Fresh out of school when he first joined the family business, 32-year-old Allen Law has taken the Singapore-based owner-operator from one to eight hotels in eight years. He tells Gracia Chiang about the next growth phase
Allen Law
CEO
Park Hotel Group
You clinched your first management contract in Singapore last month. What’s next?
Park Hotel Group has been an owner-operator (in Singapore, Hong Kong, China and Japan). This is the first management contract we’re doing for a third party. The target was only one to two hotels this year. However, there’s been a lot of interest and by the end of this year, we’d likely be able to sign three to four projects.
Where is the interest coming from?
Our two key markets, Singapore and Hong Kong, but also China and Indonesia. We’d likely have five to eight more projects next year. We will then have about 20 hotels, both owned and managed. We’re looking at most of Asia (for expansion). Thailand, Vietnam and even Myanmar, where we were recently in for an exploration trip.
How is Park Hotel Group different from other management companies?
Some of these international brands are much bigger in terms for numbers, but we’re able to be attentive to the owners’ needs. We’re slightly different from chains who say ‘we have this brand name, we’ll put it in your building and give you a GM’ and that’s it.
Some international groups also spend a lot, but owners don’t think it’s necessary. For us it’s really driving the bottom line. The philosophy we have internally is whether this hotel is owned by us or third-party owned, we’ll manage it as if we’re the owner.
What about asset growth?
We’re adopting a two-prong strategy. Direct investment will continue but on top of that, management contracts. We’ll grow faster in management contracts because investment is more on a case-by-case basis. We’re always looking for the best location within cities but these might be hard to come by. Management contracts cover areas that we may not traditionally invest in because of certain risks. We want to grow revenue coming from fee-based (contracts) to a good 10 per cent of our total hotel revenue in the next three years.
You previously talked about launching an IPO. Is that still on the cards?
Due to the recent financial crisis we’ve put these plans on hold, but we’re monitoring the market. There’s always goodwill attached to a listed company. It will also release some capital for new investments.
Will you be sticking to two brands?
We intend to focus on Grand Park (luxury) and Park Hotel (upscale), but we’re also exploring buying a brand. Coverage, brand equity and concept are a few areas of consideration. A brand with 10 to 15 hotels will fit in very nicely with what we’re planning.
We’re also developing a budget concept. We’re currently not pushing it in the market, but if we have a partner who requests for that, we’d consider.
That’s very different. Why budget?
We have the expertise to do that. It’s about providing a good product in a relatively good location, yet at a lower cost. We’ve been doing well in that respect as we’ve been managing our costs relatively better than the market average in terms of GOP (gross operating profit). For some of our hotels, we’re running at about 60 per cent. Industry wise, it’s about 40 plus per cent in Singapore.
How are you able to do this?
We cut out a lot of the middle layer and have an organisation structure that is flat and broad. We empower our ground staff to do more on their own. Our Park Hotel Academy was set up last year, and we have a number of certified courses and qualified trainers. Training and development support is very important in order for this broad structure to survive.
You’re a young father. What roles do age and your personal life play in your business?
The advantage (of being young) is that I’m able to bring in a bit more creativity and innovation. Earlier on when I first started, people thought I didn’t know anything or tried to bully me or told me things that might not be 100 per cent true. I’m now much more experienced, so the disadvantage (of age) has kind of disappeared. I’ve managed to gain experience and respect from my team, and made many friends in the industry. I also believe in hiring experienced professionals to join the team so that I learn from them and they help build the organisation.
Now that I’m a parent of an infant, I’ve also been able to chip in for a children’s programme we’re about to roll out for our hotels. I know what the needs are based on hands-on experience.
How important will travel consultants be in your future?
Very important. I continue to believe that they are irreplaceable. Some of their marketshares might have been eaten up by e-commerce but they will still be key partners. Internet bookings, especially, tend to be last minute. If we want to lock in base business, the travel trade can plug the hole quite perfectly. Travel consultants have their different niches as well, so it’s about working closely with them. Our (distribution mix) is quite balanced.
This article was first published in TTG Asia, September 7, 2012 on page 6. To read more, please view our digital edition or click here to subscribe.
