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New finance stream for Leading Hotels of the World

12 March 2012 by
New finance stream for Leading Hotels of the World

The 430-strong Leading Hotels of the World (LHW) consortium is on the verge of introducing a new revenue stream.

Currently, 55% of LHW's income comes from membership fees, adjusted according to the number of hotel bedrooms, with the remaining 45% accounted for by the 10% fee charged on all transactions generated by the organisation.

However, Ted Teng. president and chief executive of LHW, has decided that, in order to become more competitive and create greater co-operation between members, the transaction fee should be abolished and replaced by each hotel signing up three regular guests per room to the Leaders loyalty programme. In return for the $150 (£96) fee, each member will receive benefits such as free Wi-Fi and Continental breakfast, as well as a free night for every fifth night booked with LHW.

"We think this is a very compelling model to help boost revenue," Teng told Caterer and Hotelkeeper during a visit to London from LHW's headquarters in New York City.

The new means of financing LHW is currently been trialled at 50 hotels worldwide, with a view to introducing it across the entire portfolio of hotels in 2013.

Teng said that while he would like to see LHW increase its number of members, "it is more important to achieve the right members - iconic hotels in great locations - rather than the right numbers".

Since Teng joined LHW in 2008, the membership has fallen from 475 to 430.

Annual revenue for the company grew from $546m (£350m) in 2010 to $613m (£392m) in 2011.

LHW is currently represented by 13 members in the UK, including the Ritz and the Milestone in London, and the Scotsman in Edinburgh.

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By Janet Harmer

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