Excerpts from the interview are as follows:
When Minor’s looking at new management / investment opportunities what are the qualities that make a proposal or a property stand out to you?
Dillip Rajakarier: I think the first is a brand fit. The second is what guest experiences we can create. If it’s a brand fit and we believe the destination at this location can support an Anantara, the next thing we say is, okay what are the guest experiences we can create? How do we bring the local culture in to the design element of the hotel, into the service element of the hotel? What facilities we need to have? Brand fit and experiences are the two key drivers for us.
Of course the third one, if we’re investing, is we always look at what is our return on investment. The financials play an important part in terms of what we can invest. The expected return depends on the country and the site. If it’s a greenfield there are potential risk factors for delays, cost overruns etc. If it’s a brown field, which is a conversion, it’s less risker. If it’s a management contract we would look at what is our fee income that we could earn on this hotel. For new investments in Sri Lanka, we would expect around 16% IRR.
How do you see the potential for Sri Lanka’s tourism in 2020? And what are your recommendations for the country?
Rajakarier: I think this year (2019), whether we like it or not it’s going to be soft. Next year our Q1 will be soft because Q1 2019 was fantastic, especially at the two Anantaras. It’s going to take time to create that confidence and therefore it will have an impact on Q1. I think Q2 onwards will be better than this year, Q3 and Q4 will be good.
Next year I will be fairly cautious, I’m not going to be optimistic. If we see a growth next year I’ll be happy but I think next year will be between 2018 to 2019. Not as bad as 2019 but not as good as 2018, we’ll fall somewhere in the middle.
From a tourism perspective, one of the things I see in Sri Lanka is that we talk a lot but there’s not much action. I’d like to see some of that talk being converted into action and implemented. I’d also like to see a robust, sustainable tourism plan where people can actually drive, create value and bring the tourists in. That’s my hope and I hope we can make it happen.
Tourism is becoming quite an important sector today. As a country we need to have the mind-set of looking at the best ways to drive tourism, creating sustainable tourism and adding to the GDP growth of the country.
But also the biggest challenge Sri Lanka has is the talent. We have a lack of talent. We also need to develop it and the only thing we can do to create that talent is to say ‘hospitality jobs are not bad’. I love my job as CEO and you’re as good as another CEO, just because you’re in hospitality it doesn’t look bad. That confidence level and that stigma that working in hotels is not a great job, has to change.
What are the key ingredients in building hotel brands? And why do you think brand is essential for countries and companies?
Rajakarier: The key ingredient is the people. We say brands don’t build people, people build brands. As long as you have the right talent and the right people who are passionate and happy to drive the brand, your brand gets built up.
Brand building is essential because the guests connect to the brand. They come to an Anantara in Thailand and when we open one in Sri Lanka they say oh we know Anantara – the service standards, the people, the brand. From a guest expectation perspective it solves their problem because they know what to expect if they come to Sri Lanka. That’s why brands are important.
But brands are also important in terms of driving sales, marketing, distribution and PR compared to a stand-alone brand. If you’re a stand-alone brand you’re by yourself. You don’t have, or you can’t afford to have, the additional resources that a chain of brands can deploy in key markets. If you’re a single branded hotel then it becomes a rate game, as opposed to a portfolio branded hotel where you can invest in people, systems, distribution and drive revenue.
What steps have you taken towards sustainability as a group?
Rajakarier: For us, CSR is part of our core, part of our board agenda. We’re one of the only hotel companies that’s part of the Dow Jones Sustainability Indices (DJSI). We’re also part of the FTSE4Good Index.
As a company, we talk about people and planet, and how we can protect both. We have different initiatives in different countries that support sustainability projects. In the Maldives our initiatives are mostly about coral. In Africa it’s about education and providing clean water. In Thailand we have the elephant foundation which protects wildlife and working elephants. We touch different segments of the value chain from a CSR perspective.
Plastic pollutes the whole environment, especially in the Maldives where the amount of plastic they use is huge. We have given shredders to our hotels where they can shred plastic and it can be recycled. In Anantara we’re now providing refillable bottles. From a CSR perspective, and from a people perspective we offer education scholarship programs and training programs.
Many people talk about CSR but not many actually do much about CSR. It’s part of our KPIs top to bottom to drive this. Once you do that, people take responsibility and take it seriously. Sometimes guests want to come to your hotel because of the CSR activities but more than the guests, the employees, especially the next generation, they say we want to join Minor because we like what you do with the turtles, the elephants – it helps.
Last year Minor invested in NH group. What have they brought to your group and what have you achieved with them over the last 12 months?
Rajakarier: We’ve done a lot! The whole NH investment was a strategic fit for us. Minor, as a hotel group is very strong in the Middle East, Africa, Australia and Asia. NH is very strong in Europe and South America. We acquired NH to create a global platform. Apart from Portugal we didn’t overlap in one country. It’s a strategic fit.
Secondly, it’s made us a global company with strong sales & marketing distribution and PR. We are now able to drive Asians into Europe and they’re able to drive Europeans into Asia and other places as well. That’s the immediate impact we’ve had.
“Today we’re able to attract investors as a global company rather than an Asian company. It’s put us into a totally different playing field.”
We’re creating a loyalty program which will expand between the two hotels. We’re increased our S&M presence, we’ve renegotiated some of our contracts and we are now able to go into some of the corporate RFP programs. In the past, we didn’t have a presence in all of the countries but today we are in 54 countries so we can participate in global RFP programs as well. There’s a lot of benefits.
They have strong systems, they have strong people. We’ve brought some of the NH people to Asia to learn and develop and we’ve sent some of our people there. Since the acquisition we’ve launched an Anantara in Marbella in Spain, in July 2019, which is going to be managed by NH. We will convert 2 NH hotels into Anantara’s in the coming months. We’re looking at bringing more Anantara’s into Europe, acquiring more hotels. And today we’re able to attract investors as a global company rather than an Asian company. It’s put us into a totally different playing field. Today we’re one of the top 20 hotel groups in the world.
We’re able to leverage our eight brands in the different locations and create synergies, but also ensure we don’t cannibalise the customers as well – I think that’s important, we don’t want to make the same mistake as Marriott or Accor has done, as a hotel owner the owner always loses. We’re mindful of that because we always think like an owner, that’s how we started our business, we always think ‘what does the owner get as a return’.