Almost a year ago Jennifer Fox was promoted to president, international, for FRHI Hotels & Resorts — the Toronto-based parent company of Fairmont Hotels & Resorts, Raffles Hotels & Resorts and Swissotel Hotels & Resorts — while still maintaining her position as president of the Fairmont brand. It was a move that put her squarely in the middle of the action for FRHI, which expects 50% growth of its portfolio over the next five years, much of it outside North America.
HOTELS recently spoke with Fox about how that growth will be targeted, the impact of FRHI’s new geographically focused structure and how business is faring in the luxury space post-recession.
HOTELS: Given that FRHI has multiple brands doing business solely in the luxury space, how have you seen this space change and perform overall?
Jennifer Fox: It is a very good time to be at the luxury end of the market. Business is particularly good right now post-recession. There were a very challenging few years from 2008 to 2010 or 2011, but the sector has picked up.
The luxury sector has high disposable incomes. They don’t want to spend their money on more jewelry or more cars or anything else like that. They want to travel, and they want to travel with their families, and they want unique experiences. We were just looking at some research recently, and it said people with high disposable incomes and high net worth, the number-one thing they want to spend their money on is travel. So the luxury travel market is positioned really strongly and doing really well.
Where FRHI is positioned really well is we’re only operating in the luxury space — we’re not operating in the midscale space at all — and we’ve got three luxury brands that are positioned at various levels of luxury. Raffles is our super-luxury brand; it’s smaller, it’s more boutiquey — we call it emotional luxury. Fairmont is a luxury brand. We are now in 70 destinations with that brand and looking to move to almost 100 over the next five years. Then we have our Swissotel brand, which is in the upper-upscale sector, and that plays very much in the business as well as leisure space. So we’re very much focused on the luxury sector, and I think it’s a good place for us to be right now with this growth in luxury travel.
HOTELS: Why are FRHI’s growth plans as aggressive as they are over the next five years, and how will that growth be distributed among the brands?
Fox: We have a different strategy for each of our brands. Raffles will always be a smaller brand than the Fairmont brand. Today we have 11 Raffles hotels — our 11th is actually opening in a couple weeks in Istanbul. We expect that brand is going to double its size over the next five years. We’re going from 10 hotels to 20 hotels for Raffles. For Raffles, our strategy is to be in mega-cities and key resort locations.
With the Fairmont brand, we’re at 70 hotels going to about 100. We want Fairmont in major cities around the world and resort locations.
With our Swissotel brand, our biggest portfolio is in Europe, and we’re growing steadily in Asia. We see a lot of opportunities to grow our Swissotel brand, which is currently 45 hotels open or under development. We see that growing very fast as well.
So as a company, we’re very much focused on growth, but we’re also focused on the right type of growth. Where do our customers really want to go, and where can we deliver the right type of experience for them? It’s growth not just for the sake of growth, but it’s growing to connect our customers to the locations they want to go to.
Fairmont has a very good footprint in the U.S. We’ve got the Plaza in New York City; we’d like a second Fairmont in New York City. We’ve got the Miramar in Los Angeles, but there’s room for a second Fairmont in Los Angeles. We’d like to be in Miami and cities like Atlanta and Houston. What we want to be able to do is satisfy our customers in those markets they’re traveling to. We’re really growing to satisfy the demand that’s coming from our customers and make sure we have our brands in key markets.
Everybody talks about China, and we’re just like everybody else. We see China as a huge opportunity, and we’ve got a lot of growth going on in China. It’s not just because we want to be in China and it’s important to be in China, but what’s also important is the outbound Chinese consumer — they’re the future of travel. We want to have hotels in the cities they live in in China so they know our brand so when they travel internationally they’ll choose our hotels over the competition.
HOTELS: What other markets do you see as particularly ripe for growth?
Fox: Russia is another market where they’re big luxury consumers. They travel very extensively, and we need to have a presence in those markets.
Latin America is another area we’re not that strong in at the moment, but we’ve identified it as a very important market, and we have growth plans for that market. Any time you’ve got an emerging economy, people start to travel, and you want to be there so you can fulfill that demand.
We already have a small footprint in India; we’re also looking to grow in that market.
We’re also looking at fairly developed markets like Western Europe. Western Europe is a tough market to get into, but we’ve got a nice footprint there with our Swissotel brand and several Fairmonts and Raffles growing in Europe as well. Western Europe is an important market, and we’ve got a few gaps to fill in there as well.
HOTELS: Discuss FRHI’s relatively new regional structure and what it has meant for the company as well as your role in particular.
Fox: I joined the company almost three years ago as president of Fairmont. But it didn’t take us long to figure out that with our aggressive growth plans it was important to review our organizational structure and look at how we could better support operations on a global basis. With the majority of the growth being outside North America, we decided it was time to consider a geographic organizational structure rather than a brand organizational structure.
When I joined the company, we were highly centralized around our brands. Fairmont was based in Toronto, Raffles was based in Singapore and Swissotel was based in Zurich. So we were operating in very much a brand environment. The brands are still important if not more important, but we moved to a geographical model so we would be in the same time zone as our hotels, our customers and our owners. I’ve brought in some excellent senior leaders who have very deep knowledge of the regions in which they’re operating. It was a massive reorganization for us as a company, but we’re settled down, and now we’re really starting to see the benefits of this geographical move.
HOTELS: What sorts of benefits are you seeing?
Fox: First, it supports our growth plans. We’ve got a lot of growth in the Middle East and Africa, Asia and Europe, so you’ve got people on the ground working with the hotels on a daily basis. When I was in Toronto, flying to Dubai was a 14-hour flight, and you could only do it direct three times a week. Now I’m based in Zurich, and I can be in Dubai in six hours. It’s just much easier and much more effective. Decision-making is quicker, and you start to see success much quicker when you’ve got people on the ground that have that deep knowledge.
HOTELS: What has been most challenging about the shift?
Fox: Any time you go through a reorganization it is challenging because you’re asking people to uproot their lives and change their jobs, so it is certainly stressful. You have to really think it through and make sure you have your plans in place and you execute flawlessly. We did do that, and we didn’t really have a lot of challenges outside of the everyday things one would expect.
HOTELS: Last fall there were reports that Prince Alwaleed was considering strategic options for both FRHI and Four Seasons, including an IPO or merger. Has there been any internal buzz about something like that more recently?
Fox: We do have a common shareholder in Prince Alwaleed with Four Seasons, and of course we’re both Toronto-based companies, so quite often there is speculation that a merger of some sort may happen. But there certainly are no plans or discussions about that now. Naturally as an organization we’re always looking at strategic opportunities, but at the moment there’s no weight to that speculation.
HOTELS: Talk about your outlook going forward. If we were to talk again a year from now, what do you hope the biggest topics would be?
Fox: We have massive growth going on right now, and I would like to continue with that growth, and I’d like to see even greater growth. I still think there are a lot of great destinations and customers that would like to see our brands in other markets we’re not in today. I think our story is all about growth right now.