Company Update: Viceroy Hotel Group

When I meet Viceroy Hotel Group CEO Bill Walshe, the first thing he does is wave the new Viceroy ‘brand book’ under my nose. Sat under the bright lights of the Dubai World Trade Centre at Arabian Travel Market, it is rather a relief to be shown not another corporate brochure but a glossy A3 magazine, with fashion-inspired imagery and minimal words used to showcase its 16 hotels.

At the end, a double page spread is dedicated to the 17th hotel, Viceroy Dubai Palm Jumeirah, set to open in 2016 and described as a “palatial recreation of Arabian style that presents an ensemble of enchantment”. There are no lists of facilities or services on the pages of the magazine, no persuasive language and no lengthy reservation contact details; rather a few choice bullet points and photos of each hotel, their surroundings and the trendy, beautiful guests that seem to accommodate them.

The impact is one of intrigue, and makes the reader want to pack their bags and jet off to destinations such as St. Lucia, Miami or Hollywood.

“It’s a new communication style for the brand,” says Walshe of the magazine, the first issue of which launched in May, with a second now in the works. “It’s our version of a corporate directory, unlike anyone else’s, featuring one of the world’s foremost fashion bloggers on the cover.”

Here, my fashion knowledge lets me down, but Walshe explains the blogger is Alexandra Spencer, who grew up in Dubai — where Walshe himself worked as chief marketing officer for Jumeirah Group — and is his best friend’s daughter.

For the relaunch of Sugar Beach, a Viceroy Resort in St. Lucia, he recalls: “I was about to send our usual photographer over to get the usual pictures and I called Alex — she’s massive in blogging and she has half a million followers on Instagram and a couple of million hits on her blog. [I said] ‘here’s the deal, I’ll send you and a couple of a friends to St. Lucia for a week with a camera. No editorial guidelines, and I want 50 photos in return’ and they just shot each other and she blogged it and we ended up with something that should probably be a Vogue Italia shoot, not a hotel shoot. And we had such fun. What the brand is trying to do is maintain that relevance to an emerging audience.

“And we have, as suited hoteliers I think, no idea how to speak to the fashion blogging generation, the emerging Gen Y customer, so I’ve actually started to collude as opposed to collaborate with Alex to be the voice to the social media generation and to help us articulate what we do in a way that’s relevant to others; and actually it has made us far more courageous. I would never have put an image like this on the front of a hotel brochure,” Walshe says, referring to the casual young blonde woman sat on the deck of a yacht in shorts and a top that shows off her shoulders.

“She would have been covered from head to toe, but the reaction we’ve had this week from people is that it’s coffee table, it’s lifestyle, it’s emotional, it’s connected, so we’re having a lot of fun.” He reveals that he is now working with Spencer on setting up a Viceroy blog and hints more is to come in the social sphere, in which Walshe himself is active on both Twitter and Instagram.

“What we’re trying to do as a company is speak more to the destination opportunities and the destination feel and experience.

“Clearly, we want to say we have bathrooms and we have bedrooms but that is not the key message; the hero message is [for example] ‘be yourself in New York, it’s a Downtown vibe in an Uptown location’. You can see [from the brand book] that if there was a Mad Men inspired cruise liner in the 1960s it would be Viceroy New York, it’s got that whole kind of cabin, wooden, grown up feel to it.”

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However stylish the book is, Walshe is adamant that the goal is not to be “cool” but to be “relevant”, from design through to service.

“It’s trying to recognise who will be the customer that will walk through the door. I want to give something that’s great design but more importantly, we’ve never been in search of being labelled cool. I want to be relevant, so it’s about having a clear understanding of who the customer is and programming and designing around it,” says Walshe.

As such, four of the hotels — Avalon in Beverley hills, Zetta in San Francisco, Cassa in New York, and Delfina in Santa Monica — don’t even have the Viceroy name, but are “urban retreats by Viceroy”.

“A good example would be the hotel we opened in San Francisco last year,” continues Walshe. “Before designing and opening it, we went to the market and we said ‘well, what’s the demand and who’s the customer?’ It’s Silicon Valley — they’re young, playful, but very serious about what they do.

“They don’t conform to normal dress standards or presentation but every hotel in town is conforming to traditional presentation standards, so we created Hotel Zetta, which is very playful, very eccentric and speaks to them, and the reaction of the market was: ‘finally, somebody gets us’. They’ve adopted the hotel and now we’re market leaders.

“So what we do when we’re coming into a market is to go into a very detailed research process to say who is the customer, what will they react positively to, and then we kind of co-create the design of the hotel with that voice of the customer, with them in mind.”

Sometimes, that means the Viceroy name is not essential. “There are certain hotels where the individuality is such that we’re happy to put a signature on them but allow them to carry their own expression,” explains Walshe. “They’re my incubators, they are where we throw out new ideas, that’s where I road test young talent, I give general managers their first break and say ‘you know what, go and play, show me what you can do’, and then graduate them through the ranks and we have a lot of fun with that”.

Individuality is also key at core branded hotels, for example at Viceroy New York, the newest hotel, and the upcoming Dubai hotels. After all, with three properties signed for one small city, Viceroy’s “individual programming” will be critical in tapping into different market segments.

“In terms of the segments that they’ll speak to, one of the hotels is going to have a large ballroom, the other one won’t, so therefore the group segment will play in one, not in the other,” says Walshe of the two hotels signed with Arabtec in April — Viceroy Dubai Sheikh Zayed Road and Viceroy Dubai Business Bay.

“The interior design approach, the architectural programming are being handled by different companies to ensure a strong expression of individuality.”

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These will join the previously announced Viceroy Palm Jumeirah, an AED 3.67bn ($1bn) project being developed by SKAI Holdings and featuring 479 large rooms and suites and 222 signature Viceroy Residences. The resort has a unique investor model that enables buyers to purchase hotel rooms, which are then leased back in exchange for 40% of the room revenue. Based on current market conditions, investors’ annual rate of return is estimated at 12%.

“We’ve been working with SKAI Holdings for over a year; that’s moving forward very quickly, the collaboration is unbelievably positive, its going to be an extraordinary hotel,” comments Walshe. “Having city presence as well as Palm, as well as the beach, is giving us a platform for brand visibility, which will help us extend our reach into key source markets.

“It gives us additional marketing power, it makes us more credible as a partner for airlines, operators, travel agencies, and we are absolutely thrilled. The quality of the hotels that we’re going to do in the city will match that of Palm Jumeirah.”

Walshe says “the goal was always to have a city presence and a beach presence” in Dubai, but with that achieved, “we’re done”.

“The goal is not to have multiple Viceroy flags flying around Dubai; the goal is to have correctly positioned super quality products in the key areas of the city being business and leisure, which can help each other in a lot of opportunities for positive cross collaboration,” he clarifies. “But we’re not a cookie cutter brand, we’re a modern luxury brand, we’re an exclusive brand and I think that we can very easily maintain that aura of exclusivity and that position with the hotels that we’re opening, but that’s it.”

Of projects elsewhere, Walshe is a little more vague, revealing that projects are on the drawing board but yet to be announced.

“We have announced three hotels, all in Dubai and I have three more hotel management agreements signed but not yet announced — one in the US and two outside, and I expect to confirm another minimum of three hotel management agreements this year, all of which are currently at advanced LOI stage, all of which are future new builds. So what we’re focusing on right now is creating the future of Viceroy, and none are in this region beyond those three. We’ve got to start stepping into Latin America, we have our first European opportunities coming, so there’s a lot happening. We’re focused now on openings in late 2016 with Viceroy Dubai Palm Jumeirah and beyond that in 2017, 2018, 2019. I think the next announcement we make will be about another major gateway city in the US, a new build hotel to open in 2017, which will be phenomenal,” reveals Walshe.

Development of Viceroy Istanbul is delayed, leaving for now the focus very much on Dubai, with renderings and details of concepts for both Viceroy Dubai Palm Jumeirah and Viceroy Dubai Business Bay set to be unveiled soon.

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VICEROY NEW YORK: THE FIRST YEAR

Viceroy New York opened on October 9 and since then, has been a rapidly growing success story for Viceroy.

Walshe explains: “What we’ve been doing over the last number of months as seasonality has changed is bringing different components of the hotel to market. So we opened with a lot of our rooms, we didn’t have the penthouse suite open, that’s now done and launched, the restaurant Kingside with Marc Murphy, who is a very well known celebrity chef in the US, went within a month of opening on what they call the heat map in New York; that is a gauge on the most demanding tables in Manhattan. They do it based on reservations demand and critical reviews. We went to number one on the heat map within a month. It’s still the hottest table in town.”

He acknowledges that “the first quarter in New York was dreadful” thanks to the “weather intervention”, but “as soon as the snow melted, towards end February we opened The Roof. The Gerber Group in New York run the bars, originally founded by Scott Gerber and Randy Gerber, Randy being Cindy Crawford’s husband. So we opened The Roof, which is our bar on the 29th floor, an inside outside space with views directly over to Central Park and that has just gone mental. It’s really cool. The whole hotel is almost Mad Men-esque, it’s quite a masculine feel but not darkly so and it’s just cool. We did a photoshoot at the hotel and created our first video for a hotel using Dubai-based Insignia, now our brand agency.”