I attended the 2017 edition of the ILTM Conference in Cannes, where I had the occasion to discover exciting developments in the luxury hotel world. Luxury hotel brands often play a fine gamble between maintaining a core brand identity through a historically iconic collection while seeking to reinterpret and translate that identity into new locations around the world. One excellent example of a global luxury hotel brand that has done this with great success is the Mandarin Oriental.
Created in 1963, the Hong Kong-based hospitality group has expanded significantly since its inception across Europe and the Middle East. Most recently, in Europe, it has acquired the historic Ritz Hotel in Madrid, with plans to convert it in the coming months.
Below you will find my conversation with Michael Hobson, Chief Marketing Officer, who reveals some of the Hong Kong-based hospitality group’s upcoming projects in the pipeline for Europe.
Do you have any plans for a second property in London?
We think that a city like London could accommodate another Mandarin Oriental. There are a few key cities like that around the world. This is particularly true of London, where we have ownership, so we’re not subject to any other owners’ geographical restrictions of operating something else, so we could choose to do that wherever we might. The simple answer, then, is yes, we do think that there’s another opportunity in London, and in fact, it’s fair to say we are in fairly active discretion at the moment.
Are there any updates on Mandarin Oriental’s conversion of the Ritz in Madrid?
We have selected all the actors such as the architect. It’s taking a little bit longer than we first anticipated to get all the city approvals that we require. As you know, it’s a city that is very keen to preserve its heritage, and of course we respect that because it’s all part of the history of that wonderful hotel and its environs, and we are just literally waiting momentarily for the final city approval which will allow us to start the restoration. At the moment, it’s targeted for us to close the hotel at around March or April of next year. We will probably have to close the hotel for restoration for about a year to 18 months, depending on how the program goes. We will be more definitive about these plans once the final approval comes. We actually thought that the final approval would be here by now, but it’s taken a few more months. Good things take time. The city is very concerned about any redevelopment of any historical building.
With regard to the Ritz in Madrid, do you have a branding policy on how you would like your hotels to be referred to? For example, there is the Mandarin Oriental in London, which many people initially resisted and called the Hyde Park Hotel, and it’s only now after many years down the line that everyone refers to it as the Mandarin Oriental. How do you expect your guests and other people to refer to the hotel in Madrid?
Having been involved in the acquisition of the hotel in London in 1996, I can speak with some authority on the subject. When we first took over the hotel, we knew that the hotel required some refurbishment. We bought the hotel with that consideration in mind. We hadn’t quite anticipated that we would spend 60 million pounds at the time; we thought that perhaps it would be less than that. Nonetheless we acquired the hotel for 86 million pounds back in the day. We decided within about 18 months to rebrand the hotel. We made a branding error, by the way, and I had to hold my hand up and admit I was a big part of that. We were so enthusiastic to rebrand it as the Mandarin Oriental Hyde Park London, keeping the name ‘Hyde Park’ in there. We did that whilst we then went through a renovation and refurbishment.
I think we really pissed everybody off under our brand name. What we should have done in hindsight was kept it as Hyde Park whilst going through the renovation and once the renovation was complete then add our brand name and announce it as Mandarin Oriental Hyde Park. So, we’ve learned from that mistake, and the Ritz is a classic case in point. We acquired a 50% interest in that hotel in 2015. We have plugged it into our network as the Ritz in Madrid, we’ve significantly improved its performance in this period of time, but the hotel has extraordinary service. We’ve kept the colleagues who are delivering that service and learned from them. They do an extraordinary job there. The hardware, as we all know, has been very tired, but it is clean and well-kept from a housekeeping standpoint. But from a branding standpoint, we’ve decided not to rebrand the hotel until the refurbishment and the restoration are complete. I think that, going forward, that is sort of what we will do. Where you have a name that is synonymous with an important location or has a history attached to it, like the Ritz, it’s very likely that we will retain that name within the rebranded name. So, you can expect the hotel to be known as Mandarin Oriental Ritz Madrid.
Are you looking at any other development projects in Europe?
We have lots of projects in Europe. We have a very active development pipeline. We’ve actually doubled our development resources just in the last year, so we have more development directors on the ground looking for new opportunities. We do have a number of deals which we are in the final stages of the process of confirming, but we have a little policy in our group that until we have something to announce that is actually consummated, we tend not to announce them. We don’t announce pins on the maps. We have lots of pins on the map, but we don’t announce them until we’re done because I think they only serve to frustrate people like yourself when we say we’re going to be doing this and then, for whatever reason—perhaps financing doesn’t come through or development changes its mind or partnerships break up—there have been so many opportunities that we would have had to announce things that haven’t quite come through. We thus decided many years ago only to announce things that are actually complete.
But we have many cities within Europe and many resorts and city destinations around the world, actually, which we are in active discussion about. It’s fair to say that within a few years, possibly 5 years from now, I can see this group being 50 hotels. Our development pipeline has really stepped up and we think that there’s a very good sweet spot in 15 to 16 hotels. We have 31 operating hotels now, and with the 4 that are opening next year along with several others in the pipeline that are coming, that takes us to about 40. Then there are many others that will come through which will get us to having 50 hotels open in the next 4-5 years.
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Known for his international expertise on luxury hotels through his magazine, Laurent Delporte shares his vision and experiences in the world of hotels on his site DELPORTE Hospitality. He decodes the behind-the-scenes action in the sector: from food and beverage facilities, accommodations, architecture, to the quality of services. He offers interviews, advice, and articles as pragmatic resources that industry professionals and private individuals can refer to in their search for information.