Michelin says it's honest about hotel ratings. Should we believe it?

By Nikki Ekstein and Tara Patel

 

At an event at the Musée des Arts Décoratifs on the evening of Oct. 8, the Michelin guide unveiled its first global selection of keys—the equivalent of stars, but for hotels. But hours before, at a separate event at the ornate 18th century Pozzo di Borgo mansion in Paris, it unveiled something more controversial: An honest look into the ways that it makes money from such reviews, both on the hotel and restaurant sides of its operations.

 

It was the first time that the French company spoke explicitly about what many have known to be true for years: that government-run tourism boards pay for Michelin guide restaurant reviewers to come to their states and cities. 

 

 

For years questions have swirled in the travel industry about whether the company can maintain impartiality in awarding stars to local restaurants while at the same time accepting payment from the tourism bodies charged with their promotion. 

 

As it turns out, reviewing hotels—an expensive practice that has become all but impossible for most publications to do in a thorough independent way—is what forced Michelin to come clean on its practices. And that’s not because Michelin is compromising its standards. In fact, executives at the guide confirmed that the company is paying full-price, publicly-listed rates for every hotel it vets, and also for the flights required to get there. It does the same with restaurants, which is visits anonymously. (Bloomberg similarly pays for all of the hotels it reviews.)  

 

In order to go global with its hotel ratings, though, the guide has had to create different revenue streams. In October 2018, it acquired the hotel booking platform Tablet, creating a platform for Michelin loyalists to plan and book their vacations. The company takes a cut from each of these bookings at an industry standard rate of around 15 per cent. All hotels that are awarded keys are listed on the website, though only a portion are bookable. Executives present made it clear that hotels do not need to be bookable on Michelin’s site to qualify for keys.

 

In addition to anointing the top three-key designation to 143 hotels around the world, Michelin also used revealed winners of “best in class” awards in four categories for the first time. They included the Burman Hotel in Tallinn, Estonia as the best opening of the year and Atlantis The Royal, Dubai as the best hotel for architecture and design.

 

The nods reveal at least two things: That inspectors traveled far and wide, well beyond the limits of the dining guides, to identify extraordinary places to stay, and that outside sponsors footed their bill. The “Opening of the Year” category, for instance, came courtesy of United Overseas Bank (UOB) and included winners in such destinations as the Seychelles and Corsica. In another category, honoring hotels that serve as “Local Gateways,” or conduits to their broader communities, the inspectors went further off the grid, celebrating La Fiermontina Ocean in a remote coastal town in Morocco and Tierra Patagonia in Torres del Paine National Park, Chile.

 

So why come clean about the business strategy now? The move to provide greater transparency coincides with an important milestone for the company: newfound profitability. Michelin spent the last decade expanding the guide internationally and diversifying its business: it’s gone digital with a robust content platform; dabbled in “private partnerships” that has seen LVMH among the companies sponsoring its events; and most recently teased vague plans to move into the wine world. All this has reinvigorated an aging endeavor for the tire-making giant—and given it new relevance.

 

If that sounds like a solid brand refresh, consider this: Michelin’s authority means nothing without consumers’ trust in its ratings. And that’s the very thing that the company has risked in its effort to get back in the black.  

 

If tourism officials are paying as much as $1.5 million for the mere consideration of restaurant stars, are the ensuing reviews as deserving of their special status as they have traditionally been. And if the value of a star is diminished, what does that mean for Michelin’s now-growing hotel reviewing business—and whatever comes next? 

 

It’s a question that brings us back to the unusual announcement: Michelin is hoping that by being open about how it makes money, it can burnish its integrity before it’s too late. “We wanted to give the complete picture now because we are going global through the hotels and are now covering the hospitality sector worldwide,” said Gwendal Poullennec, international director of the Michelin guide. “It’s about explaining our whole strategy.”

 

“The genie is out of the bottle,” says Erich Joachimsthaler, founder and CEO of Vivaldi Group, a branding consultancy with an expertise in hotels and hospitality. “Given the subjective nature of the reviews, this can actually erode trust and give more ammunition to the skeptics,” he says of Michelin’s official reveal. But he says the company had its hands tied in an unwinnable battle for consumer trust, and that if it wanted to retain any authority, it had “no choice but to come clean now.” 

 

At the event in the gilded neoclassical rooms of the Paris mansion, Michelin officials were only so candid. They declined to provide specifics about the guide’s profitability or the number of inspectors worldwide. They did, however, discuss openly for the first time their reliance on financial contracts with tourism boards. “The reality is that we need these partners because what we do is costly,” said Julianna Twiggs, Michelin’s chief international business development officer, pointing to the cost borne by Michelin of inspector teams flying around the world, staying in pricey hotels and eating multiple times in top restaurants.  

 

The first of these partners, Michelin officials shared, was Thailand. The Tourism Authority of Thailand was on a campaign to change the reputation of the country from a low-budget party place to a food destination. Current clients, it revealed, include Saudi Arabia, or which a dining guide is slated to publish later this month.

 

But Twigg’s comments also pointed to the company’s standards. Michelin doesn’t go to all places willing to pay, she said, nor does a guidebook result from all contracts. When a tourism board fronts the cash, she says, it’s partly to pay for Michelin inspectors to travel there and assess the maturity of the restaurant scene as part of a “culinary audit.” That work, she says, does not guarantee so much as a single star. In such case, Michelin inspectors might offer partners advice on how to improve in hopes of future qualification. The Dubai dining guide, officials say, took some seven years to reach fruition.

 

“It can be a hard pill to swallow but it’s non-negotiable,” said Twiggs. “We have to have partners that see and believe in the value we bring but are willing to accept our independence.”

 

Consumers, too, will have to be able to parse those nuances. If they’re savvy, they’ll know that Michelin’s practice of paying for stays puts it in a league of its own among those who dole out hotel awards. The international jury that assembles hotel rankings for World’s 50 Best, for instance, has no rules against accepting complimentary stays, tilting that list in favor of properties with massive marketing and influencer budgets. La Liste, meanwhile, has even less credibility: It simply compiles and regurgitates the published opinions of global journalists without dispatching any inspectors of its own.

 

Perhaps it was with that in mind that Michelin offered up the perspective of one top inspector, who spoke via telephone at the event. Calling in from London to speak about her quarter-century career working at the guidebook, she said that her teams are kept “separate from the business side” and “don’t have a tick box.”

 

“This independence is a cornerstone of our credibility, ensuring that every recommendation carries authority, every star is earned fairly,” said the woman, who declined to give her name (Michelin reviewers have long been anonymous). “We know diners use our recommendations to spend their money.”

 

As for which hotels Michelin thinks you should spend your money on, these are its newly-annointed top hotels across four global categories: 

 

Architecture & Design Awards

Winner: Atlantis the Royal, Dubai

Runners up: Rosewood São Paulo, Shabara Resort (Umluj, Saudi Arabia), Benesse House (Naoshima, Japan), and Villa Nai 3.3 (Dugi Otok, Croatia)

 

The Wellness Awards

Winner: Bürgenstock Resort (Lake Lucerne, Switzerland)

Runners up: Canyon Ranch Tucson (Arizona, USA), Joali Being (Raa Atoll, Maldives), Lily of The Valley (La Croix-Valmer, France), and The Retreat at Blue Lagoon (Grindavik, Iceland)

 

The Local Gateway Awards:

Winner: La Fiermontina Ocean (Larache, Morocco)

Runners up: Zannier Sonop(Namib Desert, Namibia), Tierra Patagonia Hotel & Spa (Torres del Paine National Park, Chile), Longitude 131 (Yulara, Australia), and Post Ranch Inn (Big Sur, USA)

 

The Opening of the Year Awards:

Winner: The Burman Hotel (Tallinn, Estonia)

Runners up: Aman Nai Lert Bangkok (Thailand), Collegio alla Querce, Auberge Resorts Collection (Florence, Italy), Le Mouflon D'Or (Corsica, France), and Cheval Blanc Seychelles (Takamaka, Seychelles)