New Leadership Takes Hold At Leading
As part of his new plan for the “brand,” President and CEO Ted Teng wants to further reach out and give The Leading Hotels of the World more direct contact with consumers.
By Jeff Weinstein, Editor In Chief -- Hotels, 5/31/2009 11:00:00 PM
|
Ted Teng is starting to put his mark on The Leading Hotels of the World (LHW), New York City. After sitting back and listening a lot over the first 100 days of his tenure as president and CEO, late last year he presented a business plan that goes back to the company's roots while simultaneously looking to the future by reaching out more frequently to ever more media-savvy consumers.
Teng presented these ideas to the travel media at an April event in San Francisco, where the man who admittedly has more experience at the other end of the hotel value chain talked about focusing more on his constituents' independent-minded travelers, as well as the unique stories of the brand's individual hotels. “We need to be supplier-centric and more consumer-centric,” says Teng, who adds that LHW is re-evaluating its signature annual guidebook to make it more relevant to today's consumers.
Teng says he has three initial objectives: improve the quality of the membership (in April at 470 hotels); increase the revenue generated for member hotels; and improve the financial strength of the company. During these tough economic times, Teng is quick to point out that LHW is in good financial shape. “We have the cash to get through the recession,” he says. “We have around 300 employees, but we are not facing any layoffs nor closing any sales offices.”
Based on early results in 2009 and ongoing global economic issues, it comes as no surprise that Teng is focused on revenue generation. LHW reports that while March and April showed somewhat better results, the first two months of 2009 saw a 30% drop in reservations via its reservation service versus the same time period in 2008. In addition, room revenue was off 50% for January and February (US$71.9 million in 2009 v. US$130.3 million in 2008). It should also be noted that LHW's Great European Sale in 2009 has been successful and that the brand plans to roll out more deals like it over the remainder of the year.
In fact, Teng has set specific goals for driving revenue. Currently, LHW generates US$11 for every dollar spent by members, which he considers somewhat average by industry standards. The goal is to reach US$14 for every dollar spent and increase the revenue to hotels at twice the rate LHW grows its fees. Internally, Leading wants to grow net income 15% a year.
As for the quality aspect of Teng's plan, it means narrowing the brand and improving the average quality assurance score by one percentage point per year. As a result, he expects some fallout among the membership—perhaps by as much as 10% to 15%, and he added that about 10 hotels already have been given notices to terminate. “More hotels are failing on service standards than on physical attributes,” he says, which may explain why LHW also is in the process of overhauling quality standards.
To better interact with LHW customers, Teng wants to grow its loyalty program membership to create a more direct conversation and complete more direct transactions. The Leaders' Club currently has 50,000 members, of which 15,000 have made bookings through LHW. Within five years, Teng wants to have at least 100,000 active members who have booked a reservation within a 12-month period.
Lastly, Teng addresses the change in executive leadership at LHW's New York City headquarters, which recently saw the departure of longtime leaders Welf Ebling and Marshall Calder. “The organization I walked into reflected a period when the economy was growing, allowing executives to focus on joint ventures and other new businesses. We needed to create an organization that focuses on core business, and there were some philosophical differences on how we should now approach the business.”
No related content found.
