Although hotel rates have increased around the world since the pandemic, there could be some correction in global occupancies in the coming quarters. A top executive at Switzerland-headquartered luxury chain Kempinski Hotels S.A. said there is now a sea change in the way the free independent traveller is moving about the world, experimenting far more with 'destination dupes' or locations that offer a similar experience for a lower price.
"The informed traveller is more willing to try new destinations now. If they want a good standard of hotel for less, they now opt for other locations like Portugal, St. Moritz, Slovakia, Latvia, Bulgaria, etc. That's why we're looking at new locations seriously. For instance, we have lodges coming up in Tanzania and hotels in Lombok and Ubud, Indonesia, which we are excited about. There is more in the pipeline in Asia and then the Middle East," Amanda Elder, chief commercial officer of Kempinski said in an exclusive chat with Mint. She is also a member of the management board of the hotel major. The Baharaini Royal Family holds a majority position in this business, buying out the King of Thailand who earlier held the majority position.
"In fact, if we had a good destination in India, it would be great for us as the Indian traveller has become very important for hospitality companies. We are still fondly remembered when we were in India about a decade ago with The Leela," she added.
In 2013, a decision was made by the two mutually to discontinue its 25-year-old branding alliance due to strategic reasons. Kempinski, one of the world’s oldest luxury hotel groups, maintained its partnership with the local builder Ambience Group in Delhi till 2015 to manage its one hotel in the city. It had then hoped it would have about five hotels here by 2020 but couldn't achieve that goal. The company still hopes to flag its brand in metros like Delhi and Mumbai and could even look at existing luxury hotel properties that are looking to have a rebranding. At present, it has 82 hotels and residences around the world.
"We want to because we know there is an appetite for consumption. There's a financial upside to it as well and we recognize that. There is also the value of brand recognition. When a hotel company is present in a market, people have trust in it when they travel overseas. So we need to find the right partner here, someone who wants our culture and our brand positioning," she said.
At a global level, it would like to have about 100 hotels and resorts in the coming years. "Overall, rather than having a target number of hotels in mind, we know that the world is now redefining what luxury is and the destinations we are looking to open in the future could see portfolio shifts based on the choices of travellers," she added.
For the company, locations like Seychelles, Engelberg, Switzerland, Dubai, and Munich (during Oktoberfest) have seen a big influx of Indian travellers. "We're very appreciative of the Indian guests going to these locations," she said. Its biggest group of travellers are Germans though followed by the Chinese. At the moment though, the Chinese are largely travelling within their own country. A third of its portfolio is actually in China so it has done well.
She said hospitality companies are also now starting to use AI with technology. It's about appropriately using data and technology to understand the needs of the guest. "And this won't just be to take down only simple data but also to be very human, personalised, and yet use technology to service guests," she added.
She emphasized that the company, and to an extent the hospitality industry, was now looking at pushing for rate parity with its online travel agency (OTA) partners. "That is actually the number one thing, whether it is a top luxury property or an independent or branded property."
"We have a healthy rapport with OTA companies and what we are working on with them is trying to grow the number of room categories they sell. It shouldn't just be the lead or the entry-level room category because it's better for them as they have more margins and commissions if they're booking a higher rate and of course for us (too). We like the fact that the average rates should remain high. Because then we can continue to focus on the luxury elements of our hotels and focus on the high labour cost, amenities, appointments in the room, refurbishment, etc.," she said.
Also, the very nature of how hotel room inventory is used is changing following the pandemic. Around the world, hotel businesses, she said, are looking to take a leaf out of other industries like airlines or cruises. They have managed their inventory since after the pandemic, working at full capacity on fewer crafts and routes. For instance, if a cruise ship itinerary is not selling immediately in a particular location, it could be taken somewhere else where it would. Similarly in airlines, if a smaller carrier can complete the load, then they are comfortable moving the larger craft to other busier routes. "But what do we do? We can't move our hotel or stop competitors from opening new hotels or reducing their rate. So, for instance, in China, some hotels have maternity wards. So, they are not meant for having the baby but when you have a baby, you go there to recoup and relax and get pampered. There are lots of examples which we can use to maximize yield," she added.
