It may not be as commonly known as Hyatt, IHG, and Marriott, but those in the know are aware of The Harilela Group’s formidable position in the field of hospitality and asset management.
Since it began operations in 1959, the Group has led a number of partnerships with some of the leading players in global hospitality.
At the recently-concluded South East Asia Hotel Investors Summit, Group chairman and chief executive Aron Harilela joined HOFTEL’s Simon Allison for an insightful fireside chat regarding a strategic pivot away from pure third-party asset management to launch its own luxury boutique brand: The Hari.
Likewise, Harilela also shared his thoughts on how his company has evolved from a traditional family office model to an institutional, IRR-driven growth machine.
Identifying the Four-and-Three-Quarters Star Gaps
While global hotel conglomerates have spent the last decade aggressively expanding their brand portfolios, Harilela pointed out how a significant white space remains in the upper-upscale and luxury segments.
This unique space is one that he refers to as the four-and-three-quarters star niche.
As he explained it: “"If you look at all the big brands, what they're doing is they're waiting for the smaller brands, who don't have to spend that much money to establish themselves, to occupy that niche, and then acquiring them.”
The Harilela Group didn’t wait for a third party to fill that void in their portfolio; instead, it opted to leverage its five decades of deep asset management expertise to create its own brand from the ground up.
Backed by extensive multi-market research across Tokyo, Seoul, Hong Kong, Singapore, and London, the group launched The Hari.
The name was chosen for its cross-cultural, international appeal, and also pays homage to the family’s legendary patriarch Hari Naroomal Harilela who passed on in 2014.
Since its inception, the brand embodies the Harilela family ethos of high-end hospitality and entertainment.
When it comes to the market, make it fit
One interesting lesson Harilela shared with his audience in Bangkok was the critical importance of market-product fit over rigid brand standards.
Recalling the transformation of their London property which was, at first, one run under the American brand Thompson Hotels, Harilela pointed out how the brand’s outré image and avant-garde vibe was at odds with the elegance of its location.
Harilela said: “The founder of Thompson Hotels wanted the [staff at the] Belgravia property to wear Chelsea boots, jeans, and flip-up cuffs. I said, ‘This is Belgravia. If you want to do that, go to Shoreditch.’ Once we took away that bohemian American stuff and the property became less bohemian and more Belgravia, we really saw the yields move."
Under The Hari brand, the London property saw TripAdvisor rankings skyrocket into the top 10, driving a monumental RevPAR lift within just six months.
Not without challenges
As with everything in the hospitality business, that of running an independent boutique brand comes with its own set of challenges.
Harilela admitted that during soft patches, OTA distribution business at their 210-room Hong Kong property can climb to around 20 percent, a metric they are aggressively fighting to lower due to high commission structures.
In order to combat this, the company is actively in discussions with global hotel players regarding a potential soft-brand alliance.
According to Harilela: "We are having that conversation for three distinct elements: distribution, loyalty systems, and OTA commissions.”
This does not mean, of course, that Harilela and the Group are about to compromise their brand identity.
While he continues to debate with Group chief operating officer Brad Kirk on whether or not to enter a major alliance, Harilela is cautiously keeping an open mind.
As he puts it: "I’m still watching this space. I am not convinced that a big brand will absolutely do well in every single one of our locations. There is not one image to fit all."
