After the acquisition: Q&A with Jason Carruthers

Back in March the Fattal Hotel Group announced that it had agreed to acquire the long term lease on four Grange Hotels in London, marking the group’s first entry into the central London market. Totalling over 1,300 bedrooms, the new hotels include the Grange Tower Bridge Hotel, the Grange St Paul’s Hotel, the Grange City Hotel and the Grange Holborn Hotel, which, following a significant investment programme, will all undergo major refurbishments as the group continues to pursue a strategy to drive performance and growth. The new hotels will be operated by Jurys Inn and Leonardo Hotels UK and Ireland, with Tower Bridge, St Paul’s and City Hotels operating under Leonardo Royals, and Holborn, following extensive refurbishment, will become the group’s first NYX Hotel by Leonardo Hotels in the UK. Hotel Owner visited the Grange St Paul’s Hotel to meet Jurys Inn and Leonardo Hotels UK and Ireland managing director Jason Carruthers, to hear about its plans to fully integrate the properties into its portfolio. What made these hotels so appealing? We are very much on the growth trajectory at the moment, we didn't have a presence in central London, and these are four exceptionally well located properties in parts of the city where we absolutely wanted to be. The opportunity to bring in hotels that are of this calibre and unbranded of this size is very rare, so that is why they were so appealing to us and obviously London has the highest RevPar of any UK location. The hotels also operate in multi-segments so these are meeting and events, leisure, corporate, group, and have extensive F&B, wellness, and gyms, so that only adds to the appeal. To put them into our Leonardo Royal brand, which is a brand we are growing in the UK, it was a perfect fit. How long was the process? It was a good four to five months in the making, as you can imagine, it is relatively complex with the different parties involved with Queensgate who own the assets, us to have the operating lease, then satisfying the sellers and all the legal people and banks. It is a serious process to go through, we also had to evaluate the hotels to see what the current performance looks like and where we thought we could make some improvements. We were very pleased to get to the end of that and are very pleased with the outcome. What are some of the first steps after the deal was done? We met with the senior team with a number of my senior team to just explain to them who we are what our background is and a little bit about the brands we operate, our experience as hotelier and about the bigger organisation in terms of Fattal and how many hotels there are within the group, the growth that Fattal has experienced since 1999 and then really what our plans are for the properties. We have a number of long serving members of staff here who have then been put into a position of the owners telling them they were looking to sell the properties and have had a certain amount of uncertainty for an extended period of time. First and foremost we wanted to talk to them and explain what we have in mind and to tell them why these hotels were so appealing for us. With positioning them mainly in the Royal brand is there a certain audience in mind? With the exception of the Holborn hotel they will have a fairly similar business mix, they have a reasonable amount of conference business but we would look at the performance of the business spaces and believe there is an opportunity to yield those spaces better. We will certainly see a higher proportion of conference business moving forward but the mix of business and leisure will be fairly similar. The hotels already operate at 90% occupancy so it is subtle tweaks really to the segmentation and room types and how we manage the business on the optimum nights of the week, rather than any wholesale changes in the audience. However, the Holborn hotel will be fairly different as it is moving over to our lifestyle brand Nyx - which is aimed at a younger demographic who will be choosing to stay in that type of boutique property which is a very lively and vibrant environment that is not for everybody, but one that there is definitely a market for that kind of property in that location. We have a number of competitors within that particular set that offer that kind of solution very well. So in that there will be a slightly different audience but not particularly in the other properties. Was it always the plan to start with multiple sites or was it just the opportunity that arose? No, it was an opportunity too good to miss for those reasons. We are looking at individual sites in other locations in the UK and Ireland in cities, where we are already represented with Jurys Inn properties, where we believe we can accommodate more than one hotel in that city, and because we have multi-brands in Jurys Inn Leonardo Royal and Nyx, we can do that without cannibalising our own business. In London the hotel market is obviously far greater than any other city in the UK so we have a number of different options in London which would be individual assets that we are interested in. Are there going to be any refurbishments? Yes, we are going to refurbish all of these hotels starting in August and every hotel is going to have a bedroom refurbishment in some way. The Holborn and City is going to be a very extensive top-to-bottom refurbishment, with everything ripped out of the bedrooms and public areas. We also have an extensive refurb taking place at Tower Bridge, less extensive at St Pauls as this is the newest of the properties, but all of them will have fairly significant levels of investment with the whole project going on until the first quarter of next year. We have a period of time where we need to finalise our capital expenditure plans, and we need to get group approval from our board. What does that process involve? We will prepare sample rooms in all of the hotels and then approve the sample room and approve the costing, test them, and also map the existing customer journey with any areas of improvement we will take on board when we design the sample room. They will be signed off in the next couple of months ready for us to start the project in August. There will definitely be changes in the style of the property because in Holborn for example it opened in 2000 so the product needs to be updated. You stay in this hotel and there are things now that have moved on - if you don't have a USB point next to your bed people are moving tables around and unplugging lamps - things have changed since then. Did London’s market performance contribute to the timing of this move? We do see the fluctuation of the markets as cyclical but London over a significant period has been very, very progressive from a RevPAR perspective. I worked for Novotel previously and we had properties in London that experience very high levels of RevPAR growth over five to six years, and we have always kept an eye on London in that regard. Had the RevPAR and the market been lower than it is today, we would have still moved ahead with these hotels. If there is a slowdown in the future, while we clearly do not want that it would not affect our long-term plans. The uptick in the last six months is just a bonus that we look on very positively. What are the goals for the rest of the year for these four hotels? Short-term is to integrate these hotels and the people into our business - that is into our systems, and our processes - like how we distribute the hotels, how we market the hotels, the sales and resources we have to fully optimise them. Then we have to rebrand them: Holborn will actually become a Jurys inn before it becomes a Nyx as it is a significant journey before it becomes a Nyx. Then we carry out the refurbs and have to trade during that period of time, then relaunch them as fully refurbished hotels, and deliver on our business plan with these teams in these hotels. In that same time where we need to bring resources in to support the plan we have in place we will do that.