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Influencers with Andy Serwer: Sonia Cheng

In this episode of Influencers, Andy is joined by Rosewood Hotel Group CEO, Sonia Cheng, for a discussion about the challenges of hospitality business.

Video Transcript

[AUDIO LOGO]

ANDY SERWER: In this episode of "Influencers," Rosewood hotels CEO, Sonia Chang.

SONIA CHENG: Hospitality has always been my passion. It's in my family's blood. We have an aligned vision of really pushing boundaries and in the hotel industry. We are reaching levels that we've never seen before, even pre-COVID.

[MUSIC PLAYING]

ANDY SERWER: Hello, everyone and welcome to "Influencers." I'm Andy Serwer. And welcome to our guest, Sonia Cheng, CEO of the Rosewood Hotel Group. Sonia, nice to see you.

SONIA CHENG: Nice to see you, Andy.

ANDY SERWER: Thanks so much for joining us from Hong Kong. You have a really fascinating job and just an incredible hotel company with incredible properties, such as the Hotel de Crillon, The Carlyle in New York, Mansion on Turtle Creek in Dallas, Little Dix, Silicon Valley and Sand Hill Road, all those properties. Having said that, there are other luxury brand hotels out there as well, and I'm wondering what you think really differentiates Rosewood versus some of those other luxury names?

SONIA CHENG: So Rosewood, what's so special about Rosewood is it's a sense of place philosophy. So globally, we operate 30 properties around the world and every property has its own personality. Its philosophy is to celebrate local culture, its history, really bringing in that sense of place into the hotel so that all our travelers that come to the hotel can experience the beauty of that city. And so every property is carefully curated, really personalized, and really, it's a very special collection. So it's not, I wouldn't call it a chain, it's really a very special collection of beautiful hotels and landmark properties around the world.

ANDY SERWER: Given that each one of the properties is so differentiated, Sonia, how do you oversee such a diverse group a portfolio like this?

SONIA CHENG: Well, first of all, we have an amazing team. They are around the world. They're very talented, very passionate in the hospitality businesses, very creative, and we have an aligned vision of really pushing boundaries in the hotel industry. So we take a very thoughtful approach every time we open a hotel.

And we studied the market, we understand what the consumers are looking for each market, and we're very involved from the beginning of the design process, understanding what our target audience are looking for, curating every experience from culinary to wellness to the guest experience in the room. And also it's important for us to be immersed in that culture and to bring in those cultural experiences in every touchpoint and throughout the journey. So we don't open that many hotels every year. We carefully select the properties to make sure that every property is really special and certainly a landmark for that destination.

ANDY SERWER: How many properties do you have right now and how many are you planning to open up, say, over the next 12 months? And what is that trajectory like versus before COVID? And we'll talk about COVID, of course, in particular, but just where does the business stand versus, say, 2019?

SONIA CHENG: So for the Rosewood brand, we operate 30 hotels around the world in 18 countries. And we've announced 24 projects that are in the pipeline at the moment. And surprisingly, while COVID has a significant impact on the hospitality industry, we have experienced tremendous growth in our pipeline in the last two years. Developers and owners in the hospitality space continue to be quite confident in the outlook of the hotel industry and continue to invest in hotels and looking to partner with Rosewood in developing more Rosewoods around the world. So actually, the last two years, we have record high signings of new hotels in the pipeline.

ANDY SERWER: So take me back to March of 2020, though, and as the pandemic unfolded, how did you respond and how did you guys survive over, say, those two critical years?

SONIA CHENG: So it was certainly a very challenging time. I think it was an unprecedented time for all of us in the hotel industry. We did not prepare for it. And so we reacted very quickly.

The key to addressing this crisis is to be very flexible. We immediately take care of our associates, number one. Number two, we address key concerns of our consumers, our guests, and took a very flexible approach in the hotel to make sure that all the health and hygiene standards are there. We take into considerations what our guests are looking for to ensure that it is a safe and an exclusive environment that they feel safe to stay in.

And also, we react very quickly in terms of different markets and market needs. So for example, Rosewood Hong Kong, we pivoted very quickly, the business to staycation. So we were the first hotel in Hong Kong to launch a staycation program, because everyone in Hong Kong couldn't travel abroad. So we basically turned the hotel into an urban resort where we launched kids program, a summer program where the local residents can use our hotel as a vacation spot, and that was really successful.

And then we was an industry leader in implementing staycation. As well, we noticed during COVID, the trend of consumers looking for more privacy, exclusivity. So there's an uptick in staying in bigger villas. We developed much more curated and personalized experience in our residences and our villas. So I think the key is we maintain significant and constant communication with our team around the world so that we're able to address concerns of our associates and the organization as well as the consumers very quickly.

ANDY SERWER: So I imagine you took some of those learnings and you actually kept going with those things, right? Has that been the case?

SONIA CHENG: Absolutely. So I think over COVID, the revelation is that some of the consumers' behavior has changed. They are more focused on personalized experience, number one, they care about their own well-being, they care about lifestyle, they love to travel, they miss travel, so there's a significant pent up demand, and it also allows us to discover a new territory of, how do we bring Rosewood to their home? So we actually ramped up our digital transformation.

We are developing, we are pivoting our strategy of developing Rosewood to be beyond just a luxury hotel leader, but we want it to be a comprehensive lifestyle leader, where we are diversifying our portfolio. We launched Asaya during that time, a complete holistic wellness concept that really takes care of our consumers, not just in a traditional hotel spa. We launched our private membership concept in Hong Kong called Carlyle & Co. where it gives a safe space, an exclusive space for private members.

We also ramp up our offerings and our development on Rosewood Residences. So 50% of our Rosewood portfolio has Rosewood Residences. And then finally, we also piloted our retail offering, so really extending our Rosewood ecosystem where we can impact people's lives and give them a curated Rosewood experience wherever they are.

ANDY SERWER: Wow, that's a lot of stuff. I mean, you probably never would have done those things, all those things, certainly not in that time period, had it not been for COVID, right?

SONIA CHENG: I think that COVID gave us time to take a step back and pause and observe how consumers are behaving and how they're evolving and it accelerated some of the plans that are going to stay.

ANDY SERWER: Yeah. So yours is a family business. Your grandfather was the patriarch of the family company, and your father, and then you joined after college then working on Wall Street.

Tell us about that journey. You went to school high school in the United States, then you went to Harvard, and then, as I said, after Wall Street joined. What was that process like?

SONIA CHENG: It was amazing. So after I graduated from Harvard, I went into the finance industry, which I did a few years in investment banking and then a few years at private equity. And those experience was amazing. It gave me a very solid foundation in terms of how to analyze operating companies, build the financial skills that I need in the future.

And then after I think about five years, then I started venturing into the hospitality business. Hospitality has always been my passion. It's in our family blood, as you mention. My grandfather and my father were pioneers in the luxury hotel space in Asia.

They were the first one to develop the first luxury hotel in Hong Kong. They were the first one to develop the first luxury hotel in China. At one point, with the New World Hotels, we were one of the biggest player in Asia at that time. And my grandfather and my father always loved the hospitality business and I've always been growing up surrounded by the hotel business. We lived next door to the hotel.

I used to go with my father when he was looking after the hotel business to look at operations. I traveled around the world with them. So that's how I developed my passion. And so after the finance experience, I immediately ventured into the hotel business.

ANDY SERWER: And so you had some background in it, but basically, you were learning as you were going initially and then when did you take the reins of the business itself?

SONIA CHENG: So I joined in 2008, around 2008, 2009. And you're correct, I didn't have the traditional hotel education. I didn't go to Hotel School. But because when I joined, I was so passionate that I spent the first two years really almost a crash course in hotels, meeting as many people as possible in the hotel industry, different companies, talking to a lot of from market leaders, to influencers, to travel experts to really understand, what are the needs in the hotel industry?

What are the offerings and what are the white space? And then those first two years, the other thing I did was I knew that I need a very strong management team. So I spent the first two years hiring and recruiting the best talents to join my team to be partners on our exciting journey. And then fast forward in 2011, the key pivotal point was the acquisition of Rosewood in 2011.

ANDY SERWER: Right. How does your family, do you guys have family meetings where you talk about all the businesses together? How does your family operate that way?

SONIA CHENG: Actually, we're pretty casual. My father is a great mentor. He really loves the hotel business. So every time we have family dinners, he will discuss with me on hotel operations, give me advice, share with me his observation whenever he goes around to the hotels, and we would have really open discussion and discuss how we can improve, how we can involve, and how do we develop the brand.

ANDY SERWER: Right. And then you have brothers who are in other businesses that are part of the family group as well, right?

SONIA CHENG: That's correct.

ANDY SERWER: So tell us what's going on a little bit in Hong Kong, Sonia, in terms of the business environment. We read so much here in the United States about changes and disruption, COVID, political issues. How would you describe the environment right now?

SONIA CHENG: Well, Hong Kong recently relaxed their travel restrictions, coming to Hong Kong on the quarantine, so that's really good news. We're already seeing an uptick in travel coming into Hong Kong once the restriction was lifted. I'm very confident that once the quarantine restrictions are lifted completely, there will be a very quick recovery in Hong Kong.

I think there's a significant pent up demand in coming to Hong Kong. Hong Kong is still the one of the world's most important financial hub, business hub, cultural hub. And we're very confident in terms of Hong Kong's future and outlook and hopefully the restrictions will relax very soon and we'll see a very significant recovery.

ANDY SERWER: And just one more question along those lines. I mean, running a global business like this, are you concerned about the way the world seems to be going in terms of being anti-globalists, and the world being more divided up, and travel being more difficult between countries because of political tensions, not just COVID? Is that something you consider?

SONIA CHENG: I think now, in a line of business as I see with the recovery of COVID, we see a significant pent up demand to travel. If you look at the recovery path, whether it is in China, whether it's in Europe and the US, the trend is the same. As soon as restrictions are lifted, people want to go back to what was their normal lives period pre-COVID.

They want to see their family, they want to see their friends, they want to meet their colleagues. So what we're experiencing in our hotels are a very quick recovery. Whether it's in the US or Europe, and now Southeast Asia, we are reaching levels that we've never seen before even pre-COVID. So overall, I'm very confident in the hospitality space and its outlook.

ANDY SERWER: Right. And so just to follow up on that, are you kind of back to 2019 levels?

SONIA CHENG: Oh, some of the hotels are beyond 2019 levels. We have resorts in Mexico that it's experiencing rates and occupancy that they have never seen before since opening. So there's a huge pent up demand.

ANDY SERWER: Now, on the other hand, part of the problems with this demand are twofold. One, which is labor shortages, and two, supply chain so. I'd like to ask you about both of those things.

And I know it may be hard to generalize about both, since you are such a global business. But what about, let's just take them one at a time, what about labor shortages? How is that playing out in various markets, Sonia?

SONIA CHENG: So, we are experiencing labor challenges, I think as with everyone else in the hotel space and travel industry. However, in the last couple of months, we've been able to recruit the talent that we have been looking for. I think that it's very important to reintroduce the beauty of the hotel industry to the talents out there. I think that because of COVID, they temporarily left the industry, but a lot actually wanted to come back.

So I think it's important to focus on building an organization where we are communicating to our talents that this is a learning organization. What is your career path? Focusing on building a purpose-led organization, which the new generation of talents, that's what they're looking for.

So really shifting focus on, how do we make the hospitality industry attractive again? And it all comes down to people. It all comes down to leadership and what are you trying to build as an organization? And we've been seeing some success. We had a little bit of a bump last couple years, but then we've seen some success in recruiting back the talents.

ANDY SERWER: And as far as supply chain goes, how is that affecting your business, just in terms of being able to source everything, from food to linens to construction materials? And is that impacting pricing? And are you seeing inflation being a problem?

SONIA CHENG: So we're starting to seeing some rise in cost in our properties and our hotel operations in the US and Europe and we are addressing it. I think that we are looking at different methods of optimizing our operations. The good thing is, because the pent up demand of travel is there, and we're seeing such a surge of travel and rates are increasing as well, so overall, the impact currently is still manageable.

ANDY SERWER: Right. So you have some pricing flexibility in terms of what you're able to charge. Shifting gears a little bit, Sonia, I want to ask you about being a woman leader in the business and what that's been like, and how singular that is and what your experience has been.

SONIA CHENG: I think that, for Rosewood, I think women in the hospitality industry, we can offer a very unique perspective to the hospitality industry. And I can speak for myself, I'm a mother of four at the moment and I find it a very tremendous experience to be in the hotel industry, because previously, you were saying that there's challenges of work and family balance. And but what I realize is nowadays, a lot of women travel with their family on vacation. There's a trend of developing blending work with leisure at the same time.

And for us women, we have a different lens in the hotel industry where we can shed a different light that can help evolve the experience in hotels. So for example, because I have four children and I know what is important to children, the last couple of years we revamped our children's program, which is called Rose Explorer. So previously, in different hotels, kids clubs are seen as this 50 square meter room where you have some art table, you have some books and that's the kids club to house the children in resorts. But because I have children, I have a different perspective.

And Rosewood Phuket, for example, we've launched a new kids program where we built in a lot more educational experience from programs to learn about coral reef, to a herb garden. So they learn about organic planting, to tie weaving stations. So it's a very diverse education experience and kids love it and families are going to Rosewood because we have an amazing kids program. And I wouldn't have developed that had I not become a mother.

So I think women can really provide a different perspective to the industry. The other example I want to give you is about development of Asaya. And when we launched the Asaya concept, we created a focus group with a lot of women and talked to them about what their needs are and what they're looking for that is beyond a traditional spa. So those inspirations are very important and critical for our hotel industry to continue to develop and continue to evolve our concept.

ANDY SERWER: That's fascinating. I think you're also using data analytics to personalize hotel stays more and more. Can you talk to us about where that's going?

SONIA CHENG: Yeah, so I think it's very important that we recognize our consumers' behavior, our guests' behavior on a regular basis. So we are building a very strong CRM program globally for our hotels where we are able to understand our customer's need in advance, and so that our approach and our service approach is much more intuitive. We're building a data lake where we are capturing these data and allowing our associates at the property to provide those experience in a much more personal way.

ANDY SERWER: And what about sustainability? Is that important to you and how has that manifested both from an operational standpoint, Sonia, and also maybe from the standpoint of something that the guests might experience?

SONIA CHENG: Yes, absolutely. So sustainability is very important to us. We have just launched our social impact vision, in fact, which is called Rosewood Impact. And the vision really covers how we are going to support community, as well as play our part in protecting the planet.

And we have been doing a lot of sustainability efforts and initiatives and programs for decades now. We have a global food waste program where we try to reduce wastage, as well as reduce energy around the world. And then we have just opened Rosa Sao Paulo for example, which is one of the largest upcycling project in Brazil, in fact.

And we're committed to, within a year, to achieve 100% renewable energy through solar panels and hopefully to achieve, as a group, carbon neutrality in the future. So sustainability is very much a core pillar in our organization. We've been doing a lot, but we recognize that we need to do more to help sustain and protect the planet.

ANDY SERWER: And you just mentioned Sao Paulo. Can you tell us where you're going to be opening other properties over the next year?

SONIA CHENG: So beyond Brazil, you mean?

ANDY SERWER: Yes. Yeah.

SONIA CHENG: Yes, absolutely. So for Rosewood the brand, I mean, we've announced about 24 projects around the world. Next year is a very exciting year for us. We're opening quite a few amazing projects.

We're opening a Rosewood Amsterdam. We're opening in Rosewood Munich. We're opening our first hotel in Hawaii, Kona Village. We're also venturing into Middle East and opening Rosewood Doha as well. So very exciting openings in the next year.

ANDY SERWER: Sounds like you're going to be racking up those frequent flyer miles, Sonia, right?

SONIA CHENG: Yes, hopefully. I think next year onwards the travel will be quite intense.

ANDY SERWER: All right, final question, and I know you're not going to be able to answer this because this is like the same thing, me asking you which one of your kids is your favorite kid. So I'm going to ask you, which one of your hotel properties is your favorite property? Or is there any way that you can maybe say, well, something really sticks out in your mind that you kind of really dig?

SONIA CHENG: I mean, a lot of people ask me that question and I will give the same answer. I really do not have a favorite. Every Rosewood property really have a special place in my heart. Everyone has their own story. From Rosewood Hong Kong, which is my home, my home city. I used to live in that area, so it has a special place in my heart. To Rosewood Beijing, which is our first hotel in Asia. To a Hotel de Crillon in Paris, which is a tremendous landmark in Paris. And so every property really has an amazing spot in my heart, so I can't really say who's the favorite.

ANDY SERWER: You have the dozens of hotels and the four kids and you love them all. I can't blame. You can't single any of them out. That makes sense, right?

SONIA CHENG: Exactly.

ANDY SERWER: Sonia Cheng, CEO of Rosewood Hotel Group. Thank you so much for your time.

SONIA CHENG: Thank you, Andy. Thank you.

ANDY SERWER: You've been watching "Influencers." I'm Andy Serwer. We'll see you next time.

[AUDIO LOGO]