Horst Schulze, the founder, chairman and CEO of Capella Hotel Group, admits he is jealous of Nicholas Clayton, who has been appointed CEO of Capella Hotel Group Asia, his joint venture with Singapore’s Pontiac Land to grow Capella and Solis hotels in Asia.
Clayton is the first CEO of the group, which will soon count six Capella hotels in operation, from only one in Singapore, along with Solis hotels under development in Guangzhou, China, and Ubud, Indonesia.
Schulze believes Clayton has 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. Clayton, a disciple of Schulze from the days at Ritz-Carlton, does not flinch at that mandate. Here’s how the conversation with the older and younger CEO went:
HOTELS: Why does it take so long to grow Capella in Asia? There’s only one in operation in Singapore, which opened in 2009.
Schulze: I started Capella in 2002, after the 2001 financial crisis. I didn’t go in to do a big hotel company, but to do a few exceptional hotels, stay connected in the industry, enjoy myself. I can tell you in August 2008, we had 12 hotels under construction and another 14 signed. In October 2009, none was in construction and all the deals were gone because of the recession.
H: And now, there will be six Capella hotels in operation in Asia and a string of Solis properties, too. How did that come about?
Clayton: What we have in the portfolio today is the hard work that was done before me, and I represent them now and am vested in them. I think the participation of Pontiac Land to develop Capella Singapore helped give us credibility. For example, we were picked among many to manage the Shanghai hotel (opening in 2017 in the historical “shikumen,” or stone warehouse gate estate) because of our service philosophy and the success of our Singapore property.
We’re also opening a Capella in Ubud in May/June 2017, Bangkok end-2017/early 2018, and the Maldives and Niseko in 2020. There are also a number of Solis projects, serving the affordable luxury segment, if you will, opening in Ubud (Bali) and Guangzhou in the next two years.
Schulze: I’m jealous of him running the company going forward. Mergers that just happened in the industry only create more commoditization. Large companies cannot create upmarket hotels. I could walk through a hotel under one of these brands one year after it has opened and show you which flowers, amenities, services, etc., aren’t there anymore, because the corporate office in eight months’ time will send memos to the GM about costs, and the easiest things the GM can do is to remove the flowers, turndown, etc.
So competing with them and capturing the upper level of the market is not really that difficult—it is not by us becoming better, but by them becoming worse! I’m jealous because this opens up the space for a unique ultra-luxury market and (Clayton) can move this company forward and be the leader. I don’t have the time anymore for that opportunity. I had my chance, and what I did was to take the standards at the time—the Hyatts, InterContinentals—and move those to a different level. The luxury customer of my time was more aloof, a bit arrogant, while today, they want it their way. He has the chance to create the new masterpiece.
H: Is Capella the new “masterpiece”?
Schulze: In some ways it already is, but in a narrow rather than a global market.
Ritz-Carlton, for example, became the global market leader and benchmark, and that’s what (Clayton) will be in three to five years.
H: Nick, no pressure, but how are you planning to be the global hotel standard?
Clayton: One way is to leverage the opportunities that currently exist and raise the brand’s profile. We have all these openings and they aren’t typical hotel openings for us—the Shanghai property, for example, is a major opportunity for us to create a buzz and develop an awareness of Capella in the entire country. We have seen a few hotels (The Puli, Shanghai, The Upper House, Hong Kong) that are single openings, yet are properties that capture the market’s imagination. This is what we must do. If we do that in Shanghai, Ubud, Bangkok, the Maldives, Niseko, and have Singapore complementing them, our regional presence will be quite significant. We don’t need 30 hotels in Asia to be famous, but if we do it right, people will be interested in investing in Capella.
H: Yes, but what do you think is key to setting a new global hotel standard?
Clayton: It’s about passion and dedication toward the cause. I remember my early days of working with Horst and that I totally got his message that caring for employees is the only way. You can’t fake caring for employees. That’s the difference Horst has brought to the new brand called Capella. It’s something we believe is taken for granted today by many operators. They miss the point that this is about human relations: being effective with people to bring about greatness and to deliver a product that ultimately people are willing to pay for.
Schulze: I work with a number of companies, in consulting and making speeches, and I see that our industry and other industries are guilty of the same stuff. The chair you sit on fulfills a function. But if we hire employees to join us not just to fulfill a function, if you align them to our philosophy, objectives and thinking, then you cannot fail.
Clayton: Over time, everyone has touted service to the point people go ‘ya, ya, ya’. I visit cities all the time and for me the first test of a well-managed hotel is if you ask to see a room and they look at me strangely, like I’m a burden to them. To me, that person does not care and has failed to communicate to me the purpose of the organization.
H: Horst, what’s the first test for you of a poorly run hotel?
Schulze: No question, when I walk in and pass by three employees and they don’t look at me and say hello—that’s already finished.
