THE second keynote speaker at this year’s Annual Hotel Conference (AHC) taking place at the Hilton Manchester Deansgate on October 11 and 12 has been announced as Greg Dyke, former BBC director-general and chairman of the Football Association.
David Eisen, the editor-in-chief of Questex Hospitality Group, spoke to Greg (pictured), who in 2015 became chairman of Vine Hotels, a hotel owner and operator with a portfolio of branded and independent hotels. In March, the group acquired its first hotel in Manchester, the 148-room Best Western Cresta Court.
How does a media type, a former head of a football association find his way into the hotel business? Why did you want to enter it and what do you like most about it?
It’s like so much else of my life. It almost happened by mistake. I’ve always done some other things on the side because I was lucky, I made some money and in my late forties, early fifties, I put it to use in other things. I originally bought a golf club. Which is now a sort of golf hotel, which I’ve had for 20 years. And then I bought a small rather nice hotel in Sheffield.
I got to know some people in the hospitality business. And about two years ago, I was chairman of a big theater company and when we sold the company I made quite a bit of money and I was sitting on a lot of cash. And I go, ‘Cash is not my juice’ in an environment where they pay you half a percent interest on it, which is what it’s like here. So I decided with one of the guys I met in the hotel business if there was a hotel business we could buy that would be profitable and give me a decent return on some of the money. And we’ve now bought four hotels in the last 18 months.
What attracts you to invest in hotels as an asset class?
It’s a much better return on your money than anywhere else, in my estimation. The analysis we did on each of the last hotels we bought was: ‘If we had a recession as bad as the last one, which is hard to see, but if we did, would we survive it?’ With interest rates still low you can borrow money, and as long as there isn’t another major recession, we feel pretty confident.
What is your overall acquisition strategy? What is your vision for Vine Hotels?
On a lot of what we’ve bought, the basis is: Is there something else we can do with them? We bought one in Sheffield that we’re trying to do a big extension development on part of the land. We bought one in Southampton where we’re going to try to do the same thing and build above the compound.
Because I don’t know what it’s like in New York, but the housing business here has gone through the roof all over the place. So on three of the four we bought, one we built an extension, two we’ll probably build an extension and build some apartments. Another one we’ve built some houses. So we reduced the capital. You do that over a couple of years, reduce the capital cost of building a hotel and then they’re very good businesses.
The bulk of your hotels are branded by Best Western. They’re the brand on Mosborough Hall in Sheffield. What’s your relationship with them?
I got to know them because when I bought Mosborough Hall, which was the first one I bought, it was the Value Best Western then, and we found them quite effective and quite good, so we’ve done some more with them.
It’s quite interesting because Best Western in the U.S. has a different look or feel or connotation than in Europe. A hotel like Mosborough Hall, which has a long storied history, doesn’t necessarily fit into what you think of a Best Western in the U.S.?
I get that. I think though that their old branding was a bit too American—it didn’t suit here. I think the new branding is a lot better.
Are you a passive or involved investor/owner?
I wouldn’t say passive investment because there’s quite a lot of my money involved. I’m involved in all discussions, but I obviously listen to the hotel professionals and take their advice because they wouldn’t want to advise me about broadcasting and I don’t want to advise them about hotels. So I sit with them and I listen to what they say and try to add some ideas in there. But I’m not by nature a hotelier.
Is there a particular number of hotels you’d like to see Vine get up to?
No. We pitched for one recently that we didn’t get, and we think the price it went for was beyond what we would have paid. We look around for, not bargains, but we look around for ones that give you a good business return. I do think we’ll rush to buy more this year. Once we’re selling some of the apartments we’re building and things like that, then I think we’ll buy some more. But if something interesting came along that we really thought was worthwhile, we’d go for it.
We decide to buy a hotel and see if we can we run it better than it was—can we do something with it? Can we build an extension or build more rooms?
Would you ever look to build a hotel, or is via acquisition how you’ll grow?
I doubt whether we’d build one, but I also was in the golf business, and what I’ve learned from golf clubs is never build a golf course. Let someone else build the golf course and they can lose the money, and you can buy it off and receive it!
We haven’t even invested in London because I think London is too expensive. We think there are some interesting things outside of London. That’s what we’ve been doing.
Greg will be talking more about hotels and to this year’s theme of Embracing Change, Seizing Opportunities at The AHC on the morning of Thursday, October 11.
For further information and bookings visit www.theahc.co.uk