Opening Smarter In Down Markets
By Staff -- HOTELS Magazine, 9/1/2001
- Opening Smarter In Down Markets
- Ultimate Roomservice
- Good-bye Bass; Hello Six Continents
- Marriott GM's Winning Formula
- Stay Smart Campaign Delivers For Express
- DeVere Breaks Business Mold
- Gostelow Report
- Hoteliers
- World Watch
Opening Smarter In Down Markets
WORLDWIDE Opening a hotel is never easy, but the challenge gets even tougher when the economy is soft. Faced with competition that may have more latitude to discount, pre-opening teams are under increasing pressure to find the right rate, the right services and the right promotional packages to get guests in the door.
Pairing domestic and international sales efforts jump-started performance for the 311-room Le Méridien Chicago. Looking for ways to broaden the list of key business clients, General Manager Hugues Jaquier targeted the growing Japanese market that flies into O'Hare airport. "Some of the early statistics we saw were misleading because many of the Japanese travelers stop in Chicago only to get connecting flights," says the Swiss-born Jaquier. However, a carefully targeted promotion with Japan Airlines and Nikko generated 132 incremental room nights within weeks of the hotel's late June opening.
While working with Le Méridien's international sales offices to boost international business beyond its current 10% of total guests, Jaquier and his sales staff created packages to lure additional conference business. "We priced conference packages in a way meant to build relationships with key companies," says Jaquier. By emphasizing incentives for companies planning multiple meetings, the conference sales staff was able to increase both short- and medium-term bookings. Initial experience showed groups were more likely to add a weekend to the beginning of their meetings than to tack on days at the end, which helped to further refine the hotel's conference offer.
Le Méridien's two-for-one promotion in U.S. markets and the appeal of special features, such as 40 rooms installed with technology that makes a laptop unnecessary, have the hotel headed toward a goal of 63% occupancy and a US$250 ADR.
Four Seasons Hotels and Resorts, Toronto, works to capitalize on the "unique strengths" of each property, says Barbara Talbott, executive vice president, marketing. In the case of San Francisco, which is readying for its opening, the offers stress both the business services of an urban hotel and the resort-like fitness/pampering of a new hotel in the hip Yerba Buena neighborhood. For Cairo and Caracas, luxury was a big sell.
Selling globally was also a priority. "As a global brand, we have broadened our client base beyond the North American traveler to draw upon new markets and new travelers," Talbott says. Rather than "discounting," introductory packages more often concentrate on attractively priced packages, such as the pre-opening offer for the Four Seasons Dublin which included a two-night stay, full breakfast, spa access and VAT for US$430. Deals such as this not only attract attention but help position the hotels. Talbott says the Four Seasons in Cairo and Caracas were both rate leaders in the markets shortly after opening.
Le Méridien's Jaquier and Four Seasons' Talbott offer these tips for maximizing performance in a down cycle:
- Hire the biggest sales staff possible. Jaquier boosted his initial sales staff to 10 and was in the processing of adding "one or two more people" just a month after opening. Visibility is essential, and Jaquier likes to emphasize person-to-person selling.
- Do not focus too specifically on certain markets or segments. "Our attention was drawn by the number of Japanese travelers coming to Chicago. We overlooked the Middle East at first. That was wrong. Now, the market is also a priority," says Jaquier.
- Modify as you go. "We update our pre-opening plans to reflect current marketing conditions as the open dates approach," says Talbott. "Based on experience, we modify the plan to capitalize on where we think the business will come from."
- Do not cut back. Though GMs may be tempted to cut corners to drive profitability, Talbott's advice is, "Don't. Our success lies in delivering a high level of personalized service, wherever we operate. Even if the physical structure is wonderful, it is the staff that brings it to life for the guest."
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Every guest can live like a celebrity during a stay at the Park Hyatt Philadelphia with the hotel's "In Your Room" service. With one call to the concierge, guests can shop the Shops at Bellevue from the comfort of their rooms. Merchandise from Polo Ralph Lauren, Nicole Miller, Origins, The Hope Chest and other stores is available. Purchases are posted directly to the guest's folio. Also on the "In Your Room" service menu are in-room spa treatments, salon services, personal training, boxing and flexibility training.
"We targeted this program toward the guest who prefers a private experience or one who wishes the utmost in convenience," says Tricia Severino, the hotel's director of sales and marketing. "The feedback has been very positive since we launched the program last spring." Fitness and beauty services have proven the most popular with business guests and celebrities alike.
Good-bye Bass; Hello Six Continents
LONDON Bass PLC will head into the final quarter of this year with shareholders approving a name change to Six Continents PLC. The familiar Bass name and trademark were sold along with the brewing business to Interbrew last year. Bass had to stop using the name by late August 2002.
Bass executives say Six Continents was selected "for some powerful practical reasons." Chief among them is the fact that Bass already owns the new name through the Six Continents Club worldwide loyalty program created for the Inter-Continental brand. Six Continents is also protectable, having passed rigorous legal and marketing checks, and is registered all over the world. With so much of the infrastructure in place, this corporate "reflagging" could be achieved for the relatively low cost of US$551,000 (£375,000).
"We looked for a name that captured the scope of our business. The fact that Inter-Continental was already using it was important. But what is more significant is that it is such a good description of where we want to be," says John Sweetwood, president, The Americas, Atlanta.
Given Bass's emphasis on brand identity rather than corporate visibility, the name change is unlikely to have any major effect on the financial community or franchisees. "Analysts don't really care about the name. Their focus is on shareholder value," says Trevor J. Ward, joint managing director, TRI Hospitality Consulting, London. In his view, the upside for the new name is that it conveys global goals; the downside may be that it sits uneasily with the company's attempts to give a sense of local flavor and commitment. "It is not a major problem in any case, as the individual brands are much more important-to the owners and to the customers," says Ward.
Losing the Bass connection may have benefits, even in the UK where Bass is a household word. "Bass never had much impact at the unit level. What franchisees were buying into was the Holiday Inn/Holiday Inn Express/Crowne Plaza branding," Ward adds. "If anything, Bass was so big it may have had difficulties communicating with franchisees and creating a sense of community. Bass was, therefore, more of an irrelevance, even an irritant, than a benefit."
Beyond announcing the new name, the corporate identity will continue to have a low profile. Sweetwood says franchisees will not shoulder any additional burden.
HOLLYWOOD, CALIFORNIA Truly successful leaders understand they are only as good as the people they position alongside them. Ken Schwartz, recently appointed general manager of the soon-to-open, 640-room Renaissance Hollywood Hotel in California, believes that following this rule of thumb is responsible for making him a rising star with Marriott International, Washington, D.C. Twice winner of Marriott's "Hotel of the Year" award at the Brooklyn Marriott in 1999 and 2000, Schwartz subscribes to a simple formula: "It's all about your people."
Facing the greatest challenge of his 20-year career, the December 4 opening of a US$615-million mixed-use development that is expected to revitalize Hollywood Boulevard, Schwartz is not about to change his approach. Assuming his experience and network of colleagues will help him make wise hiring decisions-and it doesn't hurt that the high-profile project is attracting five or six outstanding candidates for every executive position-Schwartz is about to embark on what he considers the all-important motivational phase of staff development.
While his pre-opening motivational plans for the Renaissance are not yet final, he promises it certainly will be grandiose. But can he top his last opening, when a 100-piece marching band led 300 staff members in a parade across the Brooklyn Bridge? "You have to make your people feel important and get excited about their jobs," says the 47-year-old Schwartz, who counts former Fairmont executive Bob Small and Marriott's Ed Fuller, Jurgen Giesbert and Mike Stengel among his mentors. "Money is an important motivator, but you need recognition and follow-up."
For Schwartz, follow-up includes meeting with every staff member in every department twice a year on a departmental basis-without the presence of the department managers. "In Brooklyn, I met with each department for two hours to discuss anything and everything," says Schwartz. "We kept a list of every reasonable thing associates wanted to change. Because we had the meeting twice a year, department managers couldn't escape me or fail to follow through. We were able to go to the second meeting and list accomplishments. Just about 100% of what they asked for was addressed, fixed or changed." Schwartz believes this approach led to a highly motivated team and translated into a 91% occupancy rate with a great ADR.
Because the Renaissance Hollywood is a mixed-use development, Schwartz faces additional organizational and coordinative challenges. The hotel will sit alongside the new Kodak Theatre (which will be the permanent home of the Academy Awards) and a host of entertainment, shopping and dining options. Included in 50,000 square feet of multi-functional meeting space is a 25,000-square-foot rooftop Grand Ballroom catered by famed chef Wolfgang Puck. To make sure efforts are coordinated, all hotel, retail and service managers on the site will participate in bi-monthly meetings to exchange plans and share ideas. "If we don't meet, one hand doesn't know what the other is doing," says Schwartz. "Communication is the biggest thing. Every time you make a decision, you have to ask who else it impacts at the project."
Perhaps the biggest impact on Schwartz's life was the arrival of his daughter just less than a year ago. "Through my entire career, hotels have consumed my time," he says. "I'm probably going to have to bring my daughter to work a lot because it will be so difficult to leave her. I'm not going to wake up in five years and find out how much I have missed."
Stay Smart Campaign Delivers For Express
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ATLANTA Can an advertising campaign solve the woes of a soft economy? No, but it can mean more people stayed at a Holiday Inn Express last night.
Now entering its fourth year, Holiday Inn Express's US$40 million "Stay Smart" campaign has increased brand awareness 40% and advertising awareness 96% for this 10-year-old, mid-tier, limited service chain. Jenifer Zeigler, vice president of marketing for Holiday Inn Express, says the award-winning campaign's message that Holiday Inn Express is a smart choice for consumers has struck a chord. The nine executions created by Fallon Minneapolis show "ordinary" people in situations that allow them to exhibit newly enhanced intelligence, skill or artistic ability after having stayed at a Holiday Inn Express-whether preventing a nuclear meltdown or, in the most recent version, performing as the rock group KISS. The tag line, "No, but I did stay at a Holiday Inn Express at last night," differentiates Holiday Inn Express from the product-oriented advertising of many of its competitors.
More important for the owners of Holiday Inn Express' more than 1,000 properties worldwide, these inventive commercials, which air primarily on targeted cable channels, have kept the brand visible. In a year when many domestic hotels are struggling, Smith Travel Research reports Holiday Inn Express's systemwide RevPAR is up 5.2% versus the segment's 4.7% gain for the 12 months ending May 2001. A survey that tracks advertising impact shows the number of respondents who stayed at a Holiday Inn Express was up eight percentage points over a year ago. Roughly 20% of those surveyed said Holiday Inn Express ranks as one of the top three brands they would consider when planning their next trip.
While the payback for the campaign cannot be measured quantitatively in incremental room nights, franchisees feel its effects. "Before this campaign was rolled out, the advertising kept changing its message. This campaign has given the brand cohesion. It has helped build this brand," says Jack Nesbitt, owner and operator of the 69-room Holiday Inn Express, Rensselaer, Indiana. Nesbitt sees the benefits at the property level. "A lot of our guests talk about Stay Smart. They get the message and they like the idea they're making a smart choice." That thinking contributed to rising occupancy through May and fourth-quarter projections well above the June/July off-peak average of 65%.
Jay Tarasaria, owner and operator of the 141-room Holiday Inn Express, Greensboro, North Carolina, says Stay Smart "has been very successful. It draws the line between our flag and our competitors. Everybody now knows what a Holiday Inn Express is." Supporting the Stay Smart campaign with promotional efforts, such as offering double points to travel agents, has also paid dividends for Tarasaria's property by broadening his business base. "You have a larger market of consumers who recognize the product, not only regionally but around the country," he says. As a result, the hotel is on track to achieve a 70-75% occupancy rate and meet revenue target.
Zeigler sees a lot more life left in the campaign. The latest twist, which reinforces the consumer bond, challenged consumers to "Express Your Smarts" and create their own ads. Judging of contestants' 30-second video spots was underway at press time. The winner's commercial will air on the Discovery channel. "We want to keep the campaign fresh but we're always looking for ways to improve it. We want to keep people talking about the brand," she adds.
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WARRINGTON, CHESHIRE, UK Prior to the two-year, US$15 million (£10.5 million) hotel renovation project completed last year, the restaurant of the 140-room De Vere Daresbury Park could have been mistaken for hundreds of other 1970s hotel restaurants. "There was little impact. We needed to deliver a 'wow' factor," says General Manager Richard Grey.
The De Vere Group also wanted to create a concept that would appeal to the hotel's existing leisure market as well as corporate travelers attracted by a newly opened business park. Committed to pushing the design envelope and repositioning the hotel in the 4-star section, De Vere's executives saw an opportunity to play up links to the Daresbury Village native Lewis Carroll in the design.
"To most people, Lewis Carroll conjures up the Disney image of Alice in Wonderland. But, we were working on a contemporary 4-star hotel, not a theme park. It was essential to avoid fairytale sentimentality and make fantasy and functionality go hand in hand," says Josef Ransley, principle of the Guildford, Surrey-based interior design firm, Ransley Group.
Working with Liverpool architect Ormrod & Partners, Ransley reinterpreted Alice's tea party as the Looking Glass restaurant (shown above). Subdivided by hedgerows and topiary, the colorful space is flexible enough for a business lunch, a family dinner or entertaining a larger group-particularly important as a complement to the hotel's new conference facilities. The visual excitement is one reason guests stay in the hotel rather than seeking other dining experiences.
"The design makes us distinctive and gives us flexibility. We now appeal to a totally different market," says Grey. "There is nowhere quite like this."
Expect expansion of SuperClubs throughout South America and the Caribbean. Headquartered in Jamaica, the group already manages 12 resorts in the Caribbean. Now Spaniard Xavier Veciana, based in São Paulo as director of operations for Brazil, says he anticipates at least another seven projects coming on line in South America in the next five years.
Dublin-based Fitzpatrick Hotel Group, chaired by Paddy Fitzpatrick, plans to expand its non-branded boutique portfolio (it already has purchased The Morgan, Dublin). One of Fitzpatrick's sons, meanwhile, is busy extending the group's branded hotels in North America. As well as managing British Airways' dedicated crew hotel and two Fitzpatrick-owned hotels in Manhattan, this month John Fitzpatrick re-flags the former Summerfield Suites in Chicago as the Fitzpatrick Chicago. Now he is looking hard at Boston, Toronto, Los Angeles and other cities with a strong Irish base. The Fitzpatrick brand, he says, has found a niche recognized by banks.
Richard Helfer, chairman and CEO of Singapore-based Raffles International, which now includes the Swissôtel brand, is searching for opportunities in San Francisco, Paris and Rome.
Wyndham International, Dallas, and London-based designer-restaurateur Sir Terence Conran are equal shareholders of the Great Eastern Hotel, which stands on the site of a London charity hospital dating back to 1247. Managing Director Nicholas Rettie sees a growing opportunity for the partnership to look for new properties, especially in mainland Europe. Rettie is looking for landmark buildings that can be converted to hotels to cater to travelers who, he says, are increasingly turning away from brands and blandness.
Robin Hutson, co-founder with Frenchman Gerard Basset of the Alternative Hotel Company, headquartered in Winchester, UK, also is looking for convertible landmark buildings for conversion to the group's four-strong Hotel du Vin chain. Before venturing out of the United Kingdom, Hutson also wants something in Brighton, the South Coast and in the Thames Valley area west of Heathrow. The Alternative Hotel Company is 26% owned by Body Shop co-founders Ian McGlinn and Gordon Roddick.
Hotel development is attractive to entrepreneurs in Russia. In Donetsk, in the east of the Ukraine, 34-year-old tycoon Rinat Akhmetov reportedly plans to build a 5-star hotel related to Shaskhtar football club, of which he is chairman. Akhmetov makes most of his money from steel and property.
Much of Central and Eastern Europe is, however, saturated for 5-star, says Christoph Lang, vice president of projects for Ereste Bank, the largest private bank in Austria. He would certainly not favor further deluxe development in Budapest, Prague or Warsaw, but he admits there may be opportunities for second-tier projects in those cities.
Former war zones can quickly become attractive to developers. Alister Wilson, director of hotels and leisure for WS Atkins, Epsom, UK, is already assessing three possible projects in Bosnia. WS Atkins' portfolio includes project management of the Channel Tunnel and the design and project management of the Burj al-Arab hotel in Dubai.
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Orient Express Hotels, New York, appoints Adrian Constant vice president of hotel operations and development for Europe
Ahuja 
Washko - The Imperial Hotel, Ltd., Tokyo, appoints its current president Hiroshi Fujii to chairman, and Isato Yoshimura to president
- Boutique Hotel Group, New York, names Steven R. Marx president and COO
- The 130-room Beaches Inn, Negril, Jamaica, names Patrick Drake general manager (GM)
- The 370-room Four Seasons Hotel New York appoints Thomas Steinhauer GM
- The 803-room Westin Copley Place Boston appoints Vera Manoukian GM
- The 300-room Regal International East Asia Hotel, Shanghai, names Brian W. Dechant GM
- The 683-room Millennium Biltmore, Los Angeles, appoints Gunther Zweimuller GM
- The 230-room Le Royal Méridien, Chennai, India, names John G.C. Wood GM
- The 360-room Ohana Maui Islander, Lahaina, Hawaii, appoints Robert Minicola GM
- The 244-room Swissôtel Lima, Peru, names Klaus M. Lapp GM
- The 195-room Meadow View Conference Resort & Convention Center, Kingsport, Tennessee, names Dannette Williams GM
- The 462-room Sheraton Yankee Trader Beach Hotel, Fort Lauderdale, Florida, appoints Mark Politte GM.
Asia
Eyeing potential growth in the Australasian region, Radisson Hotels International has launched a bid to gain 100% ownership of DC International (DCI). If successful, the deal should open up options for Radisson to accelerate expansion there.
Raffles International Ltd. plans to acquire management contracts via the purchase of a 10-20% equity stake in property. Tokyo, Hong Kong and Paris are the prime target markets.
Reporting a 19% profit increase for the first half of 2001, General Property Trust intends to expand. The 1,652-room portfolio, which includes Ayres Rock Resort and Four Points Hotel Sydney, ranked them sixth in Australia's top 10 hotel owners in 2000.
In Sydney, a sleepy hotel transaction market is expected to awaken in the second half of 2001 as investors take advantage of a brief downturn in performance. Tracking major hotel sales (over A$5 million), Jones Lang LaSalle Hotels recorded five hotels with 1,349 rooms sold in the first half of 2001 for more than A$229 million. Compare this to July 2000, by which time A$509-million worth of hotel transactions had occurred. Japanese owners have relinquished A$140 million (61% of total sales volume) worth of hotel assets this year through June. Domestic property trusts have dominated buyers, snapping up assets representing 77% of total sales value, followed by U.K. and U.S. buyers.
Europe
Despite all the doom and gloom surrounding the industry in the aftermath of foot-and-mouth disease, European operators seem generally positive about the future, with many companies announcing further development and new expansion strategies. The Spanish market remains an area that many global chains would like to penetrate, although strong domestic competition from the likes of Hesperia (investing ?90 million in adding nine new hotels to their portfolio by 2005), AC Hoteles, NH Hoteles and Sol Meliá continues to represent a big challenge.
Swiss-based Mövenpick is on the expansion trail with new hotels planned in Germany and Italy. A 200-room hotel located near the Reichstag in Berlin will open in 2003 following extensive renovations. The company also will be operating a 250-room hotel in Frankfurt. The 162-room Rome Mövenpick will open in September after the rebranding of the existing Hotel Central Park. A second property is planned to open in Rome in 2004, which will target primarily the conference and incentive market.
Eastern Europe continues to attract investors with Maltese-based Corinthia Hotels looking to take a controlling stake in the Nevsky Palace in St. Petersburg and open a 415-room hotel in Budapest. Radisson SAS celebrated the opening of its first hotel in St. Petersburg, with plans to open a second by 2003. Meanwhile, France's Envergure Group plans to spend ?150 million over the next five years building a chain of 25-30 economy hotels in Poland, many of which will operate under the Campanile brand. Accor-Pannonia Hotels also continues to invest in hotel development in Hungary with another five hotels planned by the end of the year.
In other news, RF Hotels plans to increase its portfolio to 20 hotels by 2006. Key cities for development include Milan, Venice, Frankfurt, Berlin, Madrid, Barcelona, Paris and London. In Italy the eight-unit Baglioni chain has acquired a hotel in Paris and wants management contracts in London and New York. Boscolo is evaluating how to expand, suggesting Italian hoteliers are following the example set by Jolly in moving outside of Italy.
Latin America
Proximity to the U.S. market is keeping Central American economies more insulated from economic malaise than their South American counterparts. However, new supply is impacting the region's hoteliers, according to Thomas O'Neill, Hotel Consulting International, Miami. Panama, Guatemala City, Managua, Tegucigalpa and San Pedro Sula have all seen rising supply and declining room rates. Costa Rica and San Salvador, while expecting a softening, remain healthier due to their stronger economies.
However, opportunities remain. US Franchise Systems' Microtels will open in Campeche and Chihuahua, Mexico, later this year. Atlantica Internationals announced plans for its first Radisson hotel in Brazil. The news broke within a month of the formation of a strategic alliance between Atlantica and Radisson. Atlantica also operates Choice and Starwood hotels.
Middle East/Africa
There has been speculation as to why Fairmont Hotels & Resorts would want to own a rumored 49% stake in Dubai's upcoming US$135-million, 510-room Sheraton Plaza. The hotel is an attractive management target. Starwood Hotels &Resorts last year took the contract from Park Plaza. But as a rule, the luxury chains never invest in this region, preferring to take their "2+10" management fees.
The fact that Fairmont is 16.5% owned by Saudi Prince Alwaleed could explain in part its willingness to offer such a heavy investment. But apart from securing the management contract, and no doubt healthy base and incentive fees, it is hard to see the immediate financial advantage.
The answer: Fairmont is not seeking an immediate advantage. Chairman and CEO William Fatt says, "We see this project as the first step in a strategic alliance with the private office of His Highness Dr. Sheikh Sultan to build and operate a number of hotels in the region and other markets."
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