Rosewood Hotels Aims to Double Luxury Footprint This Decade

The formula for luxury hotels has typically had two key ingredients. First, choose locations in the districts where the elite live. Second, focus on high-touch services encouraging guests to linger, and spend, at the property.

But Rosewood Hotels & Resorts has taken somewhat alternative approaches when it created the 30 luxury hotels it operates today — and as it builds the 25 luxury hotels it has in the pipeline. Its strategy responds to shifts in consumer tastes.

“Today’s client is looking for an immersive, stand-out experience,” said Radha Arora, president and co-chief development officer. “Gone are the days when you go and build right smack in the middle of the obvious epicenter of fashion, shopping, or nightlife.”

To be sure, Rosewood Hotel Group does broadly target major tourist destinations. Next year, the brand plans to open Rosewood Munich, the brand’s first property in Germany, and Rosewood Schloss Fuschl, the group’s second property in Austria. In 2024, Rosewood Rome aims to debut. In 2025, Rosewood Milan and Rosewood Hotel Bauer near Venice are slated to open. The company also intends to expand in Asia, with nine announced openings, and in Latin America, where it debuted Rosewood São Paulo this year. It’s also growing a branded residential offering worldwide.

Geographic Arbitrage and the New Luxury

But the difference is in the nuance. The conventional wisdom in building luxury hotels has been to go to the traditionally most desirable neighborhoods in popular destinations because being seen by the right people is often what guests want most. Yet Rosewood often takes a contrarian approach.

When it opened in London, for example, it took on a property in “the City,” or financial district, rather than a district like Mayfair or Knightsbridge. The brand bet that its core customer, the next-generation elite, would put an especially high value on memorable experiences, which it believed the character of the building lent itself to creating.

A flamboyantly decorated, Edwardian-era insurance office was reconfigured as Rosewood London. Its central carriageway entrance is where the gates open up and traditionally glad staff welcome guests to enter through doors that look like the front door to number 10 Downing Street.

“Creating the sense you’re arriving into a manor or estate in an intimate way like we did there isn’t possible to do elsewhere in central London,” Arora said.

Off-Center Targets

As money earmarked to chase high-end real estate assets expands, targets can become elusive. Part of the Rosewood formula has been finding properties away from tourist epicenters that can be converted in a lightweight way and can drive high average daily rates under the Rosewood brand.

A case in point: Creating Rosewood Castiglion del Bosco involved transforming a property that wasn’t located in one of Tuscany’s most sought-after areas.

“It wasn’t capital intensive because the project was already built,” Arora said. “The Cheng family did take 50 percent ownership at first but then sold that at a good price, and the project didn’t need any capital injection. All it needed was the power of the brand. When we took over Castiglion del Bosco, within the first days we were almost $2 million, I mean, €2 million, up on what the property had been generating before.”

In Saint Barts, the group worked with real estate mogul David Bonderman who was then the owner of Le Guanahani, located on the less visited northern side of the island. Four years of renovations on the three-decade-old family resort transformed it into Rosewood Le Guanahani.

“We’ve seen the revenues in the festive season to be 70 percent higher than before the property was branded Rosewood,” Arora said.

By choosing locations that haven’t yet been dominated by the scenesters, Rosewood has a shot at creating the new local scene while also working with capital partners to buy buildings at relatively cheaper prices than properties in more central locations.

“If you take Rosewood Mayakoba, for instance, there was nothing there in that part of the Riviera in the luxury end,” Arora said. “We built and it became the destination.”

Luxury Land Grab

Creating anything in famously expensive cities such as Hong Kong, London, or New York will involve expense. But Rosewood tries to find undervalued assets to give it a margin cushion after revitalization. Its developers divide and conquer potential luxury travel fiefdoms.

To encourage repeat visits by past customers, which is cheaper than acquiring new guests, the company believes building a network of properties that are all distinctive creates a virtuous cycle of surprise and delight.

A Rosewood customer that liked staying in a hale, or a glamorous beach bungalow in Hawaiʻi’s Kona Village, A Rosewood Resort (which aims to open on the big island in summer 2023), may like the contrast with the very urban and old-school Rosewood Vienna, which has only 99 guest rooms and suites in a residential-style Austrian neighborhood.

The Vienna property has furniture meant to evoke past local aesthetics, such as the Wiener Werkstätte style at the turn of the 20th century.

“In choosing the pieces of furniture for Vienna, we had a thoughtful designer work with local partners and the ownership to make sure we curated something mindful of what the returns would be insofar as revenues are concerned after effectively attracting a clientele that could support the desire rate,” Arora said.

Creating Off-Property Experiences

Most of Rosewood’s customers are leisure travelers who care more about the experiential aspect of trips than business travelers ordinarily do. High-net-worth travelers make up the most profitable segment of its customer database. Many of these travelers seek “the new luxury” defined more by experiences than showing off status symbols and checking boxes on seeing particular sights.

One of Rosewood’s calling cards is having staff talk to guests and offering to invent relevant, bespoke experiences for them. If guests are foodies, it might propose a multi-day excursion to Oaxaca, Mexico, with Rosewood staff guiding an exploration of the food scene — even though Rosewood doesn’t have a property there.

“We don’t just arrange it,” Arora said. “We will go with you. We’re not just selling someone else’s private tours. We want to help like-minded guests really get to know each other, so we have a small nucleus of a client database that’s become friends through Rosewood experiences.”

Expanding Worldwide

Like many China-based companies, Rosewood is part of a conglomerate, New World, with interests in multiple sectors. Rosewood Hotels Group is led by CEO Sonia Cheng, a member of the billionaire Cheng family that runs parent conglomerate New World.

In the 2021 fiscal year, the hotel operations segment of New World reported revenue of approximately $100 million (807.6 million Hong Kong Dollars), which accounted for 1.2 percent of the conglomerate’s revenue.

“I want to ensure that wherever we build Rosewood properties, ‘sense of place’ is not just a tagline but infused into every aspect,” Arora said.