GROUP: SPRING

CASE SUMMARY - lebua

The case study focuses on Lebua Hotels & Resorts, a luxury hotel chain based in
Thailand, and the challenges it faced in the aftermath of the COVID-19 pandemic. The
study revolves around Deepak Ohri, the CEO, as he contemplates strategies for the
hotel’s revival and future growth.

THE LEBUA STORY

Rohit Ohri’s journey in the hospitality sector began in the 1990s at luxury hotels in India
before he moved to Bangkok in 2001. In 2003, he acquired lebua, a dormant property,
and revitalized it by focusing on setting up a high-quality restaurant, which was an
unorthodox decision at the time. Lebua quickly gained a good reputation with iconic
features such as the Skybar and the rooftop restaurant Sirocco, setting many pioneering
trends in Thailand’s luxury boutique hotel space.

THE PANDEMIC’S IMPACT ON STRUCTURAL ISSUES

The COVID-19 pandemic severely affected the hospitality industry, including lebua,
which experienced drastic drops in visitation and revenue. Ohri faced challenges related
to employee retention, geographical brand expansion, customer trust, financial viability,
and redefining luxury in the post-pandemic context. The team had to reassess their
strategies and make trade-offs to remain distinctive in a competitive market.

AFTER THE PANDEMIC, WOULD LUXURY STILL MEAN THE SAME

THING?

The post-pandemic era brought uncertainties about the definition of luxury. Ohri and his
team needed to determine what changes were necessary to maintain their brand promise
and align with new consumer behaviors. They had to ensure that lebua’s brand equity
remained a differentiator and adapted to the new realities.

THE EMPLOYEE CHALLENGE OF A POST-PANDEMIC WORLD

Employee retention became a significant issue during and after the pandemic. Lebua
needed to address the concerns of their staff, ensuring their well-being and aligning their
strategies to retain talent in a challenging environment.

FOCUSING ON HUMAN INTERACTIONS

Lebua emphasized the importance of human interactions in providing luxury services.

The hotel’s philosophy centered on privacy, simplicity, and exceptional service, which
were integral to their brand identity. This focus on personal touch and guest experience
was crucial in differentiating lebua from competitors.

BRAND CONSISTENCY THROUGH PRODUCT MANAGEMENT

Maintaining brand consistency across multiple properties was a key challenge. Lebua
developed a template for operating hotels and restaurants, ensuring that 80% of the brand
DNA remained consistent, while allowing 20% flexibility for local practices. This
approach helped maintain the brand’s identity across different locations.

COBRANDING WITH EXCLUSIVE PARTNERS

Lebua formed exclusive partnerships with iconic brands like Pernod Ricard and BMW,
enhancing their luxury positioning. These collaborations were carefully chosen to align
with lebua’s standards and customer expectations. The pandemic prompted a
reassessment of these strategies to ensure continued relevance and effectiveness.

LEBUA’S BRAND MANTRA

Lebua’s brand mantra, “Privacy, Simplicity, Service,” informed all their decisions. This
philosophy was reflected in their al fresco restaurant, housekeeping services, and overall
guest experience. The team needed to evaluate if this mantra still resonated with post-
pandemic consumers and make necessary adjustments.

THE WAY FORWARD

As lebua navigated the post-pandemic landscape, the team focused on developing a plan
to thrive in the coming decade. This involved reassessing their strategies, addressing new
challenges, and making trade-offs to ensure the brand remained distinctive and relevant
in a highly competitive industry.
Question 1. What were customers' service expectations of hotels like lebua?
How did those expectations develop?

● What were customers' service expectations of hotels like lebua?

Since lebua positions itself as a luxury hotel, customers will automatically have
high expectations for distinctiveness, exceptional features that set it apart from
other hotels, along with premium, high-standard services.

Lebua's customers’ service expectations:

- Complete privacy: A significant aspect of luxury hospitality at lebua is the

creation and delivery of privacy. Guests value their privacy highly. Lebua
has built its reputation around providing complete privacy and anonymity,
even discouraging photography in certain areas to protect guests' privacy.
- High Standard of Service Quality: Customers expect exceptional service
quality, characterized by attentiveness, personalization, and a warm, humane
interaction. At the same time, emphasizes aligning customer satisfaction
with employee satisfaction, using each customer interaction as a training
opportunity to refine service processes continually.
- Customized luxury for customer: lebua customizes luxury for its
customers, understanding that the perception of luxury can vary. The hotel
caters to high-end guests by providing bespoke services and ensuring that
every stay is tailored to meet individual needs and preferences.
- Innovation and unique experiences: Guests at luxury hotels like lebua
seek novelty and unique experiences. The hotel has successfully innovated
its service processes, human resources, training and food and beverage
testing. However, there is always a need to raise standards as customers
quickly become bored with a certain level of service.
- Simplicity and exclusivity: Lebua recognizes that their guests can easily
afford expensive services, but they don't necessarily want to see luxurious
interiors; they simply desire simplicity and exclusivity, such as providing
25.000$ per head luxury dinner with 40 guests in a disarmingly simple
restaurant.

For example, Americans may perceive luxury as something about wealth, while
Europeans may see it as an antique or a part of heritage. What's considered lavish
in India may be ordinary in Japan. Lebua ensures that customers can enjoy their
unique version of luxury. This is evidenced by their customer review ratings on
TripAdvisor, with an average loyal customer rate of 85%, rising from nearly 86%
"very good" or "excellent" customer review ratings.

● How did those expectations develop?

Lebua strived and succeeded in innovating its service procedures, human
resources, and training methods, experimenting with F&B, utilizing space more
effectively, and redefining the luxury hotel industry. Specifically:

1. Service quality and personalization:

As discussed earlier regarding customers' expectations of privacy when using hotel
services, Lebua recognized that while the general public enjoys being found in
luxurious places, celebrities want a necessary break to avoid scrutiny. Therefore,
Lebua customized its luxury for its customers based on the idea that perceptions of
luxury vary among different people and cultures.

2. Innovation and diversity:

In the same Luxury Hotel segment, Lebua had competitors such as Hilton
Worldwide, Accor Worldwide (Exhibit 2). Therefore, Lebua had to continually
innovate and improve its services to maintain its respectable status among these
luxury hotels.

Ohri felt that many luxury hotel brands comfortably adhere to a backdrop of
innovation and are often overly enthusiastic about pressuring guests by heavily
investing in room decor, corridors, and landscaping rather than restaurants and
F&B. On the other hand, Lebua innovated significantly in its specialized F&B.
Simplicity became its hallmark, and F&B was where it added the most value.
According to Ohri, simplicity is not just about dining in a lobby with flip-flops or
casual attire, but exclusivity. He felt that simplicity is the hardest thing to achieve
for those businesses.

3. Customer feedback and continuous improvement:

Lebua closely collaborated with market research companies like TNS to gather
scientific data from customer visits, using this information to train staff and
improve service processes. Committing to listening to customers and incorporating
their feedback into service improvement helps adjust service delivery to meet
customers' increasing expectations.

4. Post-Pandemic Shifts:
The COVID-19 pandemic has reshaped customer expectations, placing a strong
emphasis on health and safety considerations. There is now a heightened demand
for touch-free and technology-driven service interfaces, reflecting a shift towards
more contactless experiences. Despite this, Lebua remains committed to preserving
the essential human element of luxury hospitality while integrating technology to
enhance the overall guest experience.

The rise of remote work has further influenced customer expectations, particularly
among those who work remotely and seek accommodations that cater to their
professional needs. Remote workers now expect comfortable workspaces within
their accommodations, equipped with ergonomic furniture and adequate lighting to
facilitate productivity.

While Lebua acknowledges the importance of technology in streamlining various

service processes, it maintains a balance by prioritizing human interactions. Staff
are trained to seamlessly integrate technology into their operations, viewing it as a
support rather than a substitute for personalized guest interactions.

Lebua recognizes that the true essence of luxury hospitality lies in the intersection
of human interface and technological empowerment, with human interaction being
the cornerstone of exceptional guest experiences. This warm, humane, and friendly
interactive marketing element led to lebua having customer loyalty figures of 85
per cent on average, flowing from a nearly 86 per cent "very good" or "excellent"
customer review rating on Tripadvisor (see Exhibit 2). This approach has resulted
in high customer loyalty and satisfaction ratings.

Therefore, Lebua continues to explore ways to leverage information technology to

enhance customer service and meet evolving customer needs while preserving the
personalized and warm hospitality for which it is known.

5. Brand Philosophy and Marketing:

Lebua's brand philosophy of offering private and unique luxury experiences has
been effectively communicated through word of mouth rather than aggressive
influencer marketing. This approach has resonated with guests who seek discretion
and privacy in their luxury experiences.

Despite the prevalence of advertising and marketing through influencers, Ohri

believes that lebua should avoid this approach as it can come across as ostentatious
and desperate. Instead, he believes that effective marketing can only come from
genuine word-of-mouth from lebua's actual customers. Ohri views these platforms
as transient and asserts that luxury marketing should focus on people and direct
services.

However, after realizing that online reviews validated lebua's brand identity as
clearly understood by consumers, Ohri became confident that the pre-pandemic
customer sentiment was positive. Given all this, improving communication through
social media and internet platforms is crucial at this time.