There are a few things that Hong Kong-based Langham Hospitality Group wants changed.
More than two decades after buying what is considered Europe’s first grand hotel, The Langham, London, and then giving the property a facelift that earned the group a badge as an ultra-luxury hotel player, the company has yet to establish any other European property.
The coveted badge and 16 Langham hotels later, its own research last year had customers describing the Langham brand as “a well-kept secret” or “a hidden gem.” Nice compliment but, really, what hotel chain wants to be known only to a select few?
Eight of the 16 Langham hotels are in China, of which seven are management contracts, and one, The Langham Xintiandi Shanghai, is owned by the parent company.
Outside mainland China, it owns all eight Langham hotels, four of which are in North America in New York, Chicago, Pasadena, and Boston; two in Australia, in Sydney and Melbourne; and properties in Hong Kong and London.
As a result, the U.S., China, and Australia are the main clientele for the brand, in part due to their large domestic markets. But the outbound prospects from these markets and their global travel are why Langham is prioritizing Europe and the Middle East for a new wave of expansion, Langham Hospitality Group CEO Stefan Leser said.
“In Europe we could only accommodate them in London,” said Leser during an interview with Skift at the recent ILTM Asia Pacific. “One of our expansion priorities therefore is Europe. In some locations, we would need to acquire, while in others we would be looking for the right partners for development.”
Leser is also leading Langham’s new expansion drive beyond key cities into, for the first time, resort destinations such as Bali, Mauritius, Seychelles, and Maldives.
New expansion initiative
Parent company Great Eagle Holdings’ core revenue rose by 7.7 percent year-over-year to $851 million (HK6,662 million) in 2018, driven by an 11 percent increase in revenue from the hotels division, according to a first-quarter investor presentation.
Great Eagle also has cash and bank balances of $946 million (HK$7.4 billion) in 2018. It is known to have taken a hard look at Belmond, which was eventually sold to LVMH for a whopping $2.6 billion in December last year.
Asked if he was given a war chest by the parent to expand, Leser said, “No. We’re not expanding for the sake of building scale. When the deal is right, we’d swoop in. Our focus is a sustainable growth pattern with real skin in the game, either wholly or with the right partners.”
“There’s been a hype about asset light,” he added. “Now people are starting to reconsider asset appreciation – whether it is not more important to actually have an influence over the product and have equity in it. I firmly believe in that.”
Expansion could be through acquiring a group of hotels or individual properties and management contracts. He thinks 30 Langham hotels in key cities or resorts in the next five to 10 years is the “sweet spot” for the chain.
Current Mergers Focus
Tony Ryan, managing director of global mergers & acquisitions at JLL Hotels & Hospitality Group, said smaller, niche platforms are indeed the focus for mergers and acquisitions currently.
Management companies and private equity players are looking to fill strategic or segment gaps, he said, noting as examples InterContinental Hotels Group’s acquisition of Six Senses Hotels Resorts Spas for $300 million last February and Hyatt’s purchase of Two Roads Hospitality for $480 million in October last year.
Langham, said Ryan, can afford to be selective.
“The brand has a 150-year legacy, with The Langham in London being widely celebrated as Europe’s first grand hotel [opened in 1865]. Langham clearly has significant brand equity, and the company has leveraged this to expand the portfolio and will continue to do so.
“In addition, Langham is a wholly owned subsidiary of Great Eagle Holdings and has greater flexibility when evaluating deals compared to the bigger chains. Also, the big brands are typically under pressure due to the quarterly grind and therefore need to show growth. Considering the flexibility and the fact that the company has two proprietary brands [the other being Cordis], Langham can be more selective on deals.”
Expansion in Europe wouldn’t be without its challenges, however.
“Having a flagship property in London should certainly help when looking to expand in Europe, but at the same time, within Europe, although the Langham name/hotel would be known, it may not be recognized as a hotel chain,” said Robert Hecker, managing director, Pacific Asia Horwath HTL.
Nevertheless Hecker believes with the backing of its parent company, Langham should not have any trouble acquiring properties in Europe, although he thinks it will need to invest further into a regionally based operating platform.
“One of their strengths is their commitment to hospitality and the management infrastructure needed to support brand development and expansion, which is not as common with other hotel companies owned by real estate companies,” said Hecker.
He added there are “some possibilities” for Langham to acquire a group of hotels in Europe, and the rebranding opportunity from it would be a catalyst for its European expansion.
“I’d say by putting a focus on it, they will achieve the same momentum as they had in North America, and this will give them basis for the regional platform they need to be successful ongoing. Acquisition would certainly be an ‘easier’ and faster path toward expansion in Europe over seeking management contracts,” said Hecker.
Raising Brand AWareness
As it amps up Europe expansion, Langham is also working to change its “hidden gem” image and raise awareness of the brand as an ultra-luxury contender among consumers and partners.
A new global brand campaign, Celebrate the Everyday, has been launched, aimed at closing in on its position as the place where people celebrate their significant moments or simply celebrate life.
“Our research shows people turn to Langham for special occasions, not just for accommodation but soirees, events, and important moments. The biggest honor you can have as a hotelier is when people trust you with their biggest moments in life. While everybody talks about experiences, what more special experience can there be than a celebration, whether it is a graduation, homecoming, wedding, or just a group of friends getting together or the end of our successful week,” said Leser.
People have more reasons to celebrate than they think, said Leser, and the key is to encourage them by creating events and ideas. One such is a Barbie doll high tea at The Langham Melbourne that Leser said was “a humongous success” and raised awareness of the brand through social media.
Celebrate the Everyday replaces the rather perplexing Art of the Stay tagline used previously. It will be rolled out worldwide in phases throughout the year, with key executions in print publications, online sites, hotel rooms, and social media networks.