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Teng outlines plan to double revenues |
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New Leading boss wants to make his mark with a US$1 billion promise to members, reports Raini Hamdi
Independent luxury hotel grouping Leading Hotels of the World (LHW) has boldly promised its members a doubling of revenue to US$1 billion by 2013, from an expected US$553 million this year – without any corresponding increase of hotels to the portfolio.
There are 449 members now, after 23 new additions last year and 45 terminations.
| | Teng: not a pipeline company |
President and CEO Ted Teng, who is putting his mark on LHW since joining in September 2008, said he “would rather double the revenue than double the hotels”, declaring “we’re not a pipeline company”.
Integral to the US$1 billion business goal is encouraging its highest-spending guests to keep splashing at LHW hotels. Since January 1, Leaders Club members, of which there are around 100,000, can redeem one free night at any LHW hotel if they stay five nights anywhere with the portfolio, and regardless of the amount spent. Teng gained the 100 per cent participation by members by having LHW fund the redemption, not the hotels. It is paying off: Leaders Club generated an increase of 33 per cent in revenue in the first four months of the year to US$23.1 million. An effort to acquire new members has just been
kicked off.
Also integral to his goal are travel agents, whose contribution has risen for LHW. In the first five months, GDS bookings rose 21.3 per cent, while voice increased 20.6 per cent, a reflection, Teng said, of customers going back to agents to book their trips. He said LHW would focus on being “the best reservation channel for agents” in order to harness their value. “The luxury level is where agents offer added services and they can call us for special requests that meet their clients’ needs. If we focus on servicing the agents, we are helping agents to get their jobs done in servicing their customers,” Teng said.
GDS and voice bookings accounted for the bulk of revenue in the first five months (US$131.1 million and US$59.1 million) respectively. Internet bookings contributed US$43.8 million, a growth of 30 per cent, mainly from LHW websites.
Meanwhile, LHW booking patterns in the first five months indicate a return of the luxury traveller’s confidence in the economy. They are booking earlier rather than later, 45 days before the trip now on average, compared with 35 days before, according to Teng.
The Americas remain the biggest source of bookings in the first five months, generating US$137.2 million revenue. However, Asia-Pacific is fastest-growing, with a 35.2 per cent rise to US$17.8 million, compared with the 23.4 per cent increase from the Americas. Bookings from EMEA rose 18.7 per cent to US$79 million.
As to where they are going, bookings to the Americas rose 24.1 per cent during the period, 15.7 per cent to Asia-Pacific and 22.5 per cent to Europe.
Bookings rose 22.7 per cent in the first five months to US$233.9 million worth of revenue (not all bookings have materialised), compared with the same period in 2009. Teng expects a 15 per cent increase in revenue to US$553 million this year.
Teng also noticed figures showing that customers were staying longer (up nine per cent in roomnights and were willing to pay a higher ADR (up 13 per cent). This helps push revenues up 23 per cent in the first five months. “It shows that customers are going less for discounts and are seeking more value.
“Other data also shows they are seeking experiences, with our higher-producing (programmes) such as Leading Suites and Leading Cultures seeing increases of 61 per cent and 90 per cent respectively,” he said.
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