Talk with the CEO of a series of deluxe, boutique hotels

The article:

Cleaning House

(reference : “Cleaning House” by May Chan, in the ‘South China Morning Post’ magazine, ‘Net Worth’, April 2011)

Grace Leo, is a Hong Kong-born, Paris-based hotel management expert.  Her company G.L.A. Hotels specializes in the development, re-positioning, management and marketing of deluxe hotels with a capacity of 20 to 150 rooms.  Grace Leo is the first woman to serve on the board of the Leading Hotels of the World’s Executive Committee, and here she discusses the state of the industry.

grace leo

grace leo2


Q: There are a lot of “boutique hotels” around to capture the increasingly sophisticated taste of travellers.  What do you think of them?
A: People’s expectations are a lot more sophisticated now because of the concept of – I hate to use the word – “boutique hotel”.  I find people have overused the term.  When I came up with the first kind of design-led, smaller, medium sized hotel in Paris, people were like, wow, this is something new.  Then the trend was picked up by other people who made it a competition – let’s make the most beautiful, the most designed, the most photogenic hotel.  They came up with a lot o fireworks, and forgot that they were a hotel.  They just thought of it as a toy.
A lot of boutique hotels opened everywhere, but it’s a matter of sustaining them.  I meet people like that all the time – people who think that because they stay in hotels they can become a hotelier, or they eat at enough restaurants so they become a restaurateur.  They don’t realise that in the long run it is a profession.

Q: How is the luxury hotel business doing right now?  Where do the guests usually come from?
A: Leisure travel is exceeding Business travel in the speed of its rebound.  2011 will still be viewed as a year of recovery with 2012 being the first year for real growth post recession.  Even though China and India are experiencing economic progression they do not generate substantial amounts of luxury hotel bookings to date.  In fact, the top 3 countries producing travellers in this category are the US, the UK and Brazil.

Q: Have the expectations of guests changed after the financial crisis?  Do luxury hotels feel the need to be competitive on prices?
A: Discounting was viewed as a disservice to the luxury industry and serves only as a quick fix and will cause larger problems later on.  There is a nice comparison to Louis Vuitton’s mantra of “never putting things on sale”.  The drive here is to believe in the brand and add value.  Customers will pay if you meet and surpass expectations.

Q: How about business travellers?  Do you see they are more pragmatic with travel budgets?  And how should the hotel industry cope with that change?
A: The correction has brought back more old-fashioned values back into view.  People are not willing to overpay for things anymore.  On the other hand, there are always people who are willing to pay a premium for really good service.

Q: How are independent hotels pitched against the chain hotels, which probably score better with the star-system?
A: It’s like shopping, you go into a global store, you know what to expect.  Where I like to go shopping to Milan and Hong Kong to look for things a bit different from the rest with a bit of local flavour and a bit more creativity.  Does that mind-set sit together with LV and Miu Miu?  I am sure it does.  Both can work.  The new clients can choose, they have the confidence to mix and match things of different social levels.  I think it’s cool.  If we look at style magazines, they dissect what the celebrities wear, they can be in Dolce & Gabbana jeans and they can wear at $30 Tee-shirt from H&M.  Why not?

Q: What is the hotel scene like in Europe, and Paris?
A: In Europe, more than 60 per cent of the hotel inventory is still owned and operated by independent individuals, as opposed to the United States which probably has a much smaller proportion of independently-owned hotels.  In Paris, up until five years ago there was still a shortage of major chains.  They couldn’t penetrate a market like Paris because more than 50 per cent of the inventory was just non-chain.  But chains like Shangri-la and Peninsula, finally got there after so many years of waiting.
I got my training with the chain hotels.  And now I have developed my skill set to take existing hotels that are losing money, or looking very tired, and my job is to come up with a vision.  I put a team together, do a costing and redevelop the whole project.  I reposition the hotel.  Sometimes it is also taking advantage of an historical building and transforming it into a hotel.  Like in Lisbon, five years ago a local developer asked me to turn this 18th century building into a small luxury hotel with 85 rooms.

Q: How do you turn around the hotels which solicit your operation and management services?
A: My speciality is properties with 60 to 120 rooms in Europe.
I adapt to the building, and do a lot of customised work.  Only very recently the chains finally understood that the boutique hotel movement has really cultivated a clientele which they would love to have.  That’s why they develop smaller units – even Mandarin has developed a hotel in Landmark, Hong Kong, which is less than 100 rooms.  Before, they never dreamt of doing that.

Q: What are the areas you have looked at when giving a property a facelift?
A: Operationally, we will have an assessment of everyone.  If the right person is there we continue, if not, then we change the management, almost systematically.  A lot of time when you take over hotels, they are tired, the lack energy, their performance is down and there are reasons for that.
A lot of the time it is harder to change people than carpets and curtains.  Sometimes you can’t change people and they have to go.  It’s sometimes worthwhile to pay people (to go) who have negative energy – they don’t want to change, they don’t want to hear about anything that you want to bring in.  It is a matter of calculating how much damage you will make in the future by keeping them on the payroll.

Q: Don’t you find it sad?  It’s usually people who have helped laid down the foundations of the business who are most reluctant to change.
A: Today, even for those who have the expertise, they are replaceable.  All of us are replaceable.  I have no illusions about that.  So for those who think they are the corners, they are not going to last.

Q: Do you pay attention to the star-system at all when you re-position a hotel, or would you rather use another set of criteria to guide you where you should go?
A: The star-system varies from country to country, and it is always useful because it gives a certain structure and discipline so that hotels can meet certain requirements.  For example, in Europe disabled persons’ requirements are very demanding.  It is always good to make sure needs are being met.
But what I don’t believe is what happened before 2009 – people came up six stars, seven stars, and that is totally absurd.  This is totally over the top.

Q: How do you categorise your hotels then?
A: I use fashion terms instead.  Haute couture is like five-star, because it is more customised, more refined.  Then pret a porter clients are willing to take the risk but they prefer a more private atmosphere, and the casual chic category is basically like a diffusion line – like if you look at the Armani it will be Emporio Armani.
And I have the one called the Jules that has been a real success since it opened in 2009 in the middle of the crisis.  We immediately signed up a lot of fashion groups.  It was quite interesting to see that the sophisticated clientele are not bothered by the fact it is not in the typical district that you consider chic and all that.  People love it.


Nerd smile  My words and thoughts

I am a lover of hotels, I really couldn’t live in a world without decent hotels.  It is part of the joy of traveling and being away from home.  It really isn’t so great to be away from home because I keep at home a lot of things that I actually need to use daily, if not weekly.

So, more than  being a consolation prize for me needing to go away, a hotel should be a benefit, a joy.  I believe hotels should be inspirational, even aspirational, with staff who can really provide services to look after the guests under their roof.  The roof that they look after. 

I am often tired by the time I get back to the hotel (either through work, play or even just because I needed to get away to take a break, a rest) so comfort factors are a must.  A successful hotel, in my eyes as a customer, must show consideration and apply thoughtfulness of heart and mind.  For me, it must really be a type of home away from home

It need not be my home, of course not, but it must enable me to feel at home.  I have a home and I know where it is, I don’t need another home to look after, nor do I plan to outstay my welcome, but it is of vital importance to me that the places I stay are really and truly worthy of my customship.


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