At a certain boutique hotel in Toronto, each room is artfully designed with mid-century modern furnishings set against a brick wall, the bathroom is stocked with artisanal body products, and guests enjoy modern tech frills. The average cost of a room: $150.
So, why would anyone pay more for a luxury hotel room? The answer doesn’t lie in the decor, or the cachet of being at a ritzy property. Rather, it’s something much more elusive: the feeling only impeccable service can instill. “The key issue that separates the luxury hotel is as much an emphasis on the level of service, as on the physical product,” says Brian Stanford, national managing director at PKF Consulting in Toronto. “If I’m paying $120 at a select-service hotel, my expectations are pretty minimal. If I’m paying $350, and I’m staying at a luxury hotel you better know my name when I come in, and there better not be any hiccups in my stay.”
According to PKF, the luxury segment accounts for no more than one per cent of the 375,000 hotel rooms in Canada — but it fares well. “The luxury segment has always been a strong performer,” says Stanford. “It’s moved up a little bit but not dramatically better than the overall market.”
Nationally, occupancy grew by one point in 2012 and 2013, PKF reports, from 71.7 per cent in 2012 to 72.7 per cent in 2013; the firm forecasts 75.5-per-cent occupancy in 2014. The average daily room rate (ADR) grew from $247.29 in 2012 to $248.81 in 2013, with a forecast of $252.12 for 2014. “It’s really only been occupancy [in 2014] in the luxury segment that has been at a stronger level,” Stanford says. The upswing is tied to a more stable economy. Leisure and corporate travellers who might have stayed at a mid-scale hotel in 2009 have returned to luxury lodgings.
Between 2011 and 2012, Toronto welcomed four luxury condo hotels: The Ritz-Carlton, Shangri-La, The Four Seasons and the Trump International Hotel and Tower. Still, Stanford cautions that though the luxury segment is doing well in Toronto, the numbers are misleading. “We’re well ahead of [segment stats] in Toronto in terms of average daily rates, but we’re still continuing to absorb those four new hotels in the high end of the market,” he says, noting that occupancy is still in the upper 60-per-cent range.
That said, overall hoteliers operating in the luxury segment are enjoying “pretty decent balance sheets,” says Stanford. “The key challenges from an operator and investor perspective is making sure they keep the physical product at a high level, which means a lot of capital needs to go back into these hotels.” Keeping amenities — from foodservice to the spa — in tiptop shape is a given; another smart move is to invest in staff training.
You don’t have to tell Philip Barnes twice. The GM of Vancouver’s plush Fairmont Pacific Rim had a fantastic 2014, which he attributes to the social acumen of his team. “We’re coming up to our fifth birthday, and the repeat business factor keeps getting stronger,” he says. In that time, a number of visitors have stayed with the hotel more than 100 times.
Guest surveys tracked through Westlake Village, Calif.-based J.D. Power and Associates show the Pacific Rim rated number 2 in guest service in the Fairmont brand. Guests repeatedly praised the high service level, says Barnes. “You can have a beautiful room and a beautiful hotel, but unless you feel welcome, like it’s your home away from home, it’s just another hotel.”
One way staff at the Pacific Rim exceeds the service expectation is by being intuitive. Weary travellers never linger in a lineup. It would be nearly impossible, considering “90 per cent of repeat customers never get past the front door [without being served],” Barnes says. “We have their key, room ready, the doorman has all their information. People want efficiency and speed.”
Jean-François Pouliot, GM of the 152-room W Hotel in Montreal, also emphasizes the importance of guest satisfaction. “Design is no longer a luxury,” he says. “Everyone can design a hotel well, including limited-service places.” (Although the W Hotel’s guestrooms are being updated.) A property is set apart when its team offers authentic experiences and excellent service, he adds.
From the Maldives to Montreal, W Hotel’s Whatever/Whenever service (just one perk among many) caters to the hotel’s locale. For example, staff may help coordinate an unusual spot for a marriage proposal. It’s a genuine willingness among staff to make the guest experience special.
Meanwhile, during the 30 years Dimitrios Zarikos has been a hotelier serving the well-heeled crowd he’s seen it all, from excessively embellished room decor (hello, ’80s) to the latest in tech innovation. “I have worked in many places around the world, and you will never replace service as the definitive factor when it comes to true luxury,” says Zarikos, regional VP and GM of The Four Seasons in Toronto.
It can be as simple as using a guest’s first name instead of a generic greeting when he or she arrives. “The immediate assumption is that I know a lot more about you, than if I said, ‘Yes, ma’am,’ when I answer the phone,” says Zarikos.
But the most significant difference the GM has seen in the last five years is how a guest chooses a hotel. “There is a huge facility to the traveller to choose rates online. If their decision in the end is who is cheapest, we’d be empty,” he says. Zarikos continues vehemently: “We are not selling a commodity.”
The problem is that the online world lists similar hotels on a level playing field. How could a guest really know what it feels like to be pampered at a Four Seasons? For that reason, Zarikos recommends hoteliers and guests ally with a trusted travel agent. “Our best rates always come from the travel agents, because they are partners,” he says. “They see the product first-hand. We invite them here to experience it, to taste the food, so they’re able to describe it.”
Word-of-mouth compliments are nice, but lavish hotels are still subject to online critiques on sites such as TripAdvisor. Zarikos and his team respond to every comment, good or bad. “Human beings are good in principle. They don’t get up in the morning and say, ‘Who am I going to hurt?’” says Zarikos. “The overwhelming majority are honest comments. They may not be comments that are fair; they may be driven by emotion over fact. But, at the end of the day, all that matters is how the guest and the client feel,” he says, underscoring the importance of connecting with the visitor. “If we have failed to make them happy — whether we are right or wrong — is irrelevant.”
Volume 27, Number 2
Written By: Iris Benaroia