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Exclusive: Schulze sells Capella to Singapore family

Horst Schulze, who founded Capella Hotel Group in 2002, has sold the company to Singapore’s Kwee family, with whom he has had a relationship with since his Ritz-Carlton days and created a 2006 joint venture to expand the group in Asia through Capella Hotel Group Asia.

The Kwee family owns Pontiac Land Group in Singapore, a real estate development firm whose assets include the Ritz-Carlton Millenia Singapore, Conrad Centennial Singapore, Regent Singapore, A Four Seasons Hotel, and Capella Singapore. The transaction is between Schulze and the Kwee family members, not Pontiac Land. The terms and financial details will not be revealed.

Schulze will remain on board as chairman emeritus while Nicholas Clayton, who worked with Ritz-Carlton for 13 years during Schulze’s tenure as CEO, has been appointed CEO of Capella Hotel Group. Capella, which today has seven hotels open (five Capella, two Solis), will now be headquartered in Singapore.

"Now, I have an ownership who gets it. I’m turning it over and I’m going to phase out, not walking away. There is a saying that great hoteliers don’t die, they just fade away.” -- Horst Schulze
“Now, I have an ownership who gets it. I’m turning it over and I’m going to phase out, not walking away. There is a saying that great hoteliers don’t die, they just fade away.” — Horst Schulze

It’s apparent the move has been in the makings for a while. Clayton joined Capella Hotel Group Asia about two years ago and last year Schulze referred to him as a successor, telling HOTELS he was “jealous” of Clayton running the company going forward. He said Clayton had the opportunity to set a new global hotel standard the way he and his peers did with the Ritz-Carltons and Four Seasons of their day.

In a telephone interview from Atlanta, Schulze told HOTELS: “We have been talking with [the Kwees] about it for several years. For me, the timing is perfect. I don’t want to travel 250 days anymore and also, Nick is there. Nick understands. He has the same philosophy to create excellence rather than just another hotel. Most hotels have become commodities.

“I sold the company to the Kwees because they have the same vision. I wouldn’t have sold otherwise; I don’t want to sell my dream to anyone except someone who continues to believe in the dream.”

According to Schulze, a number of parties had approached him, particularly the large hotel brands. “I know what they will do; they will take the heart out of what it is. I was scared Capella would go the same direction as them,” he shuddered.

Asked if he was retiring or creating a new brand, Schulze, who is approaching 80, said: “I’ve no interest to launch a new brand. I sincerely believe in the philosophy of Capella, which has the right recipe and will continue to respond (to luxury customers of the future). It was clear after I did Ritz-Carlton, which was a leader, there was room for something above Ritz-Carlton – high-end, smaller, less commercial European hotels at another level. That was the model for me. If Capella keeps adjusting to new expectations of consumers, it can stay forever.

“I will never retire. I’m going to stay very involved of course, keep watch on the branding and operations. I’m also on the board of five major companies now, which keeps me quite busy. I don’t have to have an extreme travel schedule anymore.”

Schulze said he’s very excited about giving his baby away. “People thought it would bother me, but I’m so excited. I have to be pragmatic and I don’t want to wait too long. Then a big company or one of these private equity funds comes along that only wants to exploit it. I celebrate this. Now, I have an ownership who gets it. I’m turning it over and I’m going to phase out, not walking away. There is a saying that great hoteliers don’t die, they just fade away.”

The acquisition comes as the group, which operates three brands, Capella Hotels & Resorts, Solis Hotels & Resorts and Auriga Spa, is finally gaining traction with its expansion, especially in its new backyard, the Asia Pacific region.

A new Capella hotel in Shanghai just opened, joining operation in Dusseldorf, Ixtapa, Singapore and Marigot Bay. Capella hotels are being built in Bali, Bangkok, the Maldives and Sydney, all to be opened by 2020.

Solis hotels are under construction in Bali, Guangzhou, China and Atlanta, joining two currently in operation.

“A milestone goal for us is focused around the year 2020 and specifically for the Capella brand growth in Asia." -- Nicholas Clayton
“A milestone goal for us is focused around the year 2020 and specifically for the Capella brand growth in Asia.” — Nicholas Clayton

When asked how a single shareholding will make a difference to the group, new CEO Clayton said it provides a single view of how the brands should be positioned. “We control the destiny whereas before, it was more collaborative, which is fine, too,” he said. “But with a single shareholding, decision-making can be quicker and we can be more nimble.”

And with Capella’s headquarters based in Singapore, it can have an Asia-first viewpoint, which does not mean it excludes the rest of the world. “It means we are operating from a place in the world that is most attractive for hotel development and operation,” Clayton said. “There is no doubt that certain parts of the world, say Europe, are in some degree of saturation, and the barrier to new development is high. In Asia, in contrast, new destinations are being created. This is distinctively Asia – look at Indonesia, China, India, Sri Lanka; or Laos, Cambodia, Myanmar which are almost untouched by the mainstream hotel business and therefore offer years of opportunities for new hotels.

“Asia is where we feel the hotel business can be profitable.”

Clayton said the group is committed to making further investments in the three brands that will benefit hotel owners, guests and employees. An immediate investment will be in the website, revenue management and distribution, particularly digital sales and marketing. The corporate structure in Singapore supporting operations, business development, technical services and purchasing, among others, will also be further strengthened.

Asked about his goal, Clayton said the group is focused around the year 2020 and specifically for the Capella brand growth in Asia. “We will have, at the minimum, a Capella hotel opened in Bangkok, the Maldives, Ubud and Sydney, on top of the ones now opened in Singapore and Shanghai, and each one of them are unique and successful,” he said. “Look at Shanghai (distinctive shikumen buildings that first appeared in the 1860s), or Ubud (Capella camp luxury accommodation). It is important to get those hotels open successfully, and when we have six interesting hotels in the biggest population center of the world, Asia, that will be a step change in our history.

“By the time we achieve that, we will have a better view on life. It does not mean we don’t think long-term. Clearly, we want to proliferate the brand, build up brand equity in the long-term, these are our goals. I would like to make Capella Hotel Group a famous company, of course. But you have to have steps in that process. The Ritz-Carlton Hotel Company started with one hotel and it wasn’t until there were more that they were successful. So we need to get to a small bit of critical mass, and with nine Capella hotels by 2020 (including the three outside Asia in operation) we would have established ourselves clearly enough in the key destinations to be known and respected.”

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