Small Luxury Hotels CEO: Soft Brands Aren’t Hurting Our Business

Filip Boyen is no stranger to the hospitality industry, especially the luxury space. For more than 30 years he has held various positions in luxury hospitality, including serving as the chief operating officer and senior vice president of Belmond, which was formerly known as Orient-Express.

As the CEO of Small Luxury Hotels of the World, a collection of more than 500 boutique luxury properties around the world, it’s his job to help market, promote, and sell these hotels both to consumers and to the trade. Boyen took the post in July 2015 after six years at Belmond.

Boyen is the kind of executive who isn’t afraid to tell you what’s on his mind. A case in point? When he suggested that AccorHotels purchase his former company as part of AccorHotels’ push to reinvent the Orient-Express brand.

“I hope they will buy Belmond,” Boyen said of AccorHotels. “Belmond needs to get off the table. Bowen said he told an AccorHotels official the other day, “Instead of creating your own Orient-Express brand, why don’t you just buy Belmond and rebrand it back to Orient-Express? That will solve your problem in one full sweep.”

One week after we spoke to Boyen, we asked that AccorHotels official, Chris Cahill, who is CEO of luxury brands and hotel services for North America, Central America, and the Caribbean, whether his company might buy Belmond and rebrand it Orient-Express as Boyen suggested. His answer was a polite “No.”

What follows is an edited version of our in-person conversation with Boyen. He discusses his views on the state of soft-brand collections and luxury travel.

So Many Soft Brand Collections

Boyen argues that the more competition in this space, the better.

“Well first of all, what they’re doing is a massive complement to us, right?,” he said, of the major brands’ soft brand collections. “They’re telling us you’ve been doing the right thing for 27 years, because now it took us so long to get into that space.”

Hotels attached to big brands don’t understand how to deliver a true “sense of place,” Boyen said.

“I can’t get my head around the sort of sense of place that they’re trying to create,” Boyen said. “Because what does it mean for them, that sense of place? It’s usually a nice artwork of a local artist in the lobby, right? That’s as far as the sense of place goes. Because once you’re in a room, the room is going to be very standardized. Because they are big brands, it’s very hard for them to get out of that pattern, right? What is sense of place for me? For me, sense of place is you should be able to take a person into a room blindfolded, he doesn’t know where he is, the curtains are closed, and now he tells you where he is. That is sense of place. If you can achieve that, that’s sense of place, right?”

With the soft brand collections, he sees major brands attempting to do that — to create a sense of place — but he said that so far that hasn’t impacted his business at Small Luxury Hotels of the World in a negative way.

“We certainly haven’t felt an effect in our business,” Boyen said. “Last year we did our best year ever. We were 16 percent up from 2016. Our reservations were up 4 percent, our average daily rate was up 8 percent, our room nights were up 6 percent. So, at the end of the day, we had our best year ever, beating 2014 by quite a margin, which was our previous best.”

Boyen said that members of his hotel collection are “owners who are attached to their hotels, and want to control what happens in their hotels,” and for that reason, they aren’t lining up to sign deals to join the big brands’ soft brand collections. “When you go with a brand’s soft brand, you don’t control what happens any longer, because it’s basically a management contract.”

He likened what Small Luxury Hotels of the World does to “creating a worldwide platform for those hotels, to allow them to compete with the big brands,” and that’s accomplished via public relations and social media support, marketing, sales, and distribution.

If anything, he said, the proliferation of soft brands has had a positive effect on the hotel industry overall.

“What it does is it puts our hoteliers on their toes again,” Boyen said. “It’s got their attention, right? They really have to create those experiences for the clients, and use their advantages to do that. Because I always say, to provide what modern luxury travelers want today is a lot easier than it was 20 years ago.

“Twenty years ago, it was complicated. They wanted the best of the best, they wanted bling, they wanted material things. Today, it’s all about experiences, emotions, connecting them with the local community. I always say to our general managers, it should be really easy for you, being in that destination for so long. You should know, first of all, what are the most interesting off-the-beaten-track experiences for those guests to experience. You should know all the great characters in the destination, and then it’s just a point of connecting them with those experiences, right?”

On Luxury Hospitality’s Identity Crisis

While some hospitality industry experts see the luxury sector undergoing an identity crisis of sorts — primarily because the traditional markers of luxury travel no longer apply — Boyen doesn’t see the sector as being in a crisis mode.

The key to defining luxury today, he said, is flexibility and the fact that modern travelers “are tired of the predictability of big, established luxury hotel brands.”

Instead, he said, they’re looking for unique experiences. Some examples Boyen detailed included the use of book butlers who help guests find just the right book to read, or night nurses who ensure that they get a good night’s sleep. Another idea is “intuitive dining” where diners talk directly to the chef about what they’d like for their meal that night.

He mentioned a Small Luxury Hotels member, known as 700,000 Hours, which is built on a “wandering hotel” concept in which a new hotel is created every few months. Bowen also cited a hotel in Paris where guests choose their room based on the type of scent they prefer — something inspired by the fact that the hotel was the former site of a perfume manufacturer. The same hotel has its own perfume laboratory where guests can create their own signature scent.

“The big one is hands-on luxe, where people want to be involved in creating their own experiences once they are on property,” Boyen said.

“We don’t see many people booking these experiences in advance,” he added, “and that is why it’s so important that at that stage, we as hoteliers, we can explain properly and basically get them enticed and get them curious and get them and create something with them, or give them the impression that they are involved.”

Expedia and Priceline-Branded Hotels?

When we asked Boyen to comment on the possibility of online travel agencies entering the hotel business in a more direct way, something we explored in detail here, he said he didn’t see this impacting his business or the luxury hotel market.

“I feel fine, because we have a niche market of small, independent hotels. We’ve been doing it for a long time, we get more and more people wanting to join us, which is a great sign,” Boyen said. “Now that the quality is more and more consistent, they see the value of an organization like that.”

Boyen’s customers aren’t necessarily looking for something an online travel agency can deliver.

“Obviously, with 79 percent [of business coming from] travel trades, and all affluent customers, the average daily rate is attractive,” he said. “The ADR is growing every year, which is very important, and what they want at the end it’s all about the value proposition that we create. What do you get from an OTA [online travel agency] besides a good deal and being on the website? That’s not what everybody’s looking for.”

Future Demand for Luxury Travel

Boyen thinks that, regardless of where the economy or the cycle is, there will always be a demand for luxury travel experiences. But what will change over time is where people want to travel for those very luxury experiences. As more alternative luxury destinations emerge, that will make it harder for hoteliers in more established luxury spots to expect to be able to get the high rates they’ve become accustomed to charging.

“Let’s take Portugal, which is incredibly affordable,” he explained. “And let’s compare it to Italy. We know the Italians are not shy. They’re [hotels in Italy] are already incredibly expensive, right? But they keep pushing. But there comes a point where the client says, ‘enough,’ especially when alternatives become available. In Portugal, you get a luxury room for $300 to $350. You can easily compare that with places like the south of France or with Italy. The climate is there, the people are there, the food is there, the culture is there; it’s a beautiful country. It’s quite affordable compared to all the expensive destinations, so people are gravitating a little bit toward it, and they’re looking at it.”

Airbnb as competition?

Boyen isn’t opposed to Airbnb, and he thinks there’s room enough for it to exist alongside traditional accommodations.

“I’ve done it a couple of times when destinations were so busy you couldn’t get a hotel under $700, and I was there with family for a weekend, for some celebration, but the personalization is lacking,” Boyen said. “I do think there is a market for that, and we can easily live side by side, because these things are great innovations.”

Boyen also advised luxury hoteliers not to take on Airbnb head-on.

“Don’t fight them, create your own space, create your own brand, because you’re never going to win that fight, and you’re going to waste a lot of energy and money doing it, so don’t,” he said. “We don’t have that money to fight it. Let the big boys do that, like they did with the online travel agencies, and they seem to be very successful at that.”

Boyen said that as Airbnb enters more into the luxury space, its hosts may find themselves becoming semi-professional hoteliers, and they will be in for a rude awakening. “They have to have linen, they have to have special towels, and they have to have amenities, so a lot of the hosts are saying to them hold on a minute here, ‘I was expecting this to be a lot easier. This was getting them the key and have a nice day. Now you’re asking us to provide luxury accommodations for them.’ So that’s another challenge. But that they are trying it, I have no doubt. Will they be successful? The world is your oyster, I mean, I have no idea.”

What People Really Want in a Hotel Stay

Boyen said that what guests value most, even beyond complimentary champagne bottles or fruit in their rooms, is engagement with the general manager of a hotel.

“For me what is important is to have general managers (GMs) go back to being hosts,” he said. “Corporate companies are making administrators out of GMs instead of allowing them to be hosts. In how many of the big hotels do you see the GM actually in the lobby, talking to people, interacting with people?”

He continued, “I ask a lot of my clients, ‘What do you value the most when you come to hotel?’ They always say personal contact with the GM. All the fruit in the world and all the champagne in the world doesn’t do it. Personal contact with the GM, knowing that he or she cares, seeing him or her once a day generally concerned about our well-being, about us being happy in the hotel matters.”