ABTN speaks to Jonas Schuermann, general manager of the Mandarin Oriental in Hong Kong, about how the hotel business is faring in the Asian city
How long have you been in Hong Kong?
I came back to Hong Kong last September, though I have been with the company for 16-odd years. Before this I was in Kuala Lumpur for five years, Macau for three years and Bangkok for 8 years. I have been out in Asia since 1990. I am originally from Switzerland.
How are things in Hong Kong?
They are less challenging than 12 months ago. It feels like that we have found the light switch for the end of the tunnel. Not just for Mandarin Oriental but for Hong Kong. We saw some positive changes at the beginning of the year and we are all hoping that they will be sustainable.
Was it a difficult time to come to Hong Kong?
Well, it was an interesting time. One thought when I arrived last year was that things were turning. It was still quite difficult but we could see that the trends were reasonably positive. At that time, the double dip theory was still out there very strongly and we didn’t know whether we would go back to where we were six months prior to that and so far we have seen an upward trend ever since October or November last year.
China and Hong Kong didn’t seem to be as badly affected as the rest of the world. How important is the Chinese market to you
It depends on what you understand by the Chinese market, whether you mean people from China or China being the driver for business in Hong Kong. I think those are potentially two separate things. If you are a banker or worker in the insurance market and you want to be successful in today’s world you have to deal with China and India to a large extent and other economies like Indonesia and to do that Hong Kong is a perfect platform to go into those countries. They have been open to business non-stop; they haven’t closed while other economies in the western world have had very difficult times. That’s when you see people from Europe and America visiting and you’ve seen a faster recovery from those people coming into Hong Kong because if they want to do business here then they have to come.
The other side is obviously the travellers within China, more and more affluent ones, and with the economic changes within the mainland you have more Chinese travellers coming overseas, and for them, Hong Kong is considered that way, just as Macau and Singapore are also benefiting from that trend in Asia.
What is the mix of your guests?
We have a very healthy mix in this hotel between European, Americans and Asians; it’s almost one third, one third and one third. It varies from month to month but we have a really good mix. That is helping us, an even split. We have good business from Australia, about 8 percent. I should say also that Hong Kong enjoys a very strong following in the UK, and as a destination we are very grateful for what the UK has brought to Hong Kong.
And how has business improved recently?
We have a 46 % improvement in relative RevPAR (revenue per available room), year on year, but we have to be clear, we came from a reasonably modest base. The Revenue per available room: A common metric used by the hotel industry to indicate performance. has improved on the first six months of the calendar year, and that has been very healthy, but the first six months of 2009 for everybody had been modest.
The property had gone through a very extensive renovation. Have you any plans for improvements?
We have no major plans. Obviously we spent a considerable amount of funds three years ago when the hotel was closed for nine months. Like every other property you constantly adapt and improve, there is nothing of immense significance planned and we probably do a little more in the heart of the house than front of house, but there are no major changes planned.
What is your competitive set?
We have fantastic competition here in Hong Kong. The major brands are all represented. On the Hong Kong Island side you have this famous North American brand which is doing really well, as well as another brand that is dominant in Asia and has properties here in Hong Kong. Those two are really are main competitors on the Hong Kong side. On the leisure side you have the Peninsula on the Kowloon side, which has always been a fabulous hotel and the former Regent. For leisure it is the Kowloon-based hotel as well as the North American operated hotel on the Island side.
What is the mix between leisure and business?
Based on where we are, in the centre of Central, our location works in our favour during the weekdays for the corporate travellers and smaller meeting groups, but also more and more for leisure. Ever since we completed our main renovation three and a half years ago we have seen a substantial improvement in our leisure markets. We are very pleased with that because the leisure market does tend to make different use of the hotel, they are more a client that is here on weekends – which for Hong Kong island-based hotels have always been more difficult than weekdays. So we have seen a good and strong growth from the leisure market.
Is it difficult catering to both?
Not really. Everybody wants the same things: convenience, service, quality, location, and variety. Of course a business traveller has different expectations in the sense of services, speed of internet services for instance, but the basics are essentially the same. That is what a luxury hotel is all about – the quality of what we provide. I don’t think luxury today is defined by how much crystal you hang or put in the ceiling or how many gold plated faucets you have. Both segments are equally demanding and expecting very good levels. Yes, there are differences, but guests, when they come, they have specific needs and we have to meet those needs in a fast and efficient way. In that respect it’s not immensely difficult to breach the gap between business and leisure travellers.
Isn’t luxury a dirty word now for travel procurement departments?
The essential question is what do our clients value most? Not anymore the Bentleys and Rolls Royces, perhaps. It is really, if you look closely, what is the most valuable tool or asset for a guest, and very often it is time. We are providing good service and quality, what better luxury could be there than being able to generate great enjoyment for the client. I appreciate the fact that luxury means different things to different people.
A good example for me was how Louis Vuitton handled it. Before they had an advertising campaign with celebrities with the products around them. And then within quite a short time a new campaign came out emphasising workmanship and the dedication to fixing a wallet. Luxury isn’t about showing off. Is it the right word? It is one which won’t go away.
Many people in the last five or six years have used it in the wrong way or for the wrong reasons and some people don’t want to be associated with it because it could be perceived as ostentatious or not sensible with their companies, but at the end of the day the basic needs such as service, elegant surroundings, ease of access, being looked after, security – that’s what defines luxury, rather than just a label.
How do you differentiate between your hotel and the Landmark Mandarin Oriental nearby?
It’s true that it’s rare to find a hotel company which has such wonderful properties in such close proximity. What we both do really well is great service delivery and attention to detail, that’s what Mandarin is all about, and whichever you are at, that doesn’t change per se. The Landmark reflects a contemporary style, elegant touches, whereas we are much more traditional. The location, the views onto the harbour, the restaurants and services are a very different hotel. The Landmark is a much smaller hotel. We have 500-odd bedrooms and 10 restaurants and they have slightly more than 100 rooms, so it’s a much more intimate product. We are very different and also very similar.
Is there any crossover?
They are very different markets. Although there are people who say: “I go to China, stay in Hong Kong before and after, and stay in both properties.”
How many staff do you employ?
Around 800. It goes up and down. When we are full we might have a guest count of 900/ 950 for the rooms, but we also have 10 restaurants and bars, so we might be seeing 2,500 guests within 24 hours in the food and beverage operation. In that we are helped by the physical layout of the hotel. We do not have huge lobbies and massive atriums and the restaurants are scattered around many different floors, so you don’t have the impressions of being in a massive hotel. Also we are helped by the different habits of business and leisure travellers. They move in very different times. The corporate traveller comes back at five, the leisure traveller comes back at seven or eight, and the Hong Kong resident comes for meals at lunch times. So we are helped both by the physical location of the hotel as well as its layout.