Ruby Hotels Uses Innovation to Deliver ‘Lean Luxury’

Ruby Hotels is breaking new ground in German hospitality. The new hotel company was founded in 2013, and opened its first property in Munich in February 2017.

The company’s lean organisation structure enables it to concentrate on the essentials, delivering a contemporary, affordable form of luxury for the modern, cost- and style-conscious customers that it terms “Lean Luxury”. The company already has four Ruby Hotels now in operation in Munich and Vienna, with five more under construction and preparing to open in 2018 (Düsseldorf and Hamburg) and 2019 (Frankfurt).

We caught up with Tobias Koehler, Group Director Marketing and Commerce of Ruby Hotels, to find out more about the new brand, its early adoption of Duetto and the philosophy behind “Lean Luxury”.

Tell us a bit about your role at Ruby Hotels.

As Group Director of Marketing and Commerce I am responsible for our marketing, e-commerce, distribution, as well as our IT and software landscape. The creation of new business models and innovation is part of my work.

Please explain what ‘Lean Luxury’ is all about and how you developed this concept?

For us, Lean Luxury means: top location, high-quality room fittings and genuine design. All of this is offered at an affordable price by rigorously cutting out the superfluous and focusing on the essential. This works because we accommodate luxury in a relatively condensed space, similar to luxury yachts. We forego unnecessary services.

Thanks to proprietary technical innovations, we plan, build and organize ourselves differently from conventional hotels. To be precise, we plan and build in a very modular way and centralize as well as automatize processes behind the scenes wherever possible.

What were your main reasons for implementing Duetto?

Ruby is also about automation, especially when it comes to our systems in the background. Due to the comprehensive interface between Duetto and our PMS Hetras we are able to bring a higher grade of automation to our system. Furthermore, Duetto's innovative Open Pricing approach helps us to bring our group revenue management to the next level in terms of RevPAR growth.

What were the immediate effects of bringing in Duetto?

We implemented Duetto in February in our new hotel in Munich, Ruby Lilly. Shortly after that we also went live with our other three properties in Vienna. We are now able to apply a much better rate strategy, which we can automate with easy to implement rules. It is important to say that we can create individual strategies according to the needs and characteristics of each hotel. Duetto also enables us to get a better idea of future booking developments and act accordingly. We are also planning to use it to manage our corporate business.

Another important tool for us is the overbooking functionality and the BI tool (Scoreboard). Duetto gives us the power to easily manage and control several properties by using the system and setting up all relevant strategies. This gives us the transparency we need to minimize our labour costs.

How did you manage the philosophy change needed to adopt Revenue Strategy and Open Pricing internally? What were the biggest challenges and successes of this process?

As a young hotel group we are used to challenging ourselves on a regular basis, trying to improve and find or create innovations. Due to that open mindset, the step towards Duetto was logical for us.

Due to the change to Duetto we were forced to think about better segmentation, which has helped us to better understand our business.

What advice would you give to other companies about to start on this journey?

Check for existing interfaces with your PMS, check and if necessary reconsider your segmentation and rate setup, and make use of the very valuable support of the revenue experts from Duetto. Take your time when setting up Duetto. A few functionalities can be found in other systems, too, so you might be confident with these. But fields like pricing rules need some investigation to understand the full power of the tool.

Big brands have less of a monopoly in Germany than in other European markets, such as the UK. What opportunities does this provide to smaller chains, such as Ruby, and independents?

It is true that there are brands that cover a lot of cities with several hotels in each city and we think that it is great to be able choose from several kinds of hotel products. However, we also see a shift of mindset in the modern traveller. Our guests are first and foremost typified by sharing similar views and preferences to our own: they are looking for something unique and original, they appreciate character and angles, and want the things around them to have real soul. They are also more cost- and style-conscious, looking for an authentic experience of a city. 

So we concentrate on that. We offer our guests outstanding value for money. This would only be risky if we aimed universally at anyone and everyone. But that’s not what we do. We are aware that we aren’t the most suitable host for all guests.

Germany saw growth in both RevPAR and overnight stays in 2016. What was behind this growth and what can we expect from the market in 2017 and beyond?

We see several factors for this growth; however, it is not easy to narrow it down to only one or two. The German travel market is highly dependant on Germany’s economy. Since the economy has developed positively the travel market is affected by that, too. Due to international uncertainties we also see a growth in domestic leisure travel contributing to that growth.

Germany has a lot of new inventory in the pipeline, with an estimated 600 hotels planned or under construction. Can the market sustain this new inventory and what will this increased competition mean for hotels already operating?

In Germany there are many different hotel markets with different intensities of hotel pipelines, so each market could respond differently. In our home market, we focus on the top six cities: Munich, Hamburg, Berlin, Frankfurt, Cologne and Dusseldorf. These cities have a stable RevPAR level and a high and increasing demand of overnight stays. Even if we came across a hotel market with a strong hotel pipeline,e we still offer a modern, innovative niche product that brings a new type of product to any given hotel market.

RELATED ARTICLES