Business Travel Tech Talk London, 16 October,
Business Travel Awards Europe, 30 October, JW
3rd Annual Business Travel Intelligence Summit
ABTN talks to Peter Cashman, CEO of Focus Hotels, about taking 12 hotels on the brink of closure and turning them around.
All 12 properties in Focus Hotels were in administration but are now on their way to profitability. Where did you start?
By having a good business plan. You've got to start from the basics. It's almost like starting from scratch, with a hotel without any systems or processes and with staff who are highly demoralised. You have to be realistic about what you can achieve in any period of time. It's not just taking on new businesses it's dealing with a lot that can go wrong from day one. Getting the hotels tidied up and refurbished. Getting them back into the market palce. Re-establishing the contact with everybody who can deliver business. And promote the hotels in whatever format you can. On the web, through third-party operators and directly to our own contact base.
You also took on new staff...
When we took on the hotels we took on around 500 staff with them, in total. We still have the same amount of staff. One of the hotels was closed and we re-recruited the staff. At the other hotels, if we hadn't taken them on, the staff would probably have lost their jobs. It was really protecting that employment, and there was an awful lot of them who were very good people.
You mentioned they were demoralised, what is the key to turning that around?
Initially it was making sure we met with as many of them as we possibly could. They might have lost out on renumeration before we took over, and we paid them that. Even though it's something they could have recovered after from the government, we paid them so they weren't out of pocket. And then gave them good reassurance about what we could do for the businesses... by quickly going in and investing capital in the products so that they could see we weren't just saying we were going to do something, we were doing it.
Is it is simple as giving the property a spruce-up?
Initially it was. To make sure that the properties were clean and tidy, there were proper systems and processes in place, and we could get them back into the market as quickly as possible. That was the initial thing. Once we did that, then we started to properly refurbish from top to bottom.
We got the initial plan in place and the follow-up was in place two or three months later. We took over in February 2009, we put the [refurbishment] programme in place in June and it will be finished totally by February of next year. At the moment 80% of it is done.
We focused initially on the areas we felt would give clients the best feel for our products, so a big focus on our bedrooms, where most of the issues were historically. We put in very good quality bathrooms, totally retiled, with power showers, and totally refurbished the bedrooms. That had the required impact. People came and were very happy with what we did. And they came back - that's the key to success.
Where did the hotels come from?
Ten came from one operator, the Real Hotel group, which went into administration, and two of them were separate. One of them had been with the Real Hotel group historically, but it was closed when we got it. The other was an independent operator.
They were all branded, mainly Quality Hotels, and a couple as Clarion. They were all branded with Choice Hotels International.
Are they still branded?
No. We made a very conscious decision not to brand them initially. What we did was find the original names under which they traded and we put those names back on the hotels. For example, there was a Clarion hotel in Telford that was originally called the Madeley Court hotel. It was a historic country house property. We've put back the original name of the hotel.
We will take a view in the long term as to what we will do with them - if we decide to rebrand we will always try and keep the name of the hotel on them.
So you may choose to rebrand them later?
Absolutely. We'll take whatever is the right decision for the hotel. Our initial aim was to reestablish them, get them trading properly and profitably. That's where we are.
Does Focus own the hotels, or are they purely under management contracts?
It's a mixture of both.
What's the best bit, for you, in taking a hotel and turning it round?
My favourite bit is the success that comes out of taking the product and having it refurbished and relaunched, and seeing it be successful - the success that creates not for me personally, but for the staff and employees of the company. I think that's the biggest boost you get out of it. There's nothing like seeing a company that was on its knees now being successful.
How has business been?
We're slightly ahead of most people, because we've spent a lot of money on hotels while most haven't. We're running around 20% up year on year, in terms of revenue. That's a mixture of occupancy and rate, but primarily occupancy rather than rate. It's because we've turned the business around and we've adopted new market places. We are seeing a steady growth.
Do you think we will see less hotels going into administration, now that business is picking up for the hotel industry?
No, I don't necessarily think so. I hope that's the case, but in fact the danger point for some companies could be as you're coming out. No-one wants to see businesses go into administration, but there have been a significant amount and I do believe that will continue.
Is Focus Hotels looking to make future acquisitions?
We are actively in the marketplace. We are looking for new opportunities and new projects - there are lots out there, but we will only take one that fits in with our plans, which is basically hotels that are larger than 40 rooms, ideally much more than 60 rooms. Primarily commercially driven, rather than leisure driven, as well. We are very happy to take existing properties that are trading and manage them in their existing marketplaces, or properties that are in difficulties and relaunch those.
Where do you see the hotel industry going in the future? Any thoughts on future trends?
My view at the moment is that the trend for new development is limited, mainly because of the difficulty of getting access to finance. However, that probably will change in the latter half of this year. There is still finance available for the right projects in the right place, with the right brand on them.
Do you think branding is important?
It depends on the location and it depends on the hotel. There are some hotels that can perfectly and adequately trade independently because of the type of hotel they are, particularly boutique hotels and country house hotels. But for the average middle market hotel, it's more difficult unless they're part of a big group. There is an advantage of getting the right brand. It's not always easy to get the right brand, and sometimes you will trade without a brand, but certainly we would keep our options open.
Within Focus Hotels there are very different properties - country house and city centre. It must be interesting to oversee such a variety of hotels.
It's a bit of uniqueness. I suppose the key is that nearly all these hotels, even though they have different mixes, they more or less have the same client base. The people who stay in the town one week, stay in the country the next. We certainly have clients who use both hotels - they have different requirements of each. We haven't seen any real difference in the demand for both.
How has business travel been?
We've seen improvement in business travel, really starting in late June and July. I think some of it was delayed from June because of the football, and the elections. We are seeing the forward business bookings also beginning to improve.
Business is very short booked at the moment. People aren't booking far in advance. However, there is a percentage that always books well in advance, for small meetings and conferences, and people who know what their plans are. There is certainly more business on the books for that.
We are seeing some pickup in meetings and events, but we're cautious about it, because government spending cuts will have an impact. We are cautiously optimistic, more because we have refurbished our businesses and we are in a stronger position compared to our competitors.
Are all the properties within Focus Hotels profitable now?
Overall the group is profitable. There are a number of hotels which we always knew would take slightly longer to get back to profitability because they were probably left to run down further than others. Are they all in line with the plans we have for them? Absolutely.
More hotels. There is an ambition to have many more hotels than we've currently got.
How did you get into the hotel business?
My first job was at 18 in a temporary barman's job. Then I used that as a stepping stone and drove my own career. I've enjoyed it. It's a passion. I would argue it's as much a hobby as work. We all need to live of course, but I love what I do, our industry and the people in it. I wouldn't do anything else.