The recent emergence of foreign luxury hotels in central Tokyo is now redefining the hotel business in Japan. In such a changing market, Starwood Hotels Japan Company currently represented by 14 operating and three new hotels under construction in Japan is looking ahead with optimism. Starwood brands include Sheraton, Westin, W, Meridien, Aloft, Luxury Collection and the St Regis. The company plans to further expand across all major cities and resort destinations in Japan.

Heading the strategic expansion and operation in Japan is Lothar Pehl. Born in southern Germany where tourism is a traditional industry, Pehl studied hotel management at college and started his career working for several small luxury hotels in Europe before joining Sheraton and Westin, advancing his career across Europe, the Middle East and Asia. He has been in his current position since April 2006, managing several hotel brands and improving returns and quality of their services.

Japan Today reporter Taro Fujimoto visits Pehl at his main office in Ebisu to hear more about the hotel business and market in Japan.

What is your responsibility in Starwood?

I direct Starwood corporate values, standards and strategies across our portfolio of brands. I support, strengthen and build new relationships with our owners and partners, and enhance human resource systems so as to provide advanced opportunities for young hospitality professionals here in Japan. We strive to develop associates to be more international and provide therefore global opportunities to gain experiences in our hotels.

What’s your brand strategy in Japan?

Our target custumers and markets depend on the brand and location where each hotel is located. For example, for Sheraton near Tokyo Disneyland, our main target is basically families. At Westin Tokyo, it will be a mixture of business clients and independent travelers. While resorts focus on leisure and all forms of meetings and activities, city hotels target generally more corporate segments.

If you look at a hotel as a whole unit, those service areas are all connected to each other. Rooms are generally the most profitable area. The bottom line is that when managing, I don’t look at only the profit margin. I look at revenue and profit flow through. The profit is an outcome of all department efforts and specific skilled functions in a hotel.

In central Tokyo, several foreign luxury hotels have opened over the last few years. How is their arrival changing the market?

They are wonderful hotels actually. The hotel market in Tokyo and other cities is very, very big and thus all of these new hotels will bring a lift of expectation to guests, associates and owners. Your success is determined mostly by the customer and their decision to stay with you and they tend to make a decision based on a number of factors, such as the location they would like to travel to, the brand they identify most with, services they have come to expect, often their budget and initial purpose of travel. As a hotel, you cannot be everything for everybody. So, these newly opened luxury hotels are not to be considered our competitors. As a matter of fact, none of the new hotels in Tokyo are our competitors.

What do you think about the current situation of the Japanese hotel industry?

I think the Japanese hotel market will become more international in terms of services and size. Until now, Japanese hotels have been rather big, and some of them, for example, have up to 40 restaurants inside the hotel. This is because in the past, everyone expected the same experience and these hotels have been considered as everyone’s destination. Clients now have different expectations of hotels as we are more individual and expect individuality and choices to be recognized. Today, hotels have fewer rooms while rooms are becoming generally larger and, for example, some don’t even have their own restaurants as there is a multitude of dining and catering options available. The market is redefined.

The Imperial and New Otani hotels have renovated their buildings in reaction to these newly opened foreign hotels.

Hotels need generally to be renovated every 7 to 10 years as ideally each room and each facility is used daily. Every renovation is an opportunity to create and update your product in such a way that it responds to customers need. Our expectations change, including technological service availability at a hotel, such as Internet connection, mobile devices and ease of transactions when checking in or out.

Do you see more Japanese traveling aboard while less in Japan?

Yes, Japanese love to travel and explore the world and its cultures, so in normal times, Japanese will travel abroad. At the same time, we expect an increase of foreign tourists coming to Japan. So I think there is a balancing function. I am convinced that Japan tourist and visitor bureaus as well as travel institutions will further identify and promote cultural aspects and destinations of Japan. I believe visa regulations have been eased particularly for some Asian travelers; this has made it easier for individuals to travel to Japan. The responsibility of hotels is now to ensure that services align to expectations of foreign customers while blending those with the unique charm and service values that Japan has become known for.

Who are your typical guests?

There is no typical guest as each hotel brand has a number of diverse clients and markets. European customers stay in our hotels for a longer time, use more hotel facilities, which based on length of stay can be more profitable. In the case of many Asian customers, they often stay in our hotels in groups where individuals don’t choose where to stay as their travel agencies plan the entire journey. So we often do not know what individual expectations are. I see group travelers as missing out on the complete “experience” a hotel has to offer.

I think, that as many Japanese travelers do now, Asian group clients will choose their own accommodation and travel arrangements based on information and technologies available. We hope we can meet their individual expectations through our guest service program called SPG (Starwood Preferred Guest) which is designed to recognize travelers individually.

Any changes in what Japanese expect from hotels compared to the past?

There are lots of changes. For example, customers today appreciate a more refined and rewarding sleeping experience. As a consequence, we are now installing specially designed high quality “sweet sleeper beds” in every room at the Sheraton Grande Tokyo Bay. Clients also appreciate more luxurious bathrooms and Internet accessibility in their rooms. I think they are not “demanding” but expecting to be positively surprised by elements of their stay in hotels.

Thus, we like to look for the next step and improvements. Japanese customers and culture always appreciated conquest for perfection and quality, such as “the best structured and punctual” public transportation systems. As a service provider, our aim is to understand customers, and by so doing, we’ll see more business opportunities. Changes of today are subject to change tomorrow.

What areas are you focusing on?

We witness an interesting business environment right now here in Japan where we see developments and tourism interests in a number of destinations. We read increased and high expectations of Okinawa as a destination by both developers and hotel operators. Cities such as Osaka, Yokohama and Nagoya are also being redeveloped with mega projects and the creation of new transportation, residential and lifestyle centers.

What are your future plans?

We’d like to open more hotels and expand our brands across Japan in major cities and resort areas. The goal is very high but we believe there are opportunities.

What’s your managing style?

I’m a directive leader, who usually understands what I want. I gather information from a number of sources, form and share my opinion for further input either by myself or with specialists, and then decide a course of direction. I can be pretty demanding but am aware of that and recognize efforts and achievements in a fair way.

How do you spend weekends?

I only take Sundays off because I like to work on Saturdays when I can review a week’s work and think about the coming week. On Sundays, I spend time with my family, which is purely a family day. We have a rule in that we don’t use electronic entertainment options such as video games and TV on Sundays. We go out as a family and engage with each other.

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