Friday, 11 August 2017

To stay ahead Peninsula and Four Seasons let customers do the talking

The Hong Kong-based Peninsula Hotels group owns 10 high-end stopovers from Shanghai to Tokyo, New York to Bangkok, with three premises slated to follow in London, Yangon and Istanbul. To understand more about the firm’s expansion, we met the company’s Swiss-born COO Peter Borer.
Looking dapper in a dark-blue Zegna suit and sitting arrow-straight (“Hoteliers should never lean,” he insists), Borer has worked at the company for more than 40 years. We settled into the 6th-floor Marco Polo Suite of the Hong Kong flagship to discuss the shifting sands of the luxury market and why he isn’t afraid of Airbnb.

Monocle: It’s an interesting time for the hotel industry. How is the luxury market changing?
Peter Borer: To me the greatest luxury in life is to have a choice. I’ve been in this industry for 45 years and changes have always occurred. If you want to stay relevant, you evolve as luxury evolves. Thirty years ago we had to introduce a fax machine; it was breaking news because the Telex was starting to look dated. Today we offer clients a hi-tech environment even if the decor, like in this room, might look rather traditional. So the investment in products is important but so is investment in human resources. We’re at the door of China [in Hong Kong] and there’s slightly different customer behaviour so you have to train your people to make sure that your new customers feel as welcome as your old customers.

M: How are customer expectations changing?
PB: They’re better informed. A customer who came to us 20 years ago maybe came to Hong Kong for the first time and had very little knowledge of the city. Today it might be a first visit but they know exactly what they’re getting themselves into. So we have a responsibility to make sure that we deliver what we’re promising; to me there is nothing worse than to overpromise and underdeliver. That will erode your brand very quickly.

M: How do you keep consistency and a Peninsula thumbprint across 10 properties?
PB: The buildings are a good showcase of their location. The Peninsula in Paris, for instance, is a palace that was built way back at the beginning of the 20th century. Then you bring in components such as technology, which reminds people they’re in the Peninsula. In the end it really boils down to the service. When we open a new hotel, for a year in advance we recruit about 20 young people and bring them to Asia to train them in the Peninsula way before we ship them back. It’s not the hardware that stays with you, it’s the software: it’s the service you receive, and that takes time in any hotel. Don’t ever go to a hotel that has just opened; give them at least six months.

M: How do you keep talented people on board?
PB: Fresh blood, at times, is very good. But you need loyal staff because they know the guests and they know the culture. It should never be one or the other. I surround myself with very talented young people who give me energy – and hopefully they feel they work in a good environment as well.

M: Tell me about your management style.
PB: You’ll have to ask them – and I will leave the room.

M: We already have; they were dreadfully complimentary. What makes a good hotel manager?
PB: You have to be extremely passionate if you are in the hospitality industry; it is much more than a job. I work, even now, five days a week, 14 hours a day. It’s your life. In my case, I don’t have a family, so passion is hugely important. I’m not complaining – I’d do it all over again. I’m not very patient though: if somebody doesn’t like your magazine, they won’t come to you and throw it in your face. But if somebody in the lobby is not happy with their coffee they will call for me and I will have to stand there and listen. So we are always present. You have to be able to rectify right away; that means you have to be fast.

M: So you need to be diplomatic?
PB: You have to be slightly schizophrenic because this is not me: this is a job. If you come and visit me at home I’m a different person. Every morning the show starts at 06.00. You need to have the ability to sit in a suite with a head of state and make decent conversation and five minutes later you are in a situation where a colleague has a very peculiar problem and needs a lot of help right away. So life is incredibly rich, incredibly exciting and never boring. No day is like any other. During my time here I took this hotel through the opening of the tower [an extension added in 1994 to the Hong Kong flagship], we went through the Sars virus, we went through the Asian financial crisis, we went through the handover [of Hong Kong to China in 1997], we went through the millennium. So lots of very positive moments and lots of moments that make you reflect.

M: How have disruptive apartment-rental technologies affected business?
PB: It’s a very simple choice. Do you want service or not? And if you’re happy to have your own environment, please: there is a choice. The more competition we get the more alert we have to be to innovate and bring in new service offers so it’s a good thing. I love competition so I’m not worried – and there is enough to go round for all of us because the world is opening up.

M: What have been your career highlights?
pb: What gives me the greatest pleasure is seeing that I have touched lives that became successful and many of those people are still in our company. People you worked with, people you’ve promoted, people you hired: looking at their success is incredibly humbling and, at the same time, very rewarding.

M: Will hotels in the future be different to the hotels we see now?
PB: The products will certainly evolve. We are spending a lot of time with people from Dyson and Samsung and so on, talking about the future of what we can offer our guests, as well as our staff, to make working here more efficient and more healthy in terms of air purification, for example. That’s the way it goes on. The service level will have to adapt because these modern technologies will come in. But the meaning of luxury is, in the end, a person who stands in front of you, serves you well and has a good attitude – and that will never, ever go away.

Key facts

Founded: 1928.Hotels: 10.Owned by: The Hongkong and Shanghai HotelsRooms: 2,887New openings on the cards: Three

Four Seasons is known the world over for its top-notch hotels. The company traces its origins to Toronto in 1961, where it was founded as a motor-hotel for business travellers. Since 2013 its president and CEO has been Allen Smith, an affable 60-year-old American who was formerly in charge of one of the world’s largest property-investment firms. He is refreshingly frank about the direction he thinks Four Seasons should take: do less but do it better.

Despite his willingness to chart a new course for the hotel brand, Smith says that a constant in Four Seasons’ ethos is the understanding that service is its strongest asset. That remains the case whether the location is a redesigned former sailing club in Miami or one of the company’s longstanding properties in cities including Damascus, Vancouver and Kyoto. We met Smith at Four Seasons’ testing laboratory in Toronto to find out more about the brand, its imminent expansion into Asia and how it is now branching out into residential developments.

Monocle: Are there things that you have decided Four Seasons should not do?
Allen Smith: We don’t chase trends. We are a brand that stands for timelessness in what we do. Since I joined, we have opened 22 new hotels but we have also exited seven. That speaks to our willingness to say there are certain situations where, for a variety of reasons, it’s time for us to move on. It’s a strong statement of how important product quality is to the brand. Our growth needs to be measured. You have to be willing to wait for the right opportunity.

M: When you took over, you mentioned wanting to do less but better. What did you mean?
AS: Four Seasons is an extraordinary brand – and it was before I arrived. When I talk about quality over quantity, I’m making it clear that Four Seasons is not in the commodity business. Every single one of our hotels is unique and every single one is custom-built in its character. If you’re going to pursue that strategy, you can never compromise on the quality of the physical product or the service you provide. If we wanted to simply drive unit growth, we could make lots of compromises to accumulate hotels. But that’s not the business we’re in.

M: But you are diversifying. How does that work?
AS: Four Seasons is known as a hotel and resort company. In reality it’s about hotels, resorts and residences. If we look at our new projects, 80 per cent are mixed use, consisting of both hotel and residential components. In many cases the hotel would not get built but for the residential element. But to sell those residential units you need the hotel to provide the services. That combination defines the approach we take now; it has allowed us to go into projects we wouldn’t have otherwise done, such as Twenty Grosvenor Square in London. Another extension of the brand is in the Four Seasons Jet: the concept is an end-to-end travel experience where everything you can think of has been thought of, from the moment you leave your house to the moment you return. That experience resonates with people.

M: How has technology changed the face of the hospitality industry?
AS: You have technology-based disrupters: companies that have scale and financial resources we can’t match. We’re relatively small in comparison. To think we can go head to head with Priceline or Expedia or Airbnb in the online world – we can’t win that game. I think of the next tier – Marriott, Accor, arguably Hilton – as consolidators. They are focused on every hotel segment, from economy to luxury. That allows them to face off against online competitors. And then you get to the luxury space, we represent one of the largest of that ilk. We have this unique pedigree and history, we have a company based on a principle called the Golden Rule [treating others as you’d hope to be treated yourself]. It isn’t a slick corporate slogan, it is something that resonates deeply with our employees. One of the things I never lose sight of is that this is the ultimate people business – and the people at Four Seasons have a passion for service that is unlike anything I’ve ever seen.

M: What sets Four Seasons’ approach apart?
AS: I routinely get letters from our guests sharing experiences they’ve had with us – often joyous but in other cases tragic. A woman was travelling with her husband when he passed away unexpectedly at our hotel; she wrote me a five-page letter about what our team did to support her. As she put it, through their care and compassion they “allowed me to keep breathing”. It’s extraordinary. What’s so compelling is that these are situations for which there is no playbook, there’s no training manual. We don’t always get it right – we’ll be the first to admit that – and that was one of the brilliant things about Izzy [Isadore Sharp, 85-year-old founder and chairman of Four Seasons]. He realised that when you make a mistake, correcting it is often one of the best ways to win back your customers. The genuine emotional connection our employees seek to make with people is really extraordinary.

M: How are your guests’ expectations of luxury travel changing?
AS: Innovation has become much harder. There was a time when you could innovate by introducing things in the guest room, such as complimentary bath amenities. We have gone well past that. Innovation today is around guest experience. Guests are looking for a personal connection; they’re looking for a set of authentic experiences. And those qualities can only be delivered effectively by people who have a deep understanding of what we are trying to accomplish, a passion for service and a level of emotional intelligence that allows them to exercise judgment in the moment. For that reason it’s hard to do well all over the world and that’s why we stand out.

Key facts

Founded: By Isadore “Izzy” Sharp. The first Four Seasons hotel opened on Jarvis Street in Toronto in 1961.Current portfolio: 105 resort and residences in 43 countries.Annual revenue: €3.8bn.Employees: 45,000 worldwide.

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