Luxury Industry 2014 Outlook – Hotels

Luxury hotel chains are likely to experience a bumpy 2014, with slower growth than in 2013, across all regions. ‘Old money’ travelers in the established mature luxury hotel markets for outgoing travel, such as the U.S., Germany and Japan are likely to outpace, in 2014, emerging markets such as China, Brazil and Russia.

Despite its staggering outgoing travel market, China sources medium range hotels at most of 4 star category in all international destinations. China’s luxury domestic / inbound luxury hotel market has also seen a major decrease in occupancy due to the Chinese Government crack down on frugality.  Reports indicate a 30% drop in occupancy at luxury hotels in China in the past 2 months, with the trend likely to keep pace for the rest of 2014.

As for Russia, once the ‘golden goose’ of outgoing luxury travel, Russians are spending less – shorter stays in entry level room categories. Outgoing luxury travel markets to watch in 2014, each with considerable growth, are: Indonesia, Malaysia, Vietnam, Colombia, Peru, Turkey and Poland.

Most luxury hoteliers will continue to face several challenges in 2014 such as the pressure on rates, especially from corporate travelers and the expectation of guests for a sooner than previously planned renovation. Another major challenge is the trend among HNWI individuals to book their stays online, especially with discount e-tailers, therefore, a challenge in providing personalized service for guests who arrive with minimal information provided ahead of their stay.

A recent report by PriceWaterhouseCoppers PwC indicates that shaky consumer confidence, stiff competition and increased transparency offered by the internet are forcing organisations to reappraise how they price their goods and services. More than 40% of respondents consider pricing to be the most effective way of growing profitability. However, only 26% believe increased prices will drive profits over the next three years while a significant minority (17%) believe that profits will decline along with their prices.

For a second consecutive year, the world’s most dynamic luxury hotel chain in 2013 was The Ritz-Carlton with over 10 new openings. The company will not maintain its lead in 2014 from a development point of view, with only 4 confirmed new openings. The company’s reputation, long-standing commitment to providing top quality service and its increasingly flexible development criteria have been sustaining its fervent expansion in the past year. Among the Ritz Carlton openings in 2014 are: Rancho Mirage (CA), Kyoto (Japan) and two resorts in Bali – Ritz Carlton Nusa Dua and Ritz Carlton Reserve Ubud.

At the opposite end, with only two new hotels announced for 2014 is the Mandarin Oriental Hotel Group: Bodrum (Turkey) and Taipei (Taiwan) . Also with just two openings confirmed for 2014 is Fairmont Hotels & Resorts: Ajman (UAE) and Riyadh (KSA). St Regis Hotels & Resort is expected to open two new properties in 2014, in Chengdu and Istanbul.

Considering the number of announced new openings, 2014 will be the year of Sofitel Luxury Hotels will 6 new hotels confirmed for Shanghai, Kunming, Sanya, Wellington, Singapore and Dubai (Downtown).

Four Seasons Hotels & Resorts will open 4 new hotels in 2014: Orlando(FL), Johannesburg, Moscow and Dubai. Waldorf Astoria will also open 4 new hotels in 2014: Amsterdam, Dubai – Palm Jumeirah, Jerusalem, Beijing. Park Hyatt Hotels has confirmed the opening of 4 properties in 2014: New York, Vienna, Marrakech and Zanzibar.

Luxury mid-size hotel chains, with less than 20 properties globally, such as Dorchester Collection, Swire Hotels, Peninsula Hotels, Bulgari Hotels & Resorts or Oetker Collection will see at most one new hotel opening in 2014, their expansion maintaining the already slow pace. The continued international financial instability accross all regions turns developers and owners towards established hoteliers with a larger global span. Such smaller groups may have to resort to direct investments – Peninsula Hotels secured a 25% stake in its upcoming Parisian hotel while the Dorchester Collection is expanding to Rome (Italy), having purchased the Eden Hotel.

CPP-PUXURY.COM top picks:

Luxury openings of the year – new hotels (2013):

Rosewood London, Four Seasons Lion Palace, St Petersburg, Mandarin Oriental Pudong, Shanghai

Luxury openings of the year – new resorts  (2013)

L’Apogee Courchevel, Cheval Blanc Randheli, Amano’i (Aman Resorts, Vietnam)

Luxury hotel renovations of the year (2013):

Four Seasons Hotel, Buenos AiresGritti Palace, Venice, Beau Rivage Palace, Lausanne

Most anticipated luxury hotel openings in 2014:

Park Hyatt, New York, Ritz Paris, Peninsula Hotel Paris

Oliver Petcu