Orient-Express   
The orient-express group organized its web presence in much of the same way it ran its hotel, in a decentralized fashion. Each hotel property designed and managed its own site and reservations were logged directly to individual hotels rather than through a central reservation system. Tickle described the process he went through when he was hired to manage the web site:
I called Simon and asked him what he wanted to do and he said he wanted to spend about $3,000 on a web site. I was hired to begin to find a way to use the Internet to build a relationship with our clients, but there was no infrastructure whatsoever. I suggested that it would take more like half a million dollars and it took about six months to convince everyone. We still have a very decentralized system. We provide a central template and an overall look, a very subtle Orient-Express branding, but for the most part the hotel managers can personalize their sites. The customers do their booking at individual hotels online, but I capture their data and we enroll them into a travel club. In 2001 we did about 3% to 5% of hotel transactions and 15% of train business online.
Sherwood maintained:
The Internet site repeats our general strategy. Each hotel has a site of its own although they are totally integrated. Two-thirds of visitors are coming in through hotel sites rather than through the Orient-Express address. We are a small company so we do not have a 1800 Marriot number that everyone knows about. But at the same time we are an immensely well-known company on the local brand level. Now it is easy to look up online, but before that you asked your travel agent to book it. I have no problem paying a travel agent commission who creates business for us, but to pay for someone just to parcel a phone call for us is really irritating, especially as we pay 10% of the total spent to the travel agent.
Travel club
Whether customers came to the web site via individual hotel sites or the main page, their booking information was captured and entered into a central database and they were invited to join a travel club. The 2,000-person travel club comprised primarily of first time gu
ests and potential visitors rather than repeat guests, who would, who likely book over the phone. Tickle explained.
It’s a small database, but it is a high-quality database that we can learn from. Of course, the faster and bigger the web presence the more people come on the site. It is growing fast. I have a centralist role in a totally decentralized organization, so it is a struggle from day one. The American team with the larger hotels wants to centralize, but then the Italian hotel managers, with their boutique hotels feel differently. The hotel managers are all seasoned professionals, so it’s hard to push these things through. They look at this little guy in the central office with a bright idea and think, “You don’t know how to run a hotel,” which is absolutely true. But as OEH gets bigger, the growing pains are going to get worse because people are going to be turning up at the Cipriani and saying,” Look, I stayed at this other hotel and you don’t know who I am?”
Growth
When OEH went public in 2000, it proposed a 15%-20% earnings growth per share per an
num going forward.  Its growth strategy involved acquisitions and expansion of existing properties. “You have to grow revenues to grow earnings at a good rate because of fixed costs,” Struthers explained. How to expand and increase RevPar was a key element when OEH considered adding a new property. Sherwood considered expansion an essential part of delivering on growth projections. “Buying a new hotel can deliver about a 10% EBITDA return on asset, but for an expansion it can be 20% to 30%. It is cheaper to add the rooms because you don’t have to build a new lobby, restaurant, and all fixed costs are in place.”
tickle
OEH looked for unique properties with expansion and RevPar potential and transformed them Struthers described plans for the recently acquired La Residencia, in Mallorca, Spain:
What we found was that the hotel was running at 95% occupancy through peak season and almost 80% throughout the year. The first thing that strikes us is that at 95% full we can raise the prices quite significantly, close to 15%to 20%. We have already made this change with no significant customer resistance. As regards physical improvements, we will spend a couple of million dollars on replacing furniture and making it more comfortable. Ch
anging what people see makes a big difference. Then we get into the cost and organizational structure in great detail. The largest cost is the people. We have pretty good models of how you run a small luxury hotel and how you staff it. We bring that experience. Over time at La Residencia we should reduce the staff by 20% to 25%. One way is to streamline their restaurant offerings. They have four restaurants, which is too many. Also the gourmet, restaurant, which is the most expensive, is open at lunch as well as in the evening. We know from operating other Mediterranean-type hotels that what people eat at lunchtime tends to be very light, poolside snacks. It turns out that only a couple of people per day are going in, but it is fully staffed and geared up, with all the costs. Of course we are shutting it down for lunch.

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