« Even in times of crisis, excellence doesn’t sell out. »
In the wake of the coronavirus crisis, the Beau-Rivage Palace in Lausanne faced a significant loss in revenues. Despite this, the hotel launched into major renovation works along with a refocus of its strategies towards a high-end clientele and wellness.
As the renovation of the Cinq Mondes Spa was completed, the Beau-Rivage wing, now under construction, has been shut down. The next ten months will be devoted to a complete renovation of its 68 rooms. Nathalie Seiler-Hayez, a graduate of the Ecole hôtelière de Lausanne, who has been at the helm of the Palace for the past five years, tells us how the pandemic is affecting the Lausanne icon and explains her strategies to position it at the top of the world's wellness destinations.
How is the Beau-Rivage Palace coping financially with the current health and economic crisis?
Financially, the situation would be very complicated without the support of the Sandoz Family Foundation. By the end of the year, we expect accommodation-related revenues to be about CHF 20 million short from normal. That's a huge amount! Our fixed costs are very high. We started the year off well thanks to the Youth Olympic Games. And then, all of a sudden, it all stopped on 16 March, the day the venue closed.
What was it like for you?
It was very hard. At first we had to come to terms with the realization that soon the hotel would be empty and that all activity would be suspended for an indefinite period of time. And then very soon after that we found ourselves telling our 400 employees to go home. All but about 5% of the workforce, mostly management, were furloughed. We kept in constant touch, motivated the teams as much as possible, and held digital meetings to keep morale high. Personally, I chose to come in every afternoon - the mornings were devoted to attending classes with my children. Seeing the establishment emptied of its staff and customers was a shock. I walked around the hotel a lot. The walls speak to you differently when no one is around. I immersed myself in history, looking at paintings I had never paid attention to before. I rediscovered places, I reread the events surrounding the Treaty of Lausanne (Editor's note: peace treaty signed on July 24, 1923). I elevated my understanding of the weight and richness of the history of the Beau-Rivage Palace. Imagine, we had never closed in 160 years, including through two world wars!
What strategies have you adopted during the closure to make up for the losses?
In the hotel business, what is lost cannot be made up; management has to adapt moment to moment. You have to be highly responsive to the economic situation. And the most difficult thing is that we have no visibility at the moment. That’s why we decided to implement and accelerate several measures, the first of which is closing the Beau-Rivage wing for renovation. It’s the oldest wing of the hotel, built in 1861. We had initially planned the work over three years, closing one floor every winter. But the current situation prompted us to accelerate the project and renovate everything in ten months.
This requires significant financial agility on the part of the owners. How much is being invested and how has the Sandoz Family Foundation responded?
The work requires an investment of 25 million francs for 68 rooms, which are being transformed without bringing down walls or changing key locks. Of course, this choice had to be adjusted to the expected drop in occupancy rates in 2020 and the years thereafter. We have to be realistic -- the situation is catastrophic. And we are headed for what will most likely be a few complicated years. Shutting off the wing for ten months in which it would have been very difficult to fill those rooms seems to me to be a good strategy.
What is your current occupancy rate?
We are at 30% - instead of our normal 90% - of 168 rooms. We've refocused on Switzerland, we've developed the German-speaking Swiss market a lot, and it's working pretty well. It's a clientele that we didn't have before. But the turnover from corporate clients is no longer there. Today, everything has come to a standstill. Weddings, seminars and incentives have been postponed, at best until 2021, and the budgets of American companies are not going to be rearranged until 2022. We're going to lose 6 million francs on banquets.
And you have just completed the renovation of the spa, which also required investment...
Yes, its renovation cost 4.5 million francs. But all these investments are necessary, because they enhance the estate value of the establishment. They are perfectly integrated in our plan, which rests on three pillars: to continue to develop the very high-end clientele, to develop the wellness sector and bring it to the center of our offers and services, and to continue to enhance the local dimension, for better transparency. In the future, the top segment of the luxury clientele will be even more discerning, and we must be ready to offer them the best.
Can you tell us more?
We are going to work on integrating the notion of wellness in all our services. We will have a wellness concierge, for example, who will arrange a tailor-made programme for the client who wants it. It's a holistic offer for the pleasure of a healthy life. But we are not going to become a health center. The Beau-Rivage Palace is a resort hotel that will offer the best in wellness, if the client requests it, starting in the spring of 2021, when the renovations of the Beau-Rivage wing will be completed. Thanks to this, we will attract a new clientele to the hotel. This wellness clientele should represent about 10% of new clients, willing to pay a higher average price (currently 610 francs), since they will be "suite" clients.
Is the year-round clientele still present in the Palace?
No, we no longer have any. On the other hand, we have about twenty guests who spend four to five months a year at the hotel, sometimes consecutively. They are mainly American, Brazilian, Mexican and Japanese guests. Very few Europeans. Because they still have a tradition of second homes, classic family codes linked to the history of Europe. Selling everything off, having no ties and living in hotels, that's very American.
The Riviera Vevey and Montreux have come up with interesting joint price deals. Do you regret not having similar ones?
The possibility was made available by the canton of Vaud and some businesses have put it to good use. Lausanne Tourism also launched a major advertising campaign to promote the destination in German-speaking Switzerland. As far as the Beau-Rivage is concerned, we don't have any promotional activities on prices, because excellence doesn't sell out. The image of a Palace is essential. The damage would be too great. We can’t afford to give in to the temptation of a short-term financial policy.
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