CEO Dillip Rajakarier said
the deal is a “strong statement” for the Bangkok hotelier and will signal more
expansion worldwide, including the U.S.
BANGKOK — For Minor Hotels and
its CEO Dillip Rajakarier, being in Paris has outsized importance.
“When you are in Paris, it
makes a strong statement,” Rajakarier said. “[Because of this deal], we’ll be
able to get many more hotels on the back of this.”
Minor Hotels CEO Dillip Rajakarier
The deal Rajakarier refers to
is Bangkok-based Minor Hotels making its debut in Paris with three hotels being
rebranded and introduced early next year. Swiss Life Asset Managers France
chose Minor to manage a 207-key NH Paris Gare de l’Est and a 103-key NH Opéra
Paris Faubourg. A third property, with 90 keys, will open as the NH Paris
Champs-Elysées and relaunched in 2025 as an NH Collection property
following a renovation.
Rajakarier said the 2024
Summer Olympics influenced the deal's timing, but his company has long sought
to be in Paris. Minor already has eight hotels in France but none in The City
of Light.
“It’s a bit like
London. You need to be in London. Not in the outskirts, not in Birmingham,
Manchester and other places,” Rajakarier said. “Once you are in London, people
actually look at you and say, 'Oh, OK. You know what? The brand is really strong.’
“If you’re in Paris, they
know you have arrived.”
So, does this deal signal
further expansion for Minor Hotels?
“Absolutely,” Rajakarier
said. “Even during COVID, we never stopped expanding… Our growth plan will
continue, and we feel like there’s a lot more potential and a lot more places
to go into Europe.”
Those deals include acquiring
NH Hotels in 2018, operating eight former Boscolo properties (including
rebranding some into the company’s luxury Anantara brand) and future openings
for its NH Collection in Helsinki, Thailand and Laos.
“The whole of the
Northern Europe has been untapped from our perspective,” Rajakarier said. “And
we feel that there’s a lot of potential there.”
Rajakarier, who said he likes
to “chase deals,” said this one took about six months, mostly because there was
an existing operator and the details needed to stay confidential.
NH Paris Champs-Elysées will be relaunched as an NH Collection property in 2025.
PIPs and ROI
The deal for the three Paris
properties also includes a property improvement plan for the older
properties.
“They need almost a complete
renovation with regards to redesigning some of the public spaces,” Rajakarier
said. “To be honest, we’ve still not been able to put a finger on the actual
number because when I was there, I felt we would need to do a little more of an
upgrade.
“What I said to Swiss Life is
let’s do it one time, properly, so that this property will be there for so many
years.”
Regarding ROI, Rajakarier
said he expects the hotels to be profitable within the first year.
“It’s mainly driven by rate.
Of the three properties, two were operated by a small, independent brand that
didn’t have much distribution.”
Rajakarier is optimistic
because Minor already has a strong presence in Spain, which sends many visitors
to Paris.
“We feel that we’ll be able
to get that uplift pretty quickly.”
So, what is Minor’s plan to
compete in an extremely competitive market like Paris?
“For us, it’s all about the brand and the experience,”
Rajakarier said. “It also works to our benefit that we don’t cannibalize the
market because we only have three hotels, and they are in great locations where the rates are quite high.”
Geographic expansion
Rajakarier said Europe isn’t
the only place Minor wants to expand into.
“We’re targeting Europe,
we’re targeting the Middle East, we’re targeting Australia. We’re targeting
Africa. And we’re trying very hard to get into the U.S.” (Minor currently has
one hotel in New York.)
He said the company is not
driven by flags on the map but by where they can expand and drive a year of
10% to 15% growth.
“That’s our goal, and then we
work it backward. How do we ensure we achieve that growth?” Rajakarier said.
“How do we work in those destinations? How many hotels can we get in
those destinations, which will add to our growth numbers?”
Rajakarier said he is
optimistic about the U.S. because of the loyalty the company already has with
American customers.
“We would love to get into the U.S. market, both through
franchising and management contracts,” he said. “[We want to] start with North
America and then expand ourselves further down. The U.S. is a key market for
us. The main reason is that we have a lot of U.S. customers coming to Asia, the
Middle East, the Maldives, and now in Europe as well. They understand the
brand. For example, Anantara was selected as the top luxury brand by U.S.
Readers’ Choice. We feel that using that loyalty, we should be able to
get more of a presence.”
Rajakarier said when Minor
was a smaller company, coming to the U.S. was more daunting because of
potential competition with some of the largest hotel companies in the
world.
“Today, the owners
are looking at it in a different way in terms of who gives them a better return
on investment and also upside in terms of their real estate,” he said.
Varying the model by
location
Rajakarier said Minor’s model
can vary by the market.
“We do everything. We are an
entrepreneurial-driven company. We’re very opportunistic,” he said. “Our
business model depends on the location and the country. In some countries, we
own assets; in some, we will do a joint venture; in some, in tier-one cities,
we will do a lease; in some, we will do management only. And in some countries,
we will also venture into franchising.”
Even during COVID, we never stopped expanding. Our growth plan will continue, and we feel like there’s a lot more potential and a lot more places to go into Europe.
Dillip Rajakarier
Rajakarier said the company
has a good track record with investors.
“We have been quite
successful with some of the larger investment funds. They like us because they
know we take ownership and drive earnings,” he said. “Therefore, we would
rather work with fewer owners than with many owners because they know us and
they know how we operate. Hopefully [in Paris], we’ll be able to go from three hotels and to build up to 10 or 15.”
He said the company has
successfully managed the market and segment mix to keep ADR high.
“We would actually close some
of the lowest-yielding channels during peak season because you want to maximize
your rates, and we would drive everything through brand.com, saving us another
15% in OTA commissions,” Rajakarier said. “So, by doing some of these things, we
have increased our rates. In Europe, our rates have gone up by about 20% to 25% by
doing the same thing. In Asia, it’s gone up as well as in the
Maldives.”