Target London
Despite the existence of nearly 30 five-star hotels in London, Kempinski Hotels & Resorts is keen to join the marketplace.
Founded in Germany more than 100 years ago, Kempinski is the oldest luxury hotel collection in the world. But it is only in the past 20 years that the company has sought to become a truly global hotel operator and now boasts 28 properties worldwide.
Ranging from grand, traditional establishments to more pace-setting contemporary properties, Kempinski hotels are deliberately aimed at being individual, reflecting something of their location rather than the group they belong to.
So far, London has been a key destination missing from the Kempinski portfolio, despite the company's attempts to move into the city. Last year it came close to opening a property in Harrington Gardens, South Kensington, but pulled out at the 11th hour when the developer insisted on an exclusivity clause that would have prevented Kempinski from opening other hotels in London.
"London is a very important place for us to be," says vice-president sales Bill Walshe. "The UK is now the second most important market for the company, providing 12-18% of our business worldwide. This is quite remarkable considering that we don't even have a property here." Germany, of course, is the company's strongest market, accounting for 40-45% of its occupancy.
Having a presence in London is particularly important to capture the US market, says Walshe. "Much of the business that comes to Europe from the United States stops off in London first. Having a hotel here would provide us with an opportunity to secure a lot of that business and, hopefully, keep it with us as it moves on to other destinations in Europe where we have properties.
"We also want to have a hotel in London in order to be able to help our existing customers with their travel requirements."
An ideal hotel for Kempinski in London would have about 200 bedrooms, two restaurants and one or two bars. It could involve either taking over an existing management contract or a new build. Opportunities for either are hard to come by in a mature city like London, but Kempinski is prepared to bide its time until the right property comes up.
"That doesn't necessarily mean we will only look at properties with a W1 address, but wherever we go, it has to be somewhere that will enhance the Kempinski name," says Walshe.
Once established in London, Kempinski would have a base from which to look at opening hotels elsewhere in the UK, such as Manchester, Leeds, Glasgow and Edinburgh. In fact, the company has already received approaches about opening in some of these locations, but Walshe says it would be difficult to move into the UK without conquering London first.
"Provincial cities in the UK rely much more on domestic business, whereas London is internationally driven, which is what is important to us," he says.
The fact that Kempinski is now seeking to open in new destinations all over the world is a relatively new phenomenon for a company that, until the mid-1980s, was a domestic business with just four hotels in Germany. Following an injection of cash into the company in 1985 from the then majority shareholder, Lufthansa Airlines, Kempinski established its head office in Geneva, Switzerland, and began its expansion abroad.
The 418-bedroom Leela Kempinski opened in Mumbai, India, in 1990, followed by the Ciragan Palace Hotel Kempinski in Istanbul, Turkey, the following year.
Since then, as well as new hotels opening in Germany (there are now 12), growth has been particularly strong in Eastern Europe, with properties now established in Russia (in Moscow and St Petersburg), Bulgaria and Hungary.
More recently, Kempinski has opened in the United Arab Emirates, China and Indonesia. And last year saw the launch of Palazzo Versace - a 205-bedroom resort hotel, themed and designed by Versace, which is claimed to offer six-star standards - on Australia's Gold Coast.
Lufthansa relinquished its majority shareholding in Kempinski in the 1990s, although the airline maintains a close marketing relationship with the company. Today, Kempinski is a publicly quoted company on the German stock exchange, although it doesn't trade, because 84% of its equity is held by Siam Sindhorn, the property division of the Thai royal family.
"The majority shareholders have a long-term approach to the company and have injected regular investment over the past eight years," says Walshe. "It has ensured us incredible security."
Recently, Kempinski has moved from being an asset-based company to a management one. Today, only one property - the Kempinski Hotel Vier Jahreszeiten in Munich - is owned by the company, and one - the Hotel Adlon in Berlin - is leased. All the rest involve management contracts.
"Ultimately what we do best is manage hotels, and that is what we are concentrating on," says Walshe.
As well as opening in London, Walshe would like to see the establishment of a Kempinski hotel in Prague. "I would like to see the creation of links between our destinations, and Prague would very nicely link together our properties in Germany with those in Eastern Europe."
He also expects to see serious growth for the company in the Middle East and South America. And the USA is, as yet, an untapped market. New York, Los Angeles and Washington are all viewed as cities where Kempinski could do well.
Although Kempinski will continue to target prime city centres, it has shown it is not afraid to move into previously untapped locations, particularly in developing its resort hotels. The Kempinski Resort Hotel in Estepona, Spain, and the Ajman Kempinski Hotel & Resort in Ajman, United Arab Emirates, are just two examples.
While the Kempinski name provides travellers with considerable confidence about travelling to a new destination, the company is aware of the difficulties of attracting enough quality staff to a secluded location.
Walshe does not expect the number of Kempinski hotels to grow much beyond 50. "The Kempinski philosophy of running individual hotels would be difficult to maintain in a group anything bigger than that," he says.
"We have chosen the most difficult path of wanting to constantly amaze our regular travellers wherever we go."
FACTS
Kempinski Hotels & Resorts
Collingham House, Gladstone Road, Wimbledon, London SW19 1QT
Tel: 020 8307 7693
Web site: www.kempinski.com
President and chief executive: Reto Wittwer
Number of hotels: 28 (23 city centre properties and five resort hotels)
Global occupancy: 70%
Busiest hotel: Kempinski Hotel Vier Jahreszeiten, Munich, with year-round occupancy of 90%
New hotels confirmed: four - Odessa Kempinski hotel, Odessa, Ukraine (2001), Kempinski Palace hotel, S‹o Paulo, Brazil (2003), Kempinski hotel, Cairo, Egypt (2003), Iguana Bay Kempinski Resort, Guanaja, Honduras (2003)
Source: Caterer & Hotelkeeper magazine, 7-13 June 2001
