Interview: Jumeirah COO Nicholas Clayton

Jumeirah Hotels & Resorts still is most identified by its ultra-luxury Burj Al Arab hotel in Dubai, but during the past 16 years the hotel company has built and acquired its way to a global portfolio of more than 20 properties. Contrary to the prevailing image of decadence, many of those hotels primarily are business travel hotels, including the Jumeirah Frankfurt, Jumeirah Emirates Towers in Dubai, Jumeirah Carlton Tower in London and the Jumeirah Himalayas Hotel in Shanghai, according to Jumeirah Group COO Nicholas Clayton.

Group vice president of sales and marketing for the Americas Tom Civitano said Jumeirah's position in corporate travel programs is on the rise. "Companies are expanding [their use of Jumeirah] to include other hotels that we have in other destinations," he said. "In 2005, we'd get requests for maybe one or two. Now, we're getting requests for proposals that include seven or eight different properties, and that's our measurement of success: how we can expand the RFP for each company, as opposed to signing up new RFPs."

Clayton, who joined Jumeirah in April 2012, spent most of his career working for luxury hotel companies—including Viceroy, Mandarin Oriental, Ritz-Carlton and Four Seasons—often as those brands were in early stages of development. In a November interview with Business Travel News lodging editor Michael B. Baker, Clayton said that while Jumeirah has progressed beyond that early stage, growing the portfolio currently is the group's "major objective." That includes a return to the Americas, where Jumeirah in 2012 lost its presence when JW Marriott took over its Essex House property in New York.

An edited transcript of the interview follows.

How big do you see Jumeirah becoming in the long run?

There are some advantages to being a smaller group. We can be nimble and customize and have some flexibility on a lot of fronts, but the downside is that we're not in every location around the world. That's probably what [travel buyers] would say the most about us: "We love your hotels and the teams that service your hotels, but you need to be in Hong Kong and these other places." We actually have a company structure that's built for 50 hotels. We don't have to do too much to change our core structure and coverage, meaning we have sales and marketing assets around the globe. If we open a new hotel, or five or 10, I wouldn't have to change a lot in the structure of the company, just supply the staffing for the hotel itself. So, we're built for growth. We are an owner of some hotels. In Dubai, we have some ownership position there. The first of our hotels was created in order to give birth to the tourism industry of Dubai. Burj Al Arab was built to grab the international attention of the tourism audience and create a story, along with Emirates Airline. From that, we started to get more opportunities to manage hotels, and we became a management company as well as a hotel owner.

What are your target regions?

In the Middle East, the brand is very well-known, and there are lots of hotel opportunities in that region. It's also profitable to run hotels, so there's an incentive for people to develop properties. That could be in Doha; that could be in Saudi Arabia. We're looking at a project in Abuja, Nigeria. If you ignore Asia/Pacific, it's a big mistake for the future, so that's important to us, as is growing that European portfolio. Here in the States, we would like the one-two punch of the East and West coasts. We will find the right opportunity and re-enter the market here, even if we have to do some degree of participation and buying our way in, which happens in our business sometimes today. People offset some of the cost of the development to win a contract of 20 to 25 years. If we need to be flexible, we'll do it, because we see [New York] as being the world's city. Certainly for the travel industry, it's one of the best markets in the world when it comes to profitability and revenue per available room. Miami is an interesting city, but that would not be a top priority. We have many years of growth to look forward to, so we'll play to our strengths right now.

What are the markets you'll be entering in the next few years?

Five properties in China, a market we had done a lot of due diligence in. We had lots of things going with developers there, but the developers have taken their time, and things have come on later than predicted. That [includes] Guangzhou, Hangzhou and Sanya. We'll look for properties in the key cities of Shanghai and Beijing. Bali is under construction, and Bangkok. We just announced a hotel in St. Petersburg, which is helpful because we have quite a Russian clientele that come to Dubai and the Maldives. St. Petersburg is a conversion of a historic building and is probably up in the last quarter of 2015, so that's a nice fast-track project. We had something very interesting in Moscow. It has gone away, and we hope to have something go back soon, because that's a place where our brand has some strength and resonance, mainly because of that Dubai traffic.

On the corporate travel side, have buyers noticed this growth, or do they still see Jumeirah as regional?

We're only 16 years old. It's a very young brand versus some of our competitors. That was one of the reasons I joined the company, because I saw this growth taking place. We had a few of our properties come online as takeovers, so they were not known or planned and all of a sudden became a part of the portfolio in a short period of time. Grosvenor House [Apartments in London] came on in a short period of time, Rome was a takeover of an existing property and so was Pera Palace in Istanbul. When people are not pleased with their current management or want a better brand, we just have to see what it takes to get the hotel there. In the case of Rome, it was an exquisite hotel, and besides doing branding, it met our criteria for a capital city in Europe.

What sales trends are you seeing?

We have finished our budgeting cycle. In Rome, we'll grow the sales 30 to 35 percent this year, so next year we expect it will still be 25 percent. In other mature markets, it's more of a 10 percent increase. Everything is going in the right direction: up. Some areas are a little more sensitive than others. It was going to be a good year in Istanbul, but they've had this disruptive press [regarding the May protests]. What's happening on the ground is less dramatic, but it damaged the business there. Things like that you can't really help. Generally, the outlook globally is very solid.

How about Dubai?

It's amazingly resilient, from a local economy, transport and a tourism standpoint. In 2009, it saw a dip from its highs, but that still did not take it anywhere near some of the lows you saw in some of the U.S. markets, like in places like Vegas that were oversupplied. It's a low-80s market, occupancy-wise, but at some point, when we had fewer numbers of properties, our hotels were doing low 90s on an annual basis. I think of it as the gateway into the Middle East. If you want an introduction to the region, you would start someplace like that, because you can get to know about the region without being exposed to some of the faux pas you might make if you go to Saudi Arabia or some of those places. People talk about Singapore as being Asia 101. Dubai is kind of Middle East 101.

As you are attracting more corporate business, are your hotels seeing a shift in traveler mix?

The story about the new properties is about going from zero to 100, so that's where you’re seeing the big shifts. A mature hotel for us, like the Carlton Tower, which we've had in the portfolio for 10 years, it's really a refinement of the mix. Generally, success is coming to all our properties. Last year, we had eight properties that concerned me, and this year five are out of that concern and are on their way to doing some really nice numbers.

How does Jumeirah seek to attract business travelers?

People are looking for a little more excitement in their business travel, especially if they travel a lot. If I'm on business, part of your thinking about where you're going to stay is location, and the other part is: Does it have anything hot? Our brand promise is "stay different," so it was really a matter of thinking through and seeing what amenities and services we can offer that can be seen as distinctly different. For the corporate traveler, it's the promises you make about facilitating a business experience and trying to make sure people are successful: timeliness, graciousness.

It's also working with developers that have a mindset like us. We developed, now 15 years ago, the Burj Al Arab. Not every hotel can be created of that standard. I was with Mandarin Oriental when we did the hotel here in New York. It was so controversial for us as a company at the time because we were half owners. It was such a big dollar amount that we hoped it would be OK, and it turned out to be. Sometimes it's worth that extra money, and you have to convince the developer of that. Everybody goes through a process of estimating sums, and then there's a process of value engineering, bringing it back into the line. That's the process that can really kill you, when they cut out the amenities that make a big difference to the travelers. It could be the quality of the bedding, the mattresses or the IT, which is an expensive component in hotels. We have a brand that we have to bring to international prominence, because it was a brand that was born in Dubai and is a symbol of the country, of the United Arab Emirates. Emirates Airline and Jumeirah are the first two Dubai-based international brands, so we have to protect them at all cost.

How much of your business comes through direct channels?

We just relaunched our site, and the whole premise behind that was to make our digital presence, our brand communication much more effective. We introduced massive changes in our imagery, the video content ... We're really trying to step that up because we think it's important. We've seen a 30 percent rise in our traffic, but we don't see that rise in the conversions. It will pay off, but there's still a paradigm in people's mind, where they are convinced they can get it cheaper on an online travel agency. We like to have a balance of partnerships. We don't think there's any particular channel that's going to disappear. We try to keep everybody engaged because we want to be successful.

What about loyalty program membership?

Our loyalty program is called Sirius. We have 350,000 members, so it's fairly successful for a small company. We are going to sweeten the offering and make some advances there because we had counsel that this would be something for our growth and success. We intend to make it a better offering, probably change the technology platform to be more user-friendly.