Capella planning rapid growth and a third brand
 
Capella planning rapid growth and a third brand
04 JUNE 2018 8:15 AM

CEO Nicholas Clayton says Singapore-based luxury operator Capella Hotel Group will add three properties in Asia in the next eight months.

REPORT FROM THE U.S.—Capella Hotel Group has nine properties in operation now, but CEO Nicholas Clayton said rapid growth is in the works for the Singapore-based hotel group. The company will open three hotels within the next eight months, it has 10 properties under development, and a third brand is in on its way, according to Clayton.

That’s a lot of growth in a short period for a company that was founded in 2002 by industry veteran Horst Schulze, who ran The Ritz-Carlton for many years. Clayton, who took over as CEO in 2016 and who calls Schulze a mentor, said one reason for the expansion is that Asia is such a “ripe market” for tourism, perhaps more than other parts of the world.

Nicholas Clayton, CEO, Capella Hotel Group
Schulze was in a joint venture with the Singapore-based Kwee family for more than 10 years prior to selling global rights to the Capella brand to the family last year.

Clayton said the Kwee family has been in the real estate development business for 60 years and will continue to have equity in select opportunities branded and managed by the group. The way Capella has evolved is typical of similar hotel groups that begin with ownership and move to management, he said. However, he said, this ownership is well-known for holding assets for the long term.

Schulze remains chairman emeritus of Capella and an “integral part” of the company, helping with employee motivation, pre-opening countdowns and business development, said Clayton, who previously held top management positions at Jumeirah, Viceroy and Mandarin Oriental.

Clayton said Schulze’s original concept for Capella is intact, and a lot of market research went into developing a clientele that buys suites, club floor rooms and other specialty inventory at luxury hotels.

“A brand to serve that market was missing,” he said. “They don’t want to stand in line, don’t want to feel like they’re being processed; they want a curated experience.”

Development prospects
While the company’s largest hotel has 190 rooms, Capella hotels tend to be smaller than most of its competitors. “It’s a notion that we should have a manageable level of inventory, but we’re not bound by a maximum number,” Clayton said.

He said the group’s pipeline is dotted around the world, but its next three openings will be in Asia: Bali in June; Sanya, China, in October; Bangkok early in 2019. “Asia is the big story for us right now,” he said, “but not to the exclusion of the rest of the world.”

The brand works well in resort or urban areas, he said, but the difference is “when we have an urban opportunity, we need to make sure we can work with a predominant piece of leisure business. We won’t fight for corporate or group business.”

As an example, he said, the Bangkok property will be located on the Chao Phraya River and will be mostly leisure with perhaps 30% corporate business.

“We don’t want to be a product with few leisure amenities and fighting on price,” Clayton said. “That’s not fruitful.”

He said properties will have meeting space appropriate for the market and key count, with the focus on the social aspect of that space.

The company’s second brand, Solis, is a “really solid 4½” star product with two open (Donegal, Ireland; and Nanjing, China) and several in development,” Clayton said.

Brand plans, strategy
The company’s third brand, Patina, will emerge in 2020 in Sydney, where two adjoining former government buildings will become a Capella and a Patina, he said. Patina will be a “luxury lifestyle hotel” brand with properties that are bigger than most Capella hotels and “a bit more activation and energy and more of a social component,” he said.

The Capella in Sydney will have 70 rooms, and the Patina 200. More Patinas are in the works, according to Clayton.

Capella hotels are mostly new-builds, but “conversions interest us,” he said.

The company has several properties in historic buildings that were either hotels or had other uses. Its Shanghai hotel is built in a 1930s neighborhood created by a French real estate company for the country’s ex-patriots, Clayton said. The whole neighborhood has been made commercial with the hotel, retail and residential.

Capella works with developers who have a point of view and some say in what the hotel becomes, the CEO said. Everything from branding each hotel to how supplies and equipment are selected is individual, Clayton said.

“You won’t see the exact same guest amenities in every hotel; those will be local decisions,” he said. “We look at ourselves as craftsmen in hospitality.”

He said the industry has evolved a great deal, but not in its fundamentals, adding that travel is often “a disaster” until you get to your hotel and “suddenly everything becomes possible.”

“Instead of ‘no,’ I’m told ‘yes’ or given alternatives, people helping me beyond my initial request,” he said.

At its small size, Capella relies a lot on word of mouth to tell its story to potential guests, Clayton said.

“We have great stories to tell, stories that are interesting and unique to our hotels and that will create buzz,” he said.

Creating some buzz are projects like the Maldives opening in 2020, which Clayton expects to be at top of the market in a crowded luxury landscape.

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