HAMILTON, Bermuda—The luxury traveler is changing and hoteliers serving that segment need to recognize and react to those changes, said John M. Scott, president and CEO of Orient-Express Hotels Limited.
“The luxury consumer is traveling differently today,” Scott said during a phone interview. “When I grew up, my parents would go away on vacation and wouldn’t always take me and my brother. Today, the time depravation for affluent travelers is extraordinary so when they go on vacation, and in many cases when they go on business, they’re going away with their spouses and even their kids.”
Scott said it’s important for Orient-Express—which owns or part-owns and operates 35 luxury hotels as well as several restaurant, tourist train and river cruise assets—to provide the right mix of product, amenities and services that cater to the changing needs of this group.
Part of the solution, he said, is to have the right physical product to accommodate the increasing flow of multi-generational travel to luxury properties.
“I have three kids, two girls and a boy, so a lock-off guestroom doesn’t work for me,” Scott said. “I need a bigger product, a multi-unit product, either in the form of a villa or a suite that connects to two rooms.
“And while our physical product needs to change, so does the way we operate these properties,” he said. “When I’m bringing kids (on vacation), a honeymoon couple doesn’t necessarily want to sit next to us at dinner.”
Mixing business with pleasure
Another trend among luxury travelers is what Scott calls “bleisure,” or the blending of business and leisure travel in one trip. He said it’s happening in several ways at his company’s hotels: guests who extend their business trips a night or two and bring their spouse or family with them, and guests on leisure trips who also need to do business at least part of the time.
“Guests traveling on business sometimes combine the trip with leisure. They might want to go to the symphony or the opera so we must have great concierges ready to help them,” Scott said.
Even on vacation, many luxury travelers must still be connected to the office, no matter where they are. Scott said a new river cruiser, the Oracella, the company launched last year in Myanmar offers high-quality wireless Internet service.
“The day of turning off the world and going on vacation is long gone,” he said. “Guests have got to be connected, but they don’t want to disturb their families so it’s important to have extraordinary wireless and places where (guests) can get up in the morning and get away from their families to do some work before they wake up.”
Another key behavioral change is that luxury travelers are as likely as all consumers to research and book hotels and other travel experiences online.
“For a long time those of us in the luxury segment said we were insulated from that because we felt the true luxury traveler wasn’t going online to make their bookings and to see what other people are saying about an experience,” Scott said. “Today, no matter what people’s ages or demographic they want full transparency about your product and what you’re doing.”
Growth plans
Late last month, Orient-Express announced plans to rebrand its portfolio under a new brand, Belmond. The transition, which formally begins next week, involves tagging its properties with the new brand as an addition to its current name. For example, the Hotel Ritz Madrid will become the Hotel Ritz by Belmond.
During an earnings call last week, the company also outlined its growth targets and vehicles, including additional third-party management contracts. Scott said the company has also been examining its portfolio to find opportunities to enhance or augment existing properties.
As an example, he cited an additional train excursion the company added to its flagship property, the Venice Simplon-Orient-Express train linking major cities in Europe. Scott said the addition generated nearly $900,000 of incremental revenue and $600,000 of incremental earnings before interest, taxes, depreciation and amortization. Another example was the addition of six luxury suites at one of its properties in Sicily, Italy, which each carry an average rate of €1,500 ($2,060) during peak season.
“Everyone wants to talk about transformational growth, but there are a lot of things we can do within our portfolio to grow,” he said. “While that doesn’t sound as aggressively pioneering as when we went to Burma for the first time, it makes sense for who we are today.”