The Caterer interview
hotel company can focus on developing the brand, their people, the management expertise and their systems while releasing the asset value to shareholders. This has enabled the hotel groups to dramatically grow their portfolios and, in the long run, get a better return with no capital requirements. It is a model deemed to be more attractive to investors. Millennium & Copthorne is one of the few global hotel groups that continues to be both owner and investor, while in the UK Whitbread owns a large number of its sites [65% of Whitbread’s 700-strong Premier Inn estate is freehold, the remainder leasehold].
How would you sum up asset management? Asset management is one of the most impor- tant areas regarding the way hotels operate, yet it is not often spoken about. As asset man- agers, we act as the eyes and ears for owners and investors and make sure that all parties, including the brand owners, have the same focus and are working towards the same aims. By using our specialist teams to analyse and support the work of the operators, we can identify any areas where profitability can be enhanced. Management companies can’t spend on capital projects without the owners’ approval. When there is a request for expend- iture, we as asset managers look at what is required and decide whether the expenditure is necessary today, next year or not at all. If it is justified, we can advise on ways of undertak- ing the project and at what cost.
What makes a good asset manager? There are those asset managers that scream and yell and tell the hotel managers that they are doing a rubbish job. They tend to write reports and analyse a hotel’s data, but make little difference to results. We decided to rede- fine asset management and work with the operator, rather than against them, and, by doing so, engineer a change in behaviour that ultimately makes the business more profitable and therefore more valuable for the owner.
How does Michels & Taylor’s asset management team work with hotels? We don’t actually have any asset managers on our payroll; instead, we employ senior people who know their subjects. So for each hotel that we are involved with on an asset management basis, we have senior specialists in revenue, finance and property. These experts talk to the operators at the highest level and always with the intention of adding value to the business. For instance, our commercial vice-presi-
dent, Kym Kapadia, was previously revenue director at Marriott UK & Ireland, and our vice-president of finance is Ian Noble, who was a regional finance director for Hilton.
What are the key areas where you can help hotels improve their profitability? Yield management is very important and also very complex. There are many strategies you can employ to yield maximum rates, but the key is making the right decision for a specific hotel.
26 | The Caterer | 31 July 2015
Ellenborough Park Hilton St Anne’s Manor
Hilton Manchester Airport
It is always necessary to look at the costs, which are generally dominated by the payroll. We look at the size of the team and its flexibil- ity. How do rosters work? Are agency staff used? Does the team fluctuate seasonally? All these need to be considered when making the operation more efficient. We also consider the strategic perspective.
For instance, does the hotel have the right brand and are the contractual terms regarding the brand the best that can be achieved?
One of the biggest challenges facing hoteliers is the growth of online travel agents (OTAs). What advice do you give to hoteliers regarding their dealings with OTAs? Like it or not, OTAs are a reality of life. Like any distribution channel, they should be treated with respect, a good relationship should be built with them, and they should be used when required to optimise revenue for your hotel. At the same time – and importantly – there are plenty of effective ways in which a hotel can drive direct business through its own sales, marketing and distribution channels, and this should be the number one focus to minimise the overall cost of a sale. Now, with the internet, reaching customers has never been easier. When I started in the industry, I had to direct mail everyone! The more hotels concentrate on direct methods, the less important OTAs will be to a business.
Is there a future for family owned and operated hotels? Yes, I think there will always be a place for them, but there are certain things they need to ensure success, such as a good business plan and the right skill-set. They also need to have the necessary distribution to reach customers and for customers to reach them, they need to understand the power of sales and marketing, and to have solid cost disciplines. Without these, a hotel will fail – whether it is a B&B in Brighton or a large hotel in London. It is, of course, more challenging now for family businesses, as the market is more focused on branded products which have the strength of distribution.
Can independent hotels operate successfully without a brand? Yes, they certainly can, but the same principles apply. If the hotel doesn’t understand what needs to be done, the business won’t succeed.
How did you get together with Sir David Michels to form Michels & Taylor? I had known David for many years, having worked at Hilton as vice-president of market- ing in the UK before becoming vice-president of operations for the southern region. At the time, David was chief executive of
Hilton. After the sale of Hilton in 2007, David initially got me involved in asset
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