Small Luxury Hotels of the World

As the hotel brand-management group continues to expand, it remains committed to delivering true luxury experiences

Good things come in small packages.

In the case of Surrey, England-based Small Luxury Hotels of the World (SLH), that translates to smaller hotels with plenty of luxurious packages and services to offer. The 18-year-old hotel brand-management group boasts some of the most opulent properties worldwide, each with an average of just 50 guestrooms.

Eclat Hotel, Taipei, Taiwan // © 2009 Small Luxury Hotels

“Our hotels are big enough to get good facilities, and the vast majority of them are in stunning locations because of their smaller size,” explained Paul Kerr, CEO of SLH.

This year, 13 SLH properties made the list of the Top 100 Best Luxury hotels in TripAdvisor’s Travelers Choice Awards. Last year, 11 SLH hotels made Travel + Leisure’s annual World’s Best list. And in the 2009 Luxury Brand Status Index survey, conducted by the New York-based Luxury Institute, SLH was voted the number-one hotel brand by wealthy consumers.

Such accolades demonstrate SLH’s evolution into a globally recognized brand. In 1991, SLH was formed as a merger between U.K.-based Prestige Hotels Europe and Los Angeles-based Small Luxury Hotels & Resorts of North America. The following year, Kerr’s management firm, Hill Goodridge & Associates, was appointed the global management company for the nonprofit organization and has led SLH ever since.

Since then, the organization has grown considerably. In 1992, SLH had a total of 70 hotels in 12 countries and reservations revenues of approximately $2 million. Today, SLH has more than 500 hotels in more than 70 different countries with 2008 reservations revenues of more than $100 million. An average room rate at an SLH hotel is approximately $400 per night, and all of its properties are independently owned.

Managing such a large operation, especially given the current state of the global economy, is not without its challenges. Still, SLH does so with a limited team of more than 50 employees and a board of directors made up of hoteliers elected from its hotels. The board meets quarterly, planning future strategies, accepting new hotels into the group and authorizing new marketing campaigns.

While Kerr acknowledged the recession’s negative impact, he also noted that demand for SLH membership among hoteliers remains very high.

“SLH and hotels in general are experiencing a 25-30 percent downturn this year,” Kerr said. “We run our figures every week, and the worst we’ve had on a weekly basis was about 50 percent down in a week from last year. Last week, we had only a 5 percent drop compared to the same week last year — that’s the best week we’ve had for the past nine months.”

In the first quarter of 2009, however, SLH added 25 more properties to its collection and, recently, the brand added its 501st hotel, Blow Up Hall, an “electric art hotel” in Poznan, Poland. The newest SLH property to be added, as of press time, was the Villa Dubrovnik in Dubrovnik, Croatia, which is slated to open in April 2010.

While Kerr said that dwindling consumer demand was a driving force behind the decrease in revenues, he noted that increased competition and an oversupply within the hotel industry itself is also a major culprit.

“I’ve noticed that, sure enough, there is less of a [consumer] demand, but the biggest problem I would say, in the world, as far as the luxury hotel market is concerned, is that there is an oversupply as far as hotels are concerned,” Kerr said. “That’s my gut feeling. That’s the feeling I get when I talk to the hotels. There have been so many hotels built in the last 10 years.”

Becoming Part of the Brand
Each year, many hotels vie to become an SLH-branded property, but becoming a part of the brand is no easy feat. Being an SLH-branded hotel is much more than just an exclusive club membership, Kerr explained.

“[The hotels] are not really members,” said Kerr. “They are part of the brand of SLH. We’ve moved this thing from a membership club-type organization to a branding proposition. We create the brand of SLH, and we market the brand to the wider public and to agents. We also provide a central reservations system so that hotels are connected to it by using the GDS code LX.”

E. David Brewer, general manager of The Panomonte Inn & Spa in Boquete, Panama, said that the amount of exposure SLH has given his property is invaluable.

“With SLH’s database and expertise with marketing and public relations, the exposure of our property now to the worldwide market is much more than we could ever do as an
individual property,” Brewer said. “They also put us in touch with agents and help us spread the word.”

The Panamonte, which joined SLH this January, is SLH’s first property in Panama, and it underwent the extensive application process to become an SLH property. Hotels that wish to become part of SLH, unless invited, must first apply. If the hotel is deemed appropriate for inspection, SLH development team members, of which there are four worldwide, will visit the property and compile a comprehensive report. The completed reports are sent to the board of directors for approval by vote.

Of the initial inspection process, Brewer said that while it “was not too stressful” it was “a fairly meticulous survey of the whole property.”

Jim Carreker, managing director of The Louise in South Australia’s Barossa Valley region, said the inspection focused on much more than traditional standards for luxury.

“We’ve learned since we went through that process that the real focus of SLH is on the warmth of staff engagement with guests — a genuine welcome,” Carreker said. “SLH is
really looking to give guests an authentic local experience that’s unique to each property. While I am sure the inspectors were ticking off thread count and the quality of physical amenities, I was very happy to learn that the inspection was as much about the intangibles — the attributes that a guest would remember most. … It was the services and the attitude that they were looking for as much as how many towels there were in the suite.”

Last year, some 900 properties applied to SLH and only about 5 percent (66 hotels) were accepted. This year's newest properties included SLH’s first property in Japan, the Hoshinoya Karuizawa in Karuizawa; its first in Brazil, the Haras Larissa in Monte Mor; and its first in Beijing, Han’s Royal Garden. This year, SLH welcomed its first property in Denmark, the Nimb in Copenhagen; and its first in Slovenia, the Grand Hotel Toplice in Bled.

“The board of directors wants to make sure that only good hotels are within SLH,” Kerr said. “That’s the whole strength of the brand. We don’t accept everyone.”

Once they become a part of SLH, however, hotels must maintain strict standards of excellence to pass the muster of regular mystery inspections.

“We have a whole inspection team made up of consumers — lots of doctors, dentists, lawyers, accountants and wealthy people — who, at about this time of the year, write in to tell us their travel plans. Next, they’ll go and see the hotels and write up a very detailed electronic inspection plan,” Kerr explained.

The mystery inspection plan is some 32 pages in length, and Kerr believes that it is most effective when filled out by SLH customers themselves, as opposed to fellow hoteliers.

“We feel it’s best to use consumers and past customers rather than hoteliers themselves,” Kerr said. “The inspection program is very balanced, and I think that the consumer gives a great balanced view of his/her stay in the hotel. We also ask them to comment on the experience they’ve had outside the hotel, to find out how the hotel handled their stay. I think that’s the vitally important bit of a stay at a hotel.”

Experience Counts
Those activities, from learning how to make tagine (slow-cooked stew) in Morocco or riding through the Italian Alps in a romantic, horse-drawn carriage, are what SLH promotes heavily to both agents and their clients.

“For SLH, it’s more about the experience of the whole adventure rather than just staying in the hotel,” said Kerr.

SLH regularly publishes glossy, bound marketing brochures detailing just a few of the many options to be offered at its hotels. Titles range from City Escapes and A Taste of the Mediterranean to Country Retreats and Gourmet. The brochures are distributed to agents and their clients, many of whom also belong to The Club of Small Luxury Hotels of the World. Club membership in this guest loyalty program gives clients the ability to enjoy added benefits and amenities just by registering on SLH.com.

Club members, of which Kerr estimated there are 75,000 total, account for some 42 percent of SLH’s Web bookings. The majority of Club members (40 percent) are from the U.S. Still, Kerr insists that travel agents make up the overall majority of SLH’s hotel bookings.

“About 70 percent of our business is booked by travel agents,” he said. “We’re trying to make agents’ lives easier by offering the best geographic spread of luxury hotels available and by providing them with the best service.”

Wendy Burk, CEO of Travel Dynamics Group in La Jolla, Calif., and an agent of 32 years, agreed with Kerr’s assessment.

“SLH really goes above and beyond, and they really care about what it is that they are representing,” Burk said. “In the past, they’ve cleared space that wasn’t available and they even helped us arrange unbelievable parties in the south of France. The amount of detail that the inside staff does is incredible. Jon Makhmaltchi, the vice president of sales, sells you on utilizing SLH but the thing is that their team really follows through on every detail.”

Just this January, SLH unveiled a dedicated Web site exclusively for travel agents (www.slh.com/travelagents). The site gives agents more detailed information on SLH hotels and their respective GDS codes, the latest hotel offers, direct contact information for dedicated agent hotlines and information on SLH’s Groups and Meetings department.

Looking ahead, SLH has plans to expand, both on the Web and around the world. Recently, the company hired an entire Social Engagement team to manage its
communications via social media networks such as Facebook, Twitter, LinkedIn and ASmallWorld, and the organization plans to increase its online presence in 2010.

“We have a new Facebook fan page for SLH and all of our hotels are being involved. We’re training the hotels to help them with social-networking sites so you’ll be seeing regular stories and status updates from them and from myself,” Kerr said. “We’re already tweeting. We’re launching video content with YouTube. And we’ll be working with different languages and other parts of the world.”

SLH is also looking to expand its hotel presence in Asia, India and Brazil.

Yet, no matter how large SLH becomes, Kerr and his team are committed to keeping their focus on the small things — and paying attention to detail — when it comes to the brand. And he hasn’t forgotten who helped SLH get to where it is today.

“The travel agent community has been very, very supportive of SLH and, therefore, I’d like to thank them all for their support,” Kerr said.

www.slh.com