Golden Tulip key to Louvre’s future with Jin Jiang
 
Golden Tulip key to Louvre’s future with Jin Jiang
11 AUGUST 2016 8:49 AM

Since its acquisition by Jin Jiang International Hotels Group 18 months ago, Louvre Hotels Group has developed a strategy built around expanding in new destinations—especially China—and the repositioning of its Golden Tulip brand.

NANTERRE, FRANCE—More than 18 months have passed since Shanghai-based Jin Jiang International Hotels Group acquired French hotel company Louvre Hotels Group, and the retooled Louvre is almost like an entirely new company, according to Louvre’s CEO Pierre-Frédéric Roulot.

“With Jin Jiang’s entry, everything changed,” Roulot said. “It has been unbelievable for us. Jin Jiang is a long-term and strategic player. Plus, the first thing they did, they gave €2.5 billion ($2.8 billion) in credit line from (Industrial & Commercial Bank of China).”

Roulot now has the pleasure of investing that dividend. In addition, Jin Jiang also has charged him with seeking out new revenue lines, including restaurants and other initiatives, but he declined to talk specifics.

“It is too early to talk publicly about that, but Jin Jiang is a very large conglomerate, with one-third of all Chinese travelers booking with its tour company,” Roulot said. “In Europe, we are Jin Jiang’s preferred hotel company.”

Behind its new push, Louvre will concentrate on the Chinese market and a new positioning for its Golden Tulip and Campanile brands, Roulot said.

“There might be some short-term investment, perhaps an acquisition,” he said. “A couple of hotels in Germany are to be added, for example, and perhaps more in the (United Kingdom) after Brexit. Definitely more in the French market, and there will be capital expenditure allocations both for hotels and for technology and digital. We are completely new.”

Louvre was created in 1976 by the Taittinger champagne family as Groupe du Louvre. Starwood Capital Group acquired the company in 2005 and then closed on the sale of Louvre Hotels Group to Jin Jiang in 2015. Along the way, Louvre also evolved via partnerships with Golden Tulip Hospitality and Concorde Hotels.

Its current six brands are Campanile, Kyriad, Golden Tulip, Première, Royal Tulip and Tulip Inn. Louvre has approximately 1,200 hotels, while Jin Jiang has—including those Louvre assets—approximately 6,000 owned or managed properties.

Golden Tulip repositioning
A central piece to Louvre’s future is the repositioning of its Golden Tulip and Campanile brands, which Roulot said Jin Jiang identified as the two Louvre brands with the most potential. Golden Tulip, especially, is preparing to step onto the global stage.

“There is no true worldwide leader in the 4-star market, and it is a very important segment,” Roulot said. “The Chinese market has downgraded from the 5-star market to the 4-star market. That is now politically correct and has completely changed the market there. Our position is to have Golden Tulip be a 4-star hotel with a 5-star product. And you see that change, too, in Europe, with the economic crisis.”

The strategy of both companies is to raise awareness of the Louvre brand with Chinese travelers, who will stay at its European hotels via Jin Jiang’s tour operation businesses and then do so domestically when Louvre’s Asian pipeline expands. It’s all a part of the industry’s future of owning the entire booking journey, Roulot added.

“Jin Jiang gave me the opportunity to develop hotels in China, which is very difficult on your own,” he said. “We did try but were never successful. They have given us real estate and expansion opportunities.”

Louvre also intends to change its marketing strategy with its repositioned brands and target younger generations of travelers.

“Jin Jiang asked me to reposition the (Golden Tulip) brand with something younger, because if we wish to create this worldwide leader, we need to position for the next decade and new generation of businessmen, who are now millionaires,” Roulot said. “To have ‘bleisure’ components in our hotels, and more colorful design, as you are now targeting a 30- to 40-year-old customer. Already 23% of our customers for the brand are millionaires, and that will rise to more than 50% in the next five years.”

Roulot said the combination of repositioning two major brands after an ownership change and in the midst of shifting world economies will allow Louvre to grab market share.

“Our new customer does not want to stay in the hotel of their parents,” he said. “This segment is key for the industry’s future, and we can create a big network. We can walk the talk.”

Golden Tulip has approximately 250 hotels and a pipeline of another 250 properties scheduled to open in the next five years.

“All new hotels in China will be Golden Tulips, with another five as soon as possible, and then we’ll wait a little to see how the market reacts,” Roulot said.

Destination strategy
Louvre’s expansion strategy is based on establishing scale and leveraging Jin Jiang’s huge scope of hotels, transportation, entertainment, restaurants and tour operators, among its other initiatives.

Roulot said it’s also important to not rely too much on one market; Chinese travelers, for example, currently account for just 5% of Louvre’s guest count.

“We have a simple strategy and do not want to put a flag in every country,” Roulot said. “What makes sense is to tackle some big countries with international and domestic demand. South Korea, Brazil and Iran are other examples. We’ll start with Golden Tulip, which is well known as a brand so it has fewer costs. It will be done via franchises, so it is easier and comes with smaller teams. Then, when we reach critical mass, between 20 and 50 hotels, other brands will enter that market.”

Indonesia, where Louvre has 20 hotels and a pipeline of 50 additional properties, has attributes that favor this plan, Roulot said, such as a young, educated population and a good economy.

“We like it when a country’s (hotel industry) is fragmented,” he said. “In the U.K., for example, where the market is dominated by Travelodge and Premier Inn, it is difficult, although (given) the currency fluctuations and Brexit, we do see opportunities outside of London.”

Elsewhere, Roulot said business in France is good outside of Paris, and Spain is producing good results, too.

“It remains difficult to do organic expansion,” he said. “That is why it is so exciting to have companies to partner with, to have that added equity.”

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