01 Jun 2010
CEO & President, Kimpton Hotel & Restaurant Groupby Julia HannaTopics:
Founded in 1981, Kimpton Hotels & Restaurants is America’s first (and largest) boutique hotel group. With its hosted evening wine hour (where you might play Wii or have your tarot cards read), whimsical style, pet-friendly policy, and chef-driven restaurants, Kimpton was ranked number one in guest satisfaction for 2009 by the Market Metrix Hospitality Index (based on over 130,000 hotel customer surveys), beating competitors including the Ritz-Carlton, W Hotels, and the Four Seasons. Michael Depatie (MBA ’83) joined the San Francisco–based company in 2003 after stints with Trammell Crow Company, Residence Inn, Summerfield Suites, La Quinta, and Sunterra. Named CEO in 2006, Depatie oversees 6,500 employees and 50 properties in 23 U.S. cities. It is, he says, “the job of my life.”
Kimpton Hotels have different names and identities, although there are some “mini” brands like the Monaco and the Palomar. Doesn’t that make it difficult to show up on people’s radar?
Our tagline is “Every hotel tells a story.” I think of the Kimpton name as an endorser brand. So, the Triton: a Kimpton Hotel; the Monaco: a Kimpton Hotel; the Palomar: a Kimpton Hotel. It’s like a family — they all have the same last name, different first names. There’s a bit of an “insider” appeal when people understand the connection. It becomes a badge of honor to list the different properties where they’ve stayed.
But how do you get guests to stay the first time?
One of our tactics is to buy key words and use search engine optimization. There’s social media, too. Kimpton has a Facebook page, and a lot of our chefs use Twitter. We haven’t spent money on national ads to date, since we’ve been pretty effective through word of mouth; we’re also very PR-driven. Kimpton has a highly differentiated product in a commoditized business, even if it’s becoming less so through competition. Some of the stuff we do is fun, and whimsical, so it makes good copy. The media reports on our tall beds for tall people, our “Guppy Love” program that offers guests a pet goldfish during their stay, and promotions like the one we ran last summer that offered a room upgrade if you could Hula Hoop for twenty seconds or win a round of Rock, Paper, Scissors. They also write about Kimpton’s sustainability efforts, such as our partnerships with The Nature Conservancy and The Trust for Public Land. It’s interesting. People who know us, love us. The problem we have is not enough people know us. So we’re building up our InTouch loyalty program, which we introduced in 2004. Right now about 30 percent of our reservations come through that program.
It’s such a competitive business. And many of the larger chains seem to be adopting some of the distinctive, personal touches that characterize boutique hotels like Kimpton.
Yes, what was once a fairly small niche has become a legitimate segment of the industry. The big chains are adding more design elements to their refurbishments and their new builds. We think that our distinctive competence is operating excellence and the way our people show up for our guests — which isn’t to say that the Hiltons and Marriotts aren’t trying to be good operators. But their niche is distribution — more dots on the map. Once you start franchising you have to gradually give up operating excellence, because it gets in the way of growth.
How has the economic downturn affected Kimpton’s growth strategy?
It’s definitely a big opportunity. Over the last couple of years we raised two funds with a total of $360 million of equity to take advantage of the real estate deals that are available out there, and right now we have about $140 million left. Very few properties have come on the market, however, so as much as we’ve been looking, we haven’t found much to buy. To tell the truth, I don’t know what to wish for, because we own or manage a number of hotels that are getting hit hard in the recession. It’s only very recently that we’re seeing the proverbial green shoots. The hotel business is cyclical; it’s managing those cycles that is important. I do think we’re pretty well hedged in terms of our business strategy.
Tell me about Kimpton’s sense of corporate responsibility and how it relates to “conscious capitalism.” Does doing right by all stakeholders, including the environment, bring good financial results?
Absolutely! Corporate social responsibility has to be part of the culture of the organization, or it doesn’t really work. We care for our customers, so of course it makes sense that we care for our employees and our communities as an extension of that. Eco-consciousness has been part of the company since the beginning, given our practice of recycling and renovating older buildings. And because it’s part of the culture, employees feel free to initiate their own changes. An employee at one of our Seattle hotels said, “I just noticed that they’re delivering all these phone books on a huge palette. Do we need those?” No, we don’t. You save a lot of trees if you eliminate phone books across fifty hotels. Just keep a few at the front desk. We stopped putting a Bible in every room, too. But we have copies available for anybody who wants one. The Koran, the Book of Mormon, and Buddhist and Hindu texts are also available. It gives people a broader selection of what they really want.
You mentioned Kimpton’s practice of recycling buildings. Are there properties that stand out for you in terms of what they were, and what they’ve become?
One of my favorites is the Hotel Monaco in Washington, D.C. It was the original General Post Office, built in the early 19th century, and it’s a magnificent marble building that we lease from the General Services Administration. The ballroom was once the Postmaster General’s library, and a cupola lets in natural light. During the Civil War it was used as a hospital operating room where amputations were performed. Now we have wedding receptions and other functions there. Another is the Argonaut Hotel, here in the Fisherman’s Wharf area. It’s located in the San Francisco Maritime National Historical Park, in a 1907 warehouse that shares a courtyard with the Cannery complex. We preserved many of the original details, including these wonderful Douglas fir beams and brick walls.
What’s an extra little touch that makes you feel at home in a hotel?
I like a fruit plate, because then I can have a little snack before I go out to dinner or eat a bit in the morning before I work out. I also like to get a goldfish, because it’s nice to have a friend when you’re out of town. The great thing about our InTouch loyalty program is that you can customize your preferences. One of our guests, thinking “they never read these things,” wrote that he liked penguins. When he got to his room there were a couple of books about penguins and stuffed penguins on his bed. He could not believe it.
You probably win some guests over with your pet-friendly policy, too.
People love their pets. When you’re friendly to their pets, it’s like being friendly to their kids. When we opened the Hotel Monaco in Portland, Oregon, we had searchlights and a red carpet — it was like a Hollywood premiere. A big limousine pulled up, and everyone was wondering who was going to make an entrance. The door opened and out comes Abe, a yellow Lab, our “pet concierge.”
How do you attract and retain the sort of employee who enjoys delivering a high level of customer service?
For starters, we spend a lot of time trying to be a great place to work. Last year, we were selected as one of Fortune magazine’s “100 Best Companies to Work For.” We try to create an environment where our people are empowered to make creative decisions but are also accountable for the kind of results we know they can deliver. It’s very simple: A caring company culture is directly related to how an employee is going to show up for the customer. Our employees are our brand, so we try to create an environment where they can be who they really are and show up in an authentic way. As a guest, if I encounter that at the front desk, it makes me feel more relaxed, happy, and connected to who I really am. So if I hire you, I want all of you. You don’t need to be like me. I want your personality. We’re a very diverse workforce with a diverse product line to offer, which fits with what many consumers are looking for in today’s world. Our product is not just the physical product; it’s the people who work at the hotels.
You started out in real estate. Did you ever think you’d be in this business?
Yes, and I like the real estate intensity of what I do. We have billions of dollars worth of real estate, which involves lenders, equity partners, and thinking about cash flow and how it works over five years…do you buy this property or don’t buy that property? I always wanted to build a brand and a sustainable organization. This is the job I’ve always wanted since I was a kid. Now I’ve got it, and I’m having a ball.
— Julia Hanna
Class of MBA 1983, Section G