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Luxury Hotels USP by Brand

Luxury Hotels USP by Brand

Old Apr 13, 18, 10:36 pm
  #1  
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Luxury Hotels USP by Brand

I was just thinking that with so many luxury hotels nowadays under different flags, it might be useful for the people here to create a list identifying their unique selling propositions. One paragraph or one line for each would be nice. I think the people in this forum are possibly the best in the world to point out the nuances that make each brand its own. For example, I've heard Rosewood call itself "the Four Seasons for Millennials." This would make a good guide especially for those getting their feet wet. It would also help match groups to personalities. For example, if I want to wear Armani to the beach, I'll check into One&Only. If instead I'd prefer to have no shoes for dinner, I'll go to Six Senses.

Would anyone like to have a go at it?
From our previous links thread, these would be some of the names we ought to profile...

Aman
Four Seasons
Mandarin Oriental
Peninsula
Ritz-Carlton

Banyan Tree
Belmond
Capella
Como
Dorchester
GHM
Jumeirah
Oberoi
Oetker
One&Only
Park Hyatt
Raffles
Rocco Forte
Rosewood
Singita
Six Senses
St. Regis
Taj

Conrad
Fairmont
Grand Hyatt
Intercontinental
Kempinski
Luxury Collection
Shangri-La
Waldorf Astoria

Last edited by TheBrownPrince; Apr 14, 18 at 12:27 am
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Old Apr 14, 18, 7:35 am
  #2  
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think it mostly does not apply to this forum, except sometimes in terms of who else is at luxury properties

Originally Posted by Pickles
Marketing not only mostly sounds like BS to me, it is mostly BS
Originally Posted by Kagehitokiri View Post
seems unlikely that there will ever be a "chain" the likes of which were seen in the past. thankfully hope remains for individual properties due to great owners. good owners helped chains, when chains were owned by individuals and they also owned more of their properties. although if aman does not dramatically increase size of properties, that will remain unique.

those here who experienced the golden eras as well as visiting places before they became developed had fortunate timing.
some here appreciate luxury chains/properties spending more on their guests than loyalty & marketing programs

some luxury properties are less like "hotels" and some of them are managed by luxury chains

has been quite a bit of ownership/executive changes at luxury chains listed above

Last edited by Kagehitokiri; Apr 14, 18 at 7:46 am
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Old Apr 14, 18, 3:09 pm
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Originally Posted by TheBrownPrince View Post
I was just thinking that with so many luxury hotels nowadays under different flags, it might be useful for the people here to create a list identifying their unique selling propositions. One paragraph or one line for each would be nice. I think the people in this forum are possibly the best in the world to point out the nuances that make each brand its own. For example, I've heard Rosewood call itself "the Four Seasons for Millennials." This would make a good guide especially for those getting their feet wet. It would also help match groups to personalities. For example, if I want to wear Armani to the beach, I'll check into One&Only. If instead I'd prefer to have no shoes for dinner, I'll go to Six Senses.

Would anyone like to have a go at it?
While I know the brand managers try to create USPs -- I think both WA and STR push the butler service and Rosewood's tag line is "a sense of place" or something like that, at the end of the day, the management companies and brands are competing for management deals with owners and developers and their investors. That's why you see SS coming to NY and with its property in Douro Valley, neither are a typical SS. My guess is that is it's why you are also seeing FS expanding a bit faster than they had been - they probably are being more flexible with owners and developers so they can win more contracts.

Certainly there are more luxury brands than ever before, and unless you are a billionaire who wants to say he owns are FS, RC or STR because you liked the brand so much, you wanted to own one and you're a billionaire, most of these deals are about maximizing profits.

I recall during the 2008 recession, about a third or more of FS hotels were in or in a preliminary stage of insolvency, and I think management companies realized to keep growing they had to be more flexible. My understanding of the deals is the management companies (Marriott, Hilton, Accor, Montage, etc.) make their money off the top line - and they don't lose any money if the property is loss making -- they obviously get bonuses for financial performance - but the business of hotel management companies is to have as many properties as possible. Walking away from a deal means walking away from profits.
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Old Apr 14, 18, 3:47 pm
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I don't think there is a truly unique hotel chain and it will remains this way at least for the foreseeable future. If you want to create a hotel chain that only have remarkably aspirational hotels, each properties will cost you a billion dollar, since typical luxury properties with 300 rooms usually cost $300m (if you want nobody-in-the-world-ever-saw kind of properties, then it'll be more like $3-10b per property). And the hotel chain should build/own/operate each hotels themselves (unlike the most of existing hotel chains which typically own 0.5-3.0% of their entire portfolio), if they want strict quality control over the properties. That means, a hotel chain with 100 truly unique properties all over the world, will cost you $100b or more. But not many entities are rich enough to burn $100b to build those kind of network, especially there is high chance of whole investment going down the drain.

And I don't think there is a market, at least not large enough for those kind of truly exceptional 100 hotels in the world. Usually hotel should be able to charge somewhere around 1/1,000 of what they spent on each units per night, to become profitable in the project lifecycle (usually somewhere between 15 to 30 years). That means, $1b hotel with 500 rooms/suites combo should charge $2k/night and $1b hotel with 200 all-suites should charge $5k/night, on average. Maybe there is enough demand to fill handful number of big properties at this price level, but certainly not 100. Furthermore, it’s not something that last for 500 years from the time of investment. You’ll need to spend almost similar amount every 20 years, to do the full renovation (on top of that, less-but-still-significant amount with higher frequency for brush ups too), since $100m renovation to $300m property is something like brush up here and there usually.

Last edited by epiahtles; Apr 14, 18 at 5:03 pm
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Old Apr 14, 18, 4:09 pm
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Originally Posted by epiahtles View Post
I don't think there is a truly unique hotel chain and it will remains this way at least for the foreseeable future. If you want to create a hotel chain that only have remarkable, aspirational hotels, each properties will cost you a billion dollar, since typical luxury properties with 300 rooms usually cost $300m (if you want nobody-in-the-world-ever-saw kind of properties, then it'll be more like $3-10b per property). And the hotel chain should build/own/operate each hotels themselves (unlike the most of existing hotel chain), if they want strict quality control over the properties. That means, a hotel chain with 100 truly unique properties all over the world, will cost you $100b or more. But not many entities are rich enough to build those kind of network, especially there is high chance of whole investment going down the drain.
Most chains, groups, brands, etc. don't own the the hotel, they manage the hotel and maybe have a small, minority investment in the hotel, the exceptions I can think of being Peninsula and maybe Rosewood and Oetker, although I think they are a mixed bag of ownership and management contracts.
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Old Apr 14, 18, 4:18 pm
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At least three of the collections cited above with which I am familiar deliver an in situ experience reflecting the culinary taste, decor and ambience of their various settings: Oetker, Rosewood and Belmond.

Most corporate environment goes to Four Seasons and, sometimes that is not so bad. FS hotels are very similar; their resorts not so much. Actually, that is true of many brands listed; their urban hotels are often similar, their resorts more successful in displaying a more local look and feel.

Both Mandarin Oriental and Peninsula well represent their Asian roots in most venues, blending this with the local environment.

That's what I think, anyway.

P.S. some brands in the list don't achieve luxury in my book.

Last edited by KatW; Apr 14, 18 at 5:01 pm
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Old Apr 14, 18, 4:33 pm
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Originally Posted by Nicoolio View Post
Most chains, groups, brands, etc. don't own the the hotel, they manage the hotel and maybe have a small, minority investment in the hotel, the exceptions I can think of being Peninsula and maybe Rosewood and Oetker, although I think they are a mixed bag of ownership and management contracts.
Didn’t I mention that?

Originally Posted by epiahtles View Post
(unlike the most of existing hotel chain)
Anyway, I made an edit to the original post to clarify.

p.s. US-properties-heavy chains do not even manage(i.e. operate) of most of properties that carry their brands. Hotel management agreement/contract is a separate, optional contract with franchise agreement. If hotel owner is confident to run his hotel by himself, owner usually chose not to do the management contract.

Last edited by epiahtles; Apr 14, 18 at 4:42 pm
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Old Apr 14, 18, 5:13 pm
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Originally Posted by epiahtles View Post

p.s. US-properties-heavy chains do not even manage(i.e. operate) of most of properties that carry their brands. Hotel management agreement/contract is a separate, optional contract with franchise agreement. If hotel owner is confident to run his hotel by himself, owner usually chose not to do the management contract.
In the luxury segment, I don't think that's true - I am pretty sure Marriott manages Ritz-Carltons and St. Regis properties -- Hyatt the same with Park Hyatt and Hilton likewise with Conrad and WA.

If you are talking about the soft brands like Autograph Collection and Luxury Collection, or regular Sheratons and Hiltons, that might be true. For the Courtyard and Hyatt Place type properties, I am sure like you said they are mainly franchise.
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Old Apr 14, 18, 5:43 pm
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Originally Posted by Nicoolio View Post
In the luxury segment, I don't think that's true - I am pretty sure Marriott manages Ritz-Carltons and St. Regis properties -- Hyatt the same with Park Hyatt and Hilton likewise with Conrad and WA.

If you are talking about the soft brands like Autograph Collection and Luxury Collection, or regular Sheratons and Hiltons, that might be true. For the Courtyard and Hyatt Place type properties, I am sure like you said they are mainly franchise.
Okay, I'll go again. I did not just come up with some arbitrary numbers. That's a real number.

Originally Posted by epiahtles View Post
unlike the most of existing hotel chains which typically own 0.5-3.0% of their entire portfolio
You can find out how many number/ratio of hotels they're actually owned/leased on their annual report, in some cases detailed list of owned/leased properties too. FYI, in the entire US, the only StR/RC/JW owned by Starriott is StR NY. Actually, in the entire world, the only StR/RC/JW owned by Starriott is StR NY and nothing else (1 out of 226), although they leased RC Tokyo, RC Berlin, StR Osaka, JW Grosvenor House (4 out of 226).

http://files.shareholder.com/downloa...ual_Report.pdf

p.s. Okay. I just realized I misread "manage" to "own" after writing this down, due to the lack of sleep. In case of Starriott, there are 1,959 company operated properties(30.04%), 4,432 franchised/licensed properties(67.97%) and 129 JVs(1.97%). I can't be sure about luxury segment alone (for Starriott), but among the full service Starriott hotels located in NA, 38.34% of them are managed by Starriott, 0.90% of them are owned by Starriott while 60.74% of them are franchised/licensed.

In case of Hyatt, they owned only 4 PHs around the world (NY, Chicago, Paris, Zurich) and own 30-50% shares of PH Milan and Hamburg, either directly or indirectly. However, they have higher ratio of full-service properties that are in management agreement (82.7%, 274 out of 331), compare to the Starriott.

For Hilton, they only owned 5 out of 61 WAs/Conrads, but managing 51 WAs/Conrads.

Last edited by epiahtles; Apr 14, 18 at 6:49 pm
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Old Apr 14, 18, 6:05 pm
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Well, that is as clear as mud.

Are you two in violent agreement with one another?
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Old Apr 14, 18, 6:17 pm
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Originally Posted by KatW View Post
Well, that is as clear as mud.

Are you two in violent agreement with one another?
probably
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Old Apr 15, 18, 2:00 pm
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developers pick brand based on brands not already in location.
all big lux chains have dramatically increased reflagging hotels.
SS is example of being sold by founder/backer to investment co
edit: these examples all basically argue against possibility of USP

franchises - (2 RC, 1 bvlgari) 1 waldorf, 4 conrad, 1 fairmont
(RC does not allow new franchises, bvlgari may not either)
hyatt is de facto franchise by allowing outsourcing everything

epiahtles, we arent talking about nonluxury.. nonluxury counts >
Hospitality Magazine: Do we have too many sub-brands in a hotel group?

Last edited by Kagehitokiri; Apr 18, 18 at 9:39 am
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Old Apr 16, 18, 6:34 am
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Now that we've come to an agreement that most of the luxury brands' properties are managed by the company (if not necessarily owned by them), the original question of whether it's possible to make a list of unique selling propositions for any of the brands listed remains. Anyone?
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Old Apr 16, 18, 8:19 am
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Originally Posted by epiahtles View Post
I don't think there is a truly unique hotel chain and it will remains this way at least for the foreseeable future. If you want to create a hotel chain that only have remarkably aspirational hotels, each properties will cost you a billion dollar, since typical luxury properties with 300 rooms usually cost $300m (if you want nobody-in-the-world-ever-saw kind of properties, then it'll be more like $3-10b per property). And the hotel chain should build/own/operate each hotels themselves (unlike the most of existing hotel chains which typically own 0.5-3.0% of their entire portfolio), if they want strict quality control over the properties. That means, a hotel chain with 100 truly unique properties all over the world, will cost you $100b or more. But not many entities are rich enough to burn $100b to build those kind of network, especially there is high chance of whole investment going down the drain.

And I don't think there is a market, at least not large enough for those kind of truly exceptional 100 hotels in the world. Usually hotel should be able to charge somewhere around 1/1,000 of what they spent on each units per night, to become profitable in the project lifecycle (usually somewhere between 15 to 30 years). That means, $1b hotel with 500 rooms/suites combo should charge $2k/night and $1b hotel with 200 all-suites should charge $5k/night, on average. Maybe there is enough demand to fill handful number of big properties at this price level, but certainly not 100. Furthermore, it’s not something that last for 500 years from the time of investment. You’ll need to spend almost similar amount every 20 years, to do the full renovation (on top of that, less-but-still-significant amount with higher frequency for brush ups too), since $100m renovation to $300m property is something like brush up here and there usually.
I may be mistaken, but I don't think it needs to be that high (200 suites @ USD 5k/night on average) because generally speaking, land (and labour) tends to be most expensive in urban locations . Hotels in urban locations aren't unique, but they are in resort locations, where both land and labour tend to be cheaper. Not sure if North Island/Miavana are turning over a profit but you only have to look to them (10 suites at ~EUR 5,000/night++) to estimate the place likely didn't cost USD 1-10bn to build, although I'm sure someone much more well versed could dig up the exact figure.
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Old Apr 16, 18, 1:07 pm
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Originally Posted by chinmoylad View Post
I may be mistaken, but I don't think it needs to be that high (200 suites @ USD 5k/night on average) because generally speaking, land (and labour) tends to be most expensive in urban locations . Hotels in urban locations aren't unique, but they are in resort locations, where both land and labour tend to be cheaper. Not sure if North Island/Miavana are turning over a profit but you only have to look to them (10 suites at ~EUR 5,000/night++) to estimate the place likely didn't cost USD 1-10bn to build, although I'm sure someone much more well versed could dig up the exact figure.
Maybe you're right. There are not much of special urban hotels, for sure. However, I do think urban hotels can also be special and unique, but they're usually not, which I think primarily due to the budget constraint. For example, PHNY which occupies lower 25 floors of the One57, can become at least a bit special, if it occupies higher 50 floors of the One57 where you can have some views, and if it has all suites -each much larger than current suites- configuration. But if they're go for the higher 50 floors and all-suites route, the cost would reach the insane level for the hotel development. PHNY costs $390m for Hyatt, which works out $15.6m per floor, and $15.6m is not even close for the each of 70-90th floors. They have to shell out at least 3x more than that (because that's the amount Extell actually have charged for higher up condos), for the much smaller floors. That would probably pushes the development cost of the hotel beyond the $1b. If the hotel developer wants 10% ROI, that's $100m/y or a quarter of million profit per day, each suites should generate $1,369 profit (if there are 200 suites), which I think require at least $3-4k in RevPAR, and that would be translated into $4-5k in ADR.

And as for small sized resorts in rural areas, yes they're cheap. Amangiri only cost $125m for 30 or something suites, and many African luxury properties with about the same rate would be much cheaper to build, judging by the hardwares I've seen so far. But they're not the nobody-in-the-world-has-ever-seen kind of properties, as they're basically all over the world. Same goes for urban hotels. Typically, urban luxury hotels with 200-300 rooms would cost somewhere around $300-500m million and some of the relatively special one(e.g. Burj Al Arab) already cost $1b. Massive hotels with thousands of rooms (e.g. Marina Bay Sands, big Vegas hotels, etc) usually cost $1-5b to build, although only some portion of the money goes to the hotel. And I think, in any kind of product, you just don't get something that feels significantly or distinctively better unless you spend at least 3x more. Hence, I assume, $0.5b for hotels with a few dozen suites, $3b for typically sized urban hotels, $10+b for massive hotel are the bare minimum requirement to build something truly unique, that no body has ever seen. But that kind of hotel development cost doesn't make much sense financially, hence I believe it has to be something like a hobby of some super rich, not financially driven commercial properties.
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