In the luxury hotel industry, there is no such thing as an arbitrary decision. Managers carefully consider every object, every color, every name to make sure they enhance the guest experience and reflect the hotel brand’s image just right.
Such decisions took on far greater significance at the Oberoi, Mumbai, in the aftermath of what’s referred to locally as “26/11.” On November 26, 2008, Pakistani terrorists laid siege to Mumbai and targeted the five-star hotel along with a half dozen other sites in the city. After three days of gunfire and grenade blasts, 164 people were dead, including more than 30 of the Oberoi’s staff and guests; parts of the building were devastated.
Management vowed to rebuild. After a 17-month, $45 million reconstruction, the Oberoi reopened in April 2010. The Tiffin restaurant, where many of the victims were killed, was renovated and recast as an upscale international eatery and given a name that reflected the hotel’s rebirth: Fenix.
“We were rising from the ashes,” says Devendra Bharma, executive vice president of the Oberoi Group, the hotel and resort outfit that owns the Mumbai property. “We felt Fenix was a very appropriate name. Our team had brought the hotel back to glory in 17 months.”
Indeed, its glorious return and unwavering commitment to service have earned the Oberoi, Mumbai, the top spot in the World’s Best Hotels, Institutional Investor’s annual ranking of the top 100 hospitality establishments around the globe.
The Oberoi is not alone in its resurgence. The full ranking contains plenty of bright spots all over the globe. This year’s top ten hotels are notably more diverse, in terms of both geography and property type, than in past years.
These high-end properties are at the forefront of a broader recovery in the hotel industry, and the U.S. market — as in the global economy generally — is leading the way.
“The U.S. luxury segment saw a 5.7 percent increase in room rates in 2014; that’s nearly triple the rate of inflation,” says Bjorn Hanson, professor at New York University’s Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management. “Luxury occupancy rates were about 72 percent, a little higher than the long-term average. And corporate contract rates will increase 5.5 to 6.5 percent in 2015. If we put all these statistics together, it has been a very positive year.”
Although most general managers are hesitant to use the word “thriving” just yet, they certainly are relieved by the industry’s bounce back in recent years. They know too well that the recession that followed the 2008–’09 financial crisis changed not just their balance sheets but guest expectations as well, and that the former depends on how well they fulfill the latter.
“Guests are now looking for more value no matter what price point they come in at, whether they’re a suite customer or deluxe-room customer,” says Tim Ananiadis, general manager of Hotel Grande Bretagne in Athens, which ranks No. 2 on the list. That has spurred the hotel to increasingly bundle airport transfers with its room rates; it has also just spent €100,000 ($123,000) to upgrade its IT network to provide free Wi-Fi in all its rooms.
Jonas Schuermann, general manager of third-ranked Mandarin Oriental, Hong Kong, points out another significant shift in customer expectations. “In the past, the prestige of being in a five-star hotel was important,” he says. “Now guests are not concerned about the crystal chandeliers. Convenience of time has become a top priority. For today’s clientele, time is their most precious commodity. So our mission is to take whatever we can off their plate. That’s not the reason for their stay with us, but for us it’s an important service we provide.” For example, guests who need a transit visa between Hong Kong and mainland China can simply turn their passport and paperwork over to the Mandarin Oriental’s concierge and avoid the aggravating queue at the consulate.
Likewise, the Oberoi, Mumbai, has responded to the needs of its time-pressed patrons in a number of ways. “Our chauffeurs have started doing in-car meal ordering for guests,” Bharma says. “Before you reach the hotel, you can place your dinner order so that your meal will be served upon your arrival.” The hotel offers 24-hour butler service on every floor to handle guest requests. And the in-room dining menu now caters to busy guests with a new selection of smaller, simpler meals delivered in just 15 minutes — guaranteed.
Customers’ need for speed is most urgent when it comes to Wi-Fi. It’s an absolute prerequisite for Millennials (ages 18 to 35), who live on their mobile devices. Hotels have heeded the call. Investments in Wi-Fi upgrades accounted for a significant chunk of the record $6 billion spent by U.S. hotels on capital expenditures in 2014, Hanson says.
Millennials are also the driver for another predominant cap-ex trend: renovations of lobbies and other common areas. “Research shows that Millennials prefer to hang out in hotel lobbies instead of working alone in their rooms,” Hanson says. “They like homey, comfortable congregation areas. That requires a large-scale change to the configuration and nature of lobby furnishings.”
The Grande Bretagne recently spent €200,000 to refresh the upholstery in its luxurious Alexander’s Bar. “I’d say one third of our customers in the bar are under 25,” says Ananiadis.
The Peninsula Chicago, which occupies fourth place in the World’s Best Hotels, is embarking on a significant room renovation that offers a little something for every key demographic, from Millennials to their baby boomer forebears. “It will be a very different look,” says Maria Razumich-Zec, the hotel’s general manager and regional vice president, USA East Coast, of the Peninsula Hotels group. As part of the makeover, the company is replacing everything from linens and carpeting to desks and wardrobes, and installing an espresso machine and tea maker in each room. Rooms will also gain a 55-inch flat-screen TV (65-inch for suites) and complimentary VoIP international calling. In-room tablets will put at guests’ fingertips everything from room service menus to spa services to a list of activities, both in the hotel and local. “The best part is that the tablet content will be in 11 different languages,” says Razumich-Zec. “That’s going to be quite helpful. We don’t have a huge international market, maybe 11 or 12 percent. But we are going after more.”
In that effort, the Peninsula Chicago has benefited tremendously from its ties with Choose Chicago, the city’s official destination marketing organization. According to a November 2014 report by Oxford Economics, Choose Chicago and similar U.S. city and state agencies spent nearly $2 billion on promotional efforts in 2013. “Those efforts are starting to pay off,” says Razumich-Zec. “We’ve seen a big influx of visitors to Chicago.”
The Peninsula chain is also appealing to its hometown crowd in Asia by partnering with Luxe City Guides, a popular Hong Kong–based travel publisher. The result is PenCities, a weekly online luxury lifestyle journal that appears on the home page of each hotel in the chain’s ten cities, highlighting must-dos in the local area. The Peninsula Chicago’s site recently contained stories about the opening of a hot new diner by a James Beard Award–winning restaurateur and a preview of the Lyric Opera of Chicago’s 60th season.
Adam Weissenberg, partner and global leader of the Travel, Hospitality & Leisure (THL) sector at Deloitte Touche Tohmatsu in Parsippany, New Jersey, expects hotels will devote greater attention and capital to expanding their mobile presence in the coming year. “Right now, around 7 percent of THL activity is done over a mobile device,” he says. “I wouldn’t be surprised to see it grow to 40 to 50 percent in the next five years. If you don’t have the ability as a company to interact with your customers through their mobile, you will be at a big competitive disadvantage.”
The Ritz-Carlton chain is leading the mobile charge. In August it unveiled a mobile app that guests at its properties — including Ritz-Carlton Chicago, at No. 20 the highest ranked of 12 Ritz-Carlton hotels on our list — can use to check in and out, order in-room or poolside dining and submit service requests.
The Mandarin Oriental chain just revamped its mobile website in November. It enables visitors to create an integrated guest profile, which is shared across all 45 hotels in the group to offer a personalized, consistent experience during every stay. The website also features a social media menu that encourages guests to share comments and provides links to the chain’s social media pages, ranging from Facebook to Sina Weibo, a Chinese microblogging site.
Keeping tabs on social media comments about your hotel can be a full-time job. In fact, at Hotel Grande Bretagne it is. The Athens hotel’s digital team has three employees, with one dedicated solely to social media correspondence. “The way I see it, online marketing has two distinct functions,” Ananiadis says. “First, you have to be present, in the right way, with the right content. You can’t afford not to be present on any of the platforms. Second, you have to be active, by marketing yourself, by promoting your product, by taking advantage of the technology to retain your existing customers and attract new ones.”
“Unique” and “authentic” rank high among hotels’ top hashtags and search engine optimization keywords. For the Peninsula Chicago, that means promoting its Sky Rink, a rooftop ice-skating rink that raises money during the winter for two children’s charities. The Mandarin Oriental, Hong Kong, boasts three Michelin-starred restaurants as well as, in Schuermann’s words, “Hong Kong’s best-kept secret”: the Krug Room, a 12-seat restaurant featuring Asia’s largest collection of Krug champagne. The Oberoi, Mumbai, claims the first 24-hour spa in India.
More than anything, however, the heightened scrutiny via social media makes it ever more critical for hotels to get the fundamentals right. “You can make a hotel as smart as it can be, but if the service and team are not there, it’s not of any use,” says the Oberoi’s Bharma.
At the Peninsula Chicago, Razumich-Zec holds roundtable meetings with 12 different staff members each week to ensure everyone is on the same page when it comes to service. “We talk about what guests are saying, what’s happening in their departments and if they have the tools they need to do the job,” she says. “Our employees know they have an outlet where they can speak up to me and our H.R. director.” That effort has paid off in terms of employee loyalty. Razumich-Zec estimates that 20 percent of the staff has been there ten years or longer, and another 60 percent at least five years.
During the 17 months that the Oberoi was closed, Bharma and his management team continued to work diligently with their staff. Nearly all employees were retained and transferred either to the Trident, the sister hotel next door, or to another Oberoi property. “We utilized that time to train them a lot,” he says. “We had a lot of activities in the Trident to keep them busy. No one was sitting idle. That brought back their confidence and momentum.”
As 2015 unfolds, the momentum of the resurgent market will no doubt give the Oberoi and its fellow top hotels further opportunities to prove to guests — and social media followers — that their dedication to exceptional service is anything but arbitrary. “Our topmost priority is to have a consistently high level of service,” Bharma says. “How you treat your guests is what brings them back again and again — the key differentiator that sets you apart.”
