Caroline Scheufele, Co-President, Chopard

Chopard Co-President & Artistic Director, Caroline Scheufele takes us behind-the-scenes of the 154-year-old family-owned business to offer a rare insight into what makes it tick.

As one half of the brother/sister duo at the helm of historic Swiss watch and jewellery house Chopard, the brand’s Co-President & Artistic Director, CarolineScheufele, is perfectly placed to offer a comprehensive view of how the luxury domain has evolved to date.

Following the purchase of Chopard from its namesake family in 1963, the Scheufele clan has developed an indomitable dynasty which has managed to successfully balance the preservation of the brand’s core values – quality, excellence and heritage – with innovation and creativity, for decades.

More recently, under the expert guidance of Scheufele and her brother, Karl-Friedrich Scheufele, Chopard has progressively breached new markets and forged partnerships with the likes of the Cannes Film Festival, WWF and Porsche to name a few.

Chopard has also expanded its reach beyond the realm of watches and jewellery – into fragrances, eyewear, leather goods and other accessories.

The house’s latest conquest – the purchase of the five-star Hôtel de Vendôme on the esteemed Place Vendôme in Paris – is a testament to its meticulous and selective expansion strategy, reflecting the brand’s ethos, and marks a new chapter for Chopard.

Specifically, Scheufele is responsible for the ladies’ collections and high jewellery, and since her appointment in 1985 Scheufele in her tenure has introduced high-end jewellery lines to Chopard and injected a new essence of glamour and exclusivity into the growing empire.

Here, Scheufele shares her views on the changing market and offers a candid insight into how shifts in demographics, advances in technology, and fresh ventures are shaping the future of Chopard as a luxury leader.

“ We’ve always believed in providing a lot of limited editions and smaller series ”

There seem to be quite a lot new products and new ideas emerging in the market. How do you feel luxury has evolved in the last 12 months?

In terms of Chopard, we have always been very creative when it comes to our products, so not much has changed for us in that sense. For example, we’ve always believed in providing a lot of limited editions, and smaller series, so that our customers have more choice. Whereas some other houses are not as accustomed to that.

I think the trend, however, is very much moving towards using different types of gold. In our case, we use a lot of rose gold, but you can also mix, in terms of colors and even the materials, including different shades of gold, which perhaps was not done as much before.

Do you feel that some of these shifts are emerging as a result of changes in the demographic of luxury consumers?

Not necessarily. I think it’s the same. The changes in product also go hand-in-hand with fashion. I think it’s much more democratic in that way, rather than just a change in demographics. Of course, we are also now starting have a lot more affluent, younger clients versus the more classic consumer who tends to stick to diamond necklaces and products in that same vein. I think now you can mix and mingle.

“ We are now starting have a lot more affluent, younger clients versus the more classic consumer ”

In terms of the location of your consumers, is the travelling consumer becoming more important?

Travel retail is very important. This is very present in a lot of airports with duty free for example, because you have to take into account the way people move. Often, you do have some time in the airport but you don’t have enough time to go to town or a shopping area.

Travel retail, for the most part, has also become very upmarket, very luxurious. Before, you might not go to duty free, because you know you would just have magazines, and maybe some perfumes and some jewellery available. But now you go and it’s similar to what you find in the streets – the High Streets in London or High Streets in Paris. You have the same brands. So I think it’s really changed in that sense.

The internet has also had an impact. I think, often now, people know what they want to buy beforehand. They get informed, they choose, and then they go and know what they will buy.

You mentioned a variety of choice earlier, as one of the strengths of Chopard as a brand. What is the scope of that choice in terms of the range of product you offer?

Altogether, limited editions included, the house has approximately 80,000 watches and the same amount of jewellery.

Are there any plans to limit the amount of product in future, as a response to the changing market?

Chopard is a big house, but we’re definitely very exclusive and limited, compared to what our other colleagues in the same category offer, where they have, for example, 700,000 pieces. Take Rolex, or Cartier – they make some products, in some materials which we would never make. All we do is steel or we do gold. We don’t do plated or silver.

Chopard has progressively moved into other sectors – such as eyewear – and more recently, the house purchased a hotel. Can you tell us a bit about that?

Well, it’s definitely been an experience! I think, obviously, the first reason we bought the hotel is, because it houses our flagship Chopard store in Paris [on the ground floor]. The second motivation behind that purchase is perhaps because of the experience/benefits of moving into another luxury field which is somehow linked with us, in terms of lifestyle.

Obviously, there are many opportunities which we can create and currently we’ve been trying to get this particular one off the ground. The location is key – there’s only one number 1 Place Vendôme in the world, and always will be, so as pure real estate it will always be a top investment. Now we just have to make the inside just as beautiful as the address!

“ There’s only one number 1 Place Vendôme in the world, so it will always be a top investment ”

Beyond the hotel space, does Chopard have any other plans to expand into new territory?

I think we have already. As a hobby we have the wine business – which is more owned by my brother, and partner in business – and I think there’s a lot to do in that space. Obviously, with the wine, you’re drinking it [the wine] at Baselworld, and the wine is also in the hotel. But I think in future we will probably work more on the accessories too, so there’s still a lot to do there.

Hôtel de Vendôme

In terms of your distribution channels, Chopard is currently quite active on e commerce. Is technology progressively changing the way that you distribute your products?

It’s actually quite interesting, because five years ago you would not sit in a presentation, and show no models, no watches, no necklaces. Now, they [the buyers, clients] are just upstairs with our high jewellery and one of the buyers, for example, is taking pictures and just says: “I’m sending this to Kazakhstan, because there’s a wedding and they’re choosing what they want to buy”. So it’s really direct – because by tonight, we will know [what they’ve chosen to purchase].

We would not have imagined this happening five years ago. Especially not someone buying a piece for €200,000 over the phone. Of course, this also occurs because they trust the manager of the shop, but in saying that, many [consumer] habits have changed.

So definitely, it [e-commerce] is a tool and it’s important, and we have to use it wisely. But it’s also important not to over-exaggerate it. I think there’s still a touch and feel that you can’t take away from. I mean, you are not going to buy a 10-carat diamond over the internet or over the phone. But maybe you’ll get the information that way, and then you know where you are going to go, and what’s important. So, yes, in many ways, I think consumer habits have changed a lot and we have to respond to that.

“ With these unique pieces, if one is gone then it’s gone ”

Overall, is there a trend towards a particular range of price-points for pieces being sold on e-commerce, or is it more of a discovery tool for your customers?

Well, we have the e-boutique in USA and, product-wise, we generally sell more jewellery than watches. In terms of price range, we’ve sold pieces up to $50,000 [via the e-boutique].

How do you go about selling your high jewellery – in terms of Chopard’s limited edition or one-off pieces – and reaching this target market of wealthy, international clients who are often travelling?

Well, the high jewellery is rarely put on the internet for starters, because I think we still view it as something that is more intimate.

These customers don’t necessarily want the pieces exposed everywhere, because I think this is a different type of consumer we’re talking about.

These are customers who are used to going to the shows in Paris, but now you go online and you see all those photos of fashion shows live. You don’t need to sit at Chanel anymore, you can just get everything from somebody who is blogging it, and you can see the whole thing. I’m not sure this is good, because it takes away a little bit of the dream.

But with these unique pieces – if one is gone then it’s gone.

The real definition of luxury. That being said, Chopard has been quite a leader in terms of its social and digital activities. What is benefit for the brand from its interaction with social media, specifically?

I think it provides very immediate feedback and people are really amazed. Everything is alive. You don’t even have time to sit back and think, because the moment you put something up, the next second you get a question. So you have to be very proactive. You have to answer back. You cannot say: “No, I’m not available” – not personally me but the team. I think also, in terms of the communications aspect, for the press, social media has changed the world. Because the exact day something happens in another part of the world, you know it’s happening.

It [social media] is also very aspirational though, so it’s useful for building broader brand awareness, rather than something that is particularly targeted to top-end clients.

Advances in technology and the internet itself has influenced certain products to an extent – wearable technology for example. 

Chopard’s Instagram Account

Do you think that we’ll see changes to the products that luxury brands offer as well?

I think at a certain price level, yes. But, in the top, top, top end, I would say no. I think a mechanical watch is still a mechanical watch. It’s something that people collect and it will outlast generations, because in 50 years, 100 years, wind it and it will work. Whereas, maybe an Apple Watch because lacks these functions is not something our consumers are likely to collect.

At the time, when this [Apple] Watch came out, people started to collect it, but nobody talks about it anymore. I think this is not something of true luxury – I would call it a high tech gimmick. I don’t think the real watch collector would trade in a mechanical watch for that. They might have it have for fun, but that’s it. You have all the things on the iPhone, but you cannot write an email on your watch. I don’t see that.

What’s your view on brands who are trying to integrate electronics into mechanical though?

Of course, that’s just something that is going to happen now, because the devices are available. However, while other brands may think it fits their image, I don’t think it fits the image of Chopard. So, I don’t see us doing it. My brother likes to climb mountains, but I don’t think that means he’s going to make a watch that measures how many times he climbs up and down. But then again, I don’t know, you never know!

“ There’s no question that we have to adapt to price gaps ”

Has the fluctuation of the Swiss Franc impacted any of your business strategies for this year?

There’s no question that we have to adapt to price gaps – which we have, especially within Europe. We had to put the prices up a little bit in Europe. Of course, we can’t put it all up 15 to 20 per cent, because all of a sudden the product is much too expensive. So we will absorb some of those costs and we see how it goes. I think everybody’s in the same boat.

In terms of clientele, it [price fluctuations] matters more for the middle class. It matters to the younger customers – because something that was €500, all of a sudden becomes €600 or €700. That makes it a big difference, even more so for other areas. The hotel business and tourism, for example. If you go skiing in Switzerland, or skiing in Austria all of a sudden everything is 10 to 20 percent more. And if you have a big family then it also makes a difference, for sure.

Are there any markets that you feel cautious about in 2015?

Russia is challenging and it’s a big market for us. But there are also new markets on the rise. Africa is coming up for sure. India has a lot of potential. Asia is doing fine. However, it’s always shifting, so you have to go with the flow.

What are the shopping hot-spots for Chopard consumers from some of the emerging markets, in terms of location?

Everywhere really… But first and foremost, they like to go to the nice capitals, such as London, New York, Paris.

How do you measure success at Chopard?

Here, at Baselworld it’s a very good barometer. This is where we show the new trends, the novelties. So we immediately see the response and if we get [new] ideas. We often know beforehand what’s good or bad, but events like these confirm we’re doing it right.

Chopard’s Stand at Baselworld 2015

As a family-owned company, do you feel there’s always that pressure to grow?

It [being a family-owned company] has positive and negative sides. However, I think that the positives, for the time being, take the bigger part. Because, obviously, we are free to do what we want and we are very flexible, so we can adapt quickly to different situations. In terms of big projects, such as the ‘Fairmined Gold’ project [ethical gold extracted by Artisanal and Small-scale miners certified under the ‘Fairmined’ standard], I think it would have been very difficult to push through in a big machine, like LVMH or the Richemont corporation with politics and CEOs coming and going.

They’re so much into figures and statistics they may be don’t look at the quality. I think if it comes to, for example, a big shopping center opening up in Shanghai, we have to fight, because it’s one brand coming with one shop versus maybe, a big group with eight shops, so we have to fight for locations… But, so far we’ve defended ourselves fine.

What lies ahead for Chopard, in terms of challenges and opportunities?

I think we have lots of challenges. As I said, there are many markets which are upcoming. I think we have rich potential, yet it is always a big challenge to balance staying creative with maintaining [our] high standards of quality. This is an important consideration [when discussing opportunities] because, even if we grow, we have to make sure that our products, when they get to the final recipient, are not deceiving the customer.

Robert Cheng, Group VP Marketing, The Peninsula Group

Robert Cheng, Group VP Marketing at The Peninsula Hotels Group provides an insight into the inner workings of a family-owned empire which has survived the test of time.

Last year, in the height of the European summer, The Peninsula Hotels Group got tongues wagging when it launched its first-ever European location with a luxury hotel in none other than one of the most saturated hotel markets in the world – Paris.

Yet, despite a decision which surely would have had many raising their eyebrows, judging from the view of Robert Cheng, Group Vice-President of Marketing at The Peninsula Hotels Group, it’s a safe bet to say that there was no nervous fretting from the family-owned operation itself.

“We only have 10 hotels in the world, and that’s part of our overall strategy, because we only open hotels where we know that we can be the best in each of those respective markets. The one mantra that the [founding] Kadoori family has is: ‘If you can’t do it right, you better not do it’,” he says.

That same adage is applied across the company’s operations overall, and – in his role at the helm of marketing, incorporating branding, PR, e-commerce and guest engagement for The Pensinsula Group stable – Cheng is a strong believer.

“I think the biggest challenge, but also the greatest opportunity in my role, is how to represent the brand in a way that is authentic and true to its heritage, in an increasingly dynamic and increasingly communicative and global marketplace,” he adds.

Despite having come from an enviable background of work, including over four years with corporate behemoth American Express, Cheng gives a refreshing touch to The Peninsula Group’s strategy and is visibly passionate about the group’s selective string of hotels and their heritage.

“Obviously, we are quite a small hotel group, with only 10 hotels – because there are clearly much bigger players out there – but I think we do pretty well for ourselves,” he says.

“ If you can’t do it right, you better not do it ”

Tell me a bit about The Peninsula Hotels Group – how many hotels/markets you supervise in terms of branding, PR, e-commerce and guest engagement?

Well, I think we are very unique in the fact that The Peninsula Hotels Group, from the launch of our first hotel in Hong Kong, is about 86 years old – so it’s a great honour to head up marketing and kind of be the steward of the brand for such an illustrious company.

We only have 10 hotels in the world, and that’s part of our overall strategy, because we only open hotels where we know that we can be the best in each of those respective markets. We only choose global gateway cities, and within those cities, we only ever choose prime locations. And one mantra that the Kadoori family has is: “If you can’t do it right, you better not do it”.

What are your greatest challenges in this role, particularly in this digital age where consumers are constantly changing?

I think the biggest challenge, but also the greatest opportunity in my role, is: how to represent the brand in a way that is authentic and true to its heritage, in an increasingly dynamic and increasingly communicative and global marketplace. And I think one of the ways to do that by story-telling – because I do feel that we have a great story to tell – but how do I do that within a communication plan.

Obviously, we are quite a small hotel group – with only 10 hotels – because there are clearly much bigger players out there – but I think we do pretty well for ourselves.

I think that is a challenge but also a great opportunity because our heritage and the fact that we do have such a great history, and that we are a smaller but very selective group of hotels, means that we get to stand apart and differentiate our brand in a very effective way.

I think part of that also is really staying in touch with our customer and personalising the experience and staying true to that part of our legacy.

“ It’s very important to not just embrace technology for technology’s sake, but to do it for the customer ”

How do you manage to walk the fine line though, in terms of marketing, between evolution and staying true to the heritage roots of the founding Kadoorie family?

As I said earlier, we are very authentic and we are very proud of our history and obviously our branding and our message has to convey that, but I think we are very aware and it is a cornerstone of our strategy, not just in marketing but really at the hotel level where we do try and innovate, where we do try and bring in new types of experiences and services.

And we’ve never been a company which has been afraid of technology, so really in the guest rooms and in the communications, we try to convey these type of innovative experiences – but I think we are always aware that we have to keep it customer-centric when it comes to technology. I think it’s very important to not just embrace technology for technology’s sake, but also to do it for the customer, so that it adds something to their experience. So we check our technology very thoroughly and I think we are actually the only hotel group to have a dedicated research & development team – which we have had for 30 years.

So they are always investigating what’s out there, and thinking about whether it is a good fit for our clientele and our hotels, but also – equally importantly – they talk to our general managers at the hotels and listen to their experiences and then they actually create rooms to then apply the technology to see how it can improve the guest experiences.

Could you provide some examples?

One very interesting example, which we pioneered many years ago, was actually the reactive bedside panel, where one touch can actually turn all your lights off. And it may be a small thing, but I’m sure we’ve all had that moment in hotels, where you’re struggling to find that last remaining light switch! So very simple things like that, to something a little bit more quirky, to an example where one of our R&D team noticed one of our guests one day, kind of blowing on her fingernails in the lift, and then kind of went back to their lab and tested out a nail dryer, which we now have in the dressing rooms of our hotels.

So I think what’s important and what they do really well is balancing what’s out there in technology but also looking at things from the guests perspective.

And from a marketing perspective, we are always trying to do something new to inspire our guests – for example, recently we’ve been partnering with a lot of artists and celebrating local art. One example is Art Basel here in Hong Kong and we’re now in our third edition of Art Basel.

And I think that’s important – because in the case of our Hong Kong hotel, for example – because it is the oldest hotel in our group, it can sometimes get the impression that we’re a grand old don, so to speak, so it’s very important to keep it inspiring and new to all our guests.

Paris Peninsula Lobby

“ I know that luxury has different definitions for everybody ”

You mentioned the importance of technology but also the need to maintain face-to-face, customer interaction– however, the former can often eclipse the latter. How do you tackle that split specifically?

I think that’s a very good point you’ve made. I think that we want to approach the way that we use technology very, very carefully and to make sure that we still have that personal touch and are really able to be where the guest needs us.

We actually just relaunched our website and just relaunched the mobile-optimized version of the website. And – on purpose – we did not do a native app. Because we felt that we wanted to make sure that we were at the guests’ disposal in terms of them being able to get access from their mobile device, but our guests didn’t want extra real estate on their phones dedicated to a Peninsula App, so we did the next best thing and gave them a mobile-optimized site.

And there, we actually wanted to put in functions that our guests wanted, like: Timely information, geo-location and easy contact for the hotels we also partnered with Luxe City Guides to develop weekly updates for each of our destinations so that rather than providing them with the same, known tourist destinations, we provide them with the latest updates on the hottest restaurant to eat at, the exhibitions on that week, etc.

And we also have cute little functions, so like: ‘How Not To Get Lost In Your City” – so, for example, you’re travelling around in Hong Kong and we have a very handy button so that when you press it, it tells your taxi driver in Chinese where to take you.

So as you can see, I think we do want to bring technology and innovation to our guests, but we want to make sure it’s actually a resourceful for them and that it’s a function that contributes something to their experience. And in maintaining that genuine hotel experience we are very aware not to do too much yet in taking away that human interaction.

“ I think we’ve done pretty well for the last 86 years, so I hope we can continue that ”

What other types of types of content are you creating at the moment?

Right now, we’re doing a mix we have some editorial, images of course – through Instagram – and increasingly we’ve ben dipping into video and using that too and basically, working with our hotels to tell stories and then working with that content to fit different social media channels and using our own network and our fans out there to push that content.

And I hope I’m not being to traditional here, but I think as long as that content is genuine, authentic and engaging, then our fans out here will watch it, like it, share it and people will talk about it.

This really being the digital age though, there is so much content out there – how do you differentiate yourselves – in terms of content but just as much, in your overall branding and the hotel experience itself?

Well, I think for us it’s about being truthful at the base, being true to our DNA and really knowing who we are.

And I think we believe in glamour overall and we really believe in pampering our guests. And I know that luxury has different definitions for everybody, but I really hope that our niche continues to inspire and continues to engender loyalty. And I think we’ve done pretty well for the last 86 years, so I hope we can continue that. But I think in a nutshell it is really about knowing who you are.

I think that there are other great, luxury brands and hotels out there, but I hope there’s still hopefully a market for something that spoils and pampers you and that makes you feel very special when you walk through its doors. I think for us, it’s a very personal brand… You know, we’re not overly cool, but we are going to make you feel special and hopefully people will come back to us for that.

With so many avenues available to distribute content now, where do you distribute your content; and how do you choose what works best for Peninsula and its target market?

I think they key for us is to make sure that whatever we do we do it right, as is our mantra. Because we are small group, and there are a lot of different avenues out there, we are very aware that we can’t be everywhere at the same time, so I’d rather focus our efforts on where our guests are and make sure that we do that really well.

We distribute through mainly through own channels, and now, on a group-wide level, we do have Facebook, Twitter and Instagram – and I think Instagram in particular is a very interesting one for the luxury industry and for hotels in particular because you know, the things that people take pictures of most are views, and hotel rooms, and food – and, you know, we have all three.

In that vein we are testing at the moment working with influencers, and seeing with them how they can communicate their experiences to our audience and theirs through their own eyes –because there are some really great tastemakers out there that really can bring a new perspective to luxury hotels – but they have to be the right ones that really do have a real affinity with the brand.

The great thing is, that we do have a lot of these influencers who really do, legitimately want to tell our story and so we are able to do that in a very organic and natural way.

Specifically, it’s mostly a lot of bloggers ad a lot of Instagramers, but we have a very strict approach to the privacy of our guests though, and we want their story to be very natural, so on purpose we did not empty any formal celebrity ambassador – we’ll leave that to another hotel group to do!

“ I think that as a luxury marketer you have to be brave, put yourself out there ”

When you are trying out new and innovative communication strategies though – how do you assess the effectiveness of that and gage whether it will work for your customer base?

Well, as I said, we do invest in a lot of research and we really try to stay in touch with our fan an our customers to know what they want and what they will engage with, but I also think that as a luxury marketer you have to be brave, you have to put yourself out there and we have to believe in our message and in our brand.

For example we recently launched a partnership with Net-A-Porter and that was something new that we did, but it worked superbly well. It was a really innovative and exclusive partnership with an online luxury fashion retailer and publisher which really has a great following and fan-base and really understand the idea of luxury.

We launched that collaboration during Paris Fashion Week and with them created a series of stylish mini guides to the world’s most dynamic gateway cities, and we’ll soon be coming out with the next five of those during New York Fashion Week in the Fall. But I think there’s more to come there, so stay tuned!

But I spend a lot of time myself, at the hotels and I spend a lot of time also speaking with my fellow luxury marketers and I think that that also helps.

The Peninsula Hotels Group launched its first hotel in Europe, The Peninsula Paris, last year – why did the group wait until 2014 to enter the European market?

Well yes, but I don’t think that it’s so much that we waited, as much as that we really took our time. Not for lack of wanting to be in this market, but I think it also took a few years to actually restore this beautiful, heritage building that we now have for our hotel here in Paris and we took a massive amount of time and effort organising and executing that.

Paris Penninsula

But now what you have beneath that very historical façade is a very modern 21st century hotel. We really ensured before we opened that we had proper back-of-house, a beautiful spa, a 22-metre pool, well-equipped guest rooms.. So behind that 1908 building we do have a very grand and modern hotel.

But it took the longest amount of tie to find the perfect location, and we have been looking for a location like that in Paris for about 25 years. But again, we wanted it to be grand, something with beautiful architecture, the best and most central location.. Which all also explains why it took us a little bit longer.

“ We have been looking for a location in Paris for about 25 years ”

Can we expect to see more expansion in the European market for The Peninsula Hotels Group?

We are looking at other locations, but again, we are willing to be patient in order to find a spot with the best views, the greatest location, central and the right type of building.

London is one of our next locations to open, in a few more years though. We have acquired a great site, in a beautiful location on Hyde Park corner, overlooking Buckingham Palace, but again we’ve been looking in that market for 30 years for that location. We are doing that in partnership with Grosvenor. We’re in planning right now, so I think that once we get through planning with the City of Westminster, we’ll be in a better position to know opening dates, because wit that one, it’s a building that we have to tear down and rebuild.

But it takes a lot of focus and energy to open new hotels, just as much in terms of the actual process as with the communications, and while I certainly admire my peers who can open 10 hotels, but having opened one that was plenty to keep me occupied!

But in terms of other markets, it’s about finding the right location, it’s about views, but it’s also about ownership structure, because we like to keep that control for our brand.

In 2013, the Peninsula Hotel Group celebrated the 85th Anniversary of its original property, The Peninsula Hong Kong, but financial reports released in May 2015 suggested that the Hong Kong flagship reported a 4 per cent decline in revenue per available room. To what do you attribute this decline?

We did begin to undergo a renovation in 2011 and for a period of time that many of our guest rooms were unavailable because they were in the process of being renovated and outfitted with new technology so I think perhaps that for that period that you are referring to, that might have had an impact.

So it’s partly because those figures were calculated on half of our inventory during that year, because half of it was under renovation.

But I think if you look at it from a long-term perspective we are still going up, but obviously in the 2012/13 timeframe, we were running at half inventory at that hotel.

The Peninsula Hotel Group inevitably operates in a very competitive space where competitors are flush with cash and constantly upgrading and expanding. What is your strategy in such a crowded sector with strong competition?

I think the difference with us is a couple of things. One is that we adopt a very long-term strategy. We always think it’s worth it to invest both the time and the energy to make sure that each of our hotels really is at the heart of the city – so if the time is not right, or the location is not right, then we’re very happy to just sit back and be patient and wait for the perfect opportunity. And that is a very long-term strategy and it comes from our owners and our history.

The other interesting and unique thing about our group is that we are owners and operators of our hotels – not just the operators of our hotels. We always have an equity stake. Because most hotels that you will find are not the owners they are just the operators, so they are linked to the hotel owners for investment. So that gives us a lot more flexibility and also a lot of control – not just over the brand, but the manifestation of the brand – inside the hotels. So we can say to any and all of the hotels, when we want: “You need to have light music you need to have fresh flowers, you need to have free wifi”, for example.

“ I think personally, that there is enough room out there for all of us ”

On the competition note – AirBnB recently caused quite a stir when it announced the company plans to make inroads into the corporate travel industry. Is this something on the radar of the Peninsula Hotel Group or something the company would keep its eye on?

I think that there is a great need in the market for that kind of product and that kind of offer, but in terms of a threat, I don’t think it’s that immediate for us. Because I think that while that might suit some travellers, I think for us and our clientele I think the element of service is very top of mind.

There are several quite futuristic hotels with eclectic designs, in some very interesting locations emerging for construction over the next few years – what does the future look like for The Peninsula Hotel Group?

I do think, as I sad earlier, that there are a lot of great luxury hotels out there and lots to come, but also consumers are becoming more and more mobile and global – travelling more, further afield and more often – so I think personally, that there is enough room out there for all of us.

For us, I think we are in a very lucky spot in that we are in a very unique niche, at the very top end of the market. For example, we just opened in Paris and there are already a lot of hotels in Paris, but I think Paris needed another hotel – and by creating a new hotel and providing anew offer we are shining a spotlight on the city and hopefully that will also draw more people in, so I think there’s great opportunity in that.

Looking forward, we are looking very intently at the evolution of the Chinese shopper, also, the Middle Eastern markets, and some South American markets such as Brazil and even Mexico, in terms of possible locations we are scoping for new hotels.

By Daniela Aroche

Paul James, Global Brand Leader, Starwood Luxury Hotels

Paul James

Paul James, Global Brand Leader of Starwood Luxury Hotels, explains why today there is no destination too obscure to build a luxury hotel.

“We’re on a bit of a global rampage at the moment,” explains Paul James, global brand leader of Starwood’s luxury hotels – W, St. Regis and Luxury Collection. “W literally just opened in Verbier for the ski season. The next W opening will be in Beijing, and then, within a month or two after that, we’ll be in Bogata in Columbia. “

“We’re looking at our first Luxury Collection hotel in the Lebanon. We’ve got a Luxury Collection opening in San Antonio, Texas. Then we’re opening in Dalian and in Hangzhou in the next four to five months.“

“For St. Regis, the big story for this year is Istanbul. The company has been there a long time so we’ve got a really good understanding of how the market works and we’ll be opening there late summer. Then the next flag I think will be in Chengdu in China. That to me kind of is a real picture of global diversity.”

Appointed Global Brand Leader in 2008 for the three Starwood brands, James has been responsible for providing the overall strategic and creative direction for all three brands by leading the development of marketing, guest experience and communications programs.

He has also witnessed the luxury hotel industry undergo a significant period of change; disrupted by the advent of the Internet, challenged by the global financial crisis and eventually resurrected by a new segment of younger, globally diverse high net worth individuals.

We spoke with Paul James about how each of his hotel brands are positioned to serve the luxury consumers of the future.

    “ You can’t really have a five-year strategic plan anymore because things change so quickly ”

For your three brands, what best describes your strategy going into the next five-odd years?

As our CEO says, you can’t really have a five-year strategic plan anymore because things change so quickly. Instead, what we’re trying to do is to distil a five-year plan into one stream of thought. So we are clear on the steps that we know that we want to take but hopefully still nimble enough to make changes as they come along.

Also, I honestly don’t think that the enormous period of change that we encountered in the last five years is something that’s going to happen again regularly. We had a moment when the world readjusted after the great downturn, where consumers developed a new normal.

Internally we came up with this idea of Generation LuXurY (with a capitalized X and Y) to convey the passing of the baton from one generation of consumers to the next. A lot of people didn’t want to believe it, but it was happening as early as 2008/2009. Around this time a different generation of luxury audience began to take control of the buying power.

We as a company sat down and took a deeper look at what it meant to be a luxury player, where we thought luxury was going to go and where it might grow. And we’ve come through the other side of that, that consumer shift, and that’s exactly where we are today.

The Imperial Suite at The St. Regis New York

So who are these Generation LuXurY consumers?

They’re global, they’re more resourceful, they’re richer, they’re much more connected and they travel like crazy. Most of them have made their own money and – because of this – they look for value in different ways than the traditional luxury guest.

W is only 15-years-old. Over 40 percent of our hotel room guests are under 40, which shifts slightly older than the people who are in the bars and restaurants. W has always had a younger audience, but even in those 15 years the 28-year-old has become a totally different beast.

Essentially it is our job is to reach out to hotel managers within each of these brands and really understand who our core customer is, from a psychographic perspective. What is happening to the business leaders, commercial leaders and social leaders that constitute our audience? How are their tastes and needs changing?

    “ Consumers are more global, more resourceful, richer. They’re much more connected ”

In terms of source markets, who are your biggest customers by nationality? Does this differ between brands?

There is a significant difference across the three brands and it has changed a lot. As a US-based company, our strength was always within the US market. So when St. Regis and Luxury Collection and W opened up internationally, in the first instance it was to a predominately American audience. Some of the classic European hotels could have 50 or 60 percent US traffic.

But what’s happened in the last few years is reflective of those consumer changes that we were talking about. Even if I look at something ‘traditional’ – for example the St. Regis New York – in 2007 the audience was 80% male and 80% American. That core audience had not changed in decades, if ever.

Whereas now, we have just completed the restoration of that hotel and about 60% of our guests are male and about 50% of them are American. Even in the most classical, traditional luxury hotel in New York, we had to make changes to our product there to reflect those changes in our audience.

    “ In 2007 at the St. Regis New York, the audience was 80% male & 80% American ”

What would be your fastest growing source market?

China is massive for us. We have had a massive upswing in Chinese business, but that’s also because we’ve also opened five hotels in China, so it depends also how you slice the data. But lately, China has appeared in the top three or four of our global feeder markets, really, for the first time ever.

The Middle East has always been a strong market for us for specific hotels, but that has really taken off over the last couple of years. Even in a relatively small country like the UAE, we are seeing enough travellers begin to register in the top six or seven key feeder markets.

The US is still the number one, probably accounting for half our audience. Though at one time it would have been closer to three quarters. The UK and Germany follow very closely behind that and then it’s a race depending on where you are in the world. And it’s not radically different across the portfolio.

It’s been a truly global story, but we do notice a shift after opening properties in markets that are new for us. St. Regis Mexico City is a great example. Almost within a year of opening we’ve started to see really high-end luxury travellers from Mexico in Aspen, in Deer Valley, in our ski resorts over the winter. Even in our hotels in Europe.

Similarly we’ve seen a 20 percent uplift in Russian travel within the twelve months of us opening the W in St. Petersburg. There’s clearly a massive shift in the way people travel around the world, but there’s also a real sense of local brand awareness that brings people to the hotels as well.

You can’t do it just on its own. You can’t open a hotel and expect that nationality to follow, but it’s a significant start. Having that flag flying in the middle of town is hard to beat.

Les Heures Bar At The Prince de Galles, Paris

And in terms of luxury destinations, is it still the traditional luxury destinations? Or is interest shifting?

It’s very traditional and changing at the same time. It’s still impossible to get into certain destinations at peak times, but what’s interesting is that we’re seeing seasonality start to disappear, or there will only a few weeks where you will have noticeably low demand.

The Gritti Palace has been really strong year-round since it opened, in part because the Chinese travel in what is considered in Europe to be ‘out of season’ – their Chinese New Year window – which traditionally has not been a busy time for those hotels.

Miami used to be a two-season city because its primary business was from the US and people went there in the winter and didn’t go there in the summer. Now, you still have that core market, but you add to it the Brazilians, the Mexicans, and the Eastern Europeans and suddenly that seasonality has just drifted away.

There is interest in new destinations but the trouble with sophisticated, educated, experienced global travellers, is that they’ve been there and done that. They need to go to what’s next. A colleague of mine talks about luxury off the grid and they I keep saying there is no grid anymore. There is nowhere off limits to where you’re likely to build a luxury hotel.

    “ What’s interesting is that we’re seeing seasonality start to disappear ”

And what about underserved markets? Where are the opportunities?

For our brands there are massive opportunities in Russia. Building and developing hotels in Russia is very difficult. It’s a tough time at the moment and I think it’s a short-term tough time. It’s definitely a place that we should be and there’s a real opportunity.

Also in the United States, demand for hotels has reached levels back pre-2007, but there really hasn’t been any development since 2008, so there are definitely opportunities. We’re massively underserved in Sub Saharan Africa and I know that’s an area we could take Luxury Collection, W, or St. Regis to the right markets and find customers there waiting for us.

W Verbier, Switzerland

    “ For our brands there are massive opportunities in Russia. Also in the United States ”

Going back to the customer, do you see three quite distinct customer groups for each of the three brands?

We work very hard to keep very a clear positioning difference between the three brands. But we do know that today, 85% of Starwood’s luxury guests hail from generations X and Y and their approach to luxury is decidedly different than their predecessors.

There are certain commonalities between the groups. Luxury as a concept is much more experience-led, more authentic, there’s a much stronger demand for sustainability. So there are some commonalities but we work to find the lens, which is unique to each brand to tell its own story. It’s less about a flag and much more about a philosophy that is targeting an individual.

So are all these consumer groups booking online?

The majority are still booking through either brand.com, or through a call centre or hotel direct. As pure math, they’re still the majority. Interestingly we have also seen an increase of bookings travel professionals and our branded web sites. It’s important that we are represented in all channels because our guests are engaging with multiple channels throughout their day to browse or book.

    “ You can reach the wealthy online. This is a massively connected and socially active audience ”

Some research suggests that you can’t reach UHNW individuals online, yet your consumer profiles sound highly connected. What is your take?

I don’t agree at all. You can reach the wealthy online. This is a massively connected and socially active audience. If you were talking about the old cliché of rich overweight Anglo-Saxon men with white hair and fat cigars, then maybe that was true. Well that is true, but that’s a very small audience. If it exists at all outside of caricature, it’s not really who’s staying at any of these hotels.

If I look at the data to support it, The Luxury Collection has more Facebook followers than any other brand in Starwood, even though we’re only 94 hotels, which is a quarter of the size of Sheraton and half the size of Westin. Essentially, people care about the content and the stories and they share, and share frequently.

Not only do we have more likes but we are shared more often than any other brand at Starwood. The speed at which our Luxury Collection Twitter account moves is staggering. That’s fascinating to me. Certainly at W, we can’t afford not to be at the leading edge of what’s going on. We need to have a ‘what’s new what’s next’ approach to technology, as our customers, they breathe WiFi.

Presidential Suite at The W Times Square, New York

  “ Luxury hospitality has always been about experience, it’s always been about the individual ”

There has been a lot of buzz around experience lately. But wasn’t luxury hospitality always about experience?

In mature markets people have moved away from -owning more stuff, so clearly ‘doing more things’ is the obvious place to go. But luxury hospitality has always been about experience, it’s always been about the individual. We’ve always been about recognizing who you are, and why you’re there and giving you the best experience that matches that particular moment.

I think our job as luxury Hoteliers is to continue to build on understanding who you are, and what you want from any particular day. The sensitivity, the classic requirements of great luxury hotel keeping are more important than ever, because we’re able to digitize that, we’re able to share that information in a different way. We’re able to make that much more seamless.

At the moment Starwood is trialing ‘smart check in’ at some of its New York properties, where you can use your smartphone by bypass the front desk and check in using your mobile. Once you have your room number you tap your phone on the door and it will open. You don’t have to stand in line, you don’t engage with another human being and you’re in and done.

That’s great, but what isn’t great is when marketers then think that everybody wants that. The client who wants that type of service knows that hotel inside out already. They are traveling four or five days on the road every week. They have already oriented themselves with the property and this service provides significant value.

But when this – potentially W – customer wants to take their wife to a Luxury Collection island resort, do you think they want to get off the boat and walk straight to their room without talking to anyone? No they don’t. They are on leisure time and their profile shifts. They want personal service and they want to know what they should do on this island.

The check in process and their engagement with the guest service team changes radically. But this is precisely where all the things we learned from their stay in New York comes into play. We know about pillow preference or which side of the bed he sleeps on, or if he prefers sparkling water or still. And we use that to enhance this experience because it’s fewer questions that we need to ask.

 Hotel Grande Bretagne lobby

Lastly, I wonder what will be the biggest challenge that you will face managing this portfolio in the coming years?

Actually, it’s about having enough people who understand that sensitivity. To understand how people behave, to match the demand for our hotels. Getting a great supply of young, enthusiastic engaged talent, staff members, associates, who are able there, to fulfil that delivery on so many continents at such a fast rate of growth.

We’re a great organization for that, because we have great career opportunities and hospitality has always been great for giving people the opportunity to grow, But the definite challenge is that as the audience grows, we need to make sure that these hotels have a pipeline of talent to keep them operating at the levels that we demand.

Torsten Müller-Ötvös, CEO, Rolls Royce

In Conversation With Torsten Müller-Ötvös, CEO, Rolls Royce

Mr. Torsten Müller-Ötvös has been the Chief Executive Officer at Rolls-Royce Motor Cars Ltd. since March 2010.

In the four years since his appointment, the storied British luxury brand has delivered four consecutive years of record growth. Most remarkably, without any category extension, lifestyle products or outrageous increase in production numbers.

An all-time record of sales was achieved in 2013, when the brand sold 3,630 cars, In July 2014 it was announced that half-year sales had increased by 33% worldwide compared with the same period in 2013.

The brand has since opened in Azerbaijan and Kazakhstan, and announced that a new 30,000m2 Technology and Logistics Centre will be built at Bognor Regis in the coming years, to consolidate current logistics functions and allow for future expansion.

    

“ Rolls Royce is on track to achieve its fifth consecutive year of record-breaking growth in 2014 ”

If that wasn’t enough, in September it was confirmed that entrepreneur, Stephen Hung, had purchased the largest Rolls-Royce Phantom fleet in the world, for his Louis XIII hotel in Macau.

Mr. Hung ordered 30 Bespoke Extended Wheelbase Phantoms – representing the world’s single largest order of Rolls-Royces ever. Two of the fleet will be the most expensive Rolls-Royce Phantoms ever commissioned.

For all these reasons and many more, Rolls Royce is on track to achieve its fifth consecutive year of record-breaking growth in 2014. We sat down with CEO, Torsten Müller-Ötvös, to better understand the factors that are driving this success.

    “ Wraith has been very successful. 80% of Wraith customers are new to the brand ”

When we talk about production by units, the numbers have increased about 30% in three years. Is there a point where you will limit production to protect the exclusivity of the brand?

We are always talking low numbers, and we will always talk low numbers. There is one very crucial decision behind that and that is that we aren’t offering a car, which is price-wise under Ghost. We wouldn’t do that even though we understand that this would bring us lots of additional volume.

There is another player competing in our field, of which more than 80% of their offering is priced below €200,000 and they have demonstrated that you can achieve a much higher volume than we have using this position. But we are fully convinced that we need to keep Rolls Royce highly exclusive and stick to our own price positioning for our customers.

Nobody needs a Rolls Royce. It is not a product where your lease contract expires and you think, “Quick, which car are we going to buy next.” It is something that you give yourself as a present for successes in your life, or to celebrate something, and it needs to be rare. You don’t want to see a Rolls Royce at every single street corner.

    “ Rolls Royce will never enter into five digit production numbers ”

For that reason, Rolls Royce will never enter into five digit production numbers. I believe we could climb to 5,000 or 6,000, as long as we are making sure we have the right products to offer to our customers, as this is still a minute volume in the greater market. But for the moment I am definitely not worried about losing our exclusivity.

We also believe in this strategy as when you look at the market, into the growth numbers of ultra high net worth individuals, they are forecasted to grow over the next years, year by year, between 2 and 5%. These ultra wealthy people are the perfect customers for Rolls Royce, so for this reason we also believe that the outlook is positive.

    “ For the moment I am definitely not worried about losing our exclusivity ”

At the same time the age of ultra high net worth individuals is decreasing. How can you be sure to engage the younger generation?

Funnily enough, we have quite a lot of young customers already within Rolls Royce. I would say that our mix of demographics really changed dramatically after we introduced Ghost and now also Wraith. Many young customers are with us.

The youngest customer is around 25 or 24. Many of them, as you may guess, are coming from Asia – but not with inherited money – they are hard working self-made entrepreneurs from all kinds of different industries.

They are attracted to Rolls Royce because they believe that they need a certain level of transportation and our cars are offering the most luxurious means of transportation on roads that you can imagine. I can tell you, knowing that there are lots of traffic jams around, particularly in the Asian markets, there is no better way to sit in a traffic jam than in a Rolls Royce.

And whether they are young or old, I think so many people around the world know our brand. The brand is unbelievably well known, worldwide. You don’t need to explain what Rolls Royce is, wherever you go – Rolls Royce is even used as a synonym for the best. “The Rolls Royce of” whatever that may be.

For that reason you can go to cities you have never heard about in China and say to people “Rolls Royce” and they know, and the brand already has an aura that attracts young people. Of course, in a different way, which we see in the actual models.

A Wraith is a complete different animal to what the Phantom is. A Phantom is for, let’s say, the more astute elder gentleman who loves to be chauffeured. Whilst the Ghost is in between, a self-driver car, but also a car to be chauffeured in, and Wraith, it is definitely a self-driver’s car for younger people very much.

    “ There is no better way to sit in a traffic jam than in a Rolls Royce ”

And what about the female audience? Women’s wealth is also on the rise…

Women are definitely already spending with us. Women now purchase around 15% of our vehicles, which is a substantial increase. Our Phantom had an audience of only 1% women and they were very much interested in the coupes and convertibles, but Ghost has bought us women – not for their husbands – but businesswomen drivers.

We have also seen a big upswing from the Middle East. The Sheikha’s are running family businesses and they have decided to go for a Ghost, for instance, to be chauffeured in that kind of car. Also in Asia you see many, many very successful women running businesses or building businesses up. I’ve met very impressive women there, really, so that is very much in line with what happens anyhow in society.

    “ Women now purchase around 15% of our vehicles ”

The brand has been bold in entering some of the lesser-known emerging markets. How do you know when a market is ready for Rolls Royce?

We consider a few variables. The growth of ultra high net worth individuals in the region is important, then we are very much interested in stability – so that it should not be a market which peaks and then goes down again – the economy needs to be sustainable for some time.

Another early indicator is applications for dealerships, of which we receive many. So this demand factor also plays a part but t we only decide to enter a country when, from our side, it is a stable business because it’s a big investment.

And this investment is not necessarily on our side, but imagine that it is easy to sell Rolls Royce’s in the first year but what happens after that buzz dies down? You need to deliver a sustainable business. For that reason, it’s not so much about how the showroom looks, because if you don’t have the relations and connections into the kinds of people who can afford Rolls Royce, your business dies.

It’s very much about knowing influential people in the society and being able to roll them into the world of Rolls Royce. It takes some time, from time to time. People are not prepared immediately to say yes and spend the kind of money necessary on our cars. We have customers who are very quick decision makers on I go for a Rolls Royce and others who take maybe a year.

Is there a particular marketing channel that can effectively reach ultra high net worth individuals?

I’m not sure that it is channels in the sense of the Internet or social media or the likes. I’m very much convinced that the best way to connect with these individuals is through money can’t buy events. To structure experiences which attract these people, for example an invitation to a very special test drive event, to put them behind the wheel.

It’s crucial that we let them experience what Rolls Royce is. You can talk about our cars for hours but you really understand what it means to sit in a Rolls Royce once you are in there, once you drive it and once you are being driven.

And the experience must be exceptional. Maybe it is a drive through a beautiful part of the countryside to a three-star Michelin restaurant, where the chef will prepare a private dinner just for these individuals. Something that is so unique that yourself, as a wealthy individual, could not structure it yourself with your teams – something that you need to have an invitation for.

Our customers – or prospects – have invitations every evening like this. You need to have something really special. This is, for us, the most convincing way to come close and to attract them finally.

    “ I’m convinced that the best way to connect with UHNW individuals is through money can’t buy events ”

What is the next opportunity you would like seize with Rolls Royce?

First of all, a careful extension of our model ranges. We have announced that in mid-2016 we bring a new convertible kind of drophead coupe’ kind of car into the market. This is confirmed, and then, there are always lots of rumours around an SUV type of car. Yes, we are working on that, and we are making progress in the right direction, but nothing is confirmed yet. We might reach the point of a final yes or no next year.

And what do you think that the biggest challenge will be for Rolls Royce in the coming decade?

The economy, definitely. You can have a boost in a market like Japan, whilst at the same time the business in Spain collapses and it becomes very difficult to operate in France. So if you were to ask me what keeps me awake at night, it is the economy. I’m really worried about it. It’s never that people are short of money or that money is limited, this is not the point. The point is all about consumer sentiment.

Many of our customers are entrepreneurs, running their own entities, and if they find their businesses in difficult times or perhaps the overall global economic conditions take a turn for the worst, then they are probably not looking to buy a new high-end luxury car, for themselves or the business. You only do that when you feel good.

 By Sophie Doran