"It makes me fuming mad when I hear these business school graduates claiming it’s all about money," says Reto Wittwer, furiously. "Financial whizz-kids squeezing out every drop and running their companies into the ground; it feels as though everyone has forgotten that this is a business about people. If you can’t see that, then you’re in the wrong profession."
As the son of hoteliers, a graduate of Ecole Hôtelière de Lausanne, and president and chief executive of Europe’s oldest luxury hotel group for the best part of two decades, a lifetime in hospitality has afforded Kempinski’s head honcho every right
to rage against the less savoury values he sees creeping into the market.
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Wittwer is no reactionary, but represents a rare hybrid of traditionalist and outspoken radical. During the course of a wide-ranging conversation, one loses count of the number of times he deviates off-message and, disappointingly, off the record – "I can’t afford to get into that sort of trouble with our partners," he chuckles conspiratorially. Afforded the increasingly rare benefit of heading up one of the last privately owned international hotel groups, a lack of accountability to the markets is something Wittwer exploits to its fullest advantage.
"I’ve had a gun pointed in my face," he reveals, drawing a comparison to his experience of Brazilian armed robbers that some shareholders might find a little distasteful. "Do you know what your first thought is? I hope I don’t soil myself. Put people under that sort of pressure every single day and they develop the wrong reflexes. To be successful in this business, particularly in luxury, one must be authentic and enjoy life. That’s difficult if you’re living in fear and your pants are wet."
Different values
Wittwer is not particularly cryptic when it comes to the targets of such broadsides; he names them.
Mariott, for example: "They have the same people managing everything, from one to five-star. How can you be a jack of all trades in a segment that demands expertise?"
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By GlobalDataThen there’s Accor: "They do the mid-market very well, but there’s too much branding going on at the luxury level."
And Starwood: "It has to be about more than just adding another brand. Can anyone really tell the difference between a St Regis and a Luxury Collection?"
Such observations are indicative of the core values that Wittwer believes differentiate Kempinski from its luxury peers: specialisation, individuality and a dedication to capped growth. Although the operator is in the midst of an unprecedented expansion programme, the commitment remains that the portfolio never outnumbers years in operation. Founded in 1897, Kempinski is currently operating 73 hotels, with ten opening this year and a further 40 or so in the pipeline. In order to stay true to this strategy, properties will have to leave the system as well as join.
"We are not like Four Seasons, offering management contracts of 50, 70, even 90 years," Wittwer explains, continuing to show no aversion to naming names. "Agreements come to an end and, as we become more discriminating, it is not in our – or certain properties’ – best interests to continue the relationship. Trophy assets that improve our portfolio are raising standards and some that came onboard at an earlier point in our lifecycle are no longer the right fit.
"Wherever Kempinski goes, it needs to either be the market leader or utterly unique – and preferably both. We’ll help those that don’t meet that requirement find new partners, but contracts will not be extended."
Defining luxury
Standards may evolve, but, in Wittwer’s eyes, the guiding principles of luxury do not. He believes the term has been corrupted and devalued by operators pursing growth at all costs, rolling out identikit concepts that fail to fully address the aspirations of the guest.
"Luxury has to be individualised and that’s something that the Americans particularly don’t understand," he opines. "For them, luxury is standardisation, but a haute couture dress costs €500,000 for a reason; spend a million on a watch and you want to be sure nobody has the same model. Luxury, by its very nature, must be limited."
In a globalised marketplace where Western operators are increasingly looking beyond traditional markets for growth, there also seems to be some confusion around how shifting geographies should influence interpretations of luxury. InterContinental Hotels Group (IHG)’s development of Hauluxe, a five-star brand specifically tailored for the Chinese market, is one recent example of a perceived requirement to develop local characteristics. Wittwer dismisses such knee-jerk responses out of hand and points to answers rather closer to home.
"Europe defines luxury, and it does so by lifestyle rather than products," he argues. "In Asia, people’s lives are dictated by work and money; Europeans take time to live. The clothes, the jewellery, the cars: people want these things because they associate them with the European lifestyle.
"The Louis Vuitton boutique on George V has Chinese customers queuing out the door," he continues." We’ve just had a large Chinese delegation shopping for watches at our offices in Geneva, despite being able to get these things cheaper back home. It is about aspiration: sitting in Paris with a croissant and a newspaper; taking high tea in central London. These things do not go out of fashion."
To market, to market
Such resolve to remain anchored in its home market has only served to enhance Kempinski’s credentials when it comes to exporting such aspiration overseas. Wittwer claims that the operator’s Chinese partners are "pushing like crazy" to expand the current portfolio of 14 properties, but remains resolute that size must be capped.
"It will stop at a maximum of 25," he insists. "We cannot become a Chinese company with hotels in Europe. We are a European company; 50% of
our properties are here and will remain so. It is what defines us worldwide."
In the other boom market of India, Kempiski is entering the final stages of a long-standing joint marketing agreement with Leela Palaces & Resorts, and will open its first Indian hotel in Delhi within the next few months.
"Leela has become too big and needs to build its brand independently," Wittwer explains, "and India has become too important a market for us to have this murky agreement in place. We’ll be looking to get up to five hotels, but definitely no more than eight."
Elsewhere, Kempiski re-enters Latin America with the opening of a Panama property in 2015, while Africa is also high on the company’s agenda with four properties in this year’s pipeline.
Wittwer has just returned from Harare and alludes to plans for a Kempinski Luxury Safari Collection, consisting of 12 to 18 lodges as well as anchor hotels in corresponding capital cities.
"Rates are outrageously high and initial investment is rudimentary," he reveals in another moment of astonishing candour. Expect a "big announcement" within the next three months.
Talent management
This growth, however modest by the standards of large multinational operators, will require staffing. Again, Wittwer is not slow to attack his peers. "They all say there’s a war on talent, but ask them what they’re actually doing and the answers become very generic," he begins. "For Churchill, war was defined by mobilising every available resource to win. I spend at least 50% of my time on this issue. I don’t pass
my days studying spreadsheets – a three may turn into an eight if I drink a bottle of whiskey, but I’m not going to change the numbers by looking at them. I care about people because they create those numbers in the first place."
Such a hands-on approach to talent management has not been to everyone’s benefit. "I fired the corporate HR guy around six years ago," Wittwer reveals. "The identification and recruitment of talent needs to be done by general managers. HR people look at everything through the eyes of the CV and, if that’d been the case for me, I’d have never got to where I am today. General managers see the potential in a 17-year-old suitcase-hungry bellboy, regardless of where he’s come from, and it is then up to us to plot an educational path for that individual to develop."
Kempinski has introduced a provisional library of required reading on Amazon‘s Kindle and developed an independent MBA programme with Reims Management School 12 years ago – 60% of managers now hold the qualification. In terms of succession at the very top, Wittwer acknowledges that he is grooming current COO Duncan O’Rourke for the post – "He really understands the business" – and reiterates time and again the value of hands-on experience, both within Kempinski and the luxury sector as a whole.
"From maid through to chief executive, there’s not a job I haven’t done in this business," he states proudly. "We’re not banking or insurance brokerage; we’re about lifestyle, understanding people. Without spending time in this environment, you’ll never truly understand how it works. This may not be the sentiment at a publicly listed entity like IHG – people running a 4,500-hotel business are less concerned about how the coffee is brewed – but that’s not luxury and it’s not us; the engineers at Ferrari don’t particularly care about how a SEAT is put together."
Trading on traditional values has served Kempinski well thus far: even when weighted to account for growth, RevPAR, room rates and occupancy are up 12, 13 and 9% this year, respectively.
In his current role since 1995, Wittwer will not be around forever, but his faith in the trade that has brought so much personal success remains undimmed.
"It is timeless," he reflects. "I look at the automobile industry and no one can guarantee whether it will still be around in 50 years. But, as my father loved to say, people will alwaysneed to eat, drink and sleep. The more comfortable the bed, the tastier the food and the better the wine, the longer you’ll stay in business."
And, fuming mad or not, the longer Wittwer stays in business, the more interesting the industry will be for everyone.
This article was first published in our sister publication Hotel Management International.
