Project Plaza Part5

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Issues and trends

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Schmidt&Company Mega brands (luxury) 1

1. InterContinental Group InterContinental Hotels & Resorts (140 hotels; 75 countries) Hotel Indigo – Atlanta

2. Marriott International JW Marriott (24 hotels; N./S. America, SE Asia, Middle East) Ritz-Carlton (57 hotels [35 city; 22 resorts] - worldwide)

3. Hilton Hotels Corp/ Hilton Group Hilton (500 hotels, of which some true 5-star) Conrad Hotels (19 hotels - JV between both Hiltons; 5 under dev.)

4. Starwood St. Regis (11 hotels; 5 under development) The Luxury Collection (40 hotels)

5. Hyatt Hotels & Resorts Grand Hyatt (26 hotels worldwide) Park Hyatt (24 hotels worldwide; 7 under development)

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Schmidt&Company Mega brands (luxury) 2

6. Le Méridien Hotels and Resorts Le Méridien/ Le Royal Méridien (130 hotels; 56 countries

[35 city; 45 resorts]

7. Fairmont Hotels and Resorts 47 hotels [23 city; 24 resorts], mainly N. America

8. Kempinski Hotels & Resorts 40 hotels & resorts (17 countries in Europe) 30 under development (Global)

9. Shangri-La 39 Shangri-La hotels [30 city; 9 resorts], mainly Asia and Middle East

10. Four Seasons 63 hotels in 28 countries [42 city; 21 resorts] 28 hotels under development

Source of ranking information: Hotels’ Corporate 300, July 2004. Based on number of rooms.

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Schmidt&Company Mid tier luxury brands 1

1. Mandarin Oriental – monolithic with location descriptors 21 hotels (14 countries: 9 SE Asia; 6 N. America; 4 Europe)

2. Raffles Hotels & Resorts – monolithic and co-branded 12 luxury hotels

3. Loews Hotels – monolithic and endorsed 17 luxury hotels (N. America)

4. Taj Hotels, Resorts & Palaces – monolithic with sub-brands 9 Luxury Taj hotels (India); 13 international hotels

5. Kimpton Group – monolithic (Monaco) and branded 7 Hotel Monacos (US) 24 other 4.5-star hotels

6. Dusit Thani Hotels – monolithic 10 Dusit hotels; SE Asia [5 city; 5 resorts]

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Schmidt&Company Mid tier luxury brands 2

7. Oberoi Group – monolithic 20 Oberoi hotels; (India: 11)

8. Rosewood Hotels & Resorts – strongly-endorsed hotel brands 12 individually-named hotels, endorsed ‘A Rosewood Hotel/Resort’ Global [7 city; 5 resorts]; 4 under development

9. Regent International Hotels – monolithic 7 Regent hotels; (Asia: 4; Europe: 2; N. America: 1) 6 under development (China, Boston and Florida)

10. Orient Express – medium-endorsed hotel brands 34 hotels; (Europe: 10; Americas: 12; Africa, AsiaPac: 12)

11. Rocco Forte Hotels – lightly-endorsed hotel brands 13 hotels. Munich opening soon.

12. Wyndham Luxury Resorts – strongly-endorsed hotel brands 7 resorts (All USA)

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Schmidt&Company Myriad smaller groups

Dorchester Collection The Dorchester, Beverly Hills, Plaza Athenee, Meurice, Principle di

Savoia

Maybourne Hotel Group Claridges, Connaught, The Berkeley

Peninsular Group 7 hotels in SE Asia and US. Tokyo opening in 2007.

Langham Hotels Auckland, Boston, London, Hong Kong (2), Melbourne

Como Hotels & Resorts (Christina Ong) Metropolitan (London & Bangkok), The Halkin, Parrot Cay, Cocoa Island,

Begawan Giri, Uma Paro, Uma Ubud

Morgans Hotel group Morgans, Royalton, Hudson, Delano, Clift, Mondrian,

St Martin’s Lane, Sanderson. 3 under development (NYC: 2; London: 1)

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Schmidt&Company Competitor summary

Extremely crowded market

6 truly global players Rest strongly focused in region of origin

Many strongly-branded competitors More than most markets

Scores of fragmented independents; hundreds of individual properties

Competition can come from unlikely sources

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Differentiate or die

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Schmidt&CompanyDesign matters

QuickTime™ and aTIFF (Uncompressed) decompressor

are needed to see this picture.

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Schmidt&Company Couture Hotels

Bulgari combined their fashion pull with the management skill of Ritz-Carlton to create Bulgari Hotel & Resorts

Milan property opened May 2004 “Contemporary luxury in hospitality”

Unique locations, contemporary design, superior service

Bali property opened October 2006 Mountain-top resort at Pecatu village on the Bukit Peninsula

59 luxury villas (300 sqm) with patios and plunge pools

Antonio Citterio architected both projects

Plans for London, Paris, New York, Miami, California

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Schmidt&Company Palazzo Versace

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Schmidt&Company Palazzo Versace

Opened on the Australian Gold Coast in November 2000 $108m project; 250 rooms with sea view Managed by Kempinski

A luxurious oasis, offering a refined “Baroque” holiday in line with Maison Versace’s philosophy, tastes and lifestyle image

Furnishings and accessories chosen directly from the label’s Home Collection division

Second unit will be in Dubai Creek JV between Sunland Group/Emirates International Holdings 215 suites, 204 luxury villas Opening 2009

Paris, Shanghai, Bali possible next developments

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Schmidt&CompanyModern Luxury hard to define

“The new definition of luxury has evolved from grand five star hotels to one-of-a-kind smaller

hotels that heighten the five senses.

Luxury travelers are seeking hotels that provide total sensory experiences.”

Christine Gray, Editor, LuxuryTravelMagazine.com (April 2005)

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Schmidt&Company Emerging trends

Five Star Living Condo hotels are the latest trend in vacation home

ownership

Five star hotels joining forces with developers to offer ‘Residences’

Members’ clubs Home House

Soho House

Fairmont Presidents Club

Take the hotel home with you – www.hoteluxury.com

Women only. 68 rooms at Grange City Hotel, London

Nation clubs – Thailand Elite

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Schmidt&Company Hotels are HIP

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Schmidt&Company Mr and Mrs Smith

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Schmidt&CompanyCurated Consumption

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Schmidt&CompanyWhere it all comes together

Hotels are the perfect melting pot for many of today’s lifestyle trends; a place to hangout not just to sleep

Hotel bars are back in fashion Berkeley Blue Bar, Claridges, The Dorchester

Celebrity chefs queue to partner with hotel brands Alain Ducasse, Gordon Ramsay, Jean-Georges

Vongerichten, Nobu

Hotels have their own CD compilations Hotel Costes, The Berkeley, W Hotels

Hotel FF&E is now for sale on-line WHotelsTheStore.com

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The role of brands and branding

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Schmidt&Company Brands: a strategic asset

Improve financial performance Premium pricing and increased earnings Above average ROCE

Reduce risk Protect against swings in the economic environment

Create competitive advantage Raise entry barriers for competitors Help to attract opportunities, talent and better partners Defence against hostile takeovers

Make corporate strategy visible A symbol that signals what the company stands for A lens for decision-making and innovation

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Schmidt&Company Benefits for hotel groups

1. Driving earnings Brands command a price premium

Clear customer proposition for a precise target

2. Luring guests Brands create visibility for the product

Why sell to a satisfied customer twice?

3. Justifying investment Marketing efforts are leveraged across the portfolio

Publicity for one hotel benefits the whole collection

4. Attracting opportunities Will help you to expand the business more quickly

Owners believe in the power of brands

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Schmidt&Company Driving earnings

“Hilton Group said earnings climbed to £144.3m compared with £108.8m during the first half. Analysts agreed that Hilton Group’s brands helped it beat expectations. Hilton remains a strong brand for business and leisure travellers, even as the hotel market in Europe slows down.” 2001

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Schmidt&Company Luring guests

“Hilton hotels beat expectations because they used their brand to lure guests to their properties.”Mark Abraham, Bear Stearns sector analyst

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Schmidt&Company Justifying investment

“Talks with the owners of the 100 Le Meridien hotels under management contract have suggested they are prepared to invest£500m in the brand. That will be in addition to the £360m already pledged by Principal Finance Group.” 2001

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Schmidt&Company Attracting opportunities

“We are confident about our ability to realize our growth objectives over the longer term due to the quality of our new unit growth, and the quantity of new opportunities that the Four Seasons brand is attracting….”

Isadore Sharpe, Founder

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Schmidt&Company Segmenting

Segmenting markets

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Schmidt&Company Differentiating

Badge engineering

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Schmidt&Company Attributes and values

Functional & PhysicalTechnologyQuality= German engineering

PerformanceExclusivity= Luxury brand

Emotional & Psychological

The Ultimate Driving Machine

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“In an era of wide consumer choice among roughly comparable products, marketers have learned to think of

their brands not so much as a list of features

or a logo or an advertising tag line, but as a relationship with the

consumer.”

Business Week

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Schmidt&Company A lifelong relationship

BMW’s brand and product range is a text book case study in how to transcend isolated transactions…

My first BMW Yuppie Family Empty nesters

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Schmidt&Company More than logos and flags

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Three ingredients of contemporary branding:People, celebrity endorsement, no product

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Schmidt&Company

Our proposal

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Schmidt&Company Seven steps to success

1. Business strategy Corporate vision & mission. What’s your ambition?

2. Statement of identity (self-analysis) Who we are, What we do, How we do it

3. Brand promise Attributes and values defined and expressed as a proposition

4. Brand architecture Structure of the product brands within the portfolio

5. Naming & visual identity Naming strategy, verbal and visual identity

6. Operationalisation of the promise Turning the promise into a valuable customer experience

7. Brand management Sustaining the promise and maintaining the experience

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Schmidt&Company Programme - Stage One

Discovery – Look, listen and learn Project kick-off

Review of existing planning and strategy work

Stakeholder ‘soundings’ (internal & external)

Product immersion & familiarisation

Market review, competitor analysis & other desk research

Consumer research (tbc)

Communications audit (direct and indirect competitors)

Duration: 6-8 weeks

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Schmidt&Company Programme - Stage Two

Definition & Design concept – sorting inputs, shaping strategy

Clarification/confirmation of the business strategy Brand positioning

Attributes and Values Benefits, attitude & personality Essence

Brand promise Brand architecture Naming Initial design concepts Consumer research (tbc)

Duration: 6 weeks

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Schmidt&Company Programme - Stage Three

Design & operational development Finalisation of design concepts

Sign-off and design freeze

Internal communications planning

Stakeholder presentations

Delivering the promise - operational delivery planning

Duration: 6 weeks

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Schmidt&Company Programme - Stage Four

Delivery: advocacy and action Completion of brand identity design

Communications plan including launch

Implementation of the brand

Internal alignment

Implementation of Branded Operating Procedures

Duration: 12 weeks

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Schmidt&Company Project costs

Stage One - Discovery Fees £75,000

Stage Two - Definition & design concept Fees £136,000

Stage Three - Design and operational development Fees £95,000

Stage Four - Delivery Fees £30,000

Total fees £336,000Outside costs £33,600Grand total £369,600

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Schmidt&Company Next steps

Q&A

CS Partners to review formal proposal

Decision and appointment

Commence project 1 Dec 07 or New Year