• Mon. Apr 22nd, 2024

Smaller Hotel Brands Share Agile Growth Strategies

Bynewsmagzines

May 19, 2023
JLL's Gilda Perez-Alvarado and Jumeirah Group's Katerina Giannouka speak at the 2023 International Hospitality Investment Forum. (Sean McCracken)

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BERLIN — Bigger isn’t always better when it comes to hotel company innovation and success.

Chief executives from some of the smaller, more regional powerhouse hotel companies in Europe, Asia and the Middle East say they are harnessing the power of their smaller size to define their value proposition to guests and customers, create beneficial networks with like-minded organizations and grow their brands — and their case studies can inspire other smaller-but-mighty hospitality companies.

Dillip Rajakarier, CEO of Bangkok-based Minor Hotels, has said in the past that his goal is not to build the biggest company, but the most profitable one, a goal he says “is very easy” given Minor’s entrepreneurial culture.

“For us, it’s all about quality of sustainable earnings and making sure our owners and guests are happy,” he said on a CEO panel at the International Hospitality Investment Forum.

That means growth is deliberate and thorough, Rajakarier said. When Minor Hotels acquired Madrid-based NH Hotel Group in 2018, Rajakarier knew he was integrating a company that was three times larger than his original company and he needed a comprehensive plan, which for him revolved around people.

“We nurture our culture from a people and leadership perspective, and we never made any changes at NH. We nurtured and fast-tracked the growth, which came back really strong,” he said.

Today, Minor has eight hotel brands and more than 530 hotels across six continents. That’s not small, but Rajakarier said it’s small enough to allow the company to focus.

“When you have 30 or 40 brands, how do you maintain the brand architecture, culture and delivery?” he asked. “We like to keep it small but punchy.”

In recent years, Minor has expanded its reach via joint ventures — such as in 2021 with China’s Funyard Hotels & Resorts to develop projects in China — as well as acquisitions that layer in expertise that the company didn’t have before. Over the past few years, Minor has acquired majority stakes in the U.K.-based Corbin & King, owners of the high-end Wolseley restaurant brand; and Benihana Holdings, owners of the Japanese-inspired hibachi restaurant brand.

“If you have a weakness, you need to accept that,” he said. “We did that by bringing in some of the finest restaurant brands and are rolling them into our hotels.”

Growing via that network effect has been a powerful strategy for Deutsche Hospitality, which was acquired in 2019 by Shanghai-based Huazhu Group, now known as H World Group.

Deutsche CEO Oliver Bonke said that as the “international arm of H World,” his company is tapping into the wider resources, particularly in technology, that H World is developing in China, Singapore and Frankfurt.

Leveraging joint ventures to fill gaps is also part of Bonke’s strategy. In 2019, Deutsche Hospitality acquired 51% of Zleep Hotels, “an authentic Danish design-led brand with a very strong [Scandinavian] influence … that has become our fastest-growing brand,” he said. “We would not have come up with that on our own.”

The company also partnered with Porsche Design Group on a joint luxury hotel brand to gain a foothold in the luxury segment.

“You try to find these authentic jewels you keep intact so they don’t lose their authenticity and value to the market,” he said.

Taking a well-known and well-respected regional brand to a larger audience is another growth strategy that requires a well-defined vision, said Katerina Giannouka, CEO of Jumeirah Group.

Giannouka joined the Dubai-based luxury brand, well-known across the Middle East, last year and has goals to export the brand internationally.

Her vision “to grow from a regionally recognized leader in luxury hospitality to be a company that has impact and drives value in the luxury hospitality space globally” is based on exporting the elements that define Jumeirah to new locations in a way that “guests can still know what Jumeirah is, and sense it,” she said.

A big part of that entails clear focus on who Jumeirah’s customers are, where they travel and where they want to be next, she said, which is critical when marketing to ultra-luxury guests.

Giannouka said Jumeirah’s strong balance sheet and “very good financial state” supports its growth strategy, and partnerships with other key luxury players — from internationally known design firms to restaurant concept teams — lend “the opportunity for your brand to evolve in more richness.”

Giannouka also underlined the importance of regional brand companies knowing the relevance of their own brands and the value that will be sought-after as the brands expand.

For Jumeirah, Giannouka said, that traditionally has been the luxury beach bar.

“We have concepts in Dubai that are really special, especially when it comes to entertainment,” she said. “Now there’s a new category between lunch and dinner that’s the festival hour, and some of our beach bars have revenues that are the sum of a small hotel.”

Rajakarier is undertaking a similar movement to grow its 23-year-old Anantara Hotels, Resorts and Spas brand into more locations, and he’s adamant that Minor’s nimble nature as a smaller company allows it to ensure that each Anatara is curated and authentic.

“In Maldives, when you wake up at Anantara, you know you’re in Maldives. In the Middle East, when you wake up at Anantara, you know you’re in the Middle East,” he said. “It’s important to connect that brand to the local culture and ensure our team members embrace the brand value and the brand experience.”

Retaining the feeling of the brand while adapting it to a new destination is a particular strength of smaller and more nimble companies looking to grow, Rajakarier said.

“As long as you’re consistent in your brand delivery and are focused, you’re on the way to win.”

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