Rosanna Caira: After leaving Fairmont Hotels to go to the Sands Corporation in Las Vegas, you’re back with Fairmont Hotels, through the new ownership of AccorHotels. What brought you back?
Chris Cahill: I left the Las Vegas Sands after two years to the day, and then was trying to figure out what I really wanted to do. I had three criteria. Number one was I wanted to work with people that I liked and respected. I always realized the importance of it, but it became, at this stage in my career, very important. [Secondly], I wanted to be in a position where I could help influence the culture and, to some extent, the strategy and the business. The title was not as important, nor was the size of the company. To be candid, it was where I felt I could contribute. And, the third was I wanted to be in a situation where I thought we could win, based on the business. With the acquisition of FHRI by Accor, Sébastien Bazin, the chairman and CEO, and I connected and that led to conversations. Obviously, the history I had with FHRI, I felt, could be helpful for integration. I always had tremendous passion for the company. Therefore, it seemed like a natural thing to do.
RC: How does Fairmont play into the AccorHotels company?
CC: Fairmont is a very big contributor to the future of Accor because of the nature of the brand, the size and the positioning in the luxury space. It’s a tremendous opportunity. I’m seeing that in the conversations with the people in the field, especially. They are quite excited about what the prospects will be. Thus far, we have been rewarded with a tremendous amount of confidence by owners and developers; have a tremendous pipeline; and have added a lot of new properties for future development.
RC: How has the integration gone?
CC: The transaction closed in July of last year, so it’s a little over a year in. It’s gone according to plan. In many respects, it’s ahead of plan if you look at key metrics. Everybody involved knows where they stand, and have known that since last October. They have known whether they were going to be here for a year or six months or work through which element of integration and how many were going to be permanent. We wanted, within the first 90 days, to make sure people understood their future, and that is always tough, especially when you have a lot of people [who are] very passionate about the company. The second thing was building a structure. The intent from the strategy that the company put in place was to set up a separate group that would manage the luxury and upper-upscale portfolio, which is what I’m responsible for.
RC: What was your goal?
CC: On the one hand, we want to leverage this large organization. On the other hand, we wanted to ensure we gave proper support, because it’s different from a lot of our economy and mid-scale brands. We set up the structure with three distinct differences. The first thing we built into it was talent and culture. We hired an SVP of Talent and Culture who works with all the regions and corporate people in terms of ensuring that, at the entry and the leadership level, we are going through a very stringent recruitment and/or orientation process to ensure they understand each brand. You want to be careful that you don’t have brand blending or bleeding.
RC: How did you tackle such a big job?
CC: When you hire people in our business, 75 to 80 per cent of what you look for is the same. When you want to talk about the DNA of a brand and what’s the difference in the brand from the service-culture perspective, that is the nuance. You have to build in the elements that are important relative to each brand. Fairmont is a good example. One of the fundamental things about Fairmont was always the engagement service — the speaking from the heart to the [guest]. Those are characteristics and elements of people’s personality. You hire for that. In other cases, you want to be a bit more “efficient,” and therefore you hire a little differently. That was a key element. The second one was, for each of the brands, we put in place a separate brand-management team. They are more the strategists, because we have a large organization that can handle execution, such as digital and e-commerce, but we need somebody to drive the strategy. We have a senior person and a couple of people that are the brand-keepers — a different brand manager for each brand and then we built brand teams around it. For each brand, they will have two GMs, two food-and-beverage directors, two talent culture people, two sales and marketing people —a bunch that are working the brand every day and really understand it, and understand it from a customer perspective. Then, we’ll take somebody from development, who is selling the brand all the time, and technical services. We use the research group and they form a team.
It’s more than a committee. I like to tell them, if you are a committee, I don’t need you — I need you to be the keepers of the brand in both of your regions. In a global company, they are from all over the world. They come together in formal meetings twice a year. Right now, we are doing a lot of work on the Fairmont Gold Product or the Fairmont Presidents’ Club. There are sub teams and after every meeting, on a regular basis, they will do a conference call or a video call with all the GMs. I have the COOs for this group of hotels from around the world and we get together four or five times a year. A lot of the work we do is making sure the brands are remaining relevant. [It’s] a lot of customer-focus research. We look at it holistically and then use that to keep the brand fresh, moving forward and concurrent with trends. That has been in place since January. The first three or four months [spent] dealing with the people-related issues. The second three or four months was setting up the structure. The third has [been spent] getting this process implemented. And then, the third key difference that we put in place as a structure — it was set up before I even arrived — was, from the GM on up. The structure is strictly into the upper upscale luxury for this group. In other words, you don’t just have a straight geo, where you could have a mid-scale hotel, an economy hotel and a luxury — they only deal with the luxury and upper upscale. In some cases, we have even been able, based on having enough scale, to have them either only deal with luxury or only deal with upper upscale. I’m talking about the level above the GM.
[You need to] keep a very clear focus, because there are different needs, different expectations in terms of customers. With those three things — dedicated brand manager, the talent culture and the dedicated focus from an operating perspective — we’re able to leverage the whole organization, because those people tend to be pretty senior people. And then, you can leverage the whole organization from an implementation perspective.
RC: After a year, do you feel confident that the process is in place now?
CC: I’m big on numbers. Guest-services scores are up with all brands, year-on-year, through the first part of the year. Competitively, in terms of every brand, it’s up for our competitive set, year-on-year. Now, some of that, you’re getting synergy because you’re putting the two [companies] together. We’ve got some revenue synergy, but the reality is the output is there. And our pipeline is, quite frankly, extraordinary. Right now, we’ve got about 460 — 175 properties under contract that will open between now and 2021. It’s a 37-per-cent increase on the existing portfolio.
RC: When you look at the luxury brand area of the company, which brands, other than Fairmont and Raffles, are part of that?
CC: In terms of luxury, we have Fairmont, Raffles and Sofitel. And within Sofitel, we actually have a sub-brand called So — a luxury lifestyle [banner]. They tend to be smaller in size, but are not quite boutique. And then, in the upper-upscale category, we have the Pullman brand — one in Miami and one in California. We have a Swissôtel in Chicago. We don’t have MGallery in North America, but MGallery has 85 hotels today — a lot in Europe and Asia. Pullman is in Europe, Middle East and Asia Pacific. And then, we have a brand called Grand Mercure, which is in Asia Pacific and Middle East, for the most part, with a couple in South America.
RC: Do you see some of those brands filtering into North America at some point?
CC: Our focus in North America is more on the luxury tier. If we had opportunities in the upper-upscale category, we would pursue them. Given the strength of Fairmont in Canada, we are looking at whether we can extend any one of our brands in Canada. We have a lot of leverage points to be able to support additional product.
We might even, in terms of Canada, look beyond upper upscale at mid-scale. There are a lot of markets where there is still supply being built and we have the full range of brands. We’re investigating it now and spending some time on it. It’s logical based on the size of the Canadian population base and the fact that we’ve got such a dominant presence. We could leverage that effectively and at an appropriate brand tier. Accor is the largest operator of hotels, outside of China, in Asia Pacific. We’re the largest operator of hotels in South America. We’re the largest operator of hotels in Europe. We have 4,200 hotels. And, even in the Middle East and Africa, we’re second-largest. So the place we’re smallest is actually North America. That’s why the acquisition of FRHI made a lot of sense. You have got more North-American presence and you have got the upper upscale or the luxury, too.
RC: The Marriott acquisition of Starwood was driven primarily by merging the two big loyalty programs. What is the loyalty program like at Accor?
CC: The Fairmont Presidents’ Club (FPC) is one of the biggest Accor programs associated with FRHI. The Fairmont Program is a pure recognition program and has very strong penetration. Accor’s program is called Le Club Accor. It’s a rewards program similar to most of the other hotel reward programs you are familiar with. We’re going to merge those two programs, but the intention, the objective and the strategy is that we don’t want to lose the recognition elements built into the Fairmont Presidents’ Club. We’re going to expand those benefits, or the recognition element, into the rest of the luxury and upper-upscale group. That will happen sometime towards the middle or latter half of next year. It takes time to work the technology through and make the integration. We currently have about 35 million members in Le Club Accor and three or four million in the FPC program.
RC: Are loyalty programs evolving?
CC: It’s different customers — the higher up you go in the value chain, the recognition elements are very important. Which is why FPC has been able to do as well as it has, because the technology is all integrated between the property-management system, the reservation system, the data warehouse, the profiles, et cetera. You’re able to get a much better understanding of the individual needs of the consumer. At the luxury tier, that’s as important, or more important than, points and rewards. But there are also different consumers with different attitudes to that, and therefore, you want to try to cater to all customers.
RC: Has the hotel industry evolved during the last five years?
CC: In my two years at the Las Vegas Sands Corporation, we spent a lot of time on hotel and guest preferences in the gaming industry. In many respects, I probably not only kept pace but got a different view of it. The thing that is probably talked about more today is the role technology plays as an enabler towards service. Whether it’s at the annual conventions or analyst reports, everybody is talking about how to use technology to provide a more individualized guest experience. It’s not new, it’s just taken on a much stronger role, primarily because of all the other technology-enabling companies and businesses. It’s so prominent now, in terms of people’s ability to use technology to enhance their life generally — it’s flowing into the hotel business.
Technology is becoming much easier for people to use [and they] are more accustomed to it, so you can put those things in place, whether it’s portable check-ins or iPad check-ins. The issue has always been the key, and the key is now being solved by people being able to use their credit card to access rooms. That whole journey will continue to evolve.
RC: How do you avoid brand creeping when you have a lot of brands?
CC: We don’t have a lot of overlaping brands. There is obviously overlap — whether between a Raffles customer and a Fairmont customer in a certain city, or in a certain style of hotel, the same thing with Sofitel in Fairmont — but if I look at the research and the data, there is a different consumer profile, which comes back to the brand teams continuing to drive home against the core target of that brand.
We did a fair amount of work mapping among the luxury and the upper-upscale brands, the consumer, their perception of the brand, their actual usage, when they use, when they don’t use it. Competitively, they sit in a very different space. Fairmont, for example, tends to be in the luxury tier. It tends to have larger public spaces, larger, more social environments, larger meeting spaces. Sofitel tends to be very sophisticated, more contemporary and not as big. You’ll have diversions of that in certain parts of the world because it’s reflective of the nature of that market.
RC: If I’m looking at Fairmont, who are the core customers?
CC: Those things generally don’t move around very much by brand. In the case of Fairmont, for example, you have such a big resort component, you end up with a lot of leisure. Even in the urban hotels, you have a place like the Royal York, that has been around for decades, and therefore has always been the choice of leisure for people over a period of time. And so, the mix of male, female, age —I find it interesting because the demographics have gone away in the last 15 to 20 years and it’s really about psychographics.
It’s the way people think about themselves and their attitude that dictates where they want to stay and the purpose of trip. There are a bunch of elements that go into it. If I looked through the data of the various brands, there may be a bit of a bias back and forth. MGallery, for example, tends to appeal to female travellers between 42 and 45. It’s a really neat brand because it’s all about boutique and all of them are individual-styled buildings and assets.
RC: How do you see the Raffles brand playing out in North America?
CC: The key about the Raffles brand is the uber-luxury, if you will, positioning. They don’t tend to be very big, but they tend to be fairly expensive to build and to operate. Therefore, your target list of cities/locations [is smaller] and the average rates you need is higher. So you don’t see that in Canada. I might see it in Vancouver. Toronto has moved a long way in terms of rate as a city. It will be one of our slower growth brands, because you also can’t just put it in anywhere. We’re opening a hotel in Warsaw at the end of the year, which is a spectacular building and location and product, generally. We also signed a deal in London, which is going to be an incredible property, but it’s mixed use, as most of them are, and so take longer to develop. You have to be very selective on the city and location. It will not grow as quickly — it will grow more selectively.
RC: Having run the Fairmont brand for many years, how has it evolved?
CC: It has evolved, but if you go back to the two or three [brand] fundamentals, it was always built on being ‘authentically local.’ In other words, if you were in a Fairmont, you knew you were in a specific community because the community was brought to life in that property.
A sense of presence in a community is the other element. We were always fortunate that we had great, iconic-type assets, especially in Canada. But even as we moved outside of Canada, if the hotel didn’t have that iconic stature — either because of location or architecture — then we tried to build in a sense of that property’s role in the community, whether it was through the social functions and charities or being the place for meetings or events. The third was people, and that is probably the most important part. Fairmont established a structured interview for hiring every employee 25 years ago [focused] on getting people who reflect the values of the brand. So, you build in some of those cultural elements, you keep building on them and trying to make them more relevant and current to the consumer today. That is back to what I am saying about brand — you have to constantly be looking at both proprietary research, as well as the syndicated research, and what your customers are saying online.
RC: What are the three biggest trends impacting the industry?
CC: It’s the same as when I got in the business — finding the right people for the right job. Finding good-quality people will always be a challenge. It’s the nature of any business, but I think ours, more importantly, because if you look at tourism, go back over 35 years and it’s been growing at a compound growth rate of four per cent. What does it look like for the next 30 — five per cent? It’s getting bigger, therefore, there is more product; there are more locations; there are more places; and there is more demand for talent.Talent is, has been and will be, one of the biggest challenges. The second one we talked about, as far as a major change, is technology. All technology has become much more user-friendly and adaptable to different types of functions — everything from robotics to artificial intelligence. There is a wave coming relative to the impact on the hotel space, which will be positive. That’s going to be a key factor. The third is somewhat connected to both of those and that is globalization. It’s not a great word these days, but what you have happening is this massive movement of people and travel. Being able to manage the needs of these many different clients…you just think about the growth of China outbound. Thus far, a lot of that outbound is regional, but it’s becoming less regional and more global.
Your ability to provide the right level of service, especially at the luxury-consumer level, to make sure that you are catering to that customer appropriately [is important] … because on the one hand, everybody has become more global and, therefore, more accustomed to different cultural differences as they travel. You still want an element of familiarity, so to speak, whether it’s in the food offering or whether it’s in just some of the nuances of their culture. You have gone, in the business, from being product-oriented to being service-oriented to being experiential, and now this other element where people keep looking for that something special, different and self-fulfilling in some way, shape or form. They are [pushing] the envelope.
RC: Can we talk a little bit about Airbnb? Accor has recently become involved in this segment.
CC: We bought a company called Onefinestay and have two other smaller companies. We’ve now merged them all under Onefinestay, which is basically the home-vacation rental-type business. But it’s a luxury product — a true concierge luxury experience. When you book, they give you all the details [and then] provide a whole concierge service, who meets you when you get there, brings you in, gives you a local phone so you can do local texting, and phone calls. But on that is your total front desk. You have a button to contact the desk, which is a centralized function.They have an app where they will have instructions of how to use everything in the house.
The homeowner also provides you with a list of local places for food, dry cleaning, where to get wine — anything they are used to dealing with in their environment. You are actually coming into their home, but with a brief on how to live in their home, as opposed to — I’m not knocking it because it’s just a different offering — Airbnb, where you basically show up and you are on your own. This is a concierge-style product and delivery.