Hilton preps for record expansion

Friday, 30 March 2018 00:00 -     - {{hitsCtrl.values.hits}}

By Madushka Balasuriya

With over 30 years of shared history with Sri Lanka, the Hilton chain of hotels is preparing for arguably its most exciting year yet in the island nation. March marks the 20th anniversary of the last Hilton property that was opened in Sri Lanka – Hilton Colombo Residences – while last year was Hilton’s 30th in the country overall.

This year however the internationally-renowned hotel chain is on course to double that number with two new openings in Negombo and Weerawila under the Doubletree by Hilton brand. They are the first in a series of Hilton properties set to pop up around Sri Lanka in the coming years, and will be overseen by Hilton’s new Vice President of Operations South East Asia Paul Hutton.

Hutton recently sat down with Daily FT for an exclusive interview on Hilton and their goals both regionally and locally going forward. Following are excerpts:

On Sri Lanka’s tourism potential

“Sri Lanka is in a golden age, we have multiple openings here. Seven hotels and two obviously trading. I think the real exciting thing about that is that we’ll have multiple brands. Weerawila will open this year, which will be a Doubletree by Hilton – with a Sri Lankan GM who has worked with us abroad.

“Sri Lanka had a couple of decades of challenges and now we have a country that’s deemed already in the top four tourism destinations in Asia with Vietnam, Japan, and Korea. Safe environment, family destination, I think that’s one of our biggest messages to speak about Sri Lanka. It’s more than just a beach holiday.

“International arrivals were up 12.5% last year, so it’s a very healthy environment. Even if you come for a 14 day vacation to Sri Lanka you’re likely to have pre and post in Colombo, that’s just the way it is. You’d have one or two nights here, one or two nights on the back end, so that’s good. I’ve seen some of the stats already for January, and it’s a 22% increase. 

“Also the key anywhere we operate is India and China, and Sri Lanka is benefiting from that booming middle class that’s looking for versatile destinations. I mean what’s really key for Sri Lanka - I was in China for four years, and so I know what first time Chinese travellers are looking for - is clean air, blue skies, blue water, greenery. And they’re looking in many cases for that kind of experiential vacation they can’t have at home.

“Sri Lanka obviously has a wide range of budget, and luxury accommodation here. You have national brands and international brands. And I think particularly for companies like ours – we have 116 hotels in China at the moment – for a Chinese national, whether they come in a group or whether they come for business, or whether they come as free independent travellers, they’re quite comfortable with the Doubletree by Hilton brand, they’re quite comfortable with the Hilton brand, and that’s what we’ll attempt to be. A safe haven. If you haven’t travelled before, or if you’re going somewhere for the first time, that hotel needs to be there. And we continue to work with many investor groups to see if we can match a deal.”

On the growing awareness of Sri Lanka in the region

“Like anything it’s all about airlift; the continued expansion of SriLankan Airlines. I would say there is a strong awareness around South East Asia, and obviously you can appreciate how we’re now pushing Sri Lanka as an exciting, safe, family destination. It’s also a different kind of family experience, where you can do an enormous amount by road; there aren’t so many places in the Asia Pacific where you can do that. If you have less time of course you can fly from Colombo to Weerawila. Your highway system is extraordinary, and these are landmark changes for the country and making the viability of getting around not just easier but safer. I think it’s a key country. Top four for inbound are Sri Lanka, Japan, Vietnam and Korea.

“My biggest concern will be not about inbound, but about if Sri Lanka is ready. Airports? Ground facilities? Transportation? Enough hotels? You think there are a lot of hotels in Colombo but there aren’t. And a lot of the hotels have been here for a long time. Hyatt at some stage will come, Heritance at some stage will come, a Marriot at some stage will come, so I think these are the signs that you’d want to see; not only are people investing heavily, but international brands realise you need to be here.

“Our biggest challenge is 20,000 rooms are coming to Sri Lanka, and so we need about 150,000 employees. That’s the good news. How does Sri Lanka keep its people here? Sri Lanka has been a prodigious exporter of talent particularly in hospitality, I want to say since before independence. Since the start of my career I have worked with Sri Lankans all around the world. Is it still perceived as an industry where parents would like their sons and daughters to go to? We’re working very hard on inclusion, we’re working very hard on women and leadership; of the group that I have here at the moment 35% are female leaders.”

On overcoming talent drain

“I suppose with any fledgling business you need to build a culture. We’re on second generation here I think. How do you keep people? You need to expand. So we have one hotel here, then we have two hotels coming up. And equally you have lots of Sri Lankans who have worked here and then worked abroad and some have come back. Within three years if we go where we’re going, we’ll have at least nine hotels. It could be 10, 11, 12 or more. From two, that’s a prodigious growth. That means if you’re particularly ambitious and you’re an assistant manager here, we could move you to some of the other properties as a promotion. Until now we haven’t been able to do that, unless you move to Colombo Residences. Lots of people necessarily don’t want to travel, for a lot of reasons. 

“I think a lot of Sri Lankan nationals who went abroad, left because that was the only option. Either on ships or to work in the Gulf, or potentially in Asia. That was the option to work – it was good money and it meant a much better life, not only for the family but perhaps even for a village. I think that that has changed now. Salaries and working terms and conditions have improved over time here. And we need to keep improving, because we’re aware that our own hotels abroad are our biggest challengers.

“This is a country that has enviable levels of education. Has enviable levels of apprentice programs, skills-based programs, whether that’s engineers, cooks, air-conditioning mechanics, head waiters etc. So I think that puts you in a situation where you have people that are well and truly lifetime hospitality employees, as I am. Maybe this is a country that has very confident people, Sri Lanka in many ways bats above its weight. I think in terms of business that’s very positive.”

On setting the Hilton brand apart

“The greatest thing to have is that when you have new competitors in the market it forces you to look at yourself. We had two years to sit and ponder about the Shangri-La opening. I think there are two things. One is events, events are huge. The hotel will go under renovation, with room renovations starting in May. Return of the Chinese restaurant will come also hopefully by the end of this year.

“My very strong personal view is the key gateway cities, anywhere in the world – in Sri Lanka that’s Colombo – there are many choices of hotels. And the quality of your food and beverage to me is a defining factor. It is what can set you apart. Because if you live here it is most likely in 10 years you’ll never sleep in one of these rooms, but you could come here regularly, whether it’s to meet friends or to have a meeting, it is a real temperature test of how you are perceived in the local market. Because people have thousands of choices, and we’re probably not going to be the cheapest, so we have to offer something else. Either it has to be great coffee, service with a smile, maybe you used to come here with your parents, so the quality of F&B and the value proposition – such as with visiting chefs – is absolutely key to what we do.

“But our competitors are doing the same thing, so it comes down to raising the bar even higher. Like by doing Graze or the bar in the lobby. It’s not just about rooms anymore. It’s the soft piece that sets you apart. Our core focus now is to get the Chinese restaurant done and the tower. We’re also four months away from starting in Yala.”

Evolution of the Hilton Brand

“The first thing is to accept that the world is completely open and transparent, everything is on a mobile now. I think the key is that we are certain about why we’re opening hotels. Secondly we have 14 brands, and all of those brands will not be right for every place. We most likely will never have 14 brands here. But we could have three or four brands in Sri Lanka. Because it makes sense, because of the value proposition, because of the smaller resorts, and we can do a much larger city hotel. We have independent bodies that measure us against our competitors. It’s not a secret, we do know how we compare. That’s generally quite an intricate way of measuring fair market share. We need to continue to evolve and make sure we’re innovative. 

“Going back a 100 years, or 50 or 60 years, Hilton had the first airport hotels, we had the first room service, we were the first hotel to put in TVs. We’re the first company where you can go online and book your room. We have digital key access, though it’s not available everywhere, you download the app on your phone, you check yourself in, you scan the elevator, you scan the room, and then you hear the door go click two metres before you get to your room. And a few people really like that level of technology, and what people in general see is that we’re innovative. You can never stand still.

“We have a program call SALT – satisfaction and loyalty tracking – and our premise is that you have to give us a score of 9/10. Research shows that 9/10 means that you’re loyal. If you give us a 7.5 and you have loyalty cards from our competitors, next time you might use one of those if the price is right. If it’s 9/10 or better, quite rightly, you’re with us. That’s how we measure. 8.99 doesn’t cut it. We’ve been doing that for 10 years now.”

Ensuring consistency across brands and countries

“Any company of course has its brand and services standards, and it’s up to the leadership to make sure it’s checked regularly. But we try very hard to simplify our brand service standards, even though it remains our biggest challenge. Key to that is the culture. 

“We always say that the customer is right, but the most important people to us are our team. So we work very hard, including back of house. Because if we’re treating them well, by and large, they will treat our guests well. It’s quite easy to have a stick but that doesn’t produce results. It has to be because they want to do it. That’s our ultimate challenge – if you’re standing in the lobby and not sure where to go, my ultimate ‘hurrah moment’ is seeing a team member start to walk towards you. Not that you take four steps to him or her, but that they took four steps to you. But you can only do that when you’re very engaged and loyal to the place you work.”

On Hilton’s regional goals

“Simply put, our business with the 14 brands is to fill any gaps in the market. In this country it could be resorts, it could be other key cities that are developing. Our footprint is important, but we need to find the right partners like we have done here.

“Secondly, coupled with that is making sure we have the workforce that can go with our growth. Obviously Sri Lanka is huge, clearly the whole travel and tourism trade is a large employer here but nothing compared to what it’s going to be in the next five or six years. With 20,000 hotel rooms under construction, in round terms that’s another 150,000 jobs – 99% Sri Lankans – so that is exciting in one way, but we also have to make sure the talent is here. Lots of Sri Lankans work abroad, but they choose to work abroad so they may not be happy or ready to come home.

“There is also the growth of our brands. The Hilton is well known here, because we’ve been here for all of your lifetime I’m sure. And the great thing about that is multi-generational weddings, how many team members in this hotel have sons and daughters that are also working here? It’s quite unusual for a company; it’s quaint and we’re quite proud of that. 

“I think our view is quite healthy. We’re in a competitive market place, we need to sell the story of why you want to stay at Hilton. We’re not all the same, we have different things. We have 71 million members in the Hilton Honours loyalty program, but it’s up to us to attract you and it’s up to us to keep you. So whether you are a university student, or you’re 22-23 and traveling for the first time, you may stay in one of our focus service hotels, but equally we’d like to win you for life. I think quite simplistically that’s how we want to grow that loyalty.

“Also in any business you aim to have a better fair market share than the people who are identified as your competitors. In our industry that’s called REVPA – Revenue Per Available Room. It’s a very objective measurement. That’s the key to make sure we grow in any market.

“In Sri Lanka we’ve had two legacy properties, and now the time is right. We’ve aligned with good partners and hotels will hopefully continue at an exponential rate, just in time for when Hilton turns 100 in 2019.”

Pix by Sameera Wijesinghe