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Editor’s Note: This interview is part of Skift’s CEO interview series. This series is with hospitality CEOs talking about the Future of the Guest Experience and the evolving expectations and demands of hotel guests. Check out all the interviews as they come out here. Also, enjoy the previous series on the Future of Travel Booking, with online travel CEOs.
In the vast space between independent hotels and global hotel brands sit several hospitality consortia and organizations that provide some of the same marketing and promotional functions as large operators while remaining dedicated to the unique characteristics of their portfolio properties.
One such organization is Relais & Châteaux, a collection of 450 independent hotels and approximately 80 restaurants across 64 countries. The organization was created in 1954 with just eight properties in France.
The network is distinguished by its strict culinary admission standards. Unlike similar networks like Leading Hotels of the World or Preferred Hotels Group, all hotels in the Relais & Châteaux’s collection must have a restaurant component. However, not all restaurants must be connected to a hotel.
“Cuisine is really our specialty and there is no competition around this. We have 328 Michelin Stars in our family, which is really unmatched,” CEO Jean-François Ferret explained in a recent interview with Skift.
This interview is one of four-part series in which Skift looks at the state of independent hotel collections through CEO interviews and market research. Follow the rest of the series here.
Relais & Châteaux and similar organizations are unique from hotel chains like Marriott International or Hilton Worldwide for a number of factors including ownership models, pay structures, and branding. These international chains; however, are now investing in independent hotel collections of their own, driven by consumer demand for more boutique, local hospitality experiences.
Skift recently spoke to Ferret about brand standards, curating a truly unique hospitality experience, changing consumer habits, and increased competition from chain brands. An edited version of the interview can be found below.
Skift: Can you briefly describe the business model behind Relais & Châteaux?
Jean-François Ferret: Relais & Châteaux is based on two different resources: One comes from fees paid by independent hoteliers and restaurateurs and the other comes from commercial localities, channels that we provide to our properties.
The fees are different depending on whether it is a hotel or restaurant. For the hotel, the fee depends on the number of rooms. A Relais & Châteaux property of 30 rooms, which is the average, will have an entrance fee of around €10,000 and annual fee of about €20,000. For restaurants, it depends on turnover. If there is a large restaurant of more than two million guests, then there’s an entrance fee of €3,500 plus an annual fee of €800. For smaller restaurants with under two million turnover, there’s an entrance fee of €2,000 and an annual fee of €6,000.
Those fees have been frozen for roughly eight years, taking into consideration the economic situation. For smaller properties, we put caps on fees based on turnover. We want to keep our properties, especially small properties, in the family. We feel it’s very important for us to keep beautiful exclusive properties in Relais & Châteaux.
We want to attract young talent, young chefs, and try to discover the talents of the future. This year we did something new and decreased fees for small restaurants by 25 percent to lure young chefs to join the family. For them, it is a dream to be a part of the family and be close to Thomas Keller, Daniel Boulud, all the big names.
Skift: Can you tell us about the brand standards or guidelines for hotels that can join the group? How do you decide if a hotel can join Relais & Châteaux?
Ferret: The standards are very very high and very demanding, We have ten inspectors that go around the world checking on new applicants. We have a list of more than 300 criteria that we go through and each inspector does a report of at least ten pages. Afterwards members also check applicants. Then we validate the reports by the quality department in Paris and, if it is a positive application, the board of directors votes on it.
The process is quite long because we really want to target the best in terms of quality. This quality check is just the beginning, a prerequisite. What we would love to find is a certain spirit, certain values and experiences. This is what our inspectors try to find when they visit new applicants.
A property cannot join Relais & Châteaux if they don’t provide five experience, which we call the taste of the land, the soul of the innkeeper, the family spirit, the celebration of the senses, and the awakening to the artist within. We need to feel this when we visit a Relais & Châteaux property.
Each property is deeply rooted in the region with a specific culture; we should feel the spirit of the property when we visit a Relais & Châteaux property. This is what we call the “taste of the land,” which is the first experience we need to find in a Relais & Châteaux. The “soul of the innkeeper” is also so important. We want to keep properties small because we need to feel that soul.
The third, our family spirit, is also key. There is a strong sense of fellowship, we try to build memories between different properties. We call them our road to happiness, la route du bonheur in French. The family spirit is not only between members themselves but also between members and their guests. Our guests are so close to our member that in most cases they become friendly and are really treated as part of the family.
The celebration of the senses means a lot of focus on details, a kind of choreography. With the art of feeling, we provide emotions and a journey for guests to discover certain pleasured. This DNA with the five experienced is key to our recruitment process. You can be very good at quality, but if you don’t have those experiences then you cannot be part of the Relais & Châteaux family.
Skift: What are the most important marketing channels that you use today? Have they changed over the past couple of years?
Ferret: We have three channels including digital, travel agents and growth centers. The most important channel is digital, which represents 60 percent of our marketing, and we try to be very experiential with our approach. We are working on content and building a new website to not only provide a booking channel but also provide emotion and experience.
Skift: What about the demographic of your primary customer? Who is your primary customer today and has that changed over the past couple of years?
Ferret: We have around two million customers. The average age is around 48 years old, which is a decrease from five years ago when it more than 50 years old. We’re seeing the impact of markets like South America and Asia where clientele is much younger than European or North American clientele. Eighty-five percent of all business is leisure. Our guests are very loyal; our repetition rate is between 50 percent and 85 percent. Once a guest has tried Relais & Châteaux, they really come back year after year.
In terms of source market, 20 percent comes from North America and 20 percent from France. North America is leading the league as recent as last year, but I’m convinced that next year it will be the first. UK is in third followed by Asia-Pacific with 10 percent. Then you have all other source markets.
Skift: You’re not just trying to attract customers to stay in these hotels; you’re also competing for the actual independent hotel partners.
Ferret: Yes and no. Yes, of course we are competing because labels like Preferred or Small Luxury for independent hotel partners, but in reality they are not fully competitors because they are not like us. They are different. Our properties have an average of 28 to 30 rooms, which is very small. Our guests are 85 percent leisure. We, of course, are developing in cities but we are much more located in the region and very much focused on cuisine.
Cuisine is really our specialty and there is no competition around this. We have 328 Michelin Starts in our family, which is really unmatched. If you take all these criteria then you see that we don’t have real competitors that provide the same kind of experience.
Skift: Would you say that you’re not competing with Preferred Hotel Group, Leading Hotels of the World, or Small Luxury Hotels of the World?
Ferret: In front of some clients, yes, but for clients who know the DNA of Relais & Châteaux we are in a different league because we are providing an experience that none of the other labels can provide. I’ve explained to you the average room of 28. The other ones are much, much bigger. They are focused on creating image. There is no equivalent, and the experiences I have explained to you – taste of the lands, soul of the innkeeper, family spirit – you find them only at Relais & Châteaux. So of course we are competing with Preferred and Small Luxury — Leading is for too large of a hotel — but we are truly different.
Skift: Major hotel groups are entering the independent hotel space. For example, Hilton launched the Curio Collection and Marriott has the Autograph Collection. Do you see major hotel groups as competitors as they enter this space?
Ferret: We see that they are trying to enter the space with a much more experiential approach and use smaller hotels. Of course, it comes close to our DNA, but it is not like Relais & Châteaux. Hilton’s or Marriott’s collection does not provide our taste of the land or the soul of the innkeeper. When guests come to our hotels, they are usually welcomed by family. For example, one of our ryokans has been in the family for 500 years. Do you think that the art of welcoming that they provide guests is the same that you could find in the Autograph Collection? That has nothing to do with it.
We see that the major brands are trying to speak to smaller entities to provide more experience, which is good. This is a market trend, some with high quality and places like palaces but this is not the spirit of Relais & Chateaux. We keep the difference.
Skift: What do you think is driving traveler’s demand for these more independent, personalized experiences at these independent hotels?
Ferret: Travelers, both on leisure and business, are a little bit fed up of wakening in the morning and not knowing where they are. I’m a big business traveler and I can tell you when I wake up in a big chain hotel, everything is the same. Tokyo is the same as New York, which is the same as Rio, and it’s boring. The trend is really to become more experiential. That’s what the traveler wants for both leisure and business
Skift: Do you think that it will continue? What do you think is going to happen in the future? Will all of hospitality go towards this independent property?
Ferret: Yes, the shift towards more experiential hospitality will continue. We like to maintain our differentiation by going even deep than what I have explained.
We have introduced a brand new vision for Relais & Chateaux, which is more profound and intense. Presented in November, the new vision wants to provide something special with the ambitious goal of making a better world through cuisine and hospitality.
We feel that our guests will be more and more interested once they feel that our hotels are committed to something very important, to really making a better world. There is everything around durability and sustainability, but that’s clearly not enough. That’s why we want to go deeper to preserve diversity, the worldwide heritage of produce and cuisine, which is key in a more human world, a world that provides richness in terms of experiences, especially for this younger generation.
We also focus a lot on education. We feel that our chefs have so many things to share with students and trainees. We like the spirit of craftsmanship; the spirit of helping young people to learn, increase their skills, and promote it throughout the world by focusing on the kind of journeys between our different properties.
Our guests are waiting for us to commit to something that goes much further than the standard experience, further than sustainability. It’s really to make a better world through everything that we do in Relais & Châteaux.