© 2010 KEMPINSKI

REBRANDING HOTELS IN CHINA

GRAND KEMPINSKI HOTEL SHANGHAI

© 2010 KEMPINSKI

Gran Melia Hotel, opened in Q4 2009, was

rebranded in Q2 2013 to Grand Kempinski

Hotel Shanghai.

A 686 rooms & suites, full service, 5*, stand

alone property with 7 F&B outlets,

extensive banquet facilities, Spa, indoor pool,

24H health club and retail outlets.

GOR of USD 50 M (2015) , GOP 44 %,

with 580 FTE excl. seasonal casuals.

Property owned by Cuba (51%) and Chinese

(49%) investors in a JV holding company.

Background

© 2010 KEMPINSKI

Low market share since opening (STR - RGI)

following structural oversupply post-EXPO 2010

Not perceived as a luxury hotel (LQA / Review Pro +

low ranking at key booking channels)

Weak System Delivery (below 5 %)

Unsecured brand in domestic market

Inconsistent correlation between GOR and GOP

Hotel is 51 % owned by Cuba shareholder; Cuba

trade embargo causing restrictions on channel

management (GDS, Consortia, American corporate

accounts, etc.)

Challenges since opening (2009)

© 2010 KEMPINSKI

Europe Oldest Hotel Chain; Founded in 1897 in Berlin by Berthold

Kempinski

Single Brand; 78 luxury properties in 30 countries

In China since 1992 with 21 properties in all major cities

In the global pipeline 30 properties (2020)

Founder of Global Hotel Alliance; Kempinski Discovery loyalty program

Head office in Geneva, Switzerland

Kempinski Hotels

© 2010 KEMPINSKI

1. Managing de-branding and rebranding

2. Finding clear brand purpose

3. Balancing rebranding versus restructuring

4. Managing the rebranding ROI

Challenges with rebranding

© 2010 KEMPINSKI

• Relative long period between de-branding and rebranding (120 days)

causing loyalty issues with key clients

• Weak communication on de-branding with various stakeholders,

distribution channels, engagement channels (social media), key accounts,

suppliers, associates causing mixed messages

• Limited visual changes of product due to lack of funding, except for

external signage, printed material and renaming some restaurants

• Weak alignment between internal identity and new brand image

• Challenges to demonstrate ROI to owners for training, product and brand

investments (Training USD 85K, Product USD 300K and Marketing USD

1.2 M)

From de-branding to rebranding

© 2010 KEMPINSKI

• Convince all stakeholders: a slow process to build from the inside out

• Create inspiration and share authentic DNA; 1897, Grand European

hotels, “Collection of Individuals”

• Transform Hotel strategy in line with Corporate Vision and Mission

• Cement the Story! Repeat, repeat and repeat…

Rebranding without a clear purpose

© 2010 KEMPINSKI

• Deal with internal resistance: bureaucracy, clan culture and wastage

• Appoint new professionals with credible Kempinski brand background.

• Manage the mind set: create and award Brand Ambassadors

• Focus on brand partners; GHA, Resense Spa, Kempinski Trading, BE

Charity, Young Artist Program etc.

Rebranding requires restructuring

© 2010 KEMPINSKI

• Daily review social media feedback and react proportionally

• Invite Key Opinion Leaders (KOL) weekly to experience the

service standards and evaluate their feedback

• Transparency with all stakeholders; owners, banks, suppliers,

associates, local authorities

• Invest consistently in multi-channels; digital & non –digital

Managing the Promise Cap

© 2010 KEMPINSKI

Managing rebrand opportunities Budget USD 1.2M

Rebrand Marketing Budget 100% • Non-Digital marketing 40 %

• Digital marketing campaign: 33 %

• Digital operations (Website, CMS, APP) 24 %

• Kempinski Discovery (GHA Loyalty): 3 %

Non-digital marketing : 40 % • Print (fashion & travel magazines) 16 %

• New video / photography 6 %

• Hosting travel writers / bloggers / KOL 4 %

• Hosting or co-sponsoring events / charity 4 %

• Trade shows (regional) 4 %

• Industrial & COC associations 2 %

• Internal awareness / Brand Ambassadors / G Leads 2 %

© 2010 KEMPINSKI

Digital marketing campaign: 33 % • SEM / SEO (Paid search versus ranking): 10 %

• Mobile commerce strategy 6 %

• Online media (OTA/KENT/TLG): 6 %

• ORM – Reputation Management (ReviewPro): 4 %

• Meta Search (CPC) 3 %

• Retargeting 2 %

• GDS 2 % (*)

Digital operations 24 % • CMS upgrade 11 %

• Website / account management / multi-language 10 %

• Others 3 %

Kempinski Discovery (GHA Loyalty) 3 % • Various campaigns 3 %

Managing rebrand opportunities

© 2010 KEMPINSKI

• M Commerce is expected to deliver USD 700 billion in revenue

by 2016 of which USD 74 billion from consumer apps.

• Asia will make up more than 50 % of M Commerce in 2016.

• Digital advertising will overtake traditional advising and is

valued in 2016 to exceed USD 68 billion

M Commerce trends for 2016

© 2010 KEMPINSKI

1. South Korea 37 %

2. Taiwan 27 %

3. China 27 %

4. Singapore 23 %

5. Hong Kong 23 %

6. Malaysia 19 %

7. Vietnam 15 %

8. Australia 15 %

9. Philippines 11 %

10. Thailand 11 %

11. Indonesia 9 %

12. India 9 %

13. Japan 6 %

Source: HNN 9 December 2015

Population who bought via phone Asia-Australia region

© 2010 KEMPINSKI

• Focus on the right metrics “Identify clear measurements & targets before launching a campaign”

• Value your best customers “Create a model rewarding your most loyal brand ambassadors”

• Attribute value across the journey “What is working and what is not, listen to others”

• Prove marketing impact “Use controlled experimentation to understand what works before you roll it

out”

M Commerce rebranding guidelines

© 2010 KEMPINSKI

1. Mobile phone APPS development & design

2. M Commerce booking engine integration

3. M Commerce Reservation tracking & conversation

- Mobile phone direct booking

- Toll free number (Trust)

4. M Commerce search marketing (google mobile, bing mobile, yahoo mobile)

5. M Commerce text marketing; wechat, SMS, KENT

6. M Commerce banner advertising

7. M Commerce interactive contest and sweepstake - M Coupon

- Short code promotions

8. Location based services

9. Ali Pay / Mobile banking options

M Commerce strategy 2015-16

© 2010 KEMPINSKI

1. Enable your customers to book rooms, banquets and restaurant

reservations – exclusive M deals

2. Showcase contact details and location maps

3. Integrate location API's to track your customers

4. Integrate with GDS and online booking engine

5. Make offers to your customers on events, F&B promotions using alerts

6. Promote stay and holiday packages – M flash sales

7. Publish ads on mobile networks

8. Get valuable feedback from customers – create KOL’s

9. Cross sell extras, amenities with rooms and more, and sister hotels

M Commerce Features

© 2010 KEMPINSKI

Since re-branding (2013 vs. 2015)

• RevPar up 68 %

• GOR up 63 %

• GOP is up 69 %

• RGI (STR) is up 18 %

• GRI (ReviewPro) is up 22 %

• System delivery is up 32 %

• Ranking dist. channels up 38 %

• ESS is up 19 %

Managing the ROI

© 2010 KEMPINSKI

M Commerce targets (2016)

• Annual M Commerce budget 6 % of marketing budget (USD 96.000)

• Invest 2/3 in systems (tracking, search and integration) + 1/3 in

campaigns (content)

• M Commerce campaigns to generate 1 out of 12 booked rooms

(quarterly review)

• M Commerce campaign to generate 25 % outlets revenue (quarterly

review)