With over 120 years of history, Kempinski Hotels is Europe’s oldest luxury hotel group. Since 1897, Kempinski has been building its brand in the luxury hotel space and is well-regarded for its heritage hotels, luxury holiday resorts, and business and spa hotels around the world. With its long-standing reputation, the Kempinski brand has successfully weathered its fair share of ups and downs and global crises as it continues to stand strong today, operating 76 five-star hotels in 31 countries. In a webinar with EHL, Michael Henssler, Chief Operating Officer Asia and Management Board Member at Kempinski Hotels, shared with us how Kempinski has strengthened its foray into Asia over the last decade, as well as how the company has been navigating the challenges of the current pandemic.
Could you bring us back to 10 years ago when you came to Asia with Kempinski? What was the set up for Kempinski then, and what is the situation now?
About 25 years ago, Kempinski came to China with the Lufthansa Centre in Beijing. 5 years after that, they decided to create a joint venture with BTG (Beijing Tourism Group), a state-owned enterprise, which is very dominant in travel and tourism all over China. The joint venture was called Key Company and was responsible for growing the Kempinski footprint in China, where BTG would bring hotels while Kempinski would run them.
When I came in, we had eight hotels in China, with a few more in the pipeline. The growth until then was done very opportunistically, and we really had to shift gears and go for more strategic, quality growth. Because at that time, the level of quality of our portfolio in China was substantially different from the quality of our portfolio in the rest of the world. We wanted to grow not in numbers but in quality, and we were developing additional growth platforms, for example with NUO Hotels. So when I came to China, my purpose was to help transform Key Company and as its success grew, the company started to have its own balance sheet and brands. Today, we manage 30 hotels across Asia from Key Company, and I think we were the first ones to manage hotels in Singapore, Bangkok, Kuala Lumpur etc. out of China.
How would you say the Kempinski brand is different in Asia compared to Europe?
They all do a great job and one attribute of Kempinski is that the hotels are all very different. I am very happy with every hotel in terms of offering experiences on a very high level of quality, service, and craftsmanship. However, when you look over the generations of hotels, you see the constant upgrading. Since I’ve been here [in Asia], nine hotels have left our portfolio, and several have been introduced – for example, in Singapore, Bali, or and Hangzhou in China. Over time, by adding new hotels and letting go of others, we have been able to slowly uplift the portfolio. We still have a long way to go, but the gap with, for example, the Hotel Adlon in Berlin or Çırağan Palace in Istanbul, is definitely getting smaller. If you look at the latest generation of hotels in Asia, they are at the level of the Adlon.
Also, one of the key aspects of Kempinski hotels in Europe especially, is that they are often hosted in heritage buildings, or buildings with a very strong history and heritage. But it cannot always be achieved anymore, with mostly new builds now. So to express that sense of heritage into a new build, we focus on the service methods – the European method, consulting [with stakeholders], the lobby [being framed] like a living room etc. We try to implement the DNA of craftsmanship and entrepreneurship, though not necessarily to pure fixed standards; it’s very tailor-made, very European, especially when it comes to quality management and implementing touch points – that’s probably one of our more dominant challenges.
Sindhorn Kempinski Hotel Bangkok. Source: Kempinski
NUO is a distinctly Chinese luxury brand. Could you give us a brief description of how and why NUO was conceptualized?
When we started about 10 or 11 years ago, we said, “Okay we need a Chinese brand; it needs to be contemporary, Chinese, luxurious, and green – and it needs to be based on being proudly Made in China.” The first time we said proudly Made in China, we faced some scepticism. But I always use the example of ‘Made in Germany’ – ‘Made in Germany’ was created in the First World War by the British, as a shame label about products coming from Germany. “It’s made in Germany, don’t buy it – it comes from the enemy.” It was understandable in the context of that time, but when you see what it has evolved to today, it’s different. And so, when we wanted to say, ‘proudly Made in China’, we wanted to be part of reshaping the meaning of this term. We wanted it to have depth and substance – we wanted it to be meaningful. That’s what we started creating with a lot of support from the Chinese government and BTG.
There have been multiple attempts by different companies to create an Asian or Chinese brand, such as HUALUXE from IHG (InterContinental Hotel Group). How is NUO going to be different?
I think it’s in the DNA and its relevance. We took a few years and worked with universities for social studies and history and we said, “What is Chinese service? How do you define Chinese values in a service sequence?” We said, “Art is an absolute expression of culture. How do you plan the art?” For example, for the tea at NUO, we have our own tea farms and tea masters to make sure that what we are doing is truly Chinese.
The project management, quality management, and engineering – the ‘German-ness’ were brought in by us [Kempinski]. But it was our Chinese colleagues, our Chairman, and a lot of professors – we took about 3 years – to really define the processes, design, procurement etc. The purpose was to make it relevant, whether for a Chinese or foreigner, to walk into the hotel and say, “Oh, that feels different.” And it’s not a design – it’s something that you smell and feel; the whole process has been adapted – it’s really a new experience.
Kempinski speaks of high-level European service, while NUO is extremely Chinese in its DNA and heritage. As you oversee both brands, have you taken any insights from NUO and put them into Kempinski in China or vice versa?
We try to keep them separate, but I think what we learn when we deal with both is the importance of authenticity, craftsmanship, and acceptance of what is happening around us, as well as blending in the importance of working with communities. The best business plan is quality and craftsmanship. If you have something that people desire, price becomes secondary.
The start of NUO was, let’s say, a reconfirmation of our strategy for quality with Kempinski. NUO started successfully at a very high level of rates and with great acceptance from the local market, whether in our restaurants or banqueting etc. That reinforced the thought that, “You know what, [with Kempinski,] we have to be even more European; even more distinct and daring.” Because if we start to overlap the two and blend them together, we lose the authenticity. So we keep them separate, not even for the sake of effectiveness or efficiency or saving money – we don’t do things like that.
Kempinski Hotel Nanjing. Source: Kempinski
Can you tell us more about this latest venture of Kempinski in China with Universal Studios?
Comcast, the American airing company which also owns Universal, entered a joint venture with the Chinese government. Altogether, the park (Universal Beijing Resort) builds upon 4 square kilometres of land in Tongzhou, the outskirts of Beijing. It’s going to have seven hotels, a bunch of convention spaces, and an army of restaurants. The joint venture needed somebody to operate all of their hotels, the convention spaces, and the restaurants, as well as help them find and train staff. The main task was also, they said, “You know how to create distinctly different guest experiences; we want you to do the same [with our project].” There are about 6,000 rooms altogether, and then we figured that the project also needed staff housing. So now we are basically building a village of 11,000 rooms, with a kindergarten, clinic, shops etc. adjacent to that. And we were even looking for a mayor – we called him a mayor, not a General Manager – for the staff accommodation.
How does your board react when you bring a project like that to them?
Maybe 10 years ago [they would have been surprised] but today, the question would rather be, “Listen Michael, what took you so long?” It definitely took a while to build up this credibility, but I think that was always in our DNA, our culture – you need to have ideas. First of all, you need to accept that you have a challenge, because anything that’s not faced cannot be solved. And then have the guts to develop 10 ideas and maybe discard 8.
And honestly by now, our culture is very open-minded – and that’s one fundamental shift in China. At least in my experience, if you have a story, you can get it done. You may need a little more time, patience, and convincing; and the vetting process may take a little longer – but they do open their ears to stuff like that. It’s very much underestimated in other parts of the world, and is something that stimulates me very much and keeps me going every day.
Kempinski Hotel Nanjing. Source: Kempinski
What do you see happening in the next 6 months that keeps you awake at night right now?
Before 20 January, I think what kept me awake was our arrogance and ignorance when we deal with climate change and everything that’s happening around – the nationalism and [being averse to] migration etc. Especially since I come from Germany, I am very sensitive to people who close borders.
Now at this moment in time, what keeps me awake is how we will deal with it [the pandemic], how do we protect our partners and employees, how do we get through all of that. 10% of the world’s population works in our business – in hotels and everything that goes around. How and when is travelling coming back? If we go back to the Universal park, we’re building it for 65,000 people a day. Are we going to be allowed, in the future, to still have 65,000 people, or is it going to be less? I think we have to be fast and adapt quicker – yes, we [Kempinski] are doing well, but how do we use this change that is happening now to our advantage, while making meaningful changes for our environment?
How does Kempinski differentiate its market position in China or in Asia, especially for the post-COVID-19 development needs, compared to other China-specific brands?
A lot of what we are doing now, of course, follows limited guidelines, but things are happening in units. We are very entrepreneurial, so the general managers and the hotel teams have the ultimate bottom-line responsibility. They also have a certain degree of freedom to make sure that they respond and adapt to the local dynamics, since they are closer to the market and to the needs and development.
We were also the first ones to come to the ‘white gloves’ initiative, because we said that maybe not the best really wins, but the safest wins. People now do not necessarily want the cheapest room or the best view; they look for safety. We talked about how to build testing into the customer journey; making sure that we are able to help guests use apps that may be different here than elsewhere; or that they know what to expect before they arrive, as the roads change every day. It’s really day-by-day work, and the strategic planning only goes as far as you can see – and that’s a week. Marketing is as far as you can see from the rooftop, because you don’t need to talk about international markets or city-wide MICE events (Meetings, incentives, conferences, and exhibitions). You need to talk about the little business that you have around because that’s what really matters. And that’s where I hope we can be a little faster than others, because we are smaller and more flexible.