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Hotel groups in search for the milanese label

Bulgari and Armani Hotels, W, TownHouse Galleria... these chic and trendy brands are relooking the image of Italy's economic capital. Today, Milan is the fashion city more than ever. The current development of a contemporary luxury hotel sector makes it possible for the Lombard capital to take advantage of two scenes and become an upper upmarket Leisure destination in addition to a business destination that is as active as ever.

The Lombard capital is getting ready to become the temple of ultra luxury hotels, the testing grounds for fashion brand hotels. Bulgari opened the way in May 2004 when it drew back the curtain on the first jewel in its hotel collection to show the public. Managed in association with the Marriott group and its brand Ritz-Carlton, the Bulgari Hotel is a success. The growth of its turnover attests to this (+17 % for the nine first months of 2006 to 8,4 million euros). This success has led to emulators among Italian couturiers. The result of a partnership with the Emirates real estate group Emaar, the first Armani Hotel will be revealed to the public at the end of 2008, not far from the haute couture group’s headquarters. And the Rezidor group will certainly look highly upon the opening of a hotel branded Missoni since it signed a license with the Italian brand to develop 30 properties worldwide.The collapse in the years 2003-2004, when Milan, weighed down by a sickly economy, was lagging behind an Italian hotel industry that was on the rise. Today properties in the Lombard capital are in fine spirits. 2006 was an excellent year. Demand was strong at all the city’s hotels. The Olympics held in Turin, many events related to design or the success of salons such as MICAM gave Milan’s business a boost. September, which marks the return to business at the end of a summer break beat all the records with the Monza Grand Prix and fashion week as the highlights. "Economic growth has been more favorable to the hotel industry since the beginning of 2006," confirms Lucille Guitton of the Park Hyatt Milan. 2007 is off to a good start. With an additional reason to be satisfied: room rates are keeping in step with the increase in demand. "Average daily rates are growing and the first quarter 2007 was very good," confirms Francesco Brunetti of the Starwood group.The hotel groups are not hiding in the wings of this catwalk... For their contemporary brands, Milan is a necessary rite of passage. After Barcelona, Athens and Istanbul, W will open its doors in the Lombard capital at the end of 2008. "W is the ideal brand for Milan, and it is the perfect city for W," emphasizes Francesco Brunetti, regional manager for the Starwood group. W will thus strengthen the group’s presence in the upscale with, in the 5* category, Le Méridien Gallia and the Westin Palace. To this inventory may be added the Sheraton Diana Majestic - "its average daily rates are the equivalent of those at the Westin Palace" – but the Principe di Savoia, heritage of the Ciga group sold in 2003 to the Dorchester group for 275 million euros, is no longer a part of it.In the chic and trendy category, opened in 2004, Park Hyatt outpaced the rising brand of the group from White Plains. Lucille Guitton, sales coordinator for the Park Hyatt Milano, can appreciate the performance of this segment with a certain amount of perspective: "boutique hotels are making progress in Milan". With the properties of the group Una, the design hotels The Gray and The Straf or even the first Chedi launched by the group GHM in Europe, the segment is well represented in a city where trendy restaurants and bars flourish. The scheduled arrival of the Armani, W and other hotels of the kind has received a positive reception from the competition. "These brands strengthen Milan’s image. Today it is the world capital of design and fashion alongside Paris and New York," explains Francesco Brunetti.Milan’s hotel industry establishment does not seem to fear the last born, the Town House Galleria. This hotel that claims to be Europe’s first 7* (see box) leaves people perplexed. "It is a niche hotel. The marketing initiative of the seventh star is creative, but I don’t know if it will work. In comparison, we rely on strong brands," remarks Francesco Brunetti. There is no "destination bar" nor spa, nor meeting room, only a restaurant reserved for clientele: the concept of the Town House Galleria has "surprised and disappointed" Thomas Citterio, director of sales and marketing for the Four Seasons Milan. The strength highlighted by Town House Galleria – an extreme personalized service with a butler appointed to each room, present around the clock – is "economically difficult for a small hotel to sustain," according to Thomas Citterio.Located in the heart of the Galleria Vittorio-Emmanuelle II, above the Prada shop, the Town House Galleria project took some time to produce. "It was difficult in the beginning, but our architect Ettore Mocchetti did some fine work," congratulates Alessandro Rosso, the hotel’s owner. The hotel’s location leaves Thomas Citterio circumspect: "while it is well located by day, by night the Piazza del Duomo is not the chicest place to be". Milan, like Paris, has its Golden Triangle –or square as more befits the shape in this case– consisting of the Via della Spiga, Via Sant’Andrea and Via Montenapoleone and eventually via Brera. And as in Paris with its Avenue Montaigne or Rue du Faubourg Saint-Honoré, the location of luxury boutiques is also where one finds the hotels that cater to this same clientele.But the owner of the Town House Galleria defends himself: "Our little Town House Galleria cannot be compared with such groups. We have only 24 suites and want above all to give our guests the feeling they’re at home. We are a member of the Leading Hotels of the World," he specifies. The property PlanHotel invested 10 million euros in is not a trial run for the parent company. It’s the third hotel launched by this group that specializes in modern and intimate properties. Its predecessors, Town Houses 31 and 12 have no more than 20 rooms.Are luxury hoteliers preparing to suffer from the growth of the supply on this segment? The 24 rooms at the Town House Galleria should not tip the scales. And Thomas Citterio assures that "there are not enough luxury hotel brands in Milan as compared to other European cities". The Marketing director at the Four Seasons Milan recalls the hotel’s beginnings in April 1993: "the upscale segment consisted of the Hilton and Sheraton. But, in the luxury segment, we had only three real competitors: the Principe di Savoia, the Palace and the Grand Hotel et de Milan".A pioneer, Four Seasons opened a way that few hoteliers took at the time. "The openings in 2004 of the Park Hyatt and the Bulgari were the first on the luxury segment in 10 years," explains Thomas Citterio. The 20% growth of the 4 and 5* offer in the last five years explains the slower recovery of Milan’s hotel industry with respect to other European or Italian cities. "We felt it for a year and a half. The clientele of design hotels is particular. It follows fashion. We lost clients at first, but for the most part they have come back. Businessmen are with us. During the catwalks there are fashion journalists as well," pursues the manager of Four Seasons. Classic style and service always pays, even in the fashion capital.These difficult times are a thing of the past (see box). "Today these openings have been absorbed," confirms Thomas Citterio. Occupancy is not dropping. Airline traffic into the airports Linate and Malpensa (Italy’s hub) is in a strong growth period. The American market, the most important for luxury hotels together with domestic clientele, is growing and is no longer as resistant with regard to prices as in the post 9-11 years. The British, French and Spanish are always present. Even more beneficial to Milan are the growing markets such as Russia and the Middle East, or even the Far East. The Japanese have found their way back to Milan since last summer. "Rome, Florence and Venice are no longer their only destinations," rejoices Francesco Brunetti.The new branded hotels arrive in a growth period in the city’s hotel sector. All hoteliers hope to attract additional clientele with them… Starting with Italians, "fashion fanatics", according to the representative of the Starwood group. "It is good for the city," admits Thomas Citterio, "more and more people will talk about Milan. It is not a pretty city, but a city to discover." Among its many –but too often hidden – assets are La Scala, the Duomo, da Vinci’s Last Supper, white truffles in the fall, the shores of nearby Lake Como, and, of course, shopping. With Armani, W, the city will be able to gain a stronger position for itself on the Leisure and short stay segment. "I am hoping for an increase in weekend occupancy. Businessmen may stay on or will bring their families," explains Francesco Brunetti.Italy’s economic and financial capital remains highly dependent on 70% business clientele. Nonetheless this segment is very lucrative and its source is not ready to dry up. The Fiera Milano recently opened a new congress center in Rho, and it is beginning to operate full throttle. "The opening of Rho Pero brings us a growing number of fairs. Another beneficial effect: exhibitions tend to increase the length of stay," rejoices Francesco Brunetti, "today design-related exhibitions are more important for us than the fashion shows."With such perspectives, all developers, owners and operators are eying the the Lombard capital. "We want to open other hotels in Milan," adds Francesco Brunetti, "it shows our confidence. Milan is one of the cities that is able to accept the full array of our brands to meet the needs of all segments: the Sheraton for families, the Westin for business meetings, the W for hip clientele". The new brands Aloft (W’s little sister) – and Element (Westin’s) – are in the starting blocks. And, although it has yet to be confirmed, a St Regis could be in the works.The future development of luxury hotels will have to face a major pitfall, however. Like everywhere in Europe, real estate prices are soaring. The group Statuto beat all records with the takeover of the Four Seasons for over 200 million euros, or 1.7 million euros per room! "The prices are climbing, but so are results," remarks Thomas Citterio, "investing in Milan is always worth it. The hotel has been sold five times since it opened. And each time at a profit." After buying the Danieli in Venice for 177 million in 2005, the Statuto Group is no building a fine portfolio in Milan. After the Four Seasons, the Italian real estate investor is backing the project for the future W. "We are very proud to bring the city of Milan a unique opportunity to combine business, fashion, elegance and pleasure,” rejoices Giuseppe Statuto, chairman of the board of directors of the homonymous group, “the new W will solidify the reputation of the Statuto group as a leading developer of luxury hotels”.As time goes by, places are taken and the good locations will become expensive for those who wish to invest in Milan. So much so that development happens through long and costly conversions. It took seven years to transform a 15th century convent into a Four Seasons. Hotels are integrating the local architectural heritage. Bulgari was once a monastery, the Park Hyatt a palazzo built in 1870. Hotel brands that have not yet entered Milan’s market should arm themselves with patience until they find that rare bird. “I fear the Peninsula or Mandarin Oriental more than design hotels,” whispers Thomas Citterio. Those concerned beware...Town House Galleria: is it the first 7* in Europe?Last March 7, a unique hotel opened in Milan, the Town House Galleria. Boasting 7 stars, this property is located at the heart of one of the city’s symbols, the Galleria Vittorio-Emmanuelle II. The Swiss company SGS was called in to verify the reasoning behind this ranking. "This certification is serious and very complex," explains Alessandro Rosso, the property’s owner. What are the arguments that point up Milan’s last-born luxury hotel to justify this all-new title in Europe and which only Burj Al Arab can claim throughout the world? The 24 suites with their view of the arcades in the famous gallery clearly offer the kinds of services expected at a hotel with such standing. Each room is personalized and dedicated to a La Scala performer, the contemporary décor breaks away from the original decorations. Moreover, the hotel’s renovation was overseen by the Italian Institute of Fine Arts. But it is through the services it offers that the Town House Galleria wants to stand out. The restaurant and bar alike are reserved for clients and their guests. "Our philosophy is to be a "Home away from Home", explains Alessandro Rosso. The butler is the hotel’s central figure. Available around the clock, this personal assistant takes care of all the little details for the client: transportation in a Bentley limousine, organizing a dinner, ticket reservations for La Scala or the San Siro stadium or to admire Leonardo da Vinci’s Last Supper without waiting in line. "These are not standardized services, they are made to measure, in response to each of our guests’ expectations," describes Alessandro Rosso.Rejoicing results The collapse in the years 2003-2004, when Milan, weighed down by a sickly economy, was lagging behind an Italian hotel industry that was on the rise. Today properties in the Lombard capital are in fine spirits. 2006 was an excellent year. Demand was strong at all the city’s hotels. The Olympics held in Turin, many events related to design or the success of salons such as MICAM gave Milan’s business a boost. September, which marks the return to business at the end of a summer break beat all the records with the Monza Grand Prix and fashion week as the highlights. "Economic growth has been more favorable to the hotel industry since the beginning of 2006," confirms Lucille Guitton of the Park Hyatt Milan. 2007 is off to a good start. With an additional reason to be satisfied: room rates are keeping in step with the increase in demand. "Average daily rates are growing and the first quarter 2007 was very good," confirms Francesco Brunetti of the Starwood group.

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