Small Luxury Hotels plan global brand
and identify industry trends

Small Luxury Hotels of the World

The British-based Small Luxury Hotels of the World consortium has recently merged with the southern hemisphere grouping, Select Hotels & Resorts International, to create a 'global brand' to help independent, top-of-the-market hotels fight the big name chains. Brian Mills, Director of the management company for SLH, looks at the industry trends.

The recent merger of two major consortia of de luxe hotels can be seen as an intensification of the struggle to achieve global branding in the fiercely competitive international tourism market. Small Luxury Hotels of the World has linked with the southern hemisphere grouping, Select Hotels & Resorts International, to create a grouping with over 200 properties in more than 40 countries, totalling nearly 11,000 bedrooms. The range is from sophisticated city centre hotels to resorts and spas, historic chateaux, country mansions and castles to wilderness lodges, plus tropical island retreats. Among the better known are The Ritz in London, Raffles in Singapore and the Mansion on Turtle Creek in Dallas.

Confident forecasts from SLH suggest further growth over the next five years to a possible 400 hotels, and SLH has identified over 40 countries from which new members will be accepted. Among these are Argentina, Brazil, Chile, Costa Rica and Vietnam in the Far East; India; Russia; Scandinavian countries including Iceland; Germany, Spain and Turkey; plus Egypt, Morocco and Saudi Arabia in the Middle East.

High net worth

Typically, SLH clients are high net worth individuals, average age 50-55, with 70 per cent travelling for leisure, and 30 per cent for business.

The consortium's marketing philosophy deliberately highlights messages like exclusivity, privacy and individuality, and also 'smallness'. The Small Luxury Hotels branding is intended to instil confidence in a potential guest to chose any, or many of the independent venues against the arguably better known names of the international hotel chains. In contrast to the mega 500 or 1,000-room hotels of such companies, the SLH member typically will offer between 25 and 150 rooms, although the average is around 50. Different too, will be the management style - the standardised, hierarchical and anonymous approach of the conglomerate hotels is in complete contrast to the frequently proprietor-run, SLH venues where a more guest-friendly atmosphere is promised, often in house party style.

The key to achieving this 'small guy; competitiveness is the rigorous commitment to the very high standards insisted upon as a condition of SLH membership. In fact, the process begins before hotels are recruited, and for the 1996 season, only one in eight properties which applied to join were accepted.


The point is that for SLH the emphasis on quality is a hallmark of the consortium, and is therefore taken very seriously. Every hotel is inspected before taken in to membership, and is subsequently re-inspected at least once every two years by a 'mystery guest'. The report of this 'secret' assessor is over 200 pages, and tests the guest's experience from the very beginning of their visit, ie, from reservations stage through to check out. It covers all areas of the hotel operation. Whilst taking into account the individuality of every property, the report effectively evaluates whether the guest's expectations are genuinely met.

At the same time, any and every complaint is personally handled by a director of the management company and investigated in detail, if appropriate. Our argument is simply that if one hotel lets down a customer, then the entire consortium is similarly branded a failure.

As a result of the 'mystery guest' report, the hotel is awarded a pass or failure - the latter bringing with it a series of recommended improvements, to be carried out within a given time frame. On re-inspection should these changes not have been made, or in particular circumstances, the owners have no early plans for reinvestment, then membership is terminated. One other quality checking process is the personal sampling each by SLH executives of at least half of all member hotels every year.

LX for LuXury

Another essential element in the development of the SLH global brand is the consortium's worldwide exposure through GDS networks (Global Distribution Systems). These comprise a dozen or so international computerised reservations services offered through airlines and other travel organisations. In the majority of cases SLH reservations are offered toll-free, and all GDS systems use the consortium's exclusive code LX, intended to be synonymous with Luxury. Reservations revenue generated this way is forecast to reach US$25 million in 1996 (up from US$20 million in 1995), and an annual growth rate of around 15 per cent to the end of the century is considered achievable.

Of all GDS bookings for SLH approximately two-thirds (68 per cent) originate through the travel trade, a proportion expected to grow to 80 per cent within five years. Our research suggests that travel agents are confident of the credibility of the LX code.

Of all USA bookings (rounded proportions) 40 per cent are for US properties, a similar percentage for European hotels, and 20 per cent for the rest of the world. Of those originating in Europe, 70 per cent stay within Europe, 20 per cent are for US hotels, and 10 per cent go elsewhere. For reservations being made in 'Rest of the World' countries, 40 per cent are for the USA, and 20 per cent for Europe.

To stimulate such reservations, SLH offers its members a year-round marketing programme, the centrepiece of which is a Directory of Members, which in 1997 will run to over 300 pages in full colour. Some 230,000 copies will be produced, 10,000 each will be in French and German.

Looking to the future of the industry, the key is to focus on the projected orientation of customer tastes over the next five years.

One consequence will be an anticipated increase in the selection of resort properties, spas, hotels with full sporting facilities, and also those offering educational or special interest programmes to their guests.

Another need will be to practise more carefully targeted market segmentation.


One example is the flourishing interest in romantic breaks - from weekends away to white weddings - and innovative hoteliers are responding creatively with packages offering everything from champagne breakfasts to idyllic honeymoons, late ('sleep-in') checkouts to child-free zones, cultural treats to hot air ballooning and scuba diving.

In keeping with other hotel groupings, SLH are also placing more emphasis on the environment. A 'green consortium' campaign is gradually encouraging members to adopt a 'recycle and re-use' mentality, whilst appropriate properties are highlighting nearby wildlife or wilderness experiences. Examples range from spotting Nepal's unique rhinoceroses, or diving among the corals of the 1,000 islands of the Maldives, to exploring the 40 million hectares of Australia's National Parks, or viewing the 'Wigmen' of Papua New Guinea. Guests can also stay in eco-lodges in the rainforests.

The potential of golf also seems unlimited, and our members for example, offer enthusiasts' programmes guaranteeing access to favourite courses, whilst at the same time placing emphasis on money-no-object treats such as gourmet dining or VIP transfers to the first tee - by helicopter or vintage car, perhaps.

Another key high-spending sector for the foreseeable future is the corporate traveller, and our members can provide facilities for small director-level meetings, individual VIP incentives and exclusive overnight accommodation. The typically prestigious address of most properties provides a crucial advantage in the context of business politics! Recent SLH research suggests more executives work longer hours in their bedrooms responding to urgent e-mail, making international calls, faxing from their room, and hiring computer terminals. Modems are now part of the furniture, claim hoteliers!

Happily, our analysis has also identified the favourable trend that business expense account spending is on the way back, possibly to the levels of the mid-1980s. Trends include upgrades to superior rooms, more à la carte dining, purchases of finer wines and longer stays.


Next on the marketing agenda for the hotel industry will be the development of so-called 'edutainment' services available both to leisure and executive guests. Expressed simply, this is the idea of travelling to learn - and to be entertained - and not simply just to relax and do nothing (although that option, of course, remains).

Examples identify how this more constructive approach to leisure will evolve. Hotels will be encouraged to highlight local heritage and cultural attractions. Some will want to introduce libraries and collections of informative videos. Our guests can be invited to in-hotel 'evening classes' for talks on food, wine and other hospitality topics; whilst others may take up the option of viewing 'behind-the-scenes'.

Some hotels will begin to sponsor cultural programmes within the property - perhaps featuring young musicians or master craftsmen. Another choice, appropriate to country house hotels, will be 'participation' in gardening in the hotel grounds. Because so many properties are historic, SLH hotels will also be enthusiastic about promoting their heritage and architecture and antiques. And more.

Partner marketing

The exclusive and luxury connotations of the SLH brand also encourages partner marketing activity, resulting in special hotel offers for the clients of appropriately up-market businesses. Here is an opportunity for hotels to work more closely with WATA agents! We know only to well how important the travel industry is to our success, and in return how vital it is for agents to be able to rely on the hotel brands they choose.

To sum up, the core message is that Small Luxury Hotels stands for product excellence - the experience derived when expectation levels are exceeded, or, if you like, when LX is delivered.

The irony is, that only through large-scale co-operative and global marketing and management can these small and individual and bespoke hotels look forward to a successful and profitable future...

If we can look forward to teamwork with the travel trade, and particularly with our WATA friends, then prospects for us all must be very positive indeed.

For a copy of the Directory call UK +44 (0) 1372 375116 For reservations at any Small Luxury Hotel call toll free from the UK 0800 964 470 from the USA 800 525 4800. For reservations via the GDS system, access code LX (for LuXury)