CHAIN OF THE MONTH: Sofitel

In November 2007, Robert Gaymer-Jones became chief operating officer of Sofitel Luxury Hotels, tasked with establishing the chain as a separate business unit to parent company Accor, repositioning it as a leader in the luxury segment and launching two new sister brands – Legend and So.

The size of the task at hand was massive, but ironically the first job was to ruthlessly downsize the company by clearing out the hotels that did not fit in with its new image.

“When I came in we had 206 hotels within the Sofitel network from the good and the beautiful to the not-so-beautiful, so we brought that number down,” recalls Gaymer-Jones.

Using a ‘luxury index’, each hotel was reviewed and more than half were ditched by the hotel firm, leaving 100 of the best Sofitel hotels worldwide operating.

“We looked at location, facilities, clients, the ability to attract investment from the owner and whether the hotel fitted in with the Sofitel profile, is it in a market we want to be in? We went from hotel to hotel, owner to owner. Some fitted into the index of a luxury hotel but the owners weren’t ready to invest,” he explains.

The idea was to create an “exclusive club of hotels around the world” as Gaymer-Jones calls it. Alongside the closures came new deals — properties the firm saw as must-haves for its developing high-end portfolio.

But with the simultaneous closures, openings and extensive refurbishments there were unique financial challenges.

“The finances coming in went up, down, up, down, but we’re fortunate to have a board that supports the direction we’re going and understands it’s going to take a few years to get where we want to be,” he says.

“Sofitel is a fully-owned subsidiary of Accor but I run this company completely separately. Accor is great because it supports me financially, they’re like my bankers.

“At the same time it gives purchasing support, the leverage of a brand that size to create efficiencies for owners and it has an amazing distribution system,” he adds.

However, the situation got even tougher when the global economic downturn reared its head in 2008, right in the middle of the brand repositioning: “But we made decisions during the crisis that we wouldn’t cut back, even though we knew that financially it was very difficult for owners to accept some of the brand repositioning standards, but we told them this will pay off in the long run.

“Because we didn’t cut back on quality, reduce staff or service levels — we’ve come through it stronger than we were before,” asserts Gaymer-Jones.

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Asset-light strategy
Part of Gaymer-Jones’ strategy was to develop Sofitel into an asset-light business, focused on hotel management — which also freed up capital. This has involved selling off owned properties while maintaining the operating agreements.

“We own 21 hotels, by the end of the week this could be 20,” Gaymer-Jones says, speaking in March in reference to a Paris property the chain was on the verge of selling.

“We are very focused on being a manager, perhaps being an owner gives us an edge because we have an understanding of what the owners see as to how hotels should be managed, but Sofitel’s strategy is to reduce its asset ownership.

“We put the money from these investments back into our hotels. It’s not like we don’t want to own any hotels, if we find hotels in certain locations around the world in high-value key markets we would put our own investment in again,” he says.

However, when asked how many properties the firm would ideally still own in five years time, Gaymer-Jones replies six or seven: “And the reason we keep six or seven is because some of the time they’re leases and it’s very difficult to get out of a lease”.

Regionally, Sofitel currently has significant share ownership in Morocco, as well as investments in Cairo and Mauritius.

Gaymer-Jones adds: “We will hold onto some hotels until we feel the time is right to sell —– obviously you sell when there’s huge demand.

“Also, we want to make sure we sell to owners who are really interested in being partners with Sofitel. For existing hotels the owner is bound to maintain the management agreement with us, so we sell on the basis we have the rights to develop the hotel and maintain the standards”.

Today, the group’s hotel count — including owned and operated, and operated-only properties — stands at 120 in 40 countries, including a handful of operating Legend and So branded properties.

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An eye for design
So, Sofitel’s fashion-led boutique brand, was successfully launched in December 2010 with the opening of the Sofitel So Mauritius Bel Ombre by Thai architect Lek Bunnag, including features by fashion designer Kenzo Takada.

Just a few weeks ago, on February 28, the second So opened its doors in Thailand. The Hotel Sofitel So Bangkok has been designed by award-winning architect Smith Obayawat, five famous Thai interior designers and celebrated French fashion designer Christian Lacroix.

The decoration of the 238 hotel guestrooms and suites by local designers is based on a central theme, the five elements. Water, earth, wood and metal each inspire four floors, while fire is the theme of the main restoration area.

“Eventually we’ll have somewhere between 15 and 18 Sos operating around the world in the next five to seven years. I’d love to bring it to Dubai, Cairo and other parts of the Middle East. We’re looking at an opportunity in Beirut,” reveals Gaymer-Jones.

“The destinations have to be around fashion and design. The So we’ve just launched in Bangkok is unbelievable because guests choose their room by their preferred designer — it’s very fashion led. The uniforms and hotel accessories — the bathrobes and soaps — are all designer.
“Our hotel in Mauritius is the only place in the world where guests are buying the housekeeping uniforms because they’re designed by Kenzo Takada,” he continues.

Worldwide, the hotel group has already signed So properties in Singapore and Mumbai. It is also actively looking for sites in “trendy areas” in London, Paris and New York.

Gaymer-Jones says the brand is even more fashion-conscious than Rezidor’s designer lifestyle brand Missoni: “We went to Chanel and asked how our ladies should look, how much make up should they put on, how much nail varnish should they wear and so we created a ‘So look book’ for our staff.

“We’re really focusing on fashion from a guest point of view, but also from an employee point of view, and we’re using the background of Paris to create that.

“It has a boutique feel and is focused on people who like to live life intensely, have fun, enjoy themselves,” he adds, “but we want it to be authentic, we don’t just want ‘bling bling’; we want to create a lifestyle where people meet, have fun, enjoy the music, the food and the wine”.

Picking up palaces
Rolling out the Legend brand has been slightly trickier for Sofitel, after all, it’s not easy to find a palace, or an investor with the cash to pay for one. “It’s incredibly difficult to pick up a palace, these historical buildings typically have to be 100 years old or more. We’ve got a lot of competition chasing after the same owners so you have to give the owner a reason why they should choose Sofitel versus other

brands,” says Gaymer-Jones. Once the “beautiful” buildings have been found and paid for, the hotel group embarks on a full renovation — bringing in historians to reform them to their former glory.

Despite the challenges, Sofitel Legend Old Cataract Aswan became the group’s third hotel to open under the brand in October 2011, after Metropole Hanoi in Vietnam and the Grand Amsterdam in the Netherlands in 2010. Located in the Nubian Desert on the banks of the River Nile, the hotel — which originally opened in 1899 — was restored during a three-year period by French interior designer Sybille de Margerie.

The property features two wings; firstly the historic Palace, which offers 76 rooms and suites, including the Agatha Christie and the Winston Churchill Suites, named after two of the hotel’s most famous guests.

The Nile Wing of the hotel offers a contemporary design with 62 rooms and suites, the largest of which is the Agha Khan Suite.

A new addition to the hotel is Sofitel’s So Spa, a 1200m² facility featuring eight treatment rooms, three-room hammam and indoor pool.

“We just have three Legends right now, but there are going to be 10 to 11 worldwide,” says Gaymer-Jones.

Three of these will be in Egypt, with the Winter Palace Luxor initially due to be re-launched in 2013, followed by the Cecil Alexandria in 2014. However, Gaymer-Jones says the hotels may be delayed.

“Obviously dates get changed because of everything happening in Egypt, but the commitment from the Egyptian hotel authority has been incredible. They realise the importance of these developments, but it all depends on the revenues they get from tourism so it’s a catch 22,” he says, without disclosing the value of the renovations.

“They’re already running as hotels, but we want to transform them into real Legends. We decided to close the Old Cataract for three years. In Luxor, we’re more than likely going to keep the hotel open. It depends how the hotel is built, Luxor can be done in wings, but Alexandria might be more complicated,” he says.

Two more Legends, The Santa Clara in Colombia and the Palais Jamai in Morocco, are also currently under development.

“The next one will be potentially in Montefortino in Uruguay,” Gaymer-Jones reveals.

While the Legends require a significant amount of investment, he explains that once the renovations are completed, the rates can be significantly increased.

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Raising the game
“You can raise your rates to a different level because then you’re part of a collection of world-class hotels competing with the likes of the luxury Mandarin Oriental in Bangkok and The Dorchester in London for example. You are really at the high end of your brand.”

The same is true of the Sofitel branded properties, forgetting Cairo where occupancies were as low as 8% during the worst of the unrest, he adds. “We were typically able to double our RevPar in performance. We’ve driven performance so strong in these markets with the repositioning.

It’s a good story to tell as we go around the world pitching hotels to potential investors.

“I just met with our owners Abu Dhabi National Hotels (ADNH) in Dubai and they were thrilled with the results of our hotels,” he says, citing the UAE as an important market for Sofitel. The five-star, 282-room Sofitel Abu Dhabi Corniche, part of the Capital Plaza building on the emirate’s Corniche Road, opened on March 18 as the chain’s first hotel in the capital. Sofitel The Palm Dubai is scheduled to launch next year — with a “Polynesian feel” to it and 15 to 16 food and beverage outlets.

Over the next five years, Gaymer-Jones is hoping to grow Sofitel’s portfolio by around 30 hotels, to 150 in total. Most of these will be Sofitels — around 20, with another four Legends and five to six Sos. He says: “So is going to explode once people see and feel what we’ve done in Bangkok”.

Not put off by launching two new sister brands, Gaymer-Jones says a third could be on the cards: “We are open to that; we’re looking at potentially another brand,” he reveals.

But for now the Sofitel brand positioning is complete and Gaymer-Jones’ efforts were awarded with a promotion to CEO last year. It’s his strategy of quality over quantity that he believes will secure Sofitel’s place as an international hotel operator.

“I don’t want Sofitel to be the largest hotel company in the world; I just want it to be a successful, luxury hotel company focused on our DNA of design, gastronomy and culture.

“I want to create a club where people want to be part of Sofitel,” Gaymer-Jones concludes.