How major emerging markets are redefining luxury hospitality (Part 3)
As part of our series dedicated to luxury hospitality development in emerging markets, CPP-LUXURY.COM has recently interviewed, exclusively, Mr Peter Norman, Senior Vice President Acquisitions & Development, Hyatt Corp. (Europe Africa Middle East)
Park Hyatt is one of the pioneers of luxury hospitality in Russia, with a flagship property in Moscow. What are the biggest challenges in entering Russia for a luxury hotel management company? Is there potential for major luxury hotel chains in Russia’s second tier cities?
We’re thrilled to be one of the largest 5* hotel operators in Russia and CIS. We have been active in Russia for around 5-6 years and the development of our brands in this area remains a priority. We are looking for opportunities to increase both the number of locations and brands we have in Russia and currently have hotels under development in Moscow, Rostov, Sochi and two in Vladivostok. In cities like Moscow and St. Petersburg, the biggest challenge we face is to find the right opportunities that fit our brands in a highly competitive environment. Outside of the main cities, we see significant potential to expand, and we’re looking for opportunities to introduce theHyatt Place and Hyatt Regency brands to Russia’s regions. The hotel market is developing at a very quick pace in Russia because of continued growth of the economy, as well as through increased awareness of destinations like Sochi created by events such as the Olympics.
Park Hyatt is present both in Abu Dhabi and Dubai. With the new strategy of the Dubai Government to double number of visitors, could this be more of a mass strategy which could eventually put pressure on rates for the luxury hotels and thus make the destination more accessible?
The Emirates have had high ambitions for boosting the number of visitors to the region for a long time and have taken a very structured approach.. Despite this, we’re not seeing any evidence that they are moving to develop a mass market approach that would put pressure on hotel rates. What we have noticed is that there is a more conscious effort to diversify the range of accommodations to include more mid-market branded hotels. As a result, we are in discussions to introduce the Hyatt Place brand to Dubai and the rest of the GCC, and we are actively looking for the right partners and locations.
How has the development process of a new property become more challenging nowadays?
Across the industry, the most significant challenge in the development process remains intense competition for the right opportunities and partners in locations that fit our brands. This is especially the case in gateway European cities such as London and Amsterdam. However, by actively seeking out partnership opportunities, we have been able to continue our expansion into high-barrier-to-entry markets where our customers are increasingly travelling. For instance in February, we announced the signing of management agreements for hotels in Paris, Cannes and Nice that allowed us to more than double our presence in France. On the other hand, investment flowing into Africa in recent years has increased demand for hotels and made the development process less challenging.
How important is the awareness of the brand prior to entering a new market?
For Hyatt, the supply and demand dynamics for hotels on the ground is always the overriding factor when deciding whether to enter a new market. Hyatt is focussed on growing its footprint sustainably, and not simply expanding into new markets for growth’s sake. In each market, we are focused on three priorities to create long-term value – our people, our brands and our partner’s financial capital and asset base. That said, consumer awareness of our brands does of course help our expansion into new markets. That is why we are focussed on expanding our presence in key gateway cities and building preference amongst travellers to these cities.
SPAs and fine dining seem to have become an important differentiator for developers, many of which would scale down on the SPA investment and the fine dining (i.e. Michelin starred Chef)? In the case of Park Hyatt’s best performing property, what should be the optimal balance percentage revenue between rooms and non-rooms revenues, especially SPA and F&B?
At the luxury end of the market, we think it is important not to take a one-size-fits-all approach and to tailor each hotel’s offer based on research and customer feedback. We are focused on enhancing the guest experience and inspiring loyalty by understanding individual guests’ needs. 6. Why is Park Hyatt absent from major destinations such as London, Rome or Hong Kong? These locations are high on our list of priorities and we are actively looking for sustainable opportunities to introduce the Park Hyatt brand. However we will not rush into making investments and opening new hotels. We are focussed on finding the right locations and the right partners that will allow us to create long-term value and build preference amongst travellers.
What do you think has been making Park Hyatt one of the most attractive luxury hotel brands for developers and owners in China? What are your competitive advantages over other luxury chains which have none or very few properties in China?
Hyatt’s success in China is driven by our relentless focus on enhancing the guest experience and inspiring loyalty by understanding individual guests’ needs. We are proud to be known as a company that focuses on human-driven innovation, which has been co-developed with our guests in real time. Innovation is now part of the way we do business. In recent years we have hired our first chief innovation officer and created an innovation team, but we believe that innovation also needs to happen in our hotels where our guests are. A key driver of Hyatt’s expansion in China is the growth of smaller cities and resort destinations. We have taken this opportunity to establish Hyatt-branded hotels in areas where our guests are now beginning to travel. Gateway cities will continue to be a main source of growth in China, especially in principal capital cities where we don’t have presence yet and sub markets in the major cities like Shanghai and Beijing.