Oliver Of Bass Looks At An Industry In Transition And Sees Opportunties

LONDON— As chairman/CEO of one of the largest hotel companies in the world, Bass Hotels & Resorts’ Tom Oliver doesn’t make a habit of being off-base very often in his views on business matters relevant to his organization, his industry and his part of the world. When Oliver recently invited HOTEL BUSINESS® to his London office, he intimated that the international community’s dampened enthusiasm for travel to the United Kingdom has largely been fed by consumer-media-generated “hysteria” regarding the severity of the outbreak of foot-and-mouth disease across the U.K. This sentiment was seemingly exemplified the very next day when reports of new cases of the livestock ailment made front-page headlines in the local press. Oliver’s observations have not been related solely to farm reports during his tenure. Last year he had to call the shots on the $157 million acquisition of Bristol Hotels & Resorts, followed earlier this year by the purchase of Posthouse Hotels from the Compass Group for nearly $.2 billion. His decision-making prowess has been exercised even more recently, as evidenced by Bass’ agreement to pick up The Regent Hong Kong Hotel from New World Development Co. for $346 million in cash. Moreover, many industry observers are patiently waiting in the wings for the final go-ahead by Oliver and his firm’s shareholders on the long-anticipated Wyndham Hotels buy-up. Against this active acquisition back-drop, Oliver took the time to explain the logic behind his company’s past moves, the progress made assimilating these new assets into the Bass Hotels & Resorts line-up and the type of thinking that might guide the organization as it continues to explore additional growth/profitability opportunities. Bold Moves On those moves that have already gone into the books, the Bass chieftain noted that, “The integration of Bristol [into the system]has been moving ahead smoothly.” With regard to the Posthouse transaction, Oliver said, “This has proven to be a great deal for us. Not only will it [help]drive our brand— in this instance, Holiday Inn— but it shapes up as being earnings-accretive as well.” Essentially, Oliver said Bass moved on Posthouse specifically in order to boost the Holiday Inn brand in the U.K. mid-market. As a result, he noted that perhaps as many as 70 of the 79 acquired properties stand to be re-branded under the Holiday Inn flag. “This would bring our total complement of Holiday Inn locations in the U.K. to something over 100,” Oliver said, “and that’s not counting the Holiday Inn Express [label].” Some market watchers, analysts and competitors might note that not every deal the mega-organization enters into can be considered earnings-accretive. A case-in-point has been the recent Regent Hong Kong undertaking, with Bass (nominally at seven times EBITDA) picking up a trophy asset widely listed as something in the range of 11 times EBITDA. In this instance, Oliver’s assessment of the strategic value of the 514-room property— which will be renamed the Inter-Continental Hong Kong— made this an attractive transaction in that it would effectively double the Inter-Continental presence in a marketplace viewed as “starting to come back.” One final aside in line with this most recent move was Oliver’s light-hearted observation that “not all of our acquisitions are necessarily portfolio buys… though some transactions that we enter into are obviously pricey enough to make us feel like they are!” Obstacles And Opportunities Oliver covered a multitude of operational and organizational concerns, running the gamut from obstacles to opportunities. On the matter of difficulties he and his BH&R associates have been working to overcome, Oliver maintained that “trying to drive brand development in a market with so many moving parts” is probably the company’s top problem at this time, though trepidations about human resources, return-on-investment and quality assurance similarly take priority on a regular basis.