Lean luxury – Q&A with Michael Struck of Ruby Hotels

Boutique Hotel News talks to Michael Struck, CEO and founder of Ruby Hotels.

• What inspired you to create your own hotel group?
“The first two hotel groups that I established were built on incremental innovations, shaped by my previous experiences as MD of a medium-sized European hotel chain. Then, I had an accident. For some time, I was hovering between life and death. This experience gave me the courage to be more radical, and the determination to follow my personal passions. That is how Ruby was born.”

• You used the Sinus-Mileus analytic system as your starting point in defining the profile of your guests and therefore the type of hotel offering you should be making – or was it the other way around? Please tell us some more about the system.
“While the way to creating Ruby’s innovations was largely an intuitive one, the process of selecting, distilling and refining these was largely analytical. The key measures for this were the preferences and priorities of our selected target group – a focus which we follow almost religiously. The Sinus-Milieu-System is the segmentation scheme which we used to select and to profile our target group: It is psychographic segmentation, i.e. it is based on value sets and beliefs, factors which we perceive as more relevant today in determining purchasing decisions than sociodemographics.”

• What are your target groups/age groups? Who are Ruby guests?
“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.  Our guests are cosmopolitan: they feel at home in global cities. So age, gender and income are irrelevant.”

• You describe Ruby Hotels as offering “lean luxury”. What do you mean by this?
“It’s all about offering our guests what they want, but no more. So, most of our guestrooms are small but ergonomically designed along the lines of a luxury yacht interior. The finishes are very high quality and we lavish a lot of attention on the details that we think will make a difference – for example, extremely comfortable beds and the perfect shower. We have a fantastic bar and a coffee shop that serves healthy breakfasts freshly brought in each morning from local suppliers. And we have an innovative check-in system that is straightforward for the guest to use, freeing our staff – the hosts – to focus on a warm welcome.”

“We are not trying to be all things to all people. However, for our target group of budget and style-conscious travellers, we offer a five-star room, a buzzy social space and a unique experience in a cool, central location, all for the price of a budget hotel.”

• You say you tell (hi)stories with your hotels. Tell us about the stories of Ruby Sofie in Vienna.
“We love to tell the stories that abound around the building that is home to our Ruby Sofie Hotel in Vienna: It was previously one of Vienna’s most prestigious concert halls and event spaces. Some of the most famous Viennese waltzes by the Strauss family premiered there. Great minds such as Karl May held epochal lectures on stage. Because of the magnificent acoustics of the main hall, it was even used as a recording studio in later days, with some legendary classical music recordings originating there. All of these stories show in our interior design.”

• And what about the story for your investors?
“There are three things which are unique about Ruby. First, our product: lean luxury, as highlighted. Second, our processes and systems, which we redesigned fundamentally: All administrative, marketing, reservation and purchasing tasks are bundled in the head office, as well as essential parts of the front office and most management tasks. Many distribution, reservation and front office tasks are automatised, as are many accounting processes. Third, our real estate solutions: We use a modular architectural system in order to achieve a maximum space efficiency, and unconventional technical solutions to deliver the qualities of an upscale hotel at the investment cost level of a budget hotel. The resulting cost and, more significantly, fixed-cost reduction not only allows price advantages for our guests, but also decreases risks for our investors and real estate partner: We reach break-even at less than 45  per cent occupancy in central locations in gateway cities. This means our real estate partners and investors have none of the cyclicality risks that are usually associated with hotels and hotel real estate.”

• Why “Ruby”?  And why “Resorts” – is this because you feel you’re creating destinations in your urban hotels?
The name literally came to me in my sleep. To me, Ruby represents a beautiful, sensual, intelligent and happy woman who knows what she wants and causes a stir. We also like a bit of ambivalence. To many people, Ruby sounds sexy and a bit daring. Well, why not. “Resorts” are part of our game plan, but for the time being, we are focusing on city hotels.

• Are you at all concerned that you are late in entering this corner of the hotel market? There are well-established hotel groups offering “affordable chic” and there is the growing number of “posh hostels”. Or do you think this is just the start for this kind of accommodation?
“Indeed, if affordable chic was all there was to Ruby, I would be concerned. But our product goes way beyond that – to start with, because luxury requires more than being just chic. Also, Ruby derives its price-value advantages not only from an intelligent product, but also from radically redesigned processes and new technical solutions on the real estate side.”

• Do you find inspiration in any other brands and existing concepts?
Yes: Citizen M for the efficiency of its spaces and investments; Yotel for its claim to fit luxury into the smallest amount of space – they turn to first class aviation, like we turned to luxury yachts; 25hours for its originality; and Ace Hotels for their urban nonchalance.

• What sort of growth strategy do you follow as you grow the group? Where do you see particular market prospects for your concept?
“We want to grow in big cities and metropolitan areas around Europe. These are where our guests want to be and these, where the property prices are high, are where our concept offers the most financial and other advantages thanks to its highly efficient use of space.”

• You have declared your hope to open Ruby hotels in a number of the major European cities. Will your hotel in, say, Milan be different from Vienna, or London from Paris?
“Absolutely. As do our guests, we want each of our hotels to have its own character, its own story, its own personality. The place, the local area, the design, furnishings: these are all part of that. We standardise only ‘below the surface’, where it does not disrupt individuality.”

• Tell us about Ruby Marie. When is the hotel opening?
Ruby Marie opens in December. She is located in Vienna’s creative “7. Bezirk” (‘seventh district’), right on Vienna’s most important high-street “Mariahilferstraße”.  Again, we were very fortunate in securing a location with a tremendous history and a very special ‘genius locii’: Built in 1911, it was the first department store in all of Austria. The building resembles a huge round fortress, and is one of the most well-known in the city.”

• What do you think is the most important thing in a hotel that you absolutely can’t be without in the hotel business?
“For me personally, the most important things in a hotel are the bar and the bed. I think you can absolutely do without a “Guest Relations Manager”. That shouldn’t be a single job description; it should be a task for all the employees in the hotel.”

Michael Struck will be in London, speaking at the Hostel and Budget Travellerconference on November 17, and at the Sleep Conference on Tuesday 24 November.


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