhile, Schrager’s scarily fashionable hotels from the Sanderson and St Martin’s Lane in London to the Hudson in New York, the Mondrian in Hollywood and Delano in Miami, regularly welcome the likes of Kate Moss and Madonna. The design, not to mention the social scene, in Schrager’s dramatic lobbies, has revolutionised urban hotels and spawned a host of imitations.

With plans for the first opening slated for 2010, it’s early days yet. But could the edgy Schrager and super conservative Marriott come up against each other? After all, Marriott hotels have bibles in the bedside tables while Schrager’s hotels are typically frequented by design-conscious types.

Brooklyn-born Schrager co-founded the hedonistic nightclub Studio 54, which later closed and saw Schrager emprisoned for tax evasion. Bill Marriott is a Mormon who took over a root beer stand in Washington DC owned by his father and went on to build the biggest chain of cookie cutter hotels in the world.

Still, there is lots to suggest the collaboration could be timely. Recent months have seen occupancy rates at both hotel groups dip 10%. Before the economic downturn though, boutique hotels’ per room revenue growth in the US has averaged 11% a year, a third above the norm for the industry, according to Smith Travel Research.

Schrager believes über designed hotels have now reached their peak. “It’s time to go away from design because it’s over the top now,” he said recently.

In addition, the day of the cookie cutter hotel might just be over. New York based Luxury Institute research suggests consumers are now far more inclined to choose intimate venues in hospitality with great service and unique experiences.

Luxury Institute founder and CEO, Milton Pedraza, is upbeat about plans for Editions. “At a time like this you need deep pockets and staying power as a boutique hotel designer and developer. Marriott has access to their own funds and can access the funds of others since it has such a great track record,” says Pedraza.

So perhaps Editions could well be the start of a beautiful relationship. Pedraza certainly thinks so. “Now is the right time and it makes for a great marriage. Marriott knows how to locate, build and manage hotels and Schrager knows how to design and create a great boutique hotel experience,” he says.

Al Bayan
January 1, 2009

Mr. Cooper is the first to be interviewed in Al Bayan among a selection of 16 leaders in a new Business section called “From the Top.”

Some would accuse CEOs and Presidents of being behind the current crisis, while some others think they are victims. But in either case, they shouldn’t be silent but explain what’s happening and give their opinions. Arabs tend to say “I don’t know” and this make us see a future full of questions without answers; but this is an Arab habit, we face problems with tears and we suffer… from what we read every day we first thought that the crisis is a UAE one, or exclusive to Dubai.

Introduction:

Therefore our paper decided to feature the in depth opinions of International Leaders on this issue.

His name is like that of a Hollywood star and his looks convey the same impression. But in fact, he doesn’t work in the movies and the stars sleep on his beds’ pillows in a luxurious environment. He doesn’t speak much to the media; he runs 72 hotels in 25 countries, and in the last two years he needed lot of energy to be present to open 33 new hotels.

Simon Cooper, the President of The Ritz-Carlton, a brand that movie actors mention in their films, spoke to Al Bayan Business about the international strategy of the luxurious hotels with regard to the financial crisis that threatens the luxury world by losing a lot of customers, and shared the group strategy for Dubai and UAE in the coming years.

Says Mr. Cooper: The evolution of The Ritz-Carlton brand is not only done by changing styles from aristocratic/conservative to contemporary, which applied to the majority of the group hotels in the recent years, but also in not giving up “the elegance.” If the history remembers what Edward Weiner has done, the famous developer who built the first Ritz-Carlton hotel in Boston in 1927, they should know that what Simon Cooper is doing today is not dissimilar. Weiner, during the 1929 crisis, decided to keep the lights on in some unoccupied rooms to show that “success” is still there. Cooper, after seven decades, has his own recipe to fill rooms while the crisis ghosts are coming back.

His recipe has many ingredients: Ladies and Gentlemen: that’s how the Ritz-Carlton describes their own employees.

According to Mr. Cooper, these employees build a luxurious brand for the hotel and not the other way around. What if the crises force the management to resize their Ladies and Gentlemen team? Mr. Cooper replies: “We have moved many of our employees from hotels that are very affected by the crises like in the US and Europe to our hotels in the Middle East and Asia”. With the decrease of Marriott International income (the mother company that own Ritz-Carlton) by 7.1% in the third quarter of 2008 compared with the same period of 2007, it becomes realistic to move an executive chef from the States to our Jumeirah resort in the UAE. We want to provide our employees the possibility of working 30 hours a week so they can keep their benefits.” Mr. Cooper thinks that keeping the workforce is the biggest challenge: “These people know by heart the credo content (a Ritz-Carlton guide carried by everyone in the company in the world) and it’s not easy to let these people go”.

Baby boomers

Mr. Cooper noted that the picture has changed and headlines have been amended. Baby boomers are now a demographic everybody wants to tap. Hotels are looking now at retirees and their disposable income as the liquidity they’re looking for. Of course we will witness shortly many hotel products and offers for this category of people who are now around 65 years old, while there will be a drop in the number of young executives whose liquidity has been affected because of the diversity in their business activity. The new strategy that the Ritz-Cartlon Hotel Company is now applying features offers that can keep the customers more than a week in the hotel. He said that the world will notice again this age group that they’d thought were inactive. These are the people who will now have the funds at a time when the luxurious brands in the world are facing a challenge in attracting guests/consumers.

When the US and her allies won the second world war, the American soldiers came back to the States where a lot of girlfriends, fiancées and wives were waiting for them. This was in 1945, when the US witnessed the birth of a big number of babies (baby boomers) especially in 1946 which was considered as the birth year of a full special American generation.

“Luxury for whom?”

Milton Bedraza, the CEO of The Luxury Institute says in a series of studies that the financial crisis had in the last months “an impact that could lead to paraplegia” on the luxury products in the US market which is considered the largest in the world. It is expected that the sales will drop dramatically, more than in the last two crises. He added: “the jet planes, the jewellery and the expensive clothes sales have decreased because the consumers are going back to the traditional bases in spending, as the price is very important.”

An explosion that did not last Says Mr. Cooper: The luxury products markets in the world witnessed an “explosion” in the last decade while salaries were increasing, especially in emerging markets, such as Russia and China, where many consumers were able to buy expensive handbags, Italian clothes, Ferrari cars and sleep on Ritz-Carlton pillows for a long period for the first time in their life. During that period, the traditional brands of luxury products including Bulgari and Cartier introduced new production lines that many people can afford to buy, aiming at reaching a bigger number of consumers. The world was getting ready for an extravagant wave of luxury before being stopped by the dam of the financial crisis.

Did we say everything? Not really. Some markets like Asia and the Middle East are still far from the deep impact of the crisis. We froze two projects in the US but we’re going on with our projects in Dubai, Ras Al Khaimah, Egypt, Bahrain, Oman, Doha and others. People will not stop enjoying the experience of luxury in luxurious hotels, but we need to design more creative and feasible products from the value point of view.