Hotelier of the Week: Christopher Cowdray (Dec 29)

Christopher Cowdray, chief executive of the London-based hotel management company, Dorchester Collection, talks to Tom Otley about the growth of the group

The Dorchester, London

How was the Dorchester Collection formed?

It started in a fairly unusual way. The owners of the hotel, the Dorchester Group, a subsidiary of the Brunei Investment Group, had acquired various hotels starting with the Dorchester, then the Beverly Hills in Los Angeles, and the Meurice in Paris, the Plaza in New York, the Principe in Milan and most recently the two in the Americas, the New York Palace in New York and the Bel Air in Los Angeles. And so two years ago they had five hotels, and said: "We've got these, they are all very individual, they run independently, but what are the opportunities of bringing them together?" The thought was that it was like a collection of fine wines, clothes or fashion that could be brought under one umbrella, and as the Dorchester was the founding hotel, it became the Dorchester Collection.

Then last year it was again reviewed and the structure changed once again, so that the Dorchester Collection now has the purpose of being a hotel management company. Our vision is to be the ultimate at the very top end of the luxury hotel market. The ownership of the hotels is now separate from the management and my role is to head the management company and to look after the current hotels, to drive the brand so it becomes well known and to look at its expansion programme - whether it is ones we purchase or acquire, such as the two in America, or third party management agreements.

The present economic situation must have altered your expansion plans.

If you're looking to high leverage and have to borrow a lot of money, then it's not the right time to expand, but if you are in the position to buy hotels, then over the next year, you'll see some very promising opportunities in the market. So we are very well placed. In terms of management contracts, there won't be a lot, but there may be some owners who are not happy, perhaps they are independent or are part of a larger organisation and feel the time for a change. It's not as though we'll pick up five in a year, at the top of the luxury market. If we pick up one a year we'd be very happy.

Hôtel Plaza Athénée

Where are you looking to expand?

In the US I would say Washington, Chicago and Miami and in Europe, Madrid, Barcelona, Geneva, possibly even in Munich. We are not looking at resort hotels or small hotels in the countryside except for one outside London which we are developing. So it is predominantly city centre hotels of between 200-250 rooms. We are not saying that this is exactly the one size that we are after but it has to have the right heritage to become part of the group. All the hotels have to be iconic in some way so if it's just a modern build and not in a good location and rooms are small then we certainly wouldn't be looking at that. If we had 15 properties by the year 2015 we would be happy.

You have a new property in London which doesn't seem to fit the profile.

45 Park Lane fits in certain ways. It's right next to the Dorchester, 30 yards away. There is a history to that building. It used to be the former Playboy building and is well known. It's only going to be 50 rooms, but it will be part of the Dorchester infrastructure, so it has got the makings of being a successful hotel. Also, the rooms in the Dorchester are on the whole traditional, and this will be a luxury contemporary hotel, so we will actually be able our clients who like more contemporary rooms than in the Dorchester something more along that line.

The small countryside property will be a 70 room hotel. It is set in 200 acres of the most glorious countryside. It's currently a polo centre with beautiful polo grounds. There's an old Georgian House which will be completely gutted and rebuilt, and then there's the stable function as well. Its location, right next to Windsor Great Park, Virginia Water and the entrance to the Wentworth Estate close to Ascot but only 45 minutes from the Dorchester, makes it an absolute fit for the Collection.

We're very fortunate that our guests come from a very wide spread and we are not reliant on any one nationality. America is important, but the UK also generates business for our American hotels and our European hotels. Business from Russia, the Middle East, the Far East, Australia and Europe drives a lot of business into the UK, and also into the United States, so we are not reliant on one or two major markets. We have a very evenly spread market base.

You are a small group and very luxury orientated, so how do you cope with a high cost base?

With luxury hotels of this nature yes, the cost base is high, but it's also a consistent cost base, so whether you do 60% occupancy or 90% occupancy, your cost base doesn't really fluctuate. We're not in a position where we have to say that this day we need 20 housekeeping staff and the next day 50. We rely on permanent employees, and therefore when business is good and rates are high the profitability of these hotels is very encouraging. In nearly all the centres that we operate hotels in we have the highest revPAR, so we are able to command well above the norm as far as rates are concerned.

Hotel Principe di Savoia, Milan

How do you set those rates?

Every centre and city is different. We look at the rates in the market and what the market can bear, and our aim is to charge the highest rates within the city, but it's not something which you can do with a broad brush structure. You are subject to the demands in each market, and the present economic situation proves that. We have been affected, though more on occupancy than on food and beverage. But that said, we've come from a very high platform, so the occupancy is down from that high platform, but it's still very much higher than what we were doing in prior years. The first quarter of next year is looking OK at the moment, advanced bookings are looking promising but generally it's going to be a difficult year for the industry ad we will be fighting for business, so we are going to have to make sure that we have the steps in place to come through it all. That said, I don't think it's like 1990 when, after the Gulf War, everyone stopped travelling and no one was getting on planes.

Hotels are also better placed to deal with changing circumstances. Our hotels all work similarly to the airlines on yield management. We have a proportion of business who will stay nowhere else and who want their suites, and then a portion who will shop around a bit, so you have to be competitive in the right room categories.  

Even in the really good times we do that already. We don't have a ‘This is your rack rate, take it or leave it' approach. We work on a tier averaging five different rates - and they can be opened or closed according to the demand in the marketplace. Because your rates are out on the market very quickly through electronic means you make sure you are visible on the GDS and internet and appropriate bands are out there at the same time. We have flexibility of rate structures at different times of the week.

That's a business model we will stick with during the expansion, we won't compromise. You see with a lot of hotel companies where they go into rapid expansion. Because they like the idea of the income stream they take all sorts of hotels on board which don't necessarily fit into their portfolio and that's when your brand starts to get distorted.