At one point during the pandemic, Mandarin Oriental had just 200 guests staying across its portfolio of 32 hotels and residences in 23 locations; a frightening prospect for any business.
But with a long heritage, loyal guests – not to mention the roster of celebrities that are part of the group’s 20-year “I am a fan” campaign – and a strong ownership and financial backing, boss James Riley is realistically, but positively looking to the future.
“We have reopened most of our hotels now, but there was a point at which we had three quarters of them closed around the globe,” he says. “We still have New York and Barcelona closed, but otherwise during the third quarter, we got all of the hotels reopened. At the end of July, we announced a loss of $102 million and roughly at that point, we were losing about $20 million a month... But as a group, we are able to survive and manage our way through that because we’ve got very strong cash resources and shareholders who are very strongly committed.”
He mentions an organic pivot to domestic business, with the group’s flagship Hong Kong hotel continuing to hold its own, while in mainland China “where the virus has been very tightly controlled and managed”, business levels have returned very close to normal in the last three or four months, with 80-90% occupancy.
In Europe, resorts such as Mandarin Oriental, Bodrum in Turkey and Mandarin Oriental, Lago di Como in Italy did have a positive summer, but as Riley points out, every part of the world is experiencing the virus and its impacts in different ways.
“If you look across Asia, every single jurisdiction has taken the approach of closing its borders, which is a very different position to Europe, which was probably open right the way through the summer, so from a travel perspective, we’re in a bifurcated world. “I think the [travel] barriers between Asia and Europe and the US are going to remain in place for a considerable period until there is some solution to the virus. From a governmental perspective, the question would be ‘why invest in the lockdown of our borders [in Asia] and then throw it away for people to come in’ after having kept the virus out for so long.”
“My expectation is that we are going to have a difficult winter in the Northern hemisphere, but I’m hoping that we will start to see a greater degree of movement and action coming through by the second quarter of next year,” he points out. “Consumers have certainly become more conscious of the value of travel to them. If there’s one thing that’s come out of this – people really know what they’re missing. And that gives me enormous confidence in the resurgence in the business that will come once the pandemic passes.”
Future feelings
He says he “doesn’t believe that this is going to have a dramatic long-term impact on the willingness, particularly in the luxury travel end, of people’s willingness to travel”. What it will do, he says, is make them, in the longer term, more conscious of hygiene, health, cleanliness and standards.
“Therefore, companies will need to think that little bit more. We have to be very conscious of the expectations of guests when they come in and how those are evolving and use empathy with individual guests.”
While future hotel projects may have been delayed for obvious logistical reasons during the pandemic, Riley remains committed to rolling out new hotels too.
“The development pipeline that we’ve built up over the last three to four years looks pretty robust,” he says. “We’ve got 23 hotels under development, and there are a couple of them that might not come through, but I’m very confident that the vast majority will, because they are quite advanced in the construction and a lot of them are being built in conjunction with residences, a significant portion of which have been sold and require hotels to be present and completed as well. And lastly, because the nature of the owners; we have owners who are very committed to those assets and wish to be long-term owners of the properties.”
In 2021, the main new arrival will be the Mandarin Oriental Ritz in Madrid, which Riley says will be “a spectacular flagship property”.
“For anyone who loved that property before, this is going to be in a different league because of the classic iconic asset that it is,” he enthuses. “We’ve been able to put back in place the original glass lobby that was removed 70-80 years ago, and that along with the refreshing of the hotel and addition of leisure facilities and the design from Gilles & Boissier will really position it at the top of the Madrid market.”
Among other highlights towards the latter part of the year will be a hotel in Istanbul and another property in the Middle East, which is yet to be announced, but is likely to come through in the first quarter of 2021.
In the mean time, work progresses at the iconic Emirates Palace in Abu Dhabi, which Mandarin Oriental took over management of at the start of this year.
“It’s a magnificent property that we were very grateful to have the opportunity of taking over. It is a spectacular build and has been well run, but we believe there’s quite a lot we can do there to bring a new energy and passion and style to the service. There will be a complete refurbishment of the rooms, some new F&B experiences and changes to the lifestyle and wellness elements.”
Mandarin Oriental has also embarked on a new partnership with Oberoi since the start of the pandemic, combining loyalty programmes for the benefit of both groups’ guests and also working on a number of other initiatives together.
“We’re both family-controlled groups with a very long presence in the hospitality industry, and have very similar values in terms of training, focus on colleagues and the quality of service we deliver’ we’re just highly compatible,” Riley says.
Another area definitely not forgotten in the face of the pandemic is sustainability, an area Riley personally feels passionately about, as well as driving the corporate agenda for the group.
“Sustainability is something that no one can put on the back burner [because of the current crisis], and particularly people in the travel industry cannot do that,” he says.
“If we are to sustain our credentials and right to be transporting people around the world to visit far-flung and distant places, we have to do so in a way that is conscious and both recognizes the consequences we have on the environment and the value we can bring to those environments,” he continues. “All the pandemic does in my mind is further reinforce the importance of establishing our sustainable credentials in a variety of ways.”
“The important point is that sustainability is not just about carbon footprint and the green agenda. It is all about poverty, health care, wealth creation, gender equality, and moving through a variety of elements in terms of what we as hoteliers bring and do for the environments in which we operate.”
“Far too many governments and companies all around the world are setting targets for 20, 30 and 40 years ahead, by which time the people setting the targets, hopefully won’t be in their graves, but will certainly be on a deck chair enjoying their retirements; people need to put up targets they actually have to start delivering on.”
