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by Cheryl-Anne Sturken | June 25, 2012

Mandarin Oriental, Guangzhou, in ChinaEasily one of the most recognized luxury hotel operators, Mandarin Oriental Hotel Group, which currently has 26 properties in its portfolio, is kicking its development pipeline into high gear with a slew of new-build projects that will open in the next five years across Asia, Europe and the Middle East. Richard Baker, executive vice president and operations director for the Americas, sat down with the Hotel Insider to discuss the brand's expansion plans and the state of business in the group market.


Mandarin has 20 developments in the pipeline, all opening in the next four to five years. Sadly, I don't see the U.S. on that short list.
Financing is still very tight for luxury deals, but we have several projects we are tracking carefully that I can't reveal at this time. I can tell you that Los Angeles is a priority for us. We are looking at three projects there. Also, we just opened our hotel in Atlanta this year, which originally was a Rosewood project.

Will conversions be a way to grow the brand in the U.S.?
We are definitely open to conversions, provided they are in the right market and the right fit. But, we might also be interested in acquiring another brand or one hotel at a time. We have the corporate infrastructure to support that type of growth.

In the last couple of years, the owner-management relationship at many luxury properties has played out with a lot of contention in the media. Has that calmed down now that the economy has picked up somewhat?
The relationship you establish in the beginning is critical to the success of the hotel. It's not just about running a fabulous hotel -- it's about bringing value to the hotel. We understand the owner's objectives, so we actively partner with them on revenue management.

The luxury market is getting extremely competitive, maybe even a little crowded. How does Mandarin differentiate itself in the U.S. market from the American brands?

I would like to think we are different from the mainstream luxury. We are not like a Ritz-Carlton that has to tell their staff how to talk to customers. Service is so part of the Asian culture, it comes naturally to our employees, which makes it sincere and heartfelt. There is really nothing that can compete with our high level of service, except of course for other Asian brands such as Raffles or Shangri-La.

Will properties ever get back to the pure hotel model, or is the residential-hotel model here to stay?
The residential model is definitely not going away, because it holds obvious value for investors. We believe it will only continue, even increase. We have a project we are looking at in Chile right now where the residential portion is larger than the hotel.

What does group business look like today for Mandarin compared to three years ago? Is it still very last-minute?
Group business has always been a smaller section of our overall revenue, simply because our hotels are not that huge.  That said, we do have some, such as our Atlanta and Miami properties, where it represents as much as 30 to 40 percent. Let me tell you, it has not gone away. It's just being conducted in a more discreet manner. In fact, we have more group business on the books for the third and fourth quarters of this year than we did five years ago. We are also seeing an increase in group business from the financial industry and the return of incentives.