Hotel sales plan & marketing baccarat nyc

BACCARAT HOTEL SALES PLAN Managing The Hotel Sales Process

NOVEMBER 16, 2016 AMENI KABBOUDI Ashleigh Bowers Narcelles

Baccarat Hotel Sales Plan Report Ameni Kabboudi– ak5277@nyu.edu November 18, 2016 Page 1 of 1

Baccarat Hotel, which is similar to a Crystal Palace, is a luxury hotel located in Midtown area in New York City on 53rd street and between fifth and 6th avenue that opens in March 2015. Baccarat is only six blocks away from Central Park, which is the major park in New York and home to many movies’ sets. This attraction also sought after nationally and very famous internationally. Baccarat Hotel is also opposite the Modern Art Museum of New York. The hotel offers a luxurious yet modern rooms and suites with 2 major suites and 114 bedrooms all decorated finely with a very French features and décor along the 14 floors. Below is a detailed description for what makes this independent hotel unique: 1. 114 rooms that include five regular rooms and two main suites: - Classic king, which is the least expensive option with a start point of $1,000 per night.

- Grand Classic, 2 doubles bed give an extra space for a family abroad with an addition $50.

- Grand Class King, a private pied a Terre inspired by Paris but recreated in Manhattan with traditional beauty for $1,150.

- Classic Suite, two elegant spaces with a hideaway and additional space for $1,635 - Prestige Suite, this suite is more spacious with starting price of almost $2000 - Hardcourt Two Bedroom Suite, a residential space with a room, living room and dining room for $16,000 - The Baccarat Suite, a magnificent suite with innumerable sensory touches with lots of space for $31,000 2. Amenities for both suites, a dedicated team of hosts, once daily replenishment of non-alcoholic beverages, as well as twice a day housekeeping services are offered with VIP white glove service at the Madison Baccarat boutique. For women, complimentary appointment hair blowouts are available. In addition, La Mer beauty products are provided with bouquet of flowers upon arrival and freshly baked macarons at turndown as well as a daily continental breakfast in petit Salon, which is a private lounge area at the lobby that only hotel guests have access to enjoy it.

3. Open spaces for public include a bar, the grand salon where customers can have lunch or afternoon tea upon appointment with a small library that sits in an open-alcove off the grand salon for all kind of social gatherings. In addition, an event space is available and it is 800 sq. Feet with a view over 53rd street that can accommodate up to 40 guests.

4. Other amenities include a fitness center, a pool that is shared with residence, as well as a spa that carries La Mer brand, which is one of the most expensive beauty products.

5. Services can range from a ride with a chauffeur around Manhattan in a vintage French car within radius of 15 blocks from the hotel. As well as a partnership with museums and cultural events that change throughout the month. For example, guests can access to roof garden at the metropolitan museum of art for exclusive display in October.

For marketing purposes, this hotel is a bridge to bring the famous French crystal brand called Baccarat to the US. Market. This might seem a very appealing idea to target specific clients but what is more interesting is that Baccarat hotel is an extension of Maison Baccarat in Paris where a museum for the crystal brand is installed. While another Russian Baccarat lounge is set in Moscow and this is related to the long historical ties between the French elites back in the 19th century and the Russian governors.

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Thus, both countries have a much intertwined definition and components of what luxury is. Surprisingly enough, the Baccarat hotel also is opening in the Moroccan Capital, Rabat, which is a top destination to the Arabian Royalties from Gulf Countries such as Kuwait and Saudi Arabia that frequently spend their vacation there.

This hotel is undoubtedly targeted towards people who can afford it with the least expensive room rated at $1000 per night. To accomplish Baccarat’ vision behind this project, they did tailor the best amenities such as offering a prime cosmetic brand such as La Mer as the defined SPA at the hotel. The site was chosen for its amazing location in the heart of Manhattan and to build residences was a smart idea to raise the sales and cover the loss and the vacancy rates of the hotel rooms in Manhattan from real estate investment strategy.

As for partnerships, The Baccarat have been partnering with SKIDMORE, OWINGS &MERILL LLP (SOM), one of the leading architecture and interior design firms who have over 75 years’ experience and 1600 awards.

GILLES & BOISSIER is an interior design firm, which is a Parisian based firm that had a lot of high-profile signature in many different part of the world mainly specializing in hotel design.

TRIBECA ASSOCIATES, is a private New York-based firm that specializing in development and acquisition.

Baccarat hotels are also exploring different international markets with a desire to fill the current demand for ultra-luxury hotel experience which is a strong statement taking into account the success of Mandarin Oriental hotel, the famous brand established in Hong Kong or Jumeirah the Dubai-based chain. Both hotels display a strong brand awareness in the Asian and Middle Eastern markets. That is why Global cities are the target for Baccarat and the major upcoming projects will take place in: 1. Americas: San Francisco, Los Angeles, Miami, Mexico City and Sao Paolo 2. Europe: Paris, London, Milan, Geneva and Moscow (a Baccarat lounge already exist) 3. MENA Region: Abu Dhabi, Riyadh, Dubai (hotel is under construction), Doha and Rabat (a new hotel is opening soon in the Moroccan Capital) 4. Asia Pacific: Tokyo, Hong Kong, Beijing, Shanghai, Seoul, Sydney and surprisingly Bali and Maldives Away from design, finance is king in any transaction. Baccarat is an independent hotel that does not affiliate within a chain. Baccarat hotel was under SH GROUP, an affiliate global private investment firm called Starwood capital group. SH Group operates two lifestyle hotels in Miami and Brooklyn.

STARWOOD CAPITAL GROUP is a private U.S-based investment firm with a focus on global real estate. In May of 2015, SUNSHINE GROUP have bought the Baccarat hotel from Starwood Capital paying more than $2 million per key which is considered the highest price per room for a hotel in the United States.

As an independent hotel, there are many cons and pros, to start with the disadvantages; there is no support team to make this hotel work but since it is expanding there is potential for change. Promotion and marketing is an issue since there is no reputation but in this case, Baccarat hotel is dependent on the crystal fame and luxury awareness is set. Yield management is absent since the calculation of supply and demand is often calculated by big chain. In addition, in case of services and standards there is no

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clear definition for that neither does a business plan. The pros consist of easy management and operation, flexibility of management as well as the fixed price is an advantage. There is no obstacle to go through the main chain to ask for decision making or changes so power or hierarchy of management team is easier to penetrate and can be done faster without limits.

After looking at customer’s reviews on the hotel, a 4.5 stars were assigned in most booking websites where the major complaint of most customers is the smallness of the rooms. This might be interesting because space is prime in a city like New York and everyone coming to visit or move to a new apartment is surprised by the small space but that is the trade made for living in such expensive and highly demanded city. The swimming pool and the easiness of check-in was highly cheered.

Based on my own notice to the clienteles in the hotel, this might not be relevant data but Instagram pictures was mainly showing fashionistas and very famous lifestyle or travelling bloggers visiting the hotel and mostly Asian young professional who do have a different appreciation of European luxury which I found quite intriguing.

Baccarat Hotel is a glamourous hotel as it is has a very unique and specific target market. So, the segmentation occurs because of many factors.

The factors that I chose to segment my group are defined under, size of the market, 114 rooms available and a suite that is considered the third most expensive suite in New York luxury market with a price tag of $18,000 a night. Absorption rate in the hotel market reaches 89% which makes the occupancy quite appealing. As for Location, The hotel is located in one of the most expensive retail avenues in the world and just a few blocks away from the central park, the location appeals to both domestic and international clients. As for amenities, Baccarat hotel has implanted revolutionary hotel services and custom amenities powered by the latest technological innovations besides the luxury and the crystal that is featured inside and out with crystal façade rising 60 feet above the sidewalk. As for partnership, since New York Fashion week took place in fall this year, we all know how important such event is for fashion bloggers, designers and stylists. In fact, Furla which is an Italian handbag company has hosted an event last Saturday from 12-4 PM to launch its new collection. Registration was priced at $90. This event was open to public so generating revenue from a fashion event might be targeting not only actual clients but also Fashion fans and people who seek luxury with its prime location on 5th Avenue. Thus, the target market can be both business travelers as well leisure travelers coming for the weekend or even for a week from other countries. Open areas such as the bar, grand salon and restaurant may be more appealing for business travelers since many in Baccarat have confirmed that some of the business people working close to 5th avenue prefer to come here as the place is very quiet, luxurious and offer what many other places surrounding the area don’t. Business meetings take place within the grand salon as well as the restaurant that mostly host baby boomers. This was explained by the quietness that they can have which is not available in many places in Midtown. There is also bachelorette parties that took place at the Baccarat and friend’s gathering for wedding even though the hotel does not have a huge meeting/event space.

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Below is a segmentation label that I thought can be useful for our Hotel.

Identifable

Accessible

Substantial

•Purchasing Power: Clients who stay there are usually able to afford a room for at least $1000 per night •Domestic Market is as important as international •Mostly female group seem to enjoy the luxury or brag about it •The biggest suite was booked once since Baccarat's opening, Sheiks, Princes, Queens can be a great and identifable target

•Social Media has been an important tool with easier coverage •For international customers, exploring other channels might gain better success

•Younger generation have bigger appetite when it comes to luxury, akthough they prefer "low key". However some do still like "old defintion of luxury" •Retirees also can be a good target group since they have a good purchase power as well as an appetite for good service •Business travelers working within luxury market can be a target since it is close to 5th avenue.

•Reward point might not be beneficial but loyalty programs can be featured for each service used •Guest Passes to the Spa or offering complimentary service provided or a free drink at the bar

Actionable

The Positioning of the hotel is already good as it offers special luxury that not many competitor has. The strength of the brand as well as the physical attributes of the interior design is already a good differentiation in the market.

The hotel might not be catering towards mass market but a more specific clientele. As research shows, the global high net worth individuals expanded by 4.2% from last year which indicates that the market is still growing and there will be also a very fundamental clientele. In fact, even though the global economy

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is moving slow, the advantage of catering to this market is that this sample would careless about the crisis that might affect their wealth a little bit. This would not make them cut down their expenses.

Special event space is not Baccarat’s strength. However a small place exist. The place reserved for “fete or rendezvous” is only 800-square-foot event space, whose namesake is a nod to Baccarat’s iconic stemware. Overlooking 53rd Street, its floor to ceiling window floods with daylig ht, rendering its interior bright and clean. Consider the Harmonie room a canvas for custom affairs, personal or professional, accommodating up to 40 guests. Beyond its beauty, this multi-use space boasts discreet service amenities: concealed Bose speakers and a hidden projection screen, blackout drapes, two flat-screen televisions and high-speed Wi-Fi. However, a private buffet room can be accessed separately, so that meetings and conversations can continue even as lunch or coffee service begins.

This room can thought of as a small engagement party area. I am not quite sure of their partners as a tour and an interview with sales team is scheduled for next Friday.

Business/Corporate Traveler

•luxury companies who send their employees to stay in such luxurious place for a RevPAR of $1,000 •Business travelers working within luxury market can be a target since it is close to 5th avenue Leisure/Social •Clients who stay there are usually able to afford a room for at least $1000 per night •Domestic market is as important as international •Females seem to enjoy luxury •2 suites that was booked for $16,000 •Younger generation have bigger appetite when it comes to luxury, although they prefer "low key". However some do still like "old definition of luxury •Asian group travelers seem to be the main drivers since HNWI will surpass North America in 5 years with $12 Trillion •Retirees also can be a good target group since they have a good purchase power as well as an appetite for good service •No event space provided except a small one which can be thought of engagement or very special occasion gatherings for new yorkers mainly. further research will be conducted once i have the chance to speak to someone on the hotel However research have shown that even though it is important to look at competitors, the customer service should be the main driver and looking at competitors is important but irrelevant in big cities.

According to different investigation through social media as well as reviews, the brand loyalty is quite questionable. The fact that this hotel is not a chain hotel, you see people attracted more to the experience and curiosity of the character of the hotel associated with Baccarat Name. The Baccarat hotel has 9/10 reviews for its location thanks to its proximity to the most renowned fashion avenue in 5

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the world. Surprisingly, most customers who stayed at Baccarat are couples and about half of them are families but they only stayed on average for one day or three nights maximum. Although all of them have pointed out to the amazing architecture and crystal everywhere, those who put bad reviews are often annoyed by the poor management or lack of professionalism expected in such hotel. This is an important detail to figure out the competitor set as a luxury hotel but also independent. Here are 5 competitors who seem to meet Baccarat’s standard of being a luxury hotel which offer competitive perks and complimentary services to its customers:

St Regis New York

Mandarin Oriental

The Peninsula Hotel

Four Seasons Hotel New York

The Ritz Carlton New York, Central Park

•238 Rooms and 67 suites •6 Minutes walk to central Park •Free wifi •Access to Refined lounge/bar fine dining •Complimetary Garment Pressing is available upon arrival •Cognac room •International Cuisine •Steam Room and 24hour exercise room •Room Price $945

•198 Rooms + 46 Suites •1 minute walk from Colombus Circle/Central Park, one mile from Moma •Skyline Views, River views •Access to living room and/or Nespresso Machines •Chic Modern American Eatery, lounge serving snacks and speciality cockaitail bar •Fitness Center+Indoor Pool and Posh Spa •Room price $1095

•239 Rooms •6 Minutes walk from central Park and just a block away from Moma •Free wifi, upgrade city views •Access to living area and rooftop lounge and complimentary chauffeur service •Contemporrary American Restaurant •Fitness Center, a spa and indoor pool as well as sundeck •Room Price $945

•386 Rooms •6 Minute walk from Central Park and 10 minutes to Moma •Chic Plush rooms and free wifi and terraces •city or central park views •fitness center and spa •Restaurant serving breakfast, lunch and weekend brunch •Swanky Cocktail Lounge •Room Price $995

•259 Rooms •9 Minutes walk to Moma •Free wifi •Lounge access with free food, drinks and wifi and Personal Concierges •Sophisticated Bistro and Bar •Cockatil lounge serving afternoon tea •Soa and Fitness center •Room Price $975

In this Competitive set, Mandarin Hotel might seem the biggest competitor as price and brand carries same value as Baccarat except the fact that Baccarat is not strategically located to offer a beautiful view over Central Park. Also the number of rooms for all comps set is more than the 114 rooms offered at Baccarat with two suites only.

Service and management have been a critical separator for luxury and upper upscale hotel but this goes without saying that the comparable are already not an independent hotel. Thus, brand awareness as well as brand loyalty might be measured differently. While St Regis has 57 hotels around the world, while four seasons is operating in 99 locations, 114 hotels for Ritz Carlton and 15 hotels for Peninsula, Baccarat is only relying on the French crystal brand value to position itself as luxury hotel with the intention to expand internationally in prime location. Baccarat hotel stands as an independent hotel.

Starwood has a great selection of hotel to cooperate with all these hotels listed as competitors except for Four Seasons and The peninsula Hotels operated by The Hong Kong and Shanghai Hotels, Limited.

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This might be a big differentiator on the services provided by each hotel but it goes without stating that Baccarat has a potential for growth by offering more perks than other hotels within the same budget.

As this competitive set include the biggest rivals, we believe that Baccarat Hotel has competitive advantages through the following elements: 1. Having smaller hotel capacity: means a more intimate and private experience, le Petit Salon room also is only dedicated to hotel guests and this exclusivity is highly appreciated which is not considered among other competitors.

2. Wedding/Special Occasion Venue: this can be thought of as small in size but also very private place where engagement parties or special occasions can be celebrated.

3. SPA/Swimming pool: Although most of the hotels in the set include this feature, the advantage of Baccarat is having the most expensive and sought after brand which is La Mer, Also, the fitness center as well as the pool is shared with residents of the condominium part of Baccarat, which allows a more local/opportunity for guests to meet a potential partner in Business or meeting a New Yorker residing there.

4. Luxury: all hotels seem to be a complete definition of luxury in the industry. However, Baccarat is a unique French style that incorporate a very sophisticated manner that brings luxury in its highest definition.

From Marketing strategy side, a 7P's mix should be explored for Baccarat: 1 Product: customized gifts should be given to customers even if it is small, the more customization and personalization, the better it is.

2 Price: Price is already a bit lower than major competitor and in a place like New York where money is everywhere spent, customers would not be price-conscious but rather a defined strategy implantation to rise some of the prices is discussed later in the canvas.

3 Physical: There is not much to do physically since Baccarat is new and modern hotel but maybe a more attention to couples should be done such as having a music selection bringing nice atmosphere to customers.

4 Process: quick service is the key here with customized name tag in their rooms or feedback collection at the end of the customers stay can test and inspect if there is any problem. Like Hilton even though it is not among our competitor set, it was successfully integrating a score balance card which helps the business and been a secret recipe for it.

5 People: Baccarat hotel needs to level up its customer service experience since many reviews were degrading the unprofessional service so special training and more workshops need to be done for their staff.

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6 Promotion: Baccarat hotel needs to be more open about public appearance although Luxury brand do not need to be as "commercial as many other products". In a world full of choices even in hospitality industry, free discounts or a loyalty member card need to be invested in, to make customers more willing to come back to the sale place. Also free samples when partnering with luxury brands can be also explored further.

7 Place: Channel of support and tools of Marketing by using hospitality renowned tools to attract customers with a reinforced sales support.

A blue ocean strategy is identified which is a tool used in business to identify a four action plan for the hotel to emerge among other competitors by creating new customer value and uncontested market making competitors quite irrelevant: Below is a 4 action plan as well as a canvas for Baccarat Hotel. 10 factors are identified as below that need to be adjusted or eliminated or even creating new ways to make Baccarat emerge.

Eliminate Free Internet

Raise Customer Service Butler Service for Suites service Partnership with Airlines and lifestyle magazine Price for le grand salon menu

Reduce Full Public Access at no time restriction

Create Length of stay restriction Competition and winner announcement Etiquette Class Complimentary SPA Service

Eliminate phase: Free internet needs to be eliminated since It does not provide any benefit and in fact luxury hotels are proved to lose revenues when it comes to telephones and internet as costs of installation exceed its revenues. Only-paid internet can be provided especially in public area not in the room. Free internet can be negotiated for corporate travelers as they need to work while their stay. This is a way to keep leisure customers a bit away from technology and rather enjoy the experience.

Raise phase: Customer service need to be better with providing the staff with better training since many clients have complain about it, butler service for suite can be added since not many hotels are operating in that way, more partnership with airlines and lifestyle magazine can be thought of a tool for advertisement. Prices on the menu provided for lunch at le grand salon which is open for public can be

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raised since they are the average prices for any hotel lounge in NYC while competitors have higher prices, this is a way to generate more revenues.

Reduce phase: public access for the bar and lounge area create some sort of intimidation to clients who are only limited to le petit salon, certain hours to be limited as guests need to feel more comfortable with open space without much public attendance.

Create phase: a minimum length of stay need to be required since brand loyalty is the biggest challenge for Baccarat, while most customers stay on average for 3 nights only. Competition and winner announcement should be one of Baccarat strategy to keep customers happy or to gain new market, creating competition such as a quiz about Baccarat history with providing winners with free stay is highly encouraged. Etiquette classes can be introduced and this also part of the revenue increase by making small groups available at the event space if not used by charging the industry standard to bring the luxury to clients. One complimentary Spa service should be provided occasionally for top 10 or top 20 customers or special guests who might turn to brand loyalists.

Below is the canvas which is a rating system that utilize the four action plan and measure the likelihood of Baccarat and competitors to adopt the concept.

Free Internet Customer Service Butler Service for Suites service Partnership with Airlines and lifestyle magazine Price for le petit salon menu Full Public Access at no time restriction Length of stay restriction Competition and winner announcement Etiquette Class Complimentary Spa Service

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Baccarat 4 3

4 Seasons 3 4 2 2

Mandarin Hotel 3 4 3 3

3 3

3 2 4

3 1 3

0

1

1

4

0 3

0 3

1

1 4

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From selling point, Baccarat hotel can utilize many different tools should be considered in order to increase the sales of our hotel among the fierce competition in New York City. Even though such luxurious hotel might seem not in need for establishing sales activities, marketing and sales are leading departments that can bring more clients and better exposure of the hotel.

Since the hotel deals with domestic and international clients, travel agents are still necessary in the process despite the fact that statistics show that online booking will make up to 50% of total booking.

Also since it is hard to get access to international clients, using FIT techniques as well as travel consultants is the best way since it is hard to get easy access to certain market and since some markets operate quite differently. Also, since Baccarat Hotel has very high room rates compared to others which means that target market is towards the baby boomers who can afford it, travel consultant are the biggest reliable service that they can use while booking that is why commission and special care for travel consultant is important. For each segment which are divided into two major groups; Leisure and Corporate, we defined specific activities that might work to increase the sale.

For Leisure: since domestic and international make up the biggest the portion of this group, sales calls and appointment meetings with representatives from these countries/local region is necessary. Sales incentives such as offering a better commission than the average deployed in the market is beneficial and can create a win-win process that make travel consultant more careful about advising/directing the clients towards the Baccarat Hotel rather than the rest of them. Gifts also is the best way to anyone’s heart, although complimentary breakfast or internet seems the rule, clients might not appreciate it much as they believe it does not add a lot of value even though they might need it more than anything.

Upgrades of room is quote targeting since that means a good customer service by employing a special treatment such as the less-heard of spa gift cards, or timely access to the spa with few discounts since the spa La Mer is independently operating. Sales trip are also important and I would encourage a group appointments to give all travel consultants a good idea about what makes Baccarat special and also 10

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having them attending FAM trips which they would love. In fact, by setting the small-special occasion room to target people who are looking for intimate yet luxurious space in the Baccarat, by setting a meeting there and introducing them to that atmosphere, the sales agents can be impressed and can advise their clients on how and why choosing Baccarat over other hotels. Entertainment is key element anywhere, that is why by dining them and showing them the French cuisine at Chevalier Restaurant or by setting an appointment at Le Petit Salon for an afternoon tea, the agents won’t be just amazed at the wonderful decoration but would be able to transfer the experience they had at the hotel while being concentrated on the meeting at the same time.

Other ways to target older generation through sales consultants, setting a partnership with MOMA which is just across the hotel where a cocktail party can be gathered at the end of meetings by explaining why their high-net worth clients will cater about Arts and the different galleries spread all over Manhattan and since Art Collection and exhibition is part of most high net worth individuals, this can be a good set to not only explain what does MOMA offers but also show them how close the place is which is right across the hotel.

For younger generation and especially these traveling all the way from abroad, a walk towards 5 th Avenue can help them understand the proximity as well as the benefits of being at Baccarat with an integration of some promotions on the avenue such as Furla which made their new collection launch during New York Fashion week at the Baccarat.

For Corporate travelers, I guess the main segment is for those working close to midtown and who aim for special retreat, by explaining the different packages as well as the benefits of staying at Baccarat, one can negotiate although I doubt the price is negotiable for corporate as this independent hotel does carry a brand value and budgeting is not and should be an issue for its customers. That is why, a complimentary chauffeur / driver around Midtown and a Concierge dedicated to help them with their business plans is good, maybe offering them a free-IPad for use for their stay can be beneficial as they need to write notes and can take them outside the hotels as long as they can return them before checkout. A gift for Spa Treatment or discount can be much appreciated as they might need it after a day at work. Representatives from these corporations need to be addressed and for a room at 1,000 Minimum this can be seen as targeting only top managers/executives from all industries and mainly Real Estate/Luxury Goods as there are many companies ‘headquarters are in the same radius of Baccarat Hotel.

With much competition in the hospitality market and with the upsurge of construction of hotels in Manhattan, differentiation became harder than before but customer service is royal. That is why for the sales activities, a luxurious hotel such as Baccarat even though, it should not aim for much publicity, it needs to be profitable. Sales activities that are more engaging but also exploratory are needed to keep sales agent who have the chance for FAM trips to sense the Baccarat hospitality and great customer service. For international clients, online figures might be sufficient by providing a 360* view incorporated to walk around the hotel, is a new IT that can be used to make these long distances closer.

Hospitality sector have been a very competitive industry like many due to the low barriers for entry.

While independent hotels are more popular in Europe and other secondary cities abroad. Brand loyalty has been backed and supported the big chain hotels in different part of the world where customers 11

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expect a similar high level of experience than risking an experience within an unknown boutique hotel.

The expectation of certain service, treatment and perks are the biggest players towards a customer behavior. While studies have shown than millennials will replace the baby boomers by 2050, choices and points might be a good incentive to track what millennials will prefer especially if they are limited by a factor of options.

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