With a portfolio of 1 to 5 stars hotels in 60 countries across Europe and Asia, Jin Jiang-affiliate Louvre Hotels Group (LHG) has been experiencing rapid growth even despite travel restrictions in Asia.
Max Cergneux, Chief Development Officer, shares his views on ‘travel revenge’ from China, expansion into different segments and markets, staffing challenges, ESG and more ahead of his participation to the International Hospitality Investment Forum (IHIF) in Berlin on 15-17 May.
As a company with Asian ownership and a strong presence in Asia, how have travel restrictions affected the group’s performance?
Max Cergneux: Jin Jiang International is LHG’s sole shareholder since 2015 and is committed to the success of the group. Their presence has been a game changer for LHG in Asia, and specifically in China.
As many actors from the hospitality sector, we have been affected by the travel restrictions that were enforced until recently in China, but it has been mitigated by strong local demand in Europe. China has abandoned centralised quarantine in December 2022, which immediately boosted performance in the region. The current trend of "travel revenge" will continue to increase the group's performance in the coming months. The group’s footprint in the region is rising at pace, and we reached a fantastic milestone with the signing of the 500th hotel China in September 2022.
The company's flexibility and approach to innovation has helped to attenuate the impact of travel restrictions and seduce new segments of clients. The perfect example is the success of Hosho, our last hostel brand, targeting young travellers as well as Tulip Residences, the group’s extended-stay brand, which is a perfect destination for business guests and families
What segments are you focusing on as having the biggest potential for growth?
Max Cergneux: LHG’s history was built on the midscale and upper-midscale space, it is on these segments that our expertise and capabilities are today. Our goal is to offer high-quality experiences to our wide spectrum of clients, from business guests to families. LHG brands are deeply rooted in the French people's minds, which is a significant competitive advantage in these current times, when people are looking for great value-for-money options. The company's customer-centric approach, adaptability, and quality policies enable our hotels to respond to different types of demand, attracting both business and leisure clients. The guest experience feeds our vision of the sector: to anticipate new expectations to offer the best services all along the client pathway.
Which European markets are you focusing on?
Max Cergneux: LHG is a European leader with global presence. Over the years, we strengthened our footprint and are committed to remain doing so actively. The hospitality industry in Central and Eastern Europe is proving to be very promising. In a country like Poland, where we have 26 hotels and the portfolio will double in size within the next few years. Last year alone, we signed 8 new projects. Furthermore we have several new projects in the pipeline for the region to be announced soon.
Our company is also targeting Northern Europe and the UK due to their strong internal market and balanced mix of leisure and corporate clients, as well as Southern Europe for its leisure destinations and strong MICE activities.
What do you view as the major challenges affecting performance in the hospitality sector in 2023, and when do you expect a return to more manageable market conditions?
Max Cergneux: Two main challenges are still impacting the hospitality industry: inflation and recruitment.
Energy prices have increased by 30% on average year-on-year as of August 2022 according to the OECD. It has reinforced the need to accelerate the transition to energy-saving and low-consumption systems. We are deeply committed to taking part in this transition and bolstering the changes throughout our network and with the group’s stakeholders. Staff shortage is another challenge faced by the industry, with more than 80% of hospitality operators struggling with recruitment and retention.
Despite these challenges, the industry is expected to return to more traditional market conditions during 2023, with noticeable improvements in RevPAR and an increased agility to mitigate inflation. Looking at France specifically, there is a bright outlook thanks to the Rugby World cup and the Olympic Games which will put France at the front of the international scene for the next 18 months.
How are you addressing the staffing challenge?
Max Cergneux: “Passionately human” is in Louvre Hotels Group’s DNA and we have multiple initiatives in place to make LHG a best-in-class employer. Thus, the Group has a proactive policy of raising awareness of jobs in the hotel industry and facilitating the integration of new recruits, who are either come from the hotel and restaurant industry, are changing careers or are curious to discover a sector that can accelerate their careers. In 2020, the company opened its own culinary university, "Chaud Devant!", in the heart of Rungis market, to enable all its talents to train in the various professions related to gastronomy and hospitality. In addition, the Group and all its brands offer more than 90 training courses provided by its U University (Qualiopi certified in October 2021). In 2022, for example, more than 50% of employees received training there! The company strongly promotes internal mobility and career evolution.
All these initiatives have allowed us to increase the relevance of LHG as an employer in the hotel industry. We offer much more than a job: we offer a career path for our talents.
How are you developing, implementing, and measuring ESG policies to ensure their effectiveness?
Max Cergneux: Corporate Social Responsibility is anchored in our vision of hospitality.
For several years, the group has implemented its global CSR policy around 4 major pillars:
- Reduction of energy consumption (-40% by 2030, -50% by 2040 and -60% by 2050),
- Reduction and management of waste (100% bio-waste recycled by 2028)
- End of single-use plastic (elimination of all single-use plastic),
- Reduction of food waste (-50% by 2030)
These objectives are ambitious and to achieve them, we use platforms and tools to monitor and control our actions on these different subjects! We are also developing internally extra-financial reporting to monitor the impact of our actions and to help us manage them
At the same time, we believe that the commitment must be collective and positive! Raising awareness among all our stakeholders (employees, suppliers, customers, etc.). The company has launched several initiatives aimed at reducing its carbon footprint; and partnerships with Too Good To Go to combat food waste, Solikend to offer nights to social associations, and Electra to offer electric charging stations to guests. What’s more, LHG is committed to its "passionately human" standard, which is a commitment to people from a societal perspective.
Actions are carried out with the entire hotel sector to develop the sustainable commitments of the hotel and restaurant industry worldwide. With this in mind, we are proud to be part of The Hotel Sustainability Basics initiative with Jin Jiang International Hotels and Radisson Hotel Group in partnership with World Travel & Tourism Council.
What new openings are you most proud of in 2022-2023?
Max Cergneux: LHG is continuing its rapid growth with over 270 openings and signings in 2022, The company has also achieved some major milestones like the signing of its 500th hotel in China and reaching over 100 properties in India.
The Campanile brand, which is iconic to the group, has been launched in Budapest to strengthen our position in the Hungarian market. This 88-room hotel, is strategically located in the heart of Budapest, is currently under construction scheduled to open later in 2023.The opening of the first hotel in Hungary is another step towards strengthening our leadership in the region. The Campanile brand is known worldwide for its mid-range hotels, which are recognized for their modern design andconcept. This has been driving the growth of the brand in other regions outside of Europe. We already have a growing presence of Campanile in China, rapidly gaining recognition; and new projects singed to further introduce the brand in India, Indonesia and Middle East.
What are your looking forward to with regards to your participation to IHIF?
Max Cergneux: We anticipate the 2023 edition to be a great milestone as there is a very strong interest in investing into the hospitality industry. Hotels are a very interesting asset class for investors in inflationary periods as the industry has proven its ability to increase revenues during these times.
LHG has a wide range of modern and innovative brands to promote, and we are the confident to be the right partner for hotel projects.
Louvre Hotels Group is a Patron Sponsor the International Hospitality Investment Forum (IHIF) in Berlin on 15-17 May.