Client Feature

A BIG YEAR

Small Luxury Hotels of the World is celebrating its 20th anniversary, having seen both its membership and global presence grow seven-fold since 1991.  Paul Kerr is the CEO who made it happen. Gina McAdam met him.

Paul Kerr likes his numbers. ‘They tell an interesting story and they don’t lie, do they?’ It’s a rhetorical question. 

Sitting in his shirt sleeves in Small Luxury Hotels of the World’s smart new offices near London’s Victoria Station, Kerr peels away the facts from the figures in front of him. The company’s website has an Alexa global website traffic ranking of just over 60,000, where any ranking below 100,000 is considered superb (google.com is number 1). It could be that an independent hotel's own website is ranked two millionth. What does that mean? ‘That tells me that if you’re an individual hotel wanting the exposure, you’ve got to belong to an organisation like SLH. I can’t see how independent hotels can possibly really market themselves to the world on their own, especially if it’s international business they’re after.’

Another interesting fact. Back in 1991, the average size of a member of Small Luxury Hotels of the World (SLH) was 54 rooms in Europe, 89 rooms in the Americas, and 92 in Asia Pacific. Now it’s 46, 51 and 56 rooms, respectively. Translation? ‘We’re true to our brand. We are small, boutique hotels. I call it sticking to the knitting.’

Growth spurt

Whereas the hotel sizes of SLH members may have shrunk by design, the actual number of hotels in the group has increased to over 520 from 20, which was all they had two decades ago, when Hill Goodridge and Associates Ltd (HGA) -- which Kerr formed with his business partner Brian Mills – took over the management of SLH. 
‘It was a good brand that needed some money so we basically purchased the rights to manage the SLH brand.’  Success breeds success. By 2002, Kerr and Mills had set up Luxury Hotel Partners, a company that manages and operates a number of boutique hotels across Europe.

With Kerr in control, how things changed, literally taking off. Again, back in 1991, SLH (created in 1991 from the merger between Prestige Hotels Europe and Small Luxury Hotels of the World & Resorts of North America) was anything but profitable. Today, it boasts annual reservations revenue of US$89million, up from a paltry US$2million in 1991.

What’s more, the brand’s global footprint has spread from an original 12 countries to 72 across Asia, Australasia, India (and the Indian Ocean), the Americas, the Middle East, Europe and Africa. That’s plenty of space for the SLH’s carefully chosen spas, country houses, golf resorts, island retreats, city hotels and even game and wilderness lodges. In Asia, with 119 hotels, SLH outnumbers any other hotel brand in the region.

Customer type

Interestingly, in terms of hotel type, from 1991 to 2010, the number of SLH resort properties has grown most, now accounting for 41% of the SLH portfolio (versus 8% in 1991), while city centre hotels make up 33%, up from 27% in 1991. 
This might give one an inkling of the profile of the SLH customer: professional, urban and adventurous. Kerr jokes that one of his daughters, an Oxford-educated lawyer at a leading international law firm, would be the typical member of the group’s guest recognition programme -- Club of Small Luxury Hotels of the World -- which now has over 100,000 members.

It’s all about choice

Although every member of SLH is chosen for its independence, there are nevertheless standards to keep, such as being the best in one’s area and having average revenue of at least $192 per reservation. And, Kerr says,  the one thing that an SLH hotel must be able to offer its guests is choice.

‘SLH offers our customers fantastic choice, an array of great hotels around the world. We have a choice of hotels and destinations. So when customers arrive at the hotel, they also want to be offered a good choice. They want to choose when they turn up, when they leave and when to have breakfast.’ Prospective members take note.

‘We hope the hotel can offer customers choice and flexibility,’ Kerr adds, ‘because an SLH customer doesn’t want to be corralled or regulated. He’s an independent.  Our hotels have their own independent character but the guests are independent characters themselves.’

Keeping on one’s toes

And the independent hotel world hasn’t failed to take notice. SLH now accepts only about 5% of all applications for membership with Kerr admitting that he’s more likely to wait for hotels to approach him than to court them.

 It was not always thus. Kerr remembers when starting out at the height of a recession, limited funds forced him to cadge tickets on half empty planes so he and Mills could fly around the world drumming up membership.  Those days are gone, but since then, nothing has been taken for granted.

SLH has lined up a number of benefits and incentives to keep their members happy, and in 2011these include new marketing collateral and promotions such as a new hotel directory and ‘Big Experience’ gift certificates whose lucky recipients can enjoy a trove of luxury experiences, including spa and gourmet breaks. Last year, SLH launched a free iPhone app, now with 50,000 users who ‘discover, enjoy and share’ experiences at different SLH hotels around the world.

Technology rules

Indeed, technology has been good to SLH, helping the brand to achieve Kerr’s mission of achieving geographical penetration.

‘SLH still has got the only marketable global distribution system (GDS) code which is LX for luxury, and in the old days, LX helped us a lot. But this business owes its real success to Bill Gates, Microsoft and the internet has helped us so now we have a much bigger geographical reach. We rode the GDS wave, and now we’re riding the internet, but we’re also having a push from the social media side.’

This is perhaps where Kerr has excelled himself, making the decision to launch ‘New SLH blogger and Girl about Town’ Melissa Vinelli.  The concept for the blog is a bit like the ‘Dear Bill’ columns in the British magazine Private Eye -- tongue in cheek, but without the biting satire. In the blog, Kerr exchanges cyber letters with Melissa.

Kerr feels that SLH should capitalise on the brand ’s  ‘sexy’ and photogenic products and attributes – their hotels -- and social media provides the ideal channel to capture their values and bring them into the conversation, so to speak.  ‘There’s always some story in these hotels, but you have to mine it, dig dip,’ explains Kerr, ‘Social media and someone like Melissa can help us tell those stories.’

So just what kind of girl is Melissa, who’s just blogged about her first luxury break in Ireland and earlier bemoaned the fact that she didn’t have anyone to spend Valentine’s with?

Paul laughs. ’Melissa Vinelli is a quarter Italian. She’s a good girl. She made a lot of money in the city when she sold her company. She’s got her own private money, and she’s also lucky because she inherited some from her father.’ Lucky, lucky SLH!

A numbers man

By now you might have guessed that Kerr is a chartered accountant, one who loves the hotel industry and everything about travel.

He earned his spurs in the industry as financial controller at the Waldorf Hotel, then part of Trusthouse Forte, having returned to the UK from Toronto where he’d been handling insolvency cases for Touche Ross. The job in Canada was a nice step up from his first accountancy job as a business office manager at the Princes Grace Hospital and Harley Street Clinic in London.

But Kerr says that had it not been for the encouragement of Sir Michael Picard, who years before had advised him – while Kerr was still flipping burgers at an outpost of Picard’s Happy Eater empire -- to stick to his studies and gain his qualifications, none of this might have happened. And then where would SLH be?

‘I think it’s always important to have a profession to fall back on,’ Kerr says, ‘and anyway, then there weren’t many chartered accountants in the hotel business so I thought if I became a chartered accountant, I’d probably go further in the hotel industry.’  Which he did. Eventually, Kerr found himself in the unenviable role of financial director of Cunard, when the company was divesting itself of its hotel empire, which included the Ritz. But that, in turn, led to the opportunity to manage SLH, and so the real story began.

Non-negotiable

In the end, success is down to values, and Kerr has been true to his.  Beneath all that respect for the quantitative is an inherent belief in honesty, transparency and fairness, and respect for the customer.

Today, every SLH hotel has exactly the same contract as another, regardless of where they are in the world. This means that fees are the same whether one is running a fifty bedroom hotel in St Tropez or Rio. Kerr admits that this ‘no negotiation’ policy may have led to SLH losing some hotels, but there is a simple reason behind the intransigence.

‘Obviously ,people go to meetings all over the word, including our own SLH regional meetings,’ says Kerr, ‘so if you give someone a deal, they’ll never be happy because they won’t know if they got the best deal. This way, everyone knows they got the best deal because there are no deals.’

Kerr says that SLH are the only hotel group that can claim to put all its prices on the internet. ‘We preach that you should have transparency, rate parity, no matter what channel you’re in. If a customer books with the same conditions, say 30 days in advance, then the price for that room whether he’s booking through the internet, the phone or through the travel agent should be the same rate for the customer. Otherwise, the customer won’t like it. They’ll get suspicious and ask why deals are being made. Can they get something better elsewhere?’

 So it’s all about practising what they preach. ‘It’s the same thing for the hotels. Every hotel is like a customer, and therefore the hotel can’t be suspicious of SLH because everyone is treated the same. When I took over, there were all kinds of deals. Now, none. Zip. And that’s the one thing I’m very proud of.’

This is a milestone year for for Small Luxury Hotels of the World, a real big deal. Although one suspects that for someone like Paul Kerr, still harbouring great ambitions for the brand, the world will never be big enough.

To learn more about Small Luxury Hotels of the World, visit their website on www.slh.com.