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Business Analysis & Features

Cutting deals in La La Land

Christena Appleyard takes a green ANZ flight to join Redford and Jagger – well, almost – at two of The Dorchester Collection's hotels, in Los Angeles

The best definition of luxury was the title of a book by the fashionable novelist Geoff Dyer – Yoga for People Who Can't Be Bothered to Do It. The first luxury hotel to crack that one will be invincible. Until then, there is The Dorchester Collection.

The fairy-pink Beverly Hills Hotel, and its understated cousin, the Hotel Bel-Air, are the Los Angeles hotels in the Collection. This is a city that knows a thing or two about luxury and even more about business. Despite its backdrop of day spas, plastic surgery clinics and celebrity hangouts, La La Land is now a real alternative to the usual East Coast business destinations. It's especially good for the time-strapped executive who might like to tag on a few days off at the end of a business trip.

So far, analysis of the global recession's impact on luxury goods and services has ranged from smug insouciance on the part of some high-end businesses, and unpleasantly gleeful predictions of imminent collapse from their more downmarket competitors. The reality is turning out to be a little more subtle. The top hotel groups provide useful evidence about the way things are heading.

On this trip we arrive – courtesy of a comfortable Air New Zealand flight – just in time for dinner. This airline is the frequent partner for Dorchester hotel group, partly because of its environmental programme (of which more later). This makes it popular with sensitive show-biz consciences.

The atmosphere in the Polo Lounge at the Beverly Hills that evening was all languid confidence and muted high fives. At lunch the following day, it was a palpably tenser, more businesslike atmosphere. According to the rules of LA, the business nitty gritty is hammered out at lunch. Dinner is to celebrate the done deals.

The hotel, on Sunset Boulevard, opened in May 1912 so it is probably the closest thing Beverly Hills has to a historic monument. It has 204 guest rooms, including 21 bungalows which, over the years, have been inhabited by every major Hollywood star. The rates start at $450 (£278) and end at $4,700 a night. That's for a one-bedroom Presidential Suite.

The point about LA is that, in spite of the initial impression that nothing is older than last week, it has a remarkable history. In the Second World War, the city was just a collection of towns and villages linked by trolley-car lines.

When the war-driven boom came to an end, the LA Railway Company collapsed and its property was sold to LA Transit Lines, whose parent company was owned by General Motors, Standard Oil of California and Firestone Tire and Rubber Company, three entities with a deep, vested interest in ushering in a brave new world of mass personal transportation. The trolley cars disappeared and the motor car became essential. LA is now a colossal shrine to the age of the automobile.

Beverly Hills took its name from a place called Beverly Farms in Massachusetts. It was the home town of Burton Green, a director of Amalgamated Oil who failed in his attempt to find black gold beneath these Californian hills. Later, the land would deliver riches in ways those businessmen could never have conceived.

The early settlers included the Gianninis, who made their fortune in banking, and the Taylors and Andersons of Union Oil and Atlantic Richfield. Later arrivals included David Packard, the founder of Hewlett Packard, and Kirk Kerkorian, who bought MGM. Today, the local economy relies as much on its role as a financial and technology hub as it does on tourism and doing the business of show business.

For The Dorchester Collection, these two hotels are the perfect fit for the way they see the successful future of their business. Originally established by the Brunei Investment Agency in 1996, to manage its collection of hotels in Europe and the United States, the company now runs a portfolio of the world's best hotels, including The Dorchester in London, Le Meurice in Paris, and Principe di Savoia in Milan, where David Beckham hangs up his boots while he is playing for AC Milan.

They employ more than 4,000 people and, in 2008, turned over £259m with a pre-tax profit of £62m. The Beverly Hills Hotel joined the Dorchester Group in 1996, and Hotel Bel-Air joined in 2008.

The company is careful about making the distinction between running a portfolio rather than a chain of luxury hotels. "Our marketing strategy emphasises the individuality and iconic nature of each hotel, as opposed to the Four Seasons or the Mandarin Oriental where the chain's brand is part of the name of the hotel," says a spokeswoman. "Luxury hotel chains have seen a drop in occupancy and rate levels and we are not immune from the downturn. However, unlike some hotels, we are not cutting back on investment. We are just opening a new £3m spa at The Dorchester in London, and we are building a new spa at the Bel-Air. Next year we plan to open two new hotels."

What seems to sustain this type of hotel is the attention to the type of detail that well-off clients – or the less well-off who have saved for a special occasion – really look for.

One of the guests at the Bel-Air put it to me rather forcefully: "Look, I am well off. I can afford this stuff but that doesn't mean I don't know when I'm being ripped off. If I think a place is ripping me off I'm outta there. And I never go back."

The Hotel Bel-Air was my favourite of the two hotels, probably because I saw Robert Redford swimming at the Bel-Air as opposed to Mick Jagger at the Beverly Hills. The rooms are all individually designed (rates $465 to $775) and are laid out over 12 acres of stunning gardens.

Look carefully at the branches of the perfectly pruned trees and you might see one of the hundreds of secret security cameras that lead back to a control room which is monitored 24 hours a day. It's a necessity for the high-profile clients who need to know they are safe from unwanted attention at all times.

But, while rubbing shoulders with celebrities is undoubtedly an attraction with this type of hotel, it is not, as they say in these parts, the dealmaker.

"One of the emerging trends in travel at the moment," says the Dorchester spokeswoman, "is towards more bespoke services and experiences that are personalised – rather than what we call 'mastige', [groovy new word for prestige products with mass-appeal] which is what the mass luxury chains offer. Ours is not a cookie-cutter experience"

They do excel at the fabulously frivolous. At the Bel-Air the resident swans in their exquisite grounds dine exclusively on lettuce. Romaine to be exact. There is a Precious Paws programme for canine guests and the new spa at The Dorchester in London has invented something called a Spatisserie, which I think offers massage and cake.

The quality of the rooms at both these hotels and the alert attention of the staff does make staying at them a stand-out experience, quite different from your average luxury destination hotel. The company's refusal to overtly brand the hotels is obviously liberating for the staff and encourages the management to develop the authentic and unique aspects of their establishments.

And if you want to spend quality time gawping at celebs, it's probably more satisfying to be on the same flight, although security considerations prohibit any open boasting, Air New Zealand is a bit of a favourite with people in the music business.

ANZ is a small carrier and it operates twice-daily flights from London Heathrow to Auckland, either via Hong Kong or Los Angeles. The majority of its trips to LA are business, but to Hong Kong or on to New Zealand leisure dominates. Because it is a small carrier, it can react quickly to market conditions by trimming capacity and moving its fleet quickly.

Although the first-half results show a drop in profits, it has a healthy NZD$1.4bn in cash reserves in the bank. Gearing is relatively low, and the airline is enjoying a capital-expenditure holiday, with no new aircraft due until the end of 2010.

But it is its stated goal of being the world's most environmentally sustainable airline that makes it particularly interesting at the moment. Its carbon-offset programme has customers' money going directly to purchase Trustpower wind turbine credits in New Zealand.

Customers will have the option of making a donation to the Air New Zealand Environment, a conservation programme involving 100 acres in Hawkes Bay. This will include a native reforestation project and pastoral tree planting. A key part of this initiative is that the public will have access to this historic farm station from 2010 to see how the project develops.

This is the kind of ambitious strategy that a small company can only afford to undertake if it really believes in the environmental issue, and its also a perfect way of drumming up new business.