The Caterer interview Hugh Taylor Hugh Taylor is chief executive of hotel
management consultancy Michels & Taylor. He tells Janet Harmer why the change in hotel ownership has led to the rise of asset management
Why has the operation of hotels – with so many stakeholders – become so much more complicated since you joined the industry 26 years ago?
In the days when Sir David Michels [the co- founder of Michels & Taylor] headed Hilton, the owners and operators of hotels were the same entity. The global hotel companies were largely made up of just one or two brands and were either at the top or bottom end of the market, while the middle ground was domi- nated by domestic brands, such as Swallow, Jarvis and De Vere – apart from Holiday Inn. Hotel companies then divested their assets and predominately became brand companies, concentrating on distribution, loyalty pro- grammes and reservations systems. They went from owning hotels to managing or franchising properties. Almost all the domes- tic brands have now gone. Even a company like Jurys Inn – a local brand – is working with Hilton Worldwide and adding a strong, inter- national brand [Doubletree by Hilton] to its portfolio to ensure good returns. QHotels is perhaps the best and most respected among the domestic brands today.
This offloading of properties has enabled the major hotel companies to expand into a spectrum of brands. When David was chief executive of Hilton, there were just the Hilton and Conrad brands – today there are 12 Hilton Worldwide brands. Even if a hotel doesn’t want a brand, they can team up with a collection of hotels, like Curio from Hilton Worldwide or Autograph from Marriott International, which enables them to enjoy the benefits of being part of a club but without the name. As the hotel companies no longer own hotels, there are now a whole host of other
owners. Some owners, such as private equity company Lone Star Funds, which has just launched Amaris Hospitality to operate Hotel Collection and Jurys Inn, are very knowledge- able. Lone Star has John Brennan as chief executive of Amaris Hospitality and Grant Hearn, former chief executive of Travelodge, is chairman of the Hotel Collection.
How has the change in hotel ownership resulted in the growth of asset management? A lot of owners today don’t have hotel exper- tise, which has led to the creation of asset management, which has enabled companies like Michels & Taylor to flourish. We act as the hotel experts on behalf of the owners. In many cases, hotel groups no longer man- age many of the properties that carry their brand and, as a result, there is a growing number of hotel management companies – BDL Redfine, Interstate and Kew Green are the largest in the UK. Michels & Taylor is a niche business in the
market – it works with around 45 hotels; the majority in an asset management capacity and the rest in a full operating capacity. The reality is that Michels & Taylor only exists because of the changes in recent years in the way hotels are owned and operated.
Why did the hotel companies sell their assets? It was driven by the City and shareholders and was down to return on capital employed. Hotels are a capital-intensive business and owners should invest an average of 7% of their turnover per annum on capital programmes to maintain and develop the properties. But because of this, and to ensure a return, money can be very tight. By selling the property, the
“The reality is that Michels & Taylor only exists because of the changes in recent years in the way hotels are owned and operated”
24 | The Caterer | 31 July 2015
www.thecaterer.com
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