Madrid, 18th of May, 2004
When the acquisition was announced last year, Orient Express planned a €25 million improvement plan – what is the progress so far?

We are planning to bring the hotel back to its splendour – it has a special character, which is the reason for which we are taking the right steps to approve an investment program of €25 million, within the global strategy of the corporation. It is a very sensitive process, especially since the hotel’s heritage needs to be respected and preserved.

Orient Express has a different strategy to other multinationals. We will not, for example, brand this property as the Orient Express Madrid. We believe that the branding of a luxury product must be treated differently; we take pride in integrating the hotel in the local community, which contrasts with the approach of companies like Meridien, who negotiate contracts on a global level and brand their hotels without taking into account the interests of the local clientele.

Our focus is essentially on quality control as well as guest and employee satisfaction, with a special attention to details.

What is your competitive strategy towards larger, better known groups such as Starwood, Hyatt and Intercontinental?

These chains offer a standardized experience: even before arriving to the hotel, you will know where to put your toothbrush, which extension to dial for room service, etc.

Yet we operate differently – we strive to maintain the individual personality of each property. Many of our hotels are historical monuments that have been protected and restored, such as the hotel here in Madrid. We offer an experience, instead of a simple hotel room.

Leisure is an important aspect of our hotel – in fact, almost 50% of our guests are tourists. This is greatly due to the privileged location of the Ritz, which is across from the Thyssen Museum, next to the Prado and just around the corner from the Retiro.

The Ritz is not a typical business hotel that only offers meeting rooms and Internet – we offer the services and an environment that makes you fell like you are in a boutique hotel, right in downtown Madrid.

What was the impact of the March 11th terrorist bombings, and what are the hotel security measures which you have taken since then?

The initial reaction was natural – it was a tragic event which no one expected. The events that followed have certainly changed the country, and I would also say that they have strongly affected Europe as a whole. The impact was a moral shock and it took quite some time for things to return to normal.

Having said this, once the new government settles in, we believe that the situation will be back to normal.

Regarding security measures, the Ritz is a very secure hotel, particularly since it has only one entrance. Car access to the hotel is limited and we constantly maintain permanent police protection at the entrance. Even before the 11th of March, we took the initiative to improve security measures and increase the training of our personnel in case of any emergency. Today we are hosting the Palestinian delegation, and a few weeks ago we hosted the French President who came here to greet the new Spanish Prime Minister.

Yet will it be business as usual as far as occupation rates are concerned?

Yes, I believe so. Occupation rates are rebounding. Although the leisure bookings during Easter slightly declined during the holidays, we are expecting future rates to remain steady.

59.3% of total hotel demand in Madrid comes from Spanish tourists. Are they your main focus?

They are not only our main focus, but they are also our main customers. Spain is our biggest market and we are even perceiving a 10% increase in Spanish clientele. This confirms that our local approach is the right one, which has been to integrate the Ritz within the local community and preserve its traditional image.

The Ritz terrace

What is the share of American travellers coming to the Ritz?

The United States is our second biggest market. Although Spain represents about 27% of our clientele, Americans represent about 25% of our total client base. This is due to the reputation and quality of the property, and due to the strong relations which Spain maintains with the United States.

Do you believe that the Asian and Eastern European clientele will increase in the near future?

There are few Japanese clients coming to the Ritz, partly due to the economic environment, and also because Madrid has an image problem in Japan. Meanwhile, we are seeing a few more Chinese customers coming to the hotel, so this could represent a new market, although they are not really coming here in large numbers.

Regarding the Eastern European clientele, we all have great expectations now that the European Union is expanding, yet the reality shows that there is still little impact.

(continues)
What is your revenue growth strategy? To increase occupation rates or to increase services?

Services increase revenues indirectly, as you compensate quantity with quality, which we are driving towards.

The Ritz has a unique personality which we are successfully re-enforcing. Our 10% average rate increase during the first four months of the year illustrates that our traditional clients are satisfied and they are coming back. We are seeking to offer quality, not high volumes, and we believe that this creates positive synergies between the client and the hotel. At the end of the day, it is quality that drives average rates and creates confidence in the market.

The Ritz Lobby

The Intercontinental Madrid has announced that they will focus their marketing strategy on the individual traveller instead of focusing groups & conference bound travellers – do you believe that this is a good strategy?

The location of the Intercontinental is different than ours; it is a corporate hotel with a strong banding image, with the Hyatt across the street and numerous new hotels nearby such as the Hesperia. All these hotels charge a lower, average rate level, which is half of what we charge, so it is important for them to dig into the four-star plus market, which is part of their segment.

Madrid is driven by the four-star market, which will see an expansion of over 100,000 rooms in the coming years. Although the four-star market might be appealing, it is also a very competitive and volatile market. This segment yields to corporate interests and competes mostly on price and volume. The strategy of the Intercontinental must therefore be to attract the business of big corporations and to compete on rates — it is a corporate hotel with a corporate branding, so they are essentially catering to their natural market share.

Competition will be fierce, and it is estimated that the hotel offer in Madrid will grow exponentially by 45% in the next 3 years. Don’t you believe that price wars and over-capacity will hurt your market share?

Unavoidably, the situation will affect us. We also have corporate clients, but ours is a different type of clientele. This hotel has a unique personality, and it does not try to compete with new hip-hop hotels. That is the beauty of being in a dynamic business environment; it is a natural selection process that also helps to distinguish and project our personality in the market.

A new trend has developed in Spain: famous cooks are teaming up with hotels, like Fernán Adria with NH Hotels or Sergi Arola with the Miguel Angel and the Hotel Arts. Is a this a trend which you would like to develop with the Ritz Madrid?

Except for La Broche, all these restaurants follow similar approaches and, in reality, they do not bring anything new to the hotels.

But they are good business ventures, no?

I don’t believe that it is such a profitable business venture; it is essentially used as a marketing tool to enhance the quality of a hotel.

At the Ritz, we stand for the quality of our brand name and we do not need a consultancy contract to enhance our product offer like the Miguel Angel or the Hesperia does. These hotels do not have any branding, so that is why they need restaurants to enhance their hotel offer. However, the result is that people distinguish the restaurants, but they do not necessarily distinguish the hotel and its services. At the end of the day, the chefs of these hotels are selling their own image, they are not selling the hotel. The idea might good in order to encourage clients to come to the hotel, yet in practice it is the entire hotel experience that really matters.

So how do you improve your services – by offering technologies like WiFi or setting up a more personalised CRM platform, for example?

WiFi is a tool which business people need in order to perform, so we offer a half an hour of free internet access as well as WiFi in the business centre. At this point it is a standard service.

On the F&B side, our chefs are encouraged to travel to the many excellent properties in our portfolio like the Raymond Blanc in Oxford, the Hotel Cipriani in Venice and the Hotel de la Cité in Carcassone. This ensures a consistently high level of quality that is not simply led by a service contract with a famous cook.

How was your first year as General Manager of the Hotel Ritz Madrid?

It has been a great year. Yet one of the major differences with my previous post in Portugal has been the lack of flexibility in the labour market, which hampers performance and restricts staff motivation. This is something which we are rectifying gradually – we want to continue to challenge and motivate our employees so that they will do the best job possible for our clients.