Interview | Wednesday, 09 July 2008

Choose your chiefs, but you may not choose your family

Corinthia Hotels International Vice-President – Development, Paul Pisani speaks to DAVID DARMANIN on how the conglomerate is advancing and is soon expected to graduate into one of the hospitality management key players of the world.

Malta may not go down in history as one of the major contributors to the swinging sixties, or at least, surely not in terms of rock ‘n’ roll. That said, the business revolution happening on the rock over that decade was surely nothing to sneeze at. It was then when small, family run concerns witnessed an explosion of wealth and diversification, giving rise to further development in the thirty years that followed, and turning into what we know now as Malta’s mammoth organisations. Sadly, some of these same organisations are now facing serious succession issues, since the obsolescence of the “family run” model was never taken seriously enough while company ownership was being passed on to the third and fourth generation directors.
Corinthia may invest its energies into worrying about other issues, since as much as the brand may be publicly associated to the Pisani family, the group’s third party interests and its management structure have ensured safeguards against any possible conflicts arising from contempt bred by too much familiarity.
“What is typically known as Corinthia in Malta is not really what Corinthia is,” Corinthia Hotels International (CHI) Vice-President - Development, Paul Pisani said.
There are various theories related to who actually owns the group and its subsidiaries, as myths and legends surrounding Corinthia’s inception have led to several thwarted accounts on who sits on the Corinthia boards. For the record, Libyan leader Muammar Gaddafi is not one of them.
The Libyan interest into Corinthia lies in a 50 per cent stake of the holding company - Corinthia Palace Hotel Company Ltd (CPHCL), represented by Lfico, a Libyan government-owned investment company. The remaining 50 per cent is owned by the Pisanis.
CPHCL in turn, owns a series of other companies, including a majority share of International Hotels Investments plc (IHI). About a third of IHI is owned by Middle East real estate giant Nakheel - owned by UAE Sultan Ahmed bin Sulayem. The remaining share, of about a tenth, is represented by public shareholders.
IHI owns 70 per cent of Corinthia Hotels International Ltd (CHI), as the remaining 30 per cent share was bought two years ago by Wyndham Hotel Group - the world’s largest lodging franchisor, encompassing nearly 6,900 hotels under 12 brands on six continents.
“IHI is a real estate development company owning trophy assets around Europe. CHI is a management company, and that is with whom I work,” Pisani clarified.
“Before 2006, CHI managed Corinthia Hotels only. Now that Wyndham came in as a shareholder, we have a broader range of products in terms of brands and support management services to offer to third party Hotel Owners.
“CHI now is concerned with the management of three hotel brands in total: the five star deluxe Corinthia; Wyndham - a five-star brand; and Ramada Plaza - a four-star deluxe brand.”
According to urban legend, when Corinthia Palace restaurant was being converted into a luxury hotel in the early 1960s, a large number of workmen allegedly grew so attached to their employers, that they decided to make a career change and dedicate their lives to hospitality and catering at the hotel until they reached retirement age. While admitting that the account is decisively romanticised, Pisani explains how parts of the myth are actually true.
“Certainly, we put our employees at the forefront and some of our staff has been working with us for 25 or 30 years. This is because we provide a challenging and yet secure working atmosphere, and receive loyalty in return. This is not only in Malta’s case, which is where it all started, but it also spreads throughout our hotels abroad. We believe that a smile on a happy employee transposes into a smile on a happy guest. So yes, parts of Corinthia’s romantic beginnings are true,” he said.
Among the number of new exciting projects in the pipeline, CHI have recently won a contract for a prestigious London property set to house the 283-room London Corinthia by 2011.
“In the last six months we signed five new management contracts, while our target for this year is to agree on the management of 8 to 10 outside-owned hotels. As a result of our new association with Wyndham we are now exposed to new and increased opportunities, putting ourselves in a position where we get compete with the big names,” he said.
“London was an IHI investment, taken with Nakheel and Lfico. It is placed in a great location, close to Trafalgar square, and is in full sight of the London Eye. The property was owned by the Crown and was last used as a government building and a hotel prior to that. There were 26 bidders for it. Despite not being the cheapest, the IHI Consortium was selected for creativity and because its proposal was perceived to be the most interesting.”
Next in line, is a Ramada branded property in Abu Dhabi, set to open in 2010.
“We’re doing a lot in that part of the world,” Pisani said. “We have already signed on a Ramada Hotel & Suites in Dubai and our pipeline for the Middle East is very strong.
“When UAE is mentioned, people immediately mention Dubai and Abu Dhabi. Besides, Abu Dhabi is actually the capital, it is oil rich and it is where the seat of government is. Furthermore, Abu Dhabi is looking into developing, taking Dubai as its example both in repeating what it did right as well as in avoiding what it did wrong.
“In the medium term, we shall also focus some development resources on the Indian subcontinent. I was recently invited to give a speech at a hotel investment conference in Bombay within a panel entitled ‘New Kids on the Block’, and the level of feedback was great. We have already come across a number of opportunities in India, although there is nothing tangible as yet. What I know for sure is that if we embark on a project there, we will need to enter the market in a multi-property deal rather than take projects one-by-one. In any case, as interesting as India, China and other emerging markets may sound - our top priorities remain Europe, the Middle East and North Africa.”
Pisani’s confidence in large-scale growth must be surely backed by a very strong managerial backbone. He explains how the secret partly lies in who is chosen to occupy senior management positions.
“We have managed to outgrow the family business status, as we believe that our people are where they are because of merit, not because of family connections. In fact, many of our key positions are occupied by non-family members. Of course, we are proud of our heritage and I like to see ourselves as an international company which has retained its core family values. The whole personal touch is still key.”
CHI employs 45 people at head office, while 4,500 staff spread over eight countries fall within its control. But how do they manage to keep control from head office - bearing in mind that there’s one person for every thousand employees, hundreds of miles away? On the other hand, how much freehand do they give their General Managers at the different hotels across the world?
“We do have brand and operating standards - so what you find at a Corinthia in Malta you will be able to find at a Corinthia anywhere else in the world. In implementing our brand standards we also allow for a degree of local flavour. Our understanding of the local core perhaps helps give us an edge on our larger competitors - hospitality is still about people and faces.
“We also have a strong Human Resource setup. Our HR team is constantly reinventing itself, and and excels at providing excellent induction and training programmes. It takes a lot of work to keep consistency but I think we’re doing very well. Main direction and guidance originates out of our office in Malta.”
But what will a guest find at any Corinthia, worldwide, find that wouldn’t be found at any other competing hotel of the same category?
“In general, the big brands are very similar in nature, there aren’t many variations. Our key element is distinctly focus on quality and seeking to pleasantly surprise our guests at key points during their stay.. We are also strong on relationships, since in CHI managed properties, you will find a warm type of service, with a Mediterranean flavour. When we bid for a third party hotel, we are invariably pitted against the giants in our industry, so we ultimately seek to use our size and hands on style as a key edge,” he said, meaning that CHI is making good use of its size, while not necessarily considering its small size to be advantageous.
When you’re small, hotel owners would not have necessarily heard of you,” he said. “Of course since the start of our relationship with Wyndham, this has improved, but we still need time to introduce ourselves.”
That CHI needs to portray itself as a management company with a singular function is clear enough, but it is hard to believe that it hasn’t been tempted to diversify. How likely is it, for example, that CHI would not be have invested in the residential complexes being set up by Corinthia Bab Africa in Tripoli?
“Some years back, the Group was rationalised into a number of independent specialised entities with QPM for example, a sister company, becoming established as a project management company. The parent company is also involved in a number of joint ventures in Tripoli while it also has a catering arm,” he said.
As the western world faces the beginning of a financial crisis - with the soaring price of oil, the collapse of the sub-prime market and what not, the five-star hospitality sector seems to be regarded, more than ever, as a safer investment. Whereas budget holidaymakers may be discouraged to spend more on a holiday as commodity prices shoot up, niche guests affording a €400 room would traditionally be readier to absorb an increment on the room rate. When Malta saw a phase of record shut-downs in the three-star market, a freak closure of Jerma Palace Hotel and, earlier, Mistra Village raised questions as to why Corinthia group opted out of upgrading the properties instead of putting them on the market to be later developed into residential spaces.
“In view of how we’ve evolved, Mistra was no longer a core product,” Pisani said. “Unfortunately, it was time to move on. Everything has its time, and Mistra’s time was up. When we came to decide on what to do with Mistra we saw that our core business is not in resorts but in city-centre hotels. Besides, Mistra was not on water. We decided that the best option was to sell. Jerma was owned by Lfico and after they studied the situation carefully, they decided to close it down - but we were not part of this decision.”
CHI seems to have ambitious growth objectives, as when asked about his medium to long-term plans, Pisani said: “By 2015, we aim at having 65 hotels under our management. But even if we reach that stage, we would still not be big enough to be classified as one of the largest companies in the industry. That size however, would be enough for us to be able to reach critical mass in order to become key-players in the medium term thereafter.”