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- 27 Jul 2014
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In Conversation With Stuart Foster, Vice President Marketing, Hilton Luxury Brand

The number one use of discretionary income is travel, it’s a great time to be in hospitality, explains Stuart Foster, VP Marketing for Hilton Luxury Brands

The former Moët & Chandon executive arrived at Hilton in 2011, after a 15-year tenure reinvigorating the perception and distribution of LVMH’s world-renowned champagne brand, working in Paris, Tokyo and New York.

At Hilton, Foster has been charged with the development of existing and new brands’ distribution, sales and profit, account planning and pricing across the region. And leading the storied Waldorf Astoria marque into a new chapter of global luxury hospitality.

At the heart of his activities is the customer experience. “It’s not about the bed, the shower or the towels,” he enthuses. “Nor was champagne about the juice or the bottles.” Instead, Foster is on a mission to create meaningful experiences for his guests that will be remembered, as both Conrad and Waldorf Astoria continue to grow footprints across the globe.

 People are moving away from having to being 

I feel like luxury is becoming such an overused term. How do you feel about it in terms of its existence? What constitutes luxury these days?

“For us it’s really exciting because people are moving away from having to being. There was a report by the Boston Consulting Group that supported this, where they segmented the market into luxury goods, automotive and experiences, looking at growth rates and size.

“The experiential part of the luxury market represented 50% of the total luxury market, and it was growing the fastest. That is definitely the trend, and it bodes really well for travel and for hospitality. I think through the whole downturn of the economy, we’ve seen this through our research. There was a reckoning by consumers as to, “What’s all this stuff for?”

It’s certainly true that the rich are getting richer, they have more and more ability to buy whatever they want. True luxury is increasingly defined by time. Take for example private jets. As much as they are a symbol of wealth most people aren’t buying them for the comfortable chairs. They fly private to have the luxury of spending less time dealing with airports and travel.

From a hospitality standpoint, it’s exactly the same. We look at our guests from a time standpoint. How are they using their time? Can we maximize the experience they’re having at our hotel and make sure that our services are [inaudible 00:02:02] so that they can do that.

 Experiential luxury represents 50% of the total market, and it is growing the fastest 

So how do you turn this time-based value proposition into a product or a service for your clients?

One of the ways we do this at Waldorf Astoria, is we assign a personal concierge to every leisure guest. Not every business guest, but every leisure guest. That personal concierge reaches out to the guests about two weeks in advance, usually by email. It’s a real name, a real person with an email and a real cell phone number.

Based on the data we have collected during previous hotel visits, this concierge will offer an agenda of things you may be interested in. They’ll say, “Here’s what we have going on at the time you’re here. What else can we do for you?” And start that dialog. It’s all around the experiences.

That personal concierge will then greet their guest. They are standing at the front door, waiting with their keys made, to take them straight to their room, bypass the front desk. My analogy is this is the private jet of the check-in experience. Any other details that need to be taken care of can be handled in the room.


Conrad, Maldives

We are also using texting now, at least in the Americas. We’re rolling this out globally, but there are different pricing models of texting around the world, as you know. In the US pretty much everyone has unlimited. Texting seems to be the favoured methodology to then communicate with that personal concierge throughout the stay.

Think of the guest that is sitting on the beach and they decide that they want a massage that afternoon. They can text their concierge their exact request, and the concierge can manage all the details via text.

The people that use the personal concierge, it’s driven our satisfaction scores though the roof. People are now actually experiencing more, therefore they’re leaving with memories and unforgettable experiences that they maybe didn’t think they were going to have. They were just looking at us as a bed, and a shower, and a television.

 Our personal concierge service has driven our satisfaction scores though the roof 

How has that changed when you’re talking about Conrad?

Conrad is definitely much more for people who journey with purpose. They’re much more technologically enabled. You can research, plan, and book travel all on the Internet. Historically, the minute you entered the front door, the technology stopped. You still had to go up to the front desk and sign a card or hand over your passport, check in, all that.

The Conrad positioning of smart luxury is a little bit less fussy. That’s why we call it smart luxury. It’s a much more intuitive service than the formality of service that you might get at a Waldorf. It’s a different customer. We created an app. There are a lot of apps out there. Everyone’s got an app, but this app let’s you access all the services of the hotel.

All the things that you normally do from picking up that phone next to the bed with the million buttons on it. You never know which button to press so you just press 0.

 The Conrad positioning of smart luxury is a little bit less fussy. It’s a different customer 

Then you call and they transfer you anyway.

Exactly. Instead we have the Conrad Concierge app. So yesterday for example, I was at a conference and I started thinking about today. I thought, "I have a dinner tonight that could run late tomorrow I have an 8:00 call. I want to go for a run. I need breakfast.”

All using the app, in a matter of minutes, I booked my wake-up call for 6:00. I ordered breakfast for 7:30, selected everything I wanted, and then went back to listening to the conference. But the most important thing is that – as a guest – I can make all these decisions when I want to, when my mind is there.

On top of this, I had already pre-checked in so my key was waiting for me at the front desk when I arrived. But we want to take that one step further. We are testing something where you will have a key that you keep in your wallet, kind of like a credit card. It will be a Conrad access card. When you book any Conrad, we just turn that key on and off.


Conrad Concierge App

The technology is there. The outcome is that we drive loyalty, but it’s really driving convenience. People will be able to go directly to their room, using the app instead of the front desk. When your key is turned on it will say, “Mr. Foster, thank you for checking in. You’re in 1426. Your key is now activated.”

So your Conrad key, which you keep in your wallet, will be activated for the time parameters of your stay. Then next week, you can use the same key in Miami, as an example. Our headquarters can turn it on anywhere in the world at the right time, and they simply communicate to the guest what the room number is.

That’s where we’re using technology to take service to a much more technologically enabled high level of service. We still are offering the spa. You can call the valet and have your car brought around. You can change pillows. You can order a different shampoo. Actually, you can even book a jet.

We partnered with XOJet. If you want to get out and dodge quickly, you know what? You can do it through the app.

 You can change pillows. You can order a different shampoo. Actually, you can even book a jet 

In terms of your marketing mix, are you everywhere? Are you print? Are you mainly digital?

The two brands are positioned differently. Conrad is definitely much more digital. It’s almost an entirely digital communications plan. We’re still finding on Waldorf, what we call the discerning traveller, a little more mature, quite experienced in travel. They love print.

Print has been forced through a revolution. There have been some amazing redesigns of some magazines in Travel lately, people still like that tactile reading. They want the big glossy pictures to be inspired. They’re not going to do their research in the magazine, but they want it as a feeder of information.

It still remains important from a very high level of inspiration. They’re consuming as much print as they are digital, but they’re researching on their tablets. If you look at the line graph of device usage, phones spike at 6:30 in the morning. People wake up and they check their email. They use their phone generally. They’re using it as an alarm clock, what have you.

 It’s not about being everywhere. It’s about being at the right place at the right time 

It then comes down as they go to work. The PC tends to spike through the morning. Then it starts to wane as the day goes on. Starting at about 4 or 5pm, tablet usage explodes. By 8pm tablet usage is the highest among all three. It makes sense. People are sitting on their couches if they’re not out enjoying themselves.

We have the data to prove this. They’re watching TV, they’re listening to music, and they’re on their iPad or whatever tablet. They’re multitasking. They might have their phone, and texts are coming through their phone while they’re on their tablet researching their next trip. It’s not about being everywhere. It’s about being at the right place at the right time.

We target time based content and advertising on tablets in the early evening. We will time base email marketing in the morning, and we will obviously print. From a Waldorf Astoria standpoint, it still remains important.


Waldorf Astoria, Bali

There are many big hotel groups these days, which have many differentiated brands within the group. So how do you differentiate your own brands in such a saturated marketplace?

I don’t think a lot of people do it well. It’s one thing to choose or aspire to a certain position, but how do you articulate that in running a hotel? If you can’t distil your brand down to one word, then I don’t think you’ve got that clear position, in which case you are a product. You become a commodity.

Waldorf Astoria in one word is unforgettable. We really think we deliver on that. It is the inspirational environments that you have when you walk in, that sense of arrival, that wow from the architecture and design. That’s part of the unforgettable, but so are experiences, whether it’s a culinary experience, a spa experience, an off property excursion.

It’s different things for different people, but the filter is unforgettable. I think that’s what really differentiates us from the formality of other luxury hotels, which continue down the beaten path of white gloves and platters and butler. We almost forbid the word use of butler in our hotels because I don’t think that resonates anymore.

Conrad really is about inspiring connections. It is that global traveller. It is inspired, really, in one word. I think we’ve identified those positions very clearly for both our brands. I think some competitors you could articulate very clearly what they stand for, others maybe not so well.

 If you can’t distil your brand down to one word, then I don’t think you’ve got a clear position 

Who is your biggest source market?

Still the United States, for both brands, actually. We talked a lot about the numbers. It’s still the number of people who travel, not only domestically but also internationally. Waldorf has a big footprint in the US. Conrad, actually, has a relatively small footprint in the US, but the US continues to be the number one source market for Conrad.

That also has to do with the locations where we are in Asia and in Europe. We’re in gateway cities, which you get a lot of American travellers through. We’re in sought after leisure destinations, like the Algarve, or South Africa, or Koh Samui, or Bali. We continue to develop in those areas, but the US continues to be our number one source market.

 We’re in gateway cities, where you get a lot of thoroughfare by American travellers 

How are you working to get on the radar of emerging market consumers? Where wealth is seemingly exploding

We definitely are watching which countries are growing in terms of middle class, in terms of affluent, in terms of high net worth. We look at all three segments and look at the growth of that.

The ultra high net worth is what you’re going to lead and drive the aspiration with, but it’s not what you’re going to fill your hotel with. There’s just not enough of them traveling at one time. So we take a pyramid approach if you will.

We’re definitely looking at those three segments and we look at where they’re going. While development of hotels is not as linear as we would like, no one could actually say, “Gee, I want a hotel there and that’s where I’m going to focus,” unless you’re highly developed and you have a footprint that is exhausted around the world.


Waldorf Astoria, Beijing

There are 29 Waldorf Astoria’s today open today in the world. People don’t even realize that. We just opened four properties in Amsterdam, Jerusalem, Dubai, and Beijing. These are really mastheads, sort of flagships, that is putting the brand not only in those markets that people are outbound from, but people are inbound, too.

Letting people know that the expression of the brand is pure in these markets then resonates and gets them to travel to the others and become aware that we are more than one hotel.

And we develop where it’s possible. Lending is easier in Asia and places where there’s sovereign wealth. Lending in Europe and America continues to be challenging. Naturally that affects our development.

 For leisure travellers, the greatest booking channel for us is our websites 

Now that consumers have so many options, where do the majority of your bookings come from?

For leisure traveller, the greatest channel for us is our or GDS continues to be important. Travel agents continue to grow, particularly in developing markets where knowing what they’re getting, when they’re unfamiliar and they’re new.

The Chinese, for example, use it when they book outside of China. They want to make sure. They’re unfamiliar with how to book in the US. Some of it’s in the language. But now we do have websites in 22 languages. We allow people to book in a variety of languages.

Then, of course, there are the OTAs. I think the luxury traveller is less inclined to go to the OTAs because of how and where they’re inspired. If they’re inspired through print or some of our digital content that we’re doing, then naturally they’re going to be led through to the brand website. That’s the path we’re almost guiding them through.

 I think when it’s a price sensitive decision, you’re going to use the OTA 

I think when it’s a price sensitive decision, you’re going to use the OTA. “I need to go to Boston tomorrow. Where should I stay? What’s the cheapest?” That’s not a luxury … You’re not going to decide to have a luxury experience based on that.

But it’s still a big piece, because there is a mentality in some markets. In Asia, the OTAs act like a digital travel agent in the local language. So we get a strong business out of that.

I think in the US, people use OTAs to see whether or not it really is the best price on the brand website. I think we’re getting to the point now where people realize it’s exactly the same. And by booking with us if you have any issues at property level, we can help.

When its booked through an intermediary, it becomes much more complicated, especially when the third party has made the error.


Waldorf Astoria, Dubai

What’s the next big opportunity you would like to seize for the two brands?

I think we’re seizing it for Waldorf Astoria. It’s the development pipeline, the four properties we just opened. We’ve got another nine in development. That is shovels in the ground, we’re actually building, deals signed.

There are still a number of destinations where Waldorf Astoria needs to be. It will just take some time. We’re not in London. We’re not in Paris. There are a couple of destinations that, I think, from an awareness and need standpoint, we need to be. We’ll get there, but as I said, development in Western Europe has been challenging.

For Conrad, the real opportunity is the footprint in North America. We have currently four hotels open. We’ve recently signed Washington DC. We’ve recently signed Fort Lauderdale, and we’re close to announcing a third. It’s definitely growing in the right direction.

I think we need a much larger footprint in America to drive the awareness of what that brand stands for. We have been successful particularly with New York. Conrad New York opening has done wonders for the brand in terms of awareness and perception in probably the most important market in the US. That’s probably our biggest opportunity.

 The opening of Conrad New York has done wonders for the brand in terms of awareness 

And what are the biggest challenges?

We have a lot of challenges. I probably fear the space getting crowded. I think north of the full service into lifestyle, boutique luxury. That space now, you’ve got a lot of people launching branded hotels from, obviously, Bovary to Nobu to Tommy Hilfiger. The space is going to start to get crowded. I think the attractiveness of …

The number one use of discretionary income is travel. We were looking at figures yesterday that showed that ultra high net worth individual’s way over indexed on travel than anybody else. As you move up the income scale it gets even higher. I think that’s going to continue to grow. Even if it stayed flat, with the growth of wealth, the actual spend will continue to grow.

It’s a great time to be in hospitality, but I think people are going to launch concepts that are maybe not as clear. The challenge is being pure to what you’re saying to the consumer, being transparent on delivering against that promise.

For more in our series of conversations with Luxury Leaders, please see our most recent editions as follows:

- In Conversation With Elie Bernheim, CEO, Raymond Weil
- In Conversation With Thierry Andretta, CEO, Buccellati
- In Conversation With Thierry Stern, President, Patek Philippe