BERLIN—Less than two years ago, when the burgeoning hotel bubble was giving rise to unprecedented supply growth throughout the industry, management at Paris-based Sofitel Hotels turned the wholly owned Accor subsidiary firmly against the grain.
The brand’s distinctly French image was spread too thin, and its portfolio of 200-plus hotels was in dire need of focus.
“They had 205, 206 hotels on a global basis, and they said, … ‘Do we want to keep these hotels? Do we want to eliminate some? Reposition them?’” said Robert Gaymer-Jones, the company’s COO. “We came in about 18 months ago. We looked at the original 206. We’ve now pared it down to about 130, 140.”
The brand’s management team never decided on a target number as they re-evaluated the portfolio. It simply analyzed each property, one by one. If a hotel fit within the desired image of what a Sofitel should and could be, the flag stayed, and investors and owners were called upon to bring the property into the refocused brand standards. If the hotel no longer fit within those constraints, it was either repositioned with another Accor brand or removed from the portfolio.
“We’ve spent a lot of time working with owners and investors explaining the brand, why it’s important for them to invest in the brand, to bring it to the next level,” Gaymer-Jones said. “And then we’ve also had to have that conversion where we felt that hotel does not fit our brand, and move them possibly to another Accor brand. I think we’ve actually disposed of 15 hotels, just outright disposed of them because we felt like they didn’t fit any of the brands
The result is a more defined portfolio that exudes the qualities of French sophistication, he said.
“The things that are very important to us are things like design, food and beverage because of our French heritage. It’s important that we focus on elevating our food and wine knowledge (to) a higher level … We think it’s very important that the standards of service are done in an elegant way.
“We really want to be focused on creating a fine hotel product, because otherwise it’s very difficult to differentiate between us and any other hotel brand.”
Adapting to the market
That task is made even harder in an economic climate that has brought greater parity to the market. Company management is hoping to buck that trend through creative incentive packages targeted at leisure travelers. One, the decadently named “I Love Chocolate” campaign, treated guests to chocolate goodies at various intervals throughout their stay.
Gaymer-Jones said that campaign generated more than 10,000 roomnights.
But despite the extra demand, the company, like nearly all hotel companies today, has had to make cuts elsewhere. By leveraging its relationship with Accor, most of those cuts have been back of house, the company’s COO said. The high-touch areas where the company is establishing itself as a provider of luxury service have remained intact.
“From a customer point of view, they should not be seeing any change in levels of service or detail,” he said. “We want to make sure we still have that.”
Sofitel management has had to make similar concessions with investors and developers to maintain the momentum of its repositioning.
“Of course financing is difficult—to raise the cash, to rebrand a hotel, to reposition a hotel, to get new signage, to get new in-room decorations,” Gaymer-Jones said. “We are working with our owners to make sure we’re putting a sensible approach to say, ‘OK. Let’s do three or four floors this year. Next year we’ll do another three or four floors. Let’s do the public areas.’ We’re not just saying, ‘You’ve got to do 100 percent of everything by the end of the year.’ That just doesn’t work.”
The road ahead
The flexible approach has been well-received with investors and developers. There are 29 hotels in Sofitel’s pipeline, most of which are out of the ground with only a few “sitting on the fence with finance issues.” Those new projects will extend the brand’s global reach from 47 countries to 72 countries.
Additionally, the company is developing two new brands. Sofitel Legend will feature destination hotels and historic properties.
“Instead of renovating them, we restore them,” Gaymer-Jones said. “We go back to the finite detail to understand what these hotels were originally built like. What were the uniforms like? … We bring it back to a true legend. One of our commitments as a brand is to be authentic.”
The other brand is So by Sofitel, an “edgy, boutique type of hotel geared toward the younger clientele. They’re very much focused on design,” he said.
Even though the company is as lean as it’s been in a long time, a brand repositioning paired with the development of two new brands amid a global economic crisis is a road fraught with challenges. When asked for the most daunting of these, Gaymer-Jones said avoiding the urge to panic.
That strategy has worked thus far—to an extent. Though Sofitel, like nearly all luxury hotel companies, is experiencing revenue per available room declines, those drop-offs are much less significant than its competitive set, which, as Gaymer-Jones pointed out, “is a positive.”
That positive is one of many, as it turns out.
“We continue to grow our market share, in the good times as well as the bad times,” he said. “We are seeing our customer satisfaction scores better than they’ve ever been.
“The biggest opportunities now lie in the fact that we’ve implemented the brand positioning. You really see the green shoots of our success.”