NEW YORK—The international luxury market is becoming truly international, and major hotel chains are working to expand their brand presence in key and emerging markets through a flexible approach to development.
Accor, for example, is willing to “put skin in the game” to expand its Sofitel brand by 10 new properties during 2011, according to Robert Gaymer-Jones, CEO of subsidiary Sofitel Worldwide—this despite Accor’s asset-light strategy that aims to divest ownership in the company’s global portfolio.
Jumeirah Group also is pursuing leads via sliver equity, leases and pure management, said Executive Chairman Gerald Lawless.
And Taj Hotels Resorts and Palaces is leveraging partnerships with land-bank-holding developers in India to cut through government red tape, according to Raymond Bickson, the company’s managing director and CEO.
No matter the route, the name of the game is continued expansion in the luxury segment, according to the above panelists during a general session at the 33rd annual New York University International Hospitality Industry Investment Conference. High-end hoteliers must ride the surge in performance fundamentals to capture increasing market share in untapped markets and emerging economies.
Taj’s efforts in India, for instance, aim to take advantage of a growing wealthy class and a dearth of supply. The country needs 400,000 guestrooms, Bickson said; at present, it only has 60,000.
“These are growing pains that you find. … (and) the risks are there, but so are the rewards in those markets,” he said of India and other emerging hotel markets.
Bickson said the group is planning five new luxury hotel openings this year.
Jumeirah, which has six properties in Dubai, is looking to expand its reach in any of the 26 markets company management has identified as essential for growth. The group will be a few steps closer to that goal by the end of the year, by which time nine new hotels will have opened in the 12-month period. The goal is 60 signed and/or in operation at the end of 2012.
Notably absent from Jumeirah’s expansion strategy is Venue. The group has shelved plans for the new brand and has suspended planned properties on Dubai’s Palm Jumeirah and in the Dubai Healthcare City.
Sofitel’s target markets include London, New York City and Paris, said Gaymer-Jones.
Luxury performance
After a devastating few years, each of the three companies represented on the panel reported a resurgence in performance fundamentals.
Sofitel saw a 14.7% increase in revenue per available room from 2009 to 2010, and occupancies are returning to 2007 levels, Gaymer-Jones said.
Jumeirah still hasn’t recaptured a consistent average daily rate north of US$1,000, though the brand did hit that mark often during the peak season between November 2010 and April 2011, Lawless said. The group also sold 50% more rooms this January than it did the same month during 2010.
“The rebound was strong in the luxury sector,” Gaymer-Jones said. “I think we all benefited from that rebound. And I think we all expect that to continue.”
The luxury traveler evolved
The approach to development isn’t the only thing that’s shifted as the luxury segment emerges from recession. Customers, too, have displayed subtle changes in behavior and preference.
For one thing, there seems to be a certain degree of traveler guilt, the panelists agreed.
“The luxury segment now has moved from an egotistical reason to stay at a hotel to (one of) connection,” Gaymer-Jones said. Guests at his Sofitel hotels are trying to connect more with employees, asking for names and requesting stays via handwritten notes.
They also are looking for properties that are both socially conscious and enable guests to be the same. Jumeirah has formed a partnership with the Dubai Turtle Rehabilitation Center and works with guests and local marine biologists to protect and rehabilitate turtles in the Middle East.
Luxury vacations also have emerged as a means to reconnect with the family, Bickson said. As baby boomers age, they’re bringing their kids and grandchildren along with them.
But while luxury guests might be a bit more guilt-ridden, socially conscious and family oriented, they’re not absconding all comforts of five-star hotels. Spas have become a necessity throughout the world, Bickson said.
“There’s nothing wrong with pampering yourself as well,” Lawless added. “You’re paying good rates.”