Los Angeles - Luxury
hotel brand Sofitel Worldwide, part of Accor, in recent years has significantly
repositioned itself, eliminating more than half of its portfolio and
introducing two sub-brands. At the Americas Lodging Investment Summit here in
January, Sofitel CEO Robert Gaymer-Jones spoke with Business Travel News lodging editor Michael B. Baker about the
portfolio shift, the brand's plans for expansion in North America and its
relationship with corporate travel buyers.
How has Sofitel changed over the past few years?
We started off in 2007 with about 206 hotels. We pared it to about 89, culled the hotels out of the system, then we rebuilt it back up to 123, where we are today. We created two other labels to go with the Sofitel brand: So, which is a lifestyle-brand hotel, and Legend, which is more traditional palaces at the top end of luxury. We launched our first So in Mauritius two years ago, and the last one was in Bangkok. We just signed with Karl Lagerfeld for a So in Singapore, and we have a So in Rio on the books happening, as well as So Sydney, So Auckland, So Bali and So Mumbai. We have four Legends now: the first in Hanoi; in Aswan, Egypt; the Grand in Amsterdam; and [in January] we launched the Santa Clara in Cartagena, Colombia. We opened nine hotels last year, and we're opening nine to 10 hotels this year. We're predominantly in Europe, Asia and the Middle East, and Latin America with development. We haven't gotten the development we'd like in the North American market, and we'd like to change that. Part of the reason of being here is to pitch our hotel company and brands to investors in North America.
How do you plan to expand in North America?
We're looking at new builds individually as organic growth, and we are looking at potential acquisitions and takeovers of existing contracts. It's tough because of financing, but we're a great alternative at this segment. We have [nine] hotels in North America right now. We repositioned the brand as being successful around the world, and now we want to focus on North America. I changed my organization in North America to reflect that. We're coming now into the United States in 2013 with a real passion for development.
Are you looking to add the sub-brands to North America as well?
Sofitel is clearly our main brand. So is much more geared toward the fashion areas of key cities, be it New York, San Francisco, Miami or Los Angeles. It's very difficult to bring Legend to North America. If there was one, potentially in New York, I suppose, but that's it. In order to be a Legend, a hotel has to be about 100 years old.
What's your outlook for corporate travel demand this year?
We're not a company that does large group [business]. We focus on the business transient market very strongly, which complements our leisure market. We were about 75-25 percent business-to-leisure when we had 206 hotels. With the new repositioning, we're more like 50-50, so 50 percent of our occupancy is business travel. It's an important segment for us. Right now, everywhere, we are back to where we were in 2007 on our rates. [Revenue per available room] is up on the business segment to where it was before. We're achieving our RFP targets and our corporate travel pricing, so we are pretty positive.
We don't do a lot of government business. People are more nervous about Europe than what is the reality. The issue is not so much the companies or the corporate market; it's the governments, primarily. Corporations still are doing business and still are sending their clients to our hotels, and we're not seeing any decrease. The first negotiations we had with them, they said, "Things are really bad in Europe," because they're hearing so much negative stuff. You say, "No, it's quite robust, and if you want to get a corporate contract, you need to come in now." Otherwise, that window of creating those contracts will disappear, because the demand is strong enough that we can replace it with higher-end business.
How about the Asia/Pacific region?
We have a lot of projects in Asia. Out of the 28 in development right now, we have over half of them, 15, in Asia. That market is still very strong for us. China was a little soft in 2012 because of the elections, and now, that's picking back up steam. Southeast Asia has been on fire for the last year. The only area that's softer than what we'd like to see is Australia, and that's primarily the currency effect in that market.
What are the benefits of being part of Accor?
You have the Le Club, which is not as strong as all the other [loyalty programs] but is a very rich program for the business transient traveler. You have cash redemption versus points, which makes it quite an interesting opportunity for them to choose Sofitel. The other benefit is that we have a global distribution [platform]. We manage the [online travel agencies] at the proper level. We have guaranteed pricing and all the things everybody else does in services and pricing and so on. We also develop our relationships with our corporate clients. We want to make sure it's not just transactional, that it's actually a relationship. We have global sales offices around the world focusing on our corporate clients, making sure that if they have any issues, we are flexible and adaptable.
Have you been adding to Sofitel's sales staff?
Yes. The demand is strong, particularly in the corporate segment. What's happening is that the corporate market is moving so fast, where your traditional corporate clients— the IBMs, the Hewlett-Packards—are still there and are still important, but there are these new startup companies that are coming into play, and they're really energized and want to travel. They want to get their products out there to the market and take care of their people and their travelers, so we need to stay ahead of the curve, understanding who the new corporate clients of the future are. Little companies can get very big very quickly, so we need to make sure we understand who they are and get to those clients quickly.
Are many of those new clients operating outside of managed travel programs?
Yes, based on the size of the client, but you have to be careful. If you put all your sales efforts and relationship-building on IBM and forget about the little guy, that's a mistake. We want to serve the up-and-comers in the market. We understand they don't have travel companies inside their organization. It's basically Sally the secretary who's having to book things, and we need to know who she is and look after her to make sure she feels she has a point of contact with someone in Sofitel, primarily to book the clients. Eventually, we want to help these guys become big companies as well. You want to be adaptable to what's going on in this market. Our salespeople are saying, "Don't just look at the big fish. Look at the little fish, and they're going to grow."
Has there been any shift in which amenities or services are crucial for your corporate travelers?
The corporate market still is looking at making sure that we're able to offer the product and services they would expect at a luxury level of hotel. With the economic crisis of 2008 and 2009, we did very well during that period. We were in the beginning stages of the repositioning of our brands, and we made a conscious decision not to cut back on services, products or amenities. It was tough on the owners, but they supported us and saw it through. What happened was the clients at the upper echelon of luxury went down a level, and we fit in there perfectly, and we maintained their loyalty, because they see in our hotels. A luxury client, a guest willing to pay the rates, realizes we're putting investment into the products and services, be it the towels or the bedding.
What role is sustainability playing in negotiations?
Before, you would sell yourself on sustainability. Now, it's a point of entry. All hotels are following [environmental certification standard] Green Globe or whatever the requirements are, and the corporate clients appreciate it. Very much in the RFP process, as you go out to bid, they're saying, "Explain to us what your carbon footprint is and what are you doing not just in sustainability at the hotel level, but for your community. Do you have a program for Habitat for Humanity? Are you doing anything for your community?" Corporates want to feel that they're moving their customers and staff to hotels that also relate to their way of thinking. Accor does a great job of really doing a lot of this foundation work. As an example, I have a lady in my office who flew out to the middle of Africa just after Christmas to help work on building a school in Malawi. We paid for her to fly there and be part of an organization to help build these schools for children in Africa. It's a cost to the company but reflects well our culture, and each hotel will do the same thing.