Grace Hotels’ goal: Follow its strategic expansion path
 
Grace Hotels’ goal: Follow its strategic expansion path
29 MARCH 2018 8:06 AM

With a plan to add 30 properties to its portfolio during the next 10 years, Grace Hotels aims for growth in major cities, including several in the United States, according to CEO Robert Swade.

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BERLIN—Being bigger isn’t always better, even if the current trend in the hotel industry is all about scale. For London-based Grace Hotels, the quality-over-quantity debate is a short discussion.

Grace Hotels’ development strategy is determined by a mindset that focuses on creating local, authentic memories that guests can become emotionally attached to, said Robert Swade, the company’s CEO, during a break at the recent International Hotel Investment Forum.

“That’s what’s really important,” said Swade, who became CEO in 2016. “The brand is not cookie-cutter now, nor do we want it to be.

“When we’re looking for new developments, we want to craft each property so it’s suitable for the destination and the guests that will stay there,” he added. “We specifically want each hotel to be quite unique, quite separate and quite distinct.”

Robert Swade, CEO of Grace Hotels. (Photo: Grace Hotels)

Grace Hotels is a hotel management company owned by Libra Group, which is a family-owned international business group comprising 30 subsidiaries across five continents.

With six hotels in its portfolio, Grace Hotels has a target of having 30 more properties in its portfolio during the next decade, Swade said. The portfolio includes two in Greece (Grace Mykonos and Grace Santorini), one in Argentina (Grace Cafayate) and three in the United States (Grace White Barn Inn & Spa in Maine, Grace Mayflower Inn & Spa in Connecticut and Grace Vanderbilt in Rhode Island).

The uniqueness of each property ranges from a 22,000-square-foot spa at the Mayflower to the extraordinary seaside location of Santorini to horse riding and a winery at the Grace Cafayate.

“When we’re looking at new opportunities, we’re not just looking for things that offer us great product in a fabulous location with a good owner relationship, we are also looking at how it is we’re able to enter markets where we can deliver experiences.”

Projects currently under development include: Grace Marrakech (Morocco); Grace St. Moritz (Switzerland); La Dolfina Grace (Argentina); Grace Kalamata (Greece); and Grace Kea (Greece).

“At the moment we’re primarily in leisure destinations,” Swade said. “I envision in the future that we’ll go to key letterhead cities … places like London, New York and possibly other American cities like Boston, Chicago and Los Angeles. If we go into those places, I envision it being with a higher key count. I don’t envision it being more than 100, 125 keys.”

The largest existing hotel in Grace’s portfolio is the 50-room Grace Cafayate. The property in St. Moritz will have 82 rooms when complete.

Grace Hotels’ mission going forward is to seek management contracts, according to the CEO.

“We would like the majority of those management contracts to be without investment,” he said. “But we are conscious that to get into some markets we will need to offer things like key money or sliver equity. We’ll look at that on a case-by-case basis.”

To aid in the expansion, the company hired several senior executives during the past year, including Alison Styles as group commercial director, Tim Williams as group HR director and Mike O’Mahoney as group finance director.

“What we have now done is look toward a more deliberate strategy to bring in the right people, systems, infrastructure,” Swade said. “Getting people in place has been a key part of our process.”

Grace Hotels prefers to work with individual property owners seeking a luxury partner and institutional investors, he said.

“What’s important is the owner is well-funded—not just in respect of developing the property or supporting a capital program to reposition an existing hotel for a rebrand—also the access to working capital so we can manage and operate the property,” Swade said. “At the outset there has to be an alignment of expectation between owner and operator. Anybody that’s got a significant amount of cash can either acquire or build a luxury hotel. If you don’t buy into the brand philosophy right at the very beginning, then you don’t have the foundation for a successful partnership.”

The company’s biggest challenge is that it operates in a highly complex and competitive marketplace, he said.

“There are a limited number of development opportunities in destinations that might be appropriate for our brand, and the competition to win those opportunities is fierce,” Swade said. “We’ve got to make sure we’re focused on engagement with owners and make sure we have the right people and structure to be able to win those opportunities.

“In the same way that it’s a challenge, it also presents us an opportunity,” he added. “Because we’re operating in the space we’re operating in, because we’re smaller, because we have flexibility, because we have a much more interactive approach … that is the opportunity we have in what is otherwise a very crowded space.”

Grace Hotels’ philosophy is built around providing intuitive service, Swade said.

“There’s too much focus in the hospitality industry on process training colleagues and we try to stop process training and train them on intuitive service,” he said, adding that Grace Hotels employees are trained to understand the needs and wants of individual guests.

Like most hotel industry executives, Swade said a tight labor pool is among the chief challenges for his company.

“Most of the people that work in the destinations are from that destination,” Swade. “Where we have seasonal properties we have a high rate of return, but it’s important that we create opportunities for colleagues in seasonal properties.”

During the past year, Grace Hotels formed partnerships with Soneva to help with the seasonal labor situation.

“During our times we’re closed in Mykonos and Santorini, colleagues from those resorts have had an opportunity to go down to the Maldives (and Thailand) and work in Soneva properties there,” Swade said. “They get international travel, the experience of another brand and have an experience with another destination. That’s the sort of thing I think is important in demonstrating to our colleagues their value, helping us attract, motivate and retain our talent.”

Thirteen employees participated in the program in its inaugural year, he said.

“They have a particular need for additional labor at that time of year and we have people who are well-trained, motivated and want to work,” Swade said. “It will all enhance their efforts when they come back and generate loyalty. Our talent is front-line in delivering our guest experience.”

All of this leads to a desire to expand in an orderly manner—something that’s not always easy to stay focused on in this era of massive hotel industry consolidation, the CEO said.

“We’ve seen lots of activity with the big brands with mergers and suchlike and what it does mean is those companies are significant in scale,” Swade said. “We all know that gives them an advantage in terms of distribution, but I think the upside for us as a smaller group is the very personalized level of engagement that we can have with owners. The fact that we have the flexibility around our approach to design and the fact that we can ensure our colleagues can deliver intuitive service in a style that befits the hotel and destination, not in a way that’s prescribed by someone sitting a thousand miles away looking at it academically.”

The hotel management company has its own distribution channels and a deliberate strategy to drive business, including be one of the 35 members of the Global Hotel Alliance, he said. Dubai-based GHA’s loyalty program has 11 million members.

Grace Hotels is also a big believer in giving back to the community. Its foundation supports SOS Children’s Villages, which supports children who come from disadvantaged backgrounds. It donates the equivalent of $1/€1 for every night a guest stays and asks the guests to do the same. It also donates a portion of revenue earned from certain dishes on a hotel’s restaurant menu.

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