London GMs talk rate, trends and innovation

Louis Sailer

Hotel Management gathered London hoteliers to forecast investment and operations trends. In attendance were Louis Sailer, Café Royal; Kiaran MacDonald, The Savoy; David Morgan-Hewitt, The Goring; Debrah Dhugga, Dukes; Sylvain Ercoli, Bulgari Hotel & Residences and Andrew Thomson, Metropolitan by COMO.

Hotel Management gathered London hoteliers to forecast investment and operations trends. In attendance were Louis Sailer, Café Royal; Kiaran MacDonald, The Savoy; David Morgan-Hewitt, The Goring; Debrah Dhugga, Dukes; Sylvain Ercoli, Bulgari Hotel & Residences and Andrew Thomson, Metropolitan by COMO.

 

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London’s hotel performance is showing signs of improvement, following a volatile 2013. In its UK Hotels Forecast 2014, PwC calls for better pricing power in London in 2014 and record revenue per available room. PwC anticipates London occupancy to grow to 82 percent this year and hit an ADR of £138.20. Hotel Management sat down with hotel directors and GMs in London at The Savoy to scope out trends.

Ruthanne Terrero: What are your business priorities, coming off an Olympics year in 2012?

Debrah Dhugga, Dukes: The most exciting thing for Dukes is the investment our owners have been putting in over the last four years to take it up to the five-star standard. Dukes was a very corporate hotel and I changed it. So now we’re getting top-end luxury, which we’ve never historically had. Certainly the leisure side of it is growing, particularly the American market and the Russian market. There is quite a lot coming in from the UAE as well.

Sylvain Ercoli, Bulgari: We opened our hotel [in 2012] and we’re still positioning where it should be amongst the top luxury hotels in London. The market has accepted the hotel extremely well. After one year, 45 percent of our clients were repeat customers, which is higher than anticipated. Guest satisfaction is something I was keen on, and 96 percent of our clients say they have been delighted by their stay. I’m focusing more on how we can attract more Londoners to the hotel.

Louis Sailer, Café Royal: I’m the newest kid on the block. Café Royal is still in soft-launch mode. Progressively we’ll add floors and venues. We have many spaces within the hotel. Some are 150 years old, some are from the 1920s, and some are brand-new.

The people of London are very protective of Café Royal and what they want to see. So very slowly, very gently, we are entering the market, trying not to offend anybody. We used the restoration expert who did Windsor Castle after it burned down.

David Morgan-Hewitt, The Goring: We didn’t open recently; we opened 103 years ago. 2013 was rather quiet. In 2011, we had the royal wedding, and at the end of last year the Queen wrote us a Royal Warrant. It’s wonderful to say, ‘Let’s breathe and look inward to see how we can improve.’

It’s an interesting journey for us because with all the new openings, you have to constantly look at what you offer as people bring new ideas and perspectives into the marketplace. As an old property, if you don’t play the same game you wind up being dated.

David Morgan Hewitt, The Goring.

David Morgan Hewitt, The Goring.

 

Kiaran MacDonald, The Savoy: Suites are critically important for all of us, and with 73 suites, we’re continuing to chip away at competition trying to get our market share. Our aspect of overlooking the river is key. We’ve embraced that by introducing a river cruise as part of the suite offering. We’ve done it for the summer as a testing and it’s been very well received.

We’ve also added airport transfer as a [suite] standard. That’s more about taking ownership of the guest as soon as they disembark, to take out the stress around travel.

Andrew Thompson, Metropolitan by COMO: We were a non-sporting venue of the Olympic family [in 2012] and it’s incredible the amount of focus we had from January 1 to the end of the Olympics. And then came sort of a void afterward, so we used [2013] to bed down. We’re lucky with our owners that we’ve had their continuous investment in our spa and the bar. We’ve got a bedroom product that’s 16 years old; it’s still the original product, so it’s time to look at that.

Andrew Thompson, The Metropolitan by COMO.

Andrew Thompson, The Metropolitan by COMO.

 

Ruthanne Terrero: What is the current booking pattern like?

David Morgan-Hewitt: What’s surprised us is how good [2013 was]. Cities often have bad years after Olympics. We had quite a good year. June for most of us was the best month we’ve ever had.

Debrah Dhugga: And August 2013 was amazing in comparison to 2011—you can’t look at 2012 ADR in comparison. Post- and pre-Olympics there was a real dip for our season at Dukes hotel. This August we had a huge growth in occupancy and a huge growth in ADR. It was one of the strongest Augusts in history.

We all want that top-end luxury market so we’re looking at new opportunities. Russia is coming through nicely. Dukes was very much about Americans coming through. The younger market from the UAE is growing.

David Morgan-Hewitt: Bars are important. There’s a real bar culture that has returned to London.

David Morgan-Hewitt: Bars are an entry point as well. Afternoon tea is one way [people enter our brands]; the other is through bars. You can come in and join in the luxury aspect of it.

Kiaran MacDonald, The Savoy.

Kiaran MacDonald, The Savoy.

 

Ruthanne Terrero: How is your luxury leisure market evolving?

Sylvain Ercoli: All of our clients are individual travelers; there are [no corporate rates]. Our hotel has just 50 rooms and 35 suites and seven presidential suites. This is how we manage to sustain really high occupancy. I’ve observed that we’re inter-generational. We have a young market but they know the product. The new generation, ages 35 to 55, can afford £2,000 to £5,000 a night. We see them from all over the world.

Louis Sailer: The economics have changed: In the past, staying in a luxury hotel was a privilege but it’s a right nowadays. You don’t have to be 65 years old and rich. You see clients aged 17, 18, 19 and 20 with the same disposable income.

For more of our conversation with London GMs visit: HotelManagement.net, keyword: London

David Morgan-Hewitt: With so many hotels opening, it is undoubtedly making a difference and there is still a lot in the pipeline. There’s a very strong possibility that rates are going to be driven down. This might seem like a good idea for clients; however, the reality is, luxury costs money. Our wage bills are enormous because we know luxury is about having people who can see what you want before you know it yourself. If our business models change and we have to take our rates down, we are not going to have that sort of money to spend.

Sylvain Ercoli: It’s important to keep in mind that whatever you want your hotel to accomplish, we are in the people business, with shareholders, clients and staff. The question that you constantly have to ask yourself is, if you know what your customer wants today, what do they want tomorrow?

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