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Tell me about Focus Hotels Management?
We set up Focus Hotels in 2007, when myself and a couple of colleagues left a company called Choice Hotels Europe to forge a new path for ourselves in life. Initially, we had a view to concentrate on consultancy work – but we hit the recession of 2008-9 and that opened the doors to some very good full service hotel management contacts for us so we went straight back into the hotel management business, which of course had been our life prior to starting the company.
Since then, Focus Hotels has become a very successful management company, operating mainly between 15-20 hotels. We have established ourselves as having a very strong reputation in terms of our ability to turn hotels around that are in tough times – in addition to running hotels very efficiently once we are operating them.
This is the key to our operation. Our principle business is that of a full-service management company. We have a full central team and we don’t rely on our hotel teams, as our central team provides all the services required from any good management company. So that’s where we are in 2020. We operate across all market segments, but our history is based on our ability to take any product and turn it around in whatever circumstances that exists.
Can you tell me about your history prior to starting the business?
You can probably tell by my accent but I am Irish, and I started my career as a trainee manager with Trust House Forte Hotels in Ireland, then at the end of that training period moving on to get better educated in Switzerland where I worked in two hotels in Lausanne as a trainee for a couple of years. Following that I came back to the UK and worked initially at what is now the Mandarin Oriental Hotel in London which then was the Hyde Park Hotel part of THFs London division. I worked there for a couple of years and then moved to The Russell Hotel (also THF) in Russell Square, as part of the core management team.
Following this I joined a company called Centre Hotels for a period and then was headhunted to join a company called Comfort Hotels International, where I was regional operations director for London hotels.
Following the sale Comfort Hotels International, my boss at the time, who then formed a new company called Friendly Hotels in 1986, offered me the opportunity to join him as a main board director. Together we built that business from scratch and at its height we had 370+ hotels both owned, operated and franchised across Europe. Finally, in 2006 I left that company and moved on to set up Focus Hotels.
Can you go into detail about the range of services you offer?
Our core offering is that of full service hotel management operating under standard form international management agreements however sitting alongside that we also offer a service that is essentially an operational lease opportunity. This service allows us to offer a solution to owners who are not permitted to be involved with operating companies, which would include for example Pension Fund Investors or REIT investors. Our lease product is there to address these issues and although under these leases there is slightly more risk to the landlord, the hotels we have operated under these arrangements, have nevertheless so far been very successful for these landlords, with returns much higher than they would receive under a standard agreement.
In fact, we were responsible for inventing this kind of lease, which came about when in January 2009 we designed the very first such agreement with Aviva Investors. They needed a new lease structure that would allow them to contract a portfolio of 10 hotels out to Focus under a lease.
We also offer various short term service positions to hoteliers who might have a requirement for support but not a full management agreement. That support can be an overview of their commercial sales and marketing operations, giving them the support needed to get them back on track quickly. We also offer a light overview of existing hotel management for owners who themselves want to stay in place. Ultimately, we have a broad range of products that we can offer – all of which can be relied upon in this current economy, recognising that different owners have different requirements.
Could you tell me about some notable success stories?
I previously mentioned the Aviva Investors estate that we took on in January 2009, which was in a very difficult trading position and was our first major success story. We achieved precisely what we had agreed with the investors despite operating in what was a very difficult market. It was a big project to take all 10 hotels that were at the time in dire conditions and in all delivering negative EBITDA – even before they had paid their rent. But without exception we got the trading and profits of all those hotels back to where they should have been and successfully supported the sale of the portfolio to the aspiration that the investor had for them.
A few other examples relate to the Ramada Jarvis portfolio which went into a CVA agreement in late 2011. Ramada Jarvis was a large UK company at the time but two of the landlords, who have been offered new leases at significantly reduced terms, didn’t want to continue with the new setup and approached Focus as a potential solution. The properties themselves were a new-build at Heathrow Airport and one in the middle of Bristol, both with about 200 rooms. We took on both properties in late 2011, and quickly agreed to rebranded them to the Hilton DoubleTree Brand, in one case immediately and in the case of Bristol following a major refurbishment of all areas of the hotel. The result was the tripling the profit from what was being achieved and this remains the case to this day, Focus continues to successfully manage / lease these hotels which remain top performers in their markets. We have no doubt both will continue to trade very successfully in the years to come despite the current market issues.
How else would say Focus Hotels stands out from the rest?
We base our success on having excellent relationships with our owners, and having a very realistic view of the requirements of what to do when things are going wrong such as the current market. We are very strong believers that the management of the business must be successful for both the owner and the operator; and where required we have always had a willingness to accept that we might have to change some structures of our management agreements to support our owners when times get difficult. We have always taken that view and this flexibility has worked well for us. We believe the result is that our owners stay with us despite being targeted on occasions by competitors.
What can hotel owners expect from Focus Hotels during the Covid-19 pandemic?
First, we have nine of our hotels open for key workers and related contracts, operating within the guidelines which is important and we will continue to open more properties for key workers, even where there is not a great deal of demand. This is so that we can be fully operational before the hotels are allowed to open properly later in the year and be ready to take full advantage of this. However, we make sure that that financial situation is positive for our owners before we open properties, rather than giving them extra costs. It’s a difficult market place, many of us don’t believe this will come back as quickly as some people think, that’s not to say it won’t come back eventually, but it will take time and in the meantime, we must operate efficiently with maximum flexibility being delivered from the operating teams.
This is where the flexibility of our management company comes across best, and we use that to work with our owners to make sure that they are getting the best that is possible from each marketplace. The hotels that have opened so far have mainly been successful for us in the sense that as a minimum the revenue is covering or making a significant contribution to the operating costs of the properties.
However, we are probably no different from some other companies in that, where there is an opportunity, it is the right thing to start opening slowly if you can. The biggest and most important item is to keep costs under control and get flexibility from your teams, which we have got in a big way. Our hotels are ready to take advantage of the market when it comes back. I have no doubt some of it will come back quickly, particularly for domestic leisure. But for the corporate and city centre hotels it will be slower, my view it won’t come back properly until at best the last quarter of the year, even then I think 2021 is the year to look forward to.
What are your goals for the rest of this year and beyond?
Our biggest hope is that we don’t have a secondary outbreak as far as this virus is concerned, as that would be really damaging to the sector which is already in trouble. From our point of view the most important thing is to get the hotels back up and trading as best they can for the balance of this year – and then make sure that we are properly and fully in place to take advantage when the market properly returns in 2021 maybe not in the first quarter, but the second, third and fourth quarters.
Finally, do you have any personal goals?
In terms of my personal goals with the business I have achieved most of them over the years however I am, as I do for our team, continuing to set new objectives to further develop the company especially from the opportunities that will come from this market for well-funded companies such as Focus Hotels.
Personally, I hope international travel comes back quickly, I like to travel internationally (outside Europe) and experience new cultures and I used to do that at least once a year.
In addition, Europe on a short break basis was a real passion of mine, and I certainly hope that will become available again and quickly.