Barbara Muckermann - Kempinski Hotels | The Good Life Business Model, Asset-Heavy Plays & The Power of Heritage

What's going on everybody? Welcome back to another episode here On the smack hospitality podcast and this episode is in partnership with our friends from questex And The International Hospitality Investment Forum IMEA Here In Berlin. for This Episode We went To. The Famous Adlon Hotel, to speak With The Group CEO of Kempinski Barbara Mukaman on what She Calls the Ocean Of Brands Kempinsky's Legacy & Future and what she found in her first two Years With The Company.

enjoy the show Before we jump in, meet our sponsor for this episode Room Price Genie the award-winning RMS trusted by hotel groups and independents alike. Sure they started at one indie Hotel but fast forward to today They're powering three thousand plus hotels and groups across sixty five countries. not bad for a genie right? And here's The Kicker!

In the Dachh region alone there working with nine hundred plus properties and nearly forty percent of those are hotel groups. whether you've got OneHotel or a whole empire, the Genie scales with you no magic lamp required. Their autopilot reacts instantly to demand events and competitor moves giving you smarter pricing With way less effort while you stay totally in control. And they're not just software.

They are trusted advisor who actually helps You tackle demands bikes and seasonality. They've priced over fifty five million genie nights Rocked a ninety eight percent recommendation rate and took home number one RMS at The Hotel Tech Awards. If you want pricing that just works, go on. Let the genie handle it!

Barbara nice to have you on smack. thank you so much for making time between IHIF coming back to Adlon and back to IHF afterwards. So Thank You. First of all It's great To see you again And i wanted start with a very easy question For you.

You've been my maths is correct your approaching two years With the company? Correct yeah okay If you were to summarize the two years in a couple of sentences, what's it been like? Because I feel so much has happened since you came on board. Take a step back for me and summarize...

So thank you! It is a privilege to be here at Smack Podcast today And maybe one world really full And I have to say full of opportunity, joy. Amazing people! The biggest difference that they found in moving from the cruise industry...

to hotel industry is really their incredible passion for the people. It's, you know, Kempinski has more than twenty thousand employees around the world. So it is a huge embrace! A full-embrace that I got...

It is interesting and an enormous opportunity for me to realize the strength of the Kempinsky brand until i was really allowed. If we look at the luxury space, Barbara I think a lot has changed there as well especially recently. I was wondering, where do you feel luxury is at right now? Is it still the same as it used to be?

has the perception of a changed. Where are we with luxury? so first of all if we're looking at evolution of luxury realize that luxury has never stopped changing. So luxury started with The First Tailors Valentino and these guys Ferragamo who start creating craftsmanship into what we call the massification of luxury in which from this one brand you started selling a lot different products and got these huge conglomerates.

And where we are finding it today is actually in a complete different space, because luxury was born out of homogeneous markets. It started...it was born at the Court of Versailles Because you had lot people with lots money that were very bored. That's when luxury started.

So today if we're looking at the world of luxury First off all You have developed market but also have a lot emerging market and each one them Is on a different stage journey, if you want. So the way I like to define luxury is always by saying that it's really... Luxury is really that complement of emotional and functional benefits that will really allow any company to increase their willingness to pay for a customer. If we are looking at hospitality what is luxury today?

Luxury for me things unique because one of the things that I was reflecting on, I am paid to understand this industry. Well i'm not complaining and still today I don't have in my mind a clear idea. what's the difference between most luxury brands? And brands is good point.

let me dive into it. Is that maybe the advantage or one of the advantages potentially of Kempinski? Because you guys can focus on, on that one core thing. That makes you very strong as opposed to one of them and no front to any of the big kahunas.

they have sometimes three or four luxury brands which probably makes the mission of brand identification more complicated. would you agree? Can I challenge you on that? You should!

I think there's a lot of logos in the industry. There are very few brands. Okay because... You heard it here first ladies and gentlemen You know, you're only a brand if not everybody likes you and if you stand for something.

If you are a logo, you represent set of attributes. it's very different. so we can... So you immediately know that something is the brand?

If Not Everybody Likes It And It Is Very Well Defined. Now We Are Looking At The Incredible Growth Of Luxury Hospitality Post COVID. You have a lot of new logos that are all explaining different sets of functional benefits. I would dispute many.

these aren't brands. So what defines the Kepinski brand? Let me challenge you! So this is, these was the most fun part of my job in the last few years.

It was really rediscovering that the Kempinski brand and This Is Why we you know The reason why it was professionally attracted to Kampinski? I'm born as a Brand commercial person. then i had To do A lot Of operations And finance In My life but That's Really my passion. yeah That Wakes me up in the morning.

I remember one of my professors at the university was always asking a question, who's always asking how long will it take to rebuild a hundred year old heritage brand? In reality. A hundred-year-old heritage brand you need a hundred years to build. why?

because you have all this brand depth and history which really allows as a marketer today to take from your history, build the future with what is relevant for consumers today. But we know exactly who Kempinski was and if you are building a new brand which can do in half an hour using any of marketing schemes You're missing gravitas those routes Which means that you remain a logo. So Kempinski, in going really back to the essence since the beginning what it always did. It's always allowed you have a good time.

That is why we like say that this brand of The Good Life Now think about it We are here at Berlin today. Berlin hundred years ago was their place But it was not necessarily the same. It wasn't Saint-Tropez, okay? People were drinking beer.

we're not moving a lot and Germans let's be honest I'm half German so you can officially say that needed to be taught how to enjoy life. And Kempinski arrived and gave them permission to enjoy, yeah? That's when really Berlin erupted. so you know in the Berlin of Kempinsky Germans were allowed to drink beer.

they weren't allowed to bring beer by glass which means that if you feel like having a glass of champagne at eleven o'clock go for it! They added food to this glass was importing oysters imported the first avocados And so it created the shows together with The Dinner. Again, It was this joy! You know I was talking to an architect about a project of the other day and they said when Kempinski arrives in A New City...

I want you to portray that same feeling we had as kids When the circus was arriving in time for Christmas. It's that sense of joy. now We're going all celebrate together In family. That what Kempinsky is doing.

I would love to hear, Barbara when you were first approached whenever that was. When you are first approached and the discussion started of you potentially joining Kempinski what your thoughts? Because obviously i'm sure you knew the brand You have heard it probably had looked at maybe stated one but What is your first thought when somebody came in said could this be something interesting Honestly unique opportunity for a lifetime? because Silver Sea was a thirty-five year old brand.

Loro Piano, okay even if we were going to the grandfather who you are reaching maybe sixty seven years old. MSC and even younger. so I had never worked for real heritage brands And that's what really was an incredible opportunity. at same time What i really liked about hotels is not much changed in the last two hundred years.

So I thought this is really a huge opportunity to take some of the learnings off there, high experience environment that we could provide in cruise and bring them back hotels and hospitality? And so for me these was really their professional opportunities. very cool! Once you joined the hotel business I'm sure, and i know from shout out to Kirstie by the way for organizing this that you've been traveling around quite a bit meeting a lot of the portfolio.

Meeting owners, meeting staff etc. And while you were doing that, what kind of a sense did you get from the team? I'm sure every time there's change in leadership especially at number one position. There is always some form of excitement or probably also expectation...

that things develop and move forward. How do you manage this? because it isn't like. when we talked briefly about Brussels during summer When we saw each other It was not as if i am changing everything right away understand and see what's happening.

So for me, meeting the people of Kempinski was the first proof point that we were talking about a brand not a logo because even in years in which brand manuals where forgotten you know standard operating procedures had not evolved enough. And let me say all of that corporate apparatus. Yeah That helps a brand becoming alive In its daily externalities Even without nurturing wherever you were getting into a Kempinski and it applies to here, to China. You really see how that desire to deliver the good life in hospitality is something almost orally transmitting from staff member-to-staff member.

That happens because people who are close to Kempinsky understand Kempinki you know and that goes back to creating a brand, on the table versus having this living heritage. That is much more interesting and fertile. it's like a petri dish beautiful petri. there's a lot going in that picture.

just tell me then Barbara if we look at Kepinski and the development over the years, it's been let say an exciting, positively speaking. An exciting ten-fifteen years for Kempinski with a lot of change as well. I was wondering whether one of the things when you came in and spoke to people, did you feel like that was a little bit calmness as well? Not just perhaps to Kempinski but also there's been a lot going on in industry.

Brands being converted bought left right and center... There is a lot happening! Is maybe calmness sometimes a good thing to have? It's fundamental.

You need continuity. I'm merely custodian for this brand And as we know, Kempinski has had a lot of change. Has too much changed. whenever you're looking at strategy always say it's not really important to know where your going but its going consistently in the same direction because otherwise your zigzagging and its a mess.

Yeah yeah If then if look at luxury hotel industry It was very obvious thing that is happening at this moment that Kempinsky isn't doing and maybe not yet doing, so I'll love to hear from you. There's a lot of talk in the town at the moment about creating hospitality or hotel experiences that are not in hotels planes trains cruise lines big yachts and so on and so forth. How does Kempinski how do well? How does Barbara feel about that number one?

And then how does Kampinsky Feel About That? So i will feel some...I Will Say Something That Probably Will Not necessarily agree with everyone. I think that one of the biggest diminutions of Kempinski we've done was reducing it to hoteliers since eight in ninety-seven.

Kempinsky always created an ecosystem for a good life, It could have been hotel and invented first resort in world but not just limited. The first thing is, you need to go back who are and what your credential or brand territory. So would it make sense for Kempinski? To start opening restaurants...

Or start doing tours towards the countryside? We were used to do that a hundred and fifty years ago. So it makes sense inside. What is my brand?

You know, so whenever you're looking at so-called brand extensions It depends who you are And can you really claim a stake on him? I remember when I arrived at Silver Sea many many years ago I got very upset because I found the silver sea champagne. Oh, I'm like this. we don't have any brand claimed towards Champagne.

yeah Okay. On the other side, can I tell you tomorrow? I will welcome the Kempinski wine because that's how Kempinsky started! Yeah You know we used to own vineyards and We were the first.

so for us it would be legitimate. So there is a connection here. It could be legitimate...you know..

we have the supporting evidence. I think that in any time you do at brand extensions, brand extensions are great. If you as a brand can really help your guests or customers to resolve more problems through you but if you're not have the legitimacy to move there You shouldn't do it because you just decreasing value of your brand. So...

The answer is depends And I will keep watching the space if there's some news coming. If we look at markets, Barbara obviously... We all know where part of the Kempinski portfolio is and were you guys are strong or potentially looking? You said something in the very beginning that was quite interesting about emerging markets and developed market.

Obviously now we have a few developed markets with only a few emerging markets left. Tell me a little bit more about how you are feeling. Set aside geopolitical differences because we know there's a lot going on, but where do you feel like? There is a lot of talk in the town about Africa at the moment and still talking to people from Asia...

How can I see all that? So again i will always go back to this recipe. You need to build on your strength and foundation. so Kempinski is a German brand.

By the way, Germany is the largest international travel market in the world so it's absolutely great to be the first German luxury brand! So that is definitely a source-market advantage I want keep and exploit more than... The second market for Kempinski is United States. Americans don't travel as much as Germans, not at all.

They're more domestic but they spend a lot of money when they do and therefore people. so we like the American source market. Then there are another two source markets in which globally, Kempinski is very strong. One is the GCC because we were pioneers in opening in the Middle East Which again?

Is a very affluent Very sophisticated customer, which is great to have and of course the Brits The Brits or the one that never scare. whatever happens the brits are going. so you always want to have Brits in your source market mix. shout out to Great Britain.

Yeah. And then on this side We Have the Chinese. Kempinski still today is the largest international brand in China. We were the pioneers, we are first and still today have twenty-three open houses.

So let's not forget the Chinese, because they are second largest economy in world. And I assure you that will start traveling. They'll come back here. Considering these are strength of Kempinski when we started looking at development strategy and really go to my Christmas wish list where would like to have hotels for future?

Where do this people want? So, I can tell you that i'm very interested in having more leisure hotels. You know historically Kampinski's had more than seventy percent of the keys which were more business city keys. absolutely nothing wrong with it.

but we need more leisure. Leisure extends their average stay and its a different game. yeah uh...I want more European houses both capitals, as well as leisure.

And at some point we will need to understand how put more campaigns in front of this beautiful American source market which happens. This is if I need to give a trajectory for business development then on top of that, Of course. I need To consider what are my current engines of growth? That they want to consolidate China Southeast Asia in the Middle East.

So we've just this where i will be busy For the next five years. it doesn't look like you're. yeah You'll not be bored for sure don't know why guys see that. and if we If We Look at Talking a little bit about you, if we look at kind of what you've done in your past and talked already with Silver Seas which I think was the news but also go back through career further.

How much influence has luxury fashion space? Had on the hospitality industry and I feel like you're the perfect person because it's a question. I hear a lot, especially to CEOs. I Feel like your probably one of the better people.

ask cuz You might know Because you've been in both. so tell me Tell me. And The reason i asked is Is A Very Purposeful One Because Not Too Long ago On This Podcast We had The CEO Of The Karl Lagerfeld Brands. On this podcast Who's Doing The Other Way Around?

He Has Done Some Branded Residences One In Dubai. More Recently They Have in Macau for quite some time. So not too far away from your source mark as well, obviously they only have two. and he said actually...

From the outside it might not seem that way but there's a lot more connection between luxury fashion and luxury hospitality than people might assume. would you agree? I would agree but i would not use the word fashion. okay I would use the word retail, because particularly when you're thinking about luxury it's really about that timeless elegance.

The reason why i don't like the word fashion is because particular in fast fashion it almost feels like what is good taste is continuously recycled every three four months. It shouldn't be so. if you are talking about luxury, luxury lives much more than a fashion collection. Yeah, okay.

So and is that something? because... And that's where I'm heading with the question. Something as a big topic as well.

at the moment everywhere Is these partnerships? With brands that are potentially not within the hospitality space. so something you would consider Very very interesting point. yeah i think there are two aspects to consider here again.

Let's Not go into then the difference in geographies. Yes emerging markets but broadly You have two ways of building a brand. Either you build your brand on history and keep repeating the same three things, three times... And then eventually people realize oh guess what?

That's Hermès! Everybody immediately knows, perceives without having to add tagline what Hermès is. Hermès has not done any partnership in history. I think the only one was for The Apple Watch, in which they actually lent their leather over-priced leather just.

there's no partnerships because like Loro Piana these are brands that know exactly who they are. They're timeless and they just go forward repeating this same thing. There is no partnership. Then on the other spectrum you have more fashionable brands faster.

And in these cases, creative collaborations more than partnerships can create a lot of magic because you have brands that are less regimented let me say in their way and history yeah and they're much more ready to experiment and I'm afraid they're older than you, but five years max. Not more! When Vuitton put Jennifer Lopez on an advertisement all of the timeless luxury industry was shocked because I am outraged You are putting Jennifer Lopez But can i say that is a pivotal moment for the brand Because it really increased their relevance and size enormously by embracing this kind collaborations, you know?

Because they realized that the brand was strong enough to hold it. So I think this is one key aspect of partnership. On the other hand partnerships also depend a lot on where are in the world because for again if European source markets and guests typically logos are inside You don't need as much Logos shown outside. Yeah while emerging markets that are still learning You know, they're still at the beginning of their journey as consumers They want to have bigger logos.

so which of the two is Kempinski? Would you be more? The laurel pianas of the world or would you be More the Louis Vuitton's of the World? So I will definitely be a Laurel piano of the word.

there is a big difference. And this is where to your previous question, all of these retail brands or luxury brands that are trying to get into hospitality. what could go wrong? So the reality's that they reason why these brands so good at keeping their perfection, their etherealism.

you know their brand essence Is that typically the interaction between the brand and customers very fast. I desire pair shoes I go to the shop and the mom immediately feels sexy because you're like, yeah By consuming luxury. I walk out of the store And they whole thing was maximum forty minutes. It's very easy to maintain perfection.

for forty minutes You get into hospitality. They waited had a bad day. outside is raining. The plane was delayed.

that let me say it's much more difficult to keep the bubble because hospitality is the real world. And this where I think that if you take some of these amazing brands, they are very fantastic at creating these bubbles and maintaining the bubble in hospitality going to be much harder Because we have a whole world coming into the lobby again during all day. And if we look at the lobby and what you've just explained, people coming the way the world works now and there's obviously media, social media.

And everything else that's out there. has it been more difficult to create this or have become more difficult? Create unique experience for guests because There is so much choice in variety. at click of a button they can basically walk through your hotel in China virtually without having being their.

or has it? or Is that in your opinion on the reason I'm asking This heading little bit towards modernity? How difficult is it for you to balance the heritage of Kempinski with modern, I'm not even gonna say standards but do what? Yeah elements.

With relevance today. so first of all in a world where everything's available and everything is click away The importance of filters curators becomes detrimental because we can find whatever we want but it is the curation for us that's actually something much more elusive. So in this sense, again and this part of the opportunity at Kempinski was the original curator. I mean they were curating The Good Life For Germans before what the good life was.

So this role of being a curational brand versus service-brand is fundamental, and these are one difference that I think we have. The second thing again in world where everything is click away human connections become much more important. so while AI making huge changes you know actually the importance of human connection is increasing and not decreasing. And hospitality at the core, it's a business for people.

You will know this but I'll share secret with you. at the tender age of sixteen, and as we just learned there's no it wasn't too long ago. I started my career with Kempinski. this was very yeah out a bit-as a bellboy.

i tried...I earned a little bit of cash on the side while going to school. this was a hotel up in Frankfurt. that's unfortunately not longer part of the kids you know?

The Falkenstein one is unfortunately no longer part The essence of welcoming a guest and it's something that we were taught very early even as bellboys at the time. And I was wondering if you would tell me how do you see? the idea Of welcome or bringing guests into your hotel, and then did the welcome experience has a hole. How do you seed that progressing?

because i've seen A lot of things now. There's been some conversations As well in Some of the elusive luxury trade shows of the world In the hospitality business where You know, people are now also getting especially in luxury space. Getting to your hotels and very different ways. there's the commercial airlines.

There is private Airlines. There's a whole variety of different places off of getting too. How was that going? To change?

because we've talked A lot about The brand. Now In the essence behind it Let's talk About the guest. has That changed at all? so Again I think that It goes Back to who you Are.

So i Think that Particularly in let me say Hotels There are Three Different Categories Off In general, arrival experience. Let's call them one the hotels that are by definition sanctuaries So they're actually close to the world. if you add a paid guest You're allowed in mm-hmm. That will always be a very intimate and solitary By definition by design.

yeah experienced there is absolutely nothing wrong with that. Yeah, it is great serving a great exclusivity in one way or another. Exactly, so I mean i don't want to name competitors but you can immediately know who are thinking of it. there are a lot of brands that are closed to the world.

then there are the brands that is open. for example Kempinski will always be opened. One thing we say at our GM's the city are open to the destination, anybody and this is something that we're working on in product development. We were working on trolleys there whole day for example will welcome guests not paying guest hotel?

yes they just go. because if you go back to original spirit of Kempinski a successful Kempinsky in Europe, with Americans sleeping in the rooms and a local elite in the lobby. That's what you want to have because at Campinski we will always be open today. The third type of hotels are the hotels that are relying less on service And more automation.

Those are the hotel that work more on the original function. I need place for sleep. In those cases i think thanks to technology don't even want to see a human being and that's absolutely fine. Through your phone you just sweep in, go up...

And get the clean room! So thats why I divided it into three different categories because it depends where do wanna play. Okay.. And Kempinski is very clearly positioned right at second category?

For me its hundred percent. I will definitely fire anybody who considers Kempinsky close to the city. I hope you took note of that Barbara, just like that. Thirty minutes have passed and i know That You Have Places to go.

so we have about five or seven more Minutes that i want To use for three things. first Of all? I Want to play a little game with you at the end And i'm very much looking forward to that. before We Play The Game i would love to hear your opinion on the future.

we've talked A lot About the past heritage and So on and so forth. now walk me through geopolitically, I think we're all praying for the fact that the world becomes a little bit more peaceful in every part of it. But walk me through what are And I'll take two answers from you one Kempinski and one luxury hospitality space. What are we seeing in the next year?

or to what? Are some things that you guys also In Geneva, or in Dubai office our preparing for in the Next twelve to twenty four months. So Kempinsky is going asset heavy. Yeah so you will start seeing very soon announcements about Kempinsky acquiring properties.

Okay The main reason why were going as it happens because we want a offer unique a unique collection of hotels around the world. To do that, you need to control the asset - to a broader extent - that very often HMAs allow it. So in order really show the Kempinski-ness and how we are still relevant brand an incredibly relevant brand today. That is one thing that will see more and more In terms of luxury.

You know again I am trying track How many logos are launched every month. And I'm afraid that if i need to do one prediction, you will see a lot of a sea of sameness in this industry. because uh...I mean..

i hope it's not the game but If You Asked Me To Start Rolling All Of The Luxury Brands That Just Were Launched In The Last Year? I Would Fail Miserably. Tell me A Thing Or Two About The Asset Heavy Strategy Because It'S Something That A Lot Of Your competitors, if we want to call them that and are not doing. And quite deliberately so have been working very hard to become as asset light as possible with some workarounds.

then sometimes there's another company that is owned by the same group but generally the idea has been asset lite. I understand point you make of can be a bit more Kempinski-ish if we have the full ownership. What else can you tell us about that step? So I would say, I don't necessarily need a full ownership but I do need full control which is different and it all goes back to capital structure If your are public company being asset heavy its very capital intensive.

so It's best thing for companies to be asset light. In my case I'm not. Which was also one of the things that attracted me to Kempinski, we are a very well-funded private company in which the owners own other assets. so for us it is different perspective and in this case because at the core of our business there's the luxury desiring creating these unique experiences in luxury having control over the asset.

Would you say, I read an interview from you not too long ago where you discussed also the idea of potentially moving the head office from Geneva or at least attributing part to it to GCC. And would you say that owner relationship is key as well? Probably more so now than has ever been because there was a time and remember very clearly in Not So Long A Go Where There Was A Lot Of Independence Given To Management And The Ownership Perhaps Was Not As Much Involved. I always manage the companies very, very close to the ownership of stakeholders.

This is fundamental because at end-of-the-day management is mandated what the stakeholders and shareholders want do. Right now, the Dubai office has same if not some more people than the Geneva office. This is also due of how their job market evolved. it's easier to find certain skills in Dubai versus Geneva so depending on what kind of skill we want integrate into the brand Before we play our favourite game on Smack, a final question for me.

Barbara you've been around... You have been travelling quite a bit from what I heard about your team and also from Kirstie. Give me your favourite moment of the past two years? Is there anything...?

This is completely... We did not prepare you to this question! Was or was it just a moment that stuck with you where you thought wow?! This is a truly special, it can be anything.

It could from a taxi ride to stay at one of your hotels for dinner? Well actually I think there was very special moment and i was in Antarctica And you know an Orca whale Came by and the penguin to escape. The orca well jumped on your boat And I have this video of the penguin looking at the passengers Looking at the orca, you know looking at a passenger's looking at New York And he's like what do i go back? Do i stay here?

in the end the penguin just decided To ride with us. yeah, it was Just so cool because I could see the penguin strategizing. who are all these weird people Here but There's that big thing there. It was just an incredible moment of connection with a different species.

Wow, what? A moment. yeah The penguin did the right thing. I mean do you still have the video?

Maybe maybe we can blend it into this post when we publish because that's great Barbra That's great. Thank You so much. final game that we like to play on some before We let you go and bulldoze. And I'm going to give you, and disclaimer now for everyone.

this is a game we play on smack. it's not Barbara's official opinion but what i would love to do with you as I would love To Give You three hotel brands that are NOT Kempinski! And you get to book one. so stay in one...

you got buy the other and integrate into your portfolio..and one unfortunately needs to go. Okay, that's unfortunately how the game comes. And obviously we made it difficult for you because we know that you like a challenge and asked around.

so here are three brands to choose from. You get to chose between our dear friends of Four Seasons. You got to choose between Carinthia Hotels Because this is where I first met So i had to include That one. And then you get to choose as the third one Between Mandarin Oriental.

Ooh interesting okay! I would bulldozer Four seasons Ok? Because The world needs more color and less beige. Very good.

I would definitely book Mandarin Oriental, and I will buy Korean. We don't tell Simon? No, no. I mean Simon...

I love Simon as well! We're very compatible companies. so if i could afford it you would go for Simon's brand? Very good Barbara.

thank you so much for your time. a pleasure to have you. we will reconnect in twelve months and see what the sea of brands has how its developed and whether you were right with your prediction. Have a great IHAF.

Thank You again For Your Time And thankyoufor having me. It was fun half an hour. That's it for this episode everybody. Thank you for tuning in.

don't forget to share your thoughts on This episode and everything else that is going on at smack with us by checking out our website at smack dot media or connect With Us On LinkedIn YouTube Or Instagram. We'll See You Next Time.