Dealmaker: Kingsley Seevaratnum
IHG’s Largest Franchisee & IAHI EMEA Committee Chairman Shares His Perspective on the Hotel Business
Kingsley Seevaratnam knows how to succeed in the hospitality business. Besides serving as the Chairman of the IAHI EMEA Committee, he is responsible for the EMEA region of Westmont Hospitality Group, IHG’s largest franchisee and one of the largest privately owned hotel groups in the world.
Westmont’s portfolio includes approximately 150 hotels in Europe, more than 200 in North America and over 20 hotels in Japan, including a significant number of Crowne Plaza, Holiday Inn, and Holiday Inn Express properties.
“We have a unique combination of hands-on hotel operators and smart financial engineers,”
Seevaratnam said. “After being totally focused on hotels for over 30 years, we have an eye for the right deals. This means we’re very clever in the way we finance acquisitions. We have the financial backing to be able to do substantial, multi-hotel deals, and we look for locations where we can add value through refurbishing and rebranding. We’re also actively involved in selecting the right management team for the hotel or portfolio of hotels. And finally, we take a piece of the action and manage the hotels.”
Seevaratnam says that Westmont became involved with IHG in EMEA in 1996, after the company bought a group of hotels in France from Credit lyonnais, and converted them into Holiday Inn and Holiday Inn Express properties.
“We gave IHG a huge leg up in France,” he said. “Right after that, we did the same thing in Italy. We bought a group of hotels, invested in them, and turned them into Holiday Inn hotels.
"We worked very closely with IHG to grow their penetration by entering markets where they weren’t represented.”
Seevaratnam said that they chose IHG as a partner because it was one of the earliest American franchising groups to make an investment in EMEA.
“IHG already had a presence in Europe. To a franchisee, they were well ahead of the curve when it came to having what we were looking for – good brands, a good reservations system and good infrastructure. All they needed was distribution, and we were happy to give that to them. It was the perfect partnership.”
Seevaratnam believes that there are several benefits to owning an IHG hotel brand versus other brands.
“IHG has brands that have been around for 50 years and are among the best-known brands in the world – not just the hotel sector,” he said. “But I personally think that one of the big differences between IHG and other hotel companies is the vision Kemmons Wilson
had some 50 years ago to create the IAHI,” he said. “Most other hotel companies would give their right arm to have a forum like the IAHI. It gives franchisees a platform and seat at the table to negotiate directly with IHG to express their views. It’s a huge plus for IHG today.”
When Seevaratnam joined Westmont in 1996, he became an IAHI member and served on the EMEA Committee. Today, he chairs that Committee and works to make sure franchisees’ perspectives from different countries are brought to IHG senior management.
“This would be difficult to accomplish as individual hotel owners. But, through the IAHI, franchisees feel they have a voice and are part of a community,” he said. “On the IAHI EMEA Committee, we elect chairmen to represent various countries. For example, we have representatives from France, Italy, Germany, Benelux, and the UK for the Holiday Inn and Holiday Inn Express brands. The three biggest franchisees in the region are also represented on the Committee, while IAHI members from each country meet every three months with their individual Country Committees.”
“This is a capital intensive business,” he said. “And in my view, why wouldn’t you want to make sure you’re doing everything you can to get more money in return? The IAHI membership fee is so little compared to the huge benefit you get out of being a member. I urge members to get involved, engage IHG senior management to understand the impact of their decisions, and push for them to do things that are profitable for the brand and for your individual hotel.”
Staying Ahead
Seevaratnam says that just as Westmont relies on IHG to ensure they refresh
their brands to stay ahead of the competition, owners have to continually
invest in their properties and prepare for down times.
"This is a cyclical business with good times and bad," Seevaratnam said." And we have to continually reinvest in our hotels to make sure they meet
consumer expectations. Taking a longer-term view can be a big challenge for many owners because in good times, it's tempting to pocket all the profits.
But owners need to ensure they have the discipline to keep investing on a
continual basis, so they don't suddenly find that they can't do it when they
need to make improvements."
Seevaratnam is careful to say that he doesn't believe the industry is at the
top of a cycle. But he cautions owners not to put too much debt in their
businesses if they don't know which way interest rates are going. He says
it's getting more and more expensive to run hotels today. So what has
Westmont done to stay ahead?
"We're working hard to make sure we have skilled revenue management teams in
place," he said. "This is becoming increasingly important as we get into
the ever-changing world of internet bookings and third-party intermediaries.
We know we need to have people who truly understand how to look at the
business mix and cost of channels being used to fill our hotels. For
example, we have to decide if we want to spend $25 to sell a room for $100,
or if we want to take business for $80 without an element of commission.
Looking at both the top and bottom lines is a big challenge for some
owners."
Seevaratnam believes that owners should use every possible opportunity to
emphasize IHG's web site to make sure guests use it instead of other
delivery systems that can cost more money. He also urges franchisees to
register as many guests as possible for Priority Club Rewards, so they'll be
more likely to return to their hotel or another IHG hotel.
And according to Richard Hartman, IHG's Managing Director, EMEA, Westmont
practices what Seevaratnam preaches.
"Westmont is simply a great franchisee," Hartman said. "They live the
Holiday Inn legacy and they believe in what we are trying to do. They don't
always agree with us and we engage in many honest and lively discussions.
What is important though is that we are working together toward the same
objectives. On a personal note, my transition into EMEA from Asia was at a
difficult time for all of us. Without Kingsley's help and support it
wouldn't have been as successful as it has. He is a true friend to all of
us."
|
