Leading with luxury
UNDER president and CEO Reto Wittwer in the last decade, the Kempinski Hotel Group has made an impressive turnaround and is now at the forefront of the luxury sector with a formula that focuses on one-of-a-kind properties.
The company is now on a major expansion of its portfolio, and has announced plans to open 19 hotels by the end of 2009. This includes a major thrust into into China with nine hotels, and a further five in India, in Udaipur, Chennai, Hyderabad, Pune and at Gurgaon near New Delhi. Plans also include the five-star luxury hotel in Almaty, Kazakhastan and the Kempinski Barbaros Bay which will house the largest spa in the Mediterranean, operated by Six Senses. The group opened its first Dubai hotel, the landmark Kempinski Mall of the Emirates, and is set to open another four in the Middle East and North Africa by the end of 2007.
In addition, it has unveiled a new low-budget brand, Shaza, earlier this year, which is expected to see 20 new hotels across the Middle East. These have been distinctly conceived, designed, and will be operated specifically for the region’s travellers but also for culturally-aware international travellers looking for an authentic regional experience. The new hotels will be in destinations such as Cairo, Dubai and Beirut.
TTN sat down with Wittwer, who was awarded a Lifetime Achievement Award by the New York-based American Academy of Hospitality Sciences (AAHS) earlier this year. Excerpts from the interview:
You’ve been at Kempinski 11 years now, how’s that been like? And congratulations on that Lifetime Achievement Award.
Well, we’ve gone from near bankruptcy to prosperity. When I joined the 11 years ago, I was tasked with turning around the finances of the group, since it was always in some terrible financial situation or another. When you are about to die, your only priority is to make sure that you stay alive. And it would be a shame that a hotel [group] of that age, would have to go under. Basically the first two to three years after it stabilized we had to create a platform for it to grow – you cannot build a skyscraper on moving land – and then we had to change the shareholding. My rapport with the shareholders became clearer with more direction and this made life simpler. So we decided we’ve come from near death and where do we go from here, where do we want to be and what do we want to be. We decided it was essential to establish a long term plan since we did not want to a mixed company with real estate but a management company. So we decided to sell all our properties except one, the showcase property, so we can say we are owners. The money was used to clean up our balance sheet and fund our expansion programme.
And obviously you’ve changed your positioning along the way?
Our message was to become the premier hotel group, not like some other luxury brands, where if you’ve seen one, you’ve seen them all. We are very unique, we do not have a similar portfolio, and all our hotels are extremely different. We have positioned ourselves as a company that is in the luxury end of the market that sells and thrives on its own individuality and heritage.
In the Middle East we entered the market with a hotel in Ajman and no one believed we would do well, but today after the Emirates Palace and the Kempinski Mall of the Emirates, everyone respects us. The Kempinski Mall of the Emirates with its Ski Dome is the most unique hotel in Dubai and in Abu Dhabi the market leader is the Emirates Palace and it will always remain like that. So we are pioneers everywhere. We also have hotels in some unique destinations like Chad and Djibouti, where you do not see a lot of luxury hotels. We see a market in Chad, since Chad has the second largest gas reserve in the world. We were the first international company going into China and Russia and today we are recognised as a company that is adventurous and is ready go where nobody else will.
Are you ready to spend as much on developing these, though, as you did on the Emirates Palace?
If you never speak, you never say anything wrong, if you never take a risk, you will never find out. It’s always in hindsight, but we don’t step into new areas blindly, we study the potential of the market and ensure the destination is booming, and that strategy has paid off with the Emirates Palace.
Does it become more of a challenge to live up to the expectation of such a prestigious property now?
It has. After Emirates Palace, we have to show that henceforth this is the Kempinski standard worldwide, a standard we have to comply with. As more and more exceptional hotels open everywhere,
we have to become more distinct from them. Our goal is also to stay exclusive and we will keep our goal to 100. There
will never be more than 100. Maybe one day portfolio will be equivalent to 100 Emirates Palaces. Maybe that won’t happen, but at least you have that vision.
What’s in the pipeline for the region?
We don’t have plans to franchise to every street corner but to grow intelligently. We would like to close the gap between the Middle East and Asia. We’re already in China, we’ve signed Jakarta, and we will build a landmark hotel in Bangkok. Between south-east Asia and the Middle East is the gap, we are now in India with the Leela and there are other opportunities, but again, we’re being selective. We have a very good period in the company that we want to keep, if you eat too fast, eventually you end up throwing up. The growth you create emphasizes the value; having two or three properties of the calibre of Emirates Palace gives us more value than having 10.
Tell us about your plans for Shaza.
We were approached by partners who didn’t have the know-how to help establish a brand that is distinct and that reflects through its name and values and traditions, some of aspects of the Sharia. As an international company we don’t want to be associated with something very specific to an area, be it Chinese or Swiss or German. So, we decided to give our management know-how, as long as it’s clearly disassociated from the Kempinski brand. Once the brand is on its feet, we will release it to grow. It’s not a complementary, secondary or a top brand of Kempinski. For Shaza the natural markets would be where its values are appropriately understood.
Kempinski Spas are very popular – how important are spa facilities to the hotel guests? What do you think is the future of spas for the hotels in the Middle East?
I think luxury living is lifestyle selling. It’s not just about having a spa, every three-star hotel has a spa, I think eventually there will be too many spas and they will all not survive because of poor management, as well as the fact that expectations are rising with every spa that is opened today. I think what we will be looking for is to complement the style of living along with a wellness programme including meals, such as the Ayurvedic programmes that we provide. It has to be a package, not just a massage. In a leisure property where you are on a holiday, you have all the time you need to relax and unwind whereas in a city property, it’s all about convenience and efficiency. So we make sure we know the guest requires.