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“Artificial Intelligence will dramatically change the way we do hospitality” Rupert Simoner, CEO Vienna House

Interview with Rupert Simoner. Prior to becoming CEO of Vienna House on September 1, 2014, he held the position of General Manager of the Kempinski Grand Hotel des Bains St. Moritz and then Senior Vice President Europe for the Kempinski Group. A look back at his vision for the group’s evolution and future projects.

Your company changed hands a couple of months ago: did your new Thai shareholders, U City and BTS Group, set a new strategy for the group Vienna House? What are the goals of your new partnership with Absolute Hotel Services Group, a Thai hospitality management company they also own?

Our new shareholders are long-term investors, unlike institutional or  private equity investors who change their portfolio rapidly. Most importantly, we share the same passion: the hotel industry. They already invested in Hospitality with Absolute Hotel Services – operating two brands: U Hotels & Resorts and Eastin Hotels– and that was also interesting for us because we are going to establish Vienna House as a brand in Asia.

Through our new partnership with AHS, we can grow our companies individually; but we can also find synergies in term of critical systems, technologies, digitalization... We plan to grow as standalone entities, but have a back office platform with certain common features: same reservation or revenue system, same CRM… However, that doesn’t mean we’ll have one centralized revenue centre for all hotels because we don’t really believe in it: distribution channels for hotels in Vietnam or in Disneyland Paris, for example, are totally different. But we can use the same system.

To implement these synergies, there is no time schedule because it is a step by step process. We have already completed a first step: development. We are currently overseeing the development of Absolute Hotels in Europe, which oversees the development of Vienna House in Asia. The next step will be IT.

 

You’ve been quite active in terms of hotel real estate deals recently, and hired Daniel Ross as Chief Investment Officer in the summer of 2017… What’s in the pipeline? Are there some upcoming strategic shifts?

Our real strategic shift occurred about 3 years ago when I decided to launch our new brand, changing from the old “Vienna International” brand to the “Vienna House” brand. I believe that in order to really create a strong brand in the hotel industry, you must control your final product: the hotels. So, we decided to move from a pure management company to an owner-operator model; that’s why we started to buy and convert properties. And that’s what we will keep doing in the future: own a good part of the properties under the “Vienna House” flag, and another, especially in Europe, on lease contracts. The next hotels we open will be owned in Warsaw and Liechtenstein, and leased in Kronberg and Leipzig; we’re in the process of buying and converting two other properties in Central Europe.

Regarding investment opportunities, we are currently looking at individual hotels and small portfolios of 5 to 10 hotels that could be a good fit for us, i.e. which we can convert into Vienna House or Vienna House Easy units.

We’re also looking at hospitality-related investments, such as F&B, data and customer relations, marketing and branding.  For example, a bakery concept is something we could invest in because it is European, easy to access and can serve other companies. But we need to understand the business; we would not invest in something that is totally outside our core business.

 

What countries/cities are you targeting for real estate acquisitions?

As a European company, we’re mainly looking in Europe, although we may also consider a portfolio in the US on the East Coast for example - but not properties throughout the continent. What we could typically be interested in would be a portfolio of hotels in the Iberian Peninsula, in the UK, France, Poland, Benelux or Greece… with a business or leisure community that we can serve from our global offices. What we find very interesting in Europe is that there are many cities where demand is both leisure and corporate.

Moreover, Vienna House is a city brand and although everyone believes that business is in the big cities, this is not true. 80% of the German business is in smaller cities, so that is where we developed and we have taken the same approach in Poland. We would apply the same model if we went to France (excl. Disneyland) or the UK. There are a good number of mid-sized cities (>150,000 inhabitants) with business offices and that’s what we would probably seek, if we were to develop there.

 

Getting back to your brand, Vienna House, which you completely redesigned two years ago: what impact did you feel from this reshuffle?

The impact was massive. I believe that if we had not changed or had waited for another few years, Vienna International would have turned into a takeover target. Vienna International was not a brand, it was a silent model, with hotels managed individually. Today, the Vienna House brand is very young, so we need to continue to invest in it, but we have managed to grow not only the portfolio but also how it delivers: our EBITDA is now 48% higher than it was three years ago. We have a completely different portfolio and when it comes to employer branding, which is extremely important to us, we keep hearing: “we’d like to work for you, to continue, to join you to keep creating this story”.

 

You’re preparing the launch of a new brand & concept, “Basecamp”: what will be its customer promise?

It’s actually an “extended hospitality” concept. You need to understand what people want when they are staying not for 1 or 2 nights, but for 1 or 3 months. If you want the individuality of a private living format, an AirBnB-like apartment is fine. But then, the client is generally on their own and doesn’t know anyone in the city. So having an aparthotel with common areas shared with the community could be interesting. Then, add a touch of YMCA or Club Med-like experience where I have quality, style, I don’t need to sit at my table to wait to be served but I can go directly to the bar or to fridge and take two beers and add it directly to my bill; bring my wine to my apartment or have it with my friends in the garden... That’s what we’re trying to do with our “Basecamp” concept. The choice of the name is tied to climbing basecamps, where there is a special atmosphere, everybody talks to each other and everyone has their specific needs.

We are working on a pilot project in Munich where we have a “Basecamp” in the design stages; we plan to open it three years from now. We’re going to have rooms for short stay, micro-apartments and dorms, so there will be a different style of living there, for different lengths of stay. There will be large public areas which you can use or not – it’s up to you. An area at the back of the hotel reserved for long-stay clients that those staying only one or two nights will never see. However, I don’t want to have an aparthotel where you go in, get you room key and that’s basically it. We will also implement a new service concept with a casual tone, different from the traditional hotel atmosphere which I consider too stiff. I really want to have a service that really takes me into account and is connected with everything that is happening in the city.

What do you think will be tomorrow’s game-changers for the hospitality industry?

There are two things I’m carefully looking at, and they have an impact on every aspect of hospitality. The first is the physical evolution of hotels: we must look at that and see what our society is doing, and what it is changing in order to adapt our products.

Second, we are developing new technologies every day. When there is a new trend, everybody jumps on it. I truly don’t believe in it: very soon the millennials will become something else, they’ll grow; and the idea that everything must be bought via a machine or by computer will also be different because artificial intelligence will change the way we’ll do hospitality. So, we need to find the right balance between digitalization and local experience; between “modern analogue” and digital, and what is the right balance.

Today everybody is saying “I want to work on big data” and most of the big hospitality companies spend fortunes on big data. Yes, it is important, but personally if I had an investment choice between making my website voice controlled or a loyalty program I would invest into voice control. I believe loyalty is coming from being attached to a brand and from the fact a brand is meaningful to you; loyalty is not coming because you have points.

I believe the big disruptor will be artificial intelligence. That will dramatically change the way we’ll do hospitality. I could also mention the internet of the things. There are so many appliances that I’m thinking we could change thanks to AI, new fields we could work on... By knowing the people with whom we interact better, we can adapt our service to what each client likes most. In terms of booking, communicating, experience, AI will make a huge difference. So, for me, AI, the analogue/digital mix and the evolution of physical products are things we should watch closely: each one of them is heavily impacting the people who work for us.

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