Why so many of the announced luxury hotels are delayed ?

In a review of the most important announced and planned luxury hotel projects worldwide for 2011-2015, CPP has identified that over half have already been delayed by one year from initial announcement, 30% by two years from initial annoucement, 10% are delayed by three years and 10% are delated indefinitely. CPP’s review included the major international luxury chain operators Four Seasons, Mandarin Oriental and Ritz Carlton.

In an exclusive interview to CPP-LUXURY.COM, Cristoph Mares, Operations Director of EMEA region at MANDARIN ORIENTAL Group said: ” All 16 hotels under development, with the exception of Paris which is a long-term lease, are management contracts. As such, the opening dates of these hotels are determined by their owners and developers. We remain in ongoing discussions with each project owner and continue to monitor and adjust opening dates as appropriate.”

Speaking of Mandarin Oriental’s upcoming Paris opening (delayed by less than a year from initial estimate), Mr Mares said: ”Mandarin Oriental, Paris will open this summer on the world famous rue Saint Honoré and is designed to compete amongst the city’s legendary palace hotels. It will feature the largest rooms in Paris, an Asian-inspired spa and restaurants overseen by 2-star Michelin Chef, Thierry Marx. General Manager Philippe Leboeuf, formerly of Claridge’s in London and Le Crillon in Paris, will lead a dedicated team of professionals trained in Mandarin Oriental’s legendary service standards.” The Paris Mandarin Oriental will be directly competing with the likes of Four Seasons George V, Athenee Plaza, Park Hyatt Vendome, Fouquet’s Barriere and Le Bristol, less with the newly opened Shangri La (smaller size, no SPA, different type of location). Of the direct competitors, Le Bristol is the only to have been recently entirely renovated.  

Four Seasons Hotels and Resorts could not be reached for specific comments on upcoming hotel openings, therefore CPP has compiled market data and information from developers and media. Four Seasons’s most delayed opening in the past 5 years was Four Seasons Beirut, opened early 2010. The hotel opened more than four years after the initial estimated timing, mostly due to the political instability. Despite being partly owned by Four Seasons shareholder Prince Al Waleed, the Beirut property opened without assuring neither the standards of the chain nor the five star regular standards of the Middle East in general. Incosistent service, many construction flaws and the location opposite to a construction site due to last at least another 3 years have made it impossible for Four Seasons to reach a luxury standard, losing out to direct competitors such asLe Gray and Vendome InterContinental. Works on a new Kempinski in Beirut are underway and the Moevenpick Resort Hotel has announced plans for a major renovation. Regardng Beirut, Mr Mares of Mandarin Oriental advised: ”Mandarin Oriental continues to review opportunities in a variety of key destinations around the world including Beirut. We have no announcement to make at this time.”

Mandarin Oriental’s ”record” opening delay is held by Beijing a key destination for the Asian chain. The project was initially delayed following a fire in 2009 at the building which comprises the hotel. Christoph Mares confirmed to CPP-LUXURY.COM ”Mandarin Oriental will manage the Beijing property and remains in discussions with the developer of the Beijing project regarding a new opening date. The developers are back on site where work has recommenced. An opening date is currently scheduled for 2013-2014.” 

Moscow seems to be an equally challening city for both Mandarin Oriental and Four Seasons, both properties already being delayed more than 2 years from initial estimated opening. Christoph Mares told CPP-LUXURY.COM: ”Moscow is a key international destination, with room for additional supply in the luxury segment.  Our hotel will compete at the top end of the market, and will offer Mandarin Oriental’s exceptional products and services, including innovative dining, holistic spas, guest-centred technology and of course legendary service.” without providing a timing estimate, which is believed to be late 2012.. The Mandarin Oriental Moscow is developed by Unicor, directly owned by Rossiyskiy Kredit Bank.

As for the Four Seasons Moscow, the delay is mostly due to the negotiation between Nafta-Moskva, the company affiliated with billionaire Suleiman Kerimov, who is currently in active negotiation to acquire a blocking stake of 26% in the hotel’s parent company. There is no updated estimate on the opening which was initially scheduled for late 2010. The same uncertain situation is at the Four Seasons Sankt Petersburg. The hotel  will occupy a building known as “The House with Lions”, a beautiful historical building in the centre of St Petersburg. The hotel will include 183 rooms and suites and was supposed to open mid 2010.

Marrakech is another major destination where the Mandarin Oriental and Four Seasons are ‘fighting’ for supremacy with their upcoming properties. It seems that Four Seasons already has the upper hand, with the hotel confirmed to open summer 2011. The spectacular Mandarin Oriental Marrakech, probably the most advertised un-opened luxury hotel, has no officially confirmed opening date, registering a more than three years delay from the initial estimated opening. Market sources indicate that the private Indian origin owners and developers have been facing financing issues, hence the major delay. Mandarin Oriental officials declined to provide an estimated opening date, however remain optimist about the prospect of inaugurating the hotel by the end of this year.

Vienna. With Shangri La having recently pulled out of a project ready to open mid this year, news on the upcoming Four Seasons in Vienna have been multiplying with an estimated opening for end of 2012. The 160 room hotel will be located downtown within a building which is currently under renovation. However, Four Seasons press materials and web site do not list Vienna as an imminent opening property.

With a lesser number of new openings, Ritz Carlton seems to have been more ”fortunate” in catalyzing owners and developers to respect opening estimates. With the exception of Toronto which opens this Spring with a 2 years delay, the latest Ritz Carlton in Los Angeles opened with just a 6 month delay, while the new flagship property in Hong Kong (tallest hotel in the world) has just a 5 month delay, with inauguration confirmed for March 29th 2011. For those of you wondering why Ritz Carlton has no planned openings for London and Paris, the most dynamic luxury hospitality markets worldwide, the answer is simple. The brand has long been registered and maintained exclusively by the two existing independently owned and managed Ritz Hotels (Ritz London, Ritz Paris)  and it will take another 7 years for the issue to be cleared. Meanwhile, Marriott and Renaissance (sister brands of Ritz Carlton with Marriott Group) hotels in both cities are developing at a staggering pace. Other Ritz Carlton upcoming locations: Cairo (2014), Macao (2013) and Aruba (2013).

While I am aware of the need to publicize early opening announcements especially from the point of view of developers which most of the time use the opportunity to raise extra financing, I find it puzzling why hotel chains do not pay more attention in updating opening estimated timings. Such updates are not important only for luxury hospitality or business media in general but can also be vital in understanding the situation of a particular market where the hotel is supposed to open, especially in an ever changing economic and political environment worldwide. Simply opting for not posting upcoming properties on the main web site (i.e. Four Seasons) does not avoid questions and doubts. Such examples would be the Four Seasons in Venice and the Four Seasons in Toronto.  

Oliver Petcu