“For luxury hospitality, this pandemic will help better foresee the next ones”

Luxury hospitality will never be the same. Strongly impacted by sanitary measures aiming at containing the pandemic, the sector is looking for new solutions towards growth, while already preparing for a potential new sanitary crisis as underlined by Philippe Rubod, expert of the business and CEO of Swiss Hospitality Global, a company specialized in hospitality consulting.

What is the pandemic’s impact on international luxury hospitality?

It was massive and global during the first phase of the epidemic, when all the countries in the world applied severe lockdowns on their population. During this period, luxury hotel attendance dropped down to 95%. Since the summer 2020, Covid’s impact on luxury hospitality has been mixed. It now varies according to countries, regions (urban or holiday region), client segments (business or leisure), and types of establishments. Therefore, the impact depends on several factors.

What are these factors?

First, medical management of the pandemic among the best performing countries, including Thailand with one death linked to Covid for 750,000 inhabitants to this day, and the worst including France, with one death from Covid for 720 inhabitants. The former was able to lift travel restrictions within its borders very quickly. Furthermore, if these countries benefit from a significant domestic market as does China, or midrange buying power, such as Switzerland or the UAE, there is a capacity to generate significant indigenous demand, specifically in tourism and leisure. In these countries, luxury hospitality benefitted from this demand. Then, there is the political and administrative management of the pandemic. Restrictions inside a territory, hotel restaurants or of ski lifts closures in Alpine countries, or the lack thereof, have more or less impacted the attendance of luxury establishments.

Do high net worth clients want to avoid mass vacationers?

Yes, luxury leisure tourism is picking up in isolated countries or regions such as the Maldives, the Caribbean and the Alps. They offer an escape from constraints, from which luxury clients can go beyond: travelling in private planes, renting luxury yachts and villas with hospitality services, etc. Lastly, it is noticed that wealthy clients now prefer high-end establishments with smaller capacity. This type of accommodation guarantees more intimacy: private villas, suites, private spaces. And therefore, less volumes and mix among clients.

Does Switzerland manage to take advantage of this situation?

Urban luxury hospitality has been damaged for a year, because of the significant part of business tourism in its client mix. In 2020, we recorded a drop of 85 to 95% in attendance in Geneva and Zurich regarding 5-star establishments, vs 2019. Luxury leisure hospitality (Alps and lakes) performed better in 2020 (minus 25% in average vs 2019), mainly due to a strong demand from the domestic market. The latter represents up to 80% of alpine hotel nights, according to destinations. Lastly, in a context of prolonged closures of restaurants and bars, luxury hotels in Switzerland that offer gastronomic experiences under their own roof were able to drive much needed room bookings.

We hear a lot of things about Palaces that had to reinvent themselves. Do you confirm?

It all depends on what the word “reinvent” means. In the backstage, it means better cost management (salaries, products, energy), processes and team organization (skills and training). It is a question of survival. Under the spotlights, the “reinvention” is about experience for the hosted client, or the lack thereof, (singularity, innovation), mainly the relevance of concepts (accommodation, restauration, wellness and other). But it’s also about knowing how to quickly transform rooms into semi-medical accommodations, into offices or even autonomous apartments for clients looking to confine with high-end services. This pandemic is therefore rich in learnings to better anticipate the next ones.

Do luxury hotels need to create bridges with other professions by betting on leisure for example?

Luxury establishments never stopped offering innovative client experiences. In Switzerland during the 19^th Century, palaces were extremely festive and “disruptive” locations. Something everyone forgot, as they now seem so “conventional”. Bridges with other luxury ecosystems nourish hospitality, under the impulse of non-hospitality luxury brands. Bulgari, Armani, Audemars Piguet or Baccara are now active in luxury hospitality and impacting it. Tomorrow it will be the same with motor brands, champagne, cigars or even cosmetics and wellness. The arts and entertainment will not be cast aside either.

New concepts have emerged, such as workation. Is it a temporary trend or will it anchor sustainably?

Workation is actually only the extension, made into a concept, of a reality that is simple and recent: the web broke forever the sanctity of the wall between work and leisure. When we see people panicking when stripped from their mobile cellphone or their laptop, it is clear there will be no going back…

Will this pandemic accelerate the digitalization of 5-star hotels?

Absolutely and thankfully, as long as it doesn’t overlap on the human factor, the foundation of luxury.

Is it forced or chosen digitalization?

It is an inevitable process, much needed and beneficial, but which the pandemic is accelerating. It will help luxury establishments to improve their profit margins, which truly need it, especially in Switzerland.

Practically, what will change for hotels?

Precious time will be freed regarding transactional relations with the establishment (check-in, check-out, payment, choosing services, etc.). Furthermore, everything that plays a role in the extreme personalization of offers and experiences: the client’s history, preferences, pre- and post-stay experiences, a connection to luxury partners, etc. Digitalization has to enable placing people back at the center of client experience, not push them away.

How can we attract younger generations to work in palaces? By telling them that if they naturally feel happier when giving than receiving, a skill that cannot be learned, there is no greater universe to accomplish this dream.