Interview subject: Patrick Imbardelli, president and CEO, Pan Pacific Hotels Group
Interviewer: Stacey Mieyal Higgins, managing news editor, HotelNewsNow.com
Interview site: 10th annual Australia, New Zealand & Pacific Hotel Industry Conference at the Hilton Sydney
Interview date: 8 July 2010
Stacey Mieyal Higgins: Hi. I’m Stacey Higgins here at the ANZPHIC conference in Australia. I’m here with Patrick Imbardelli. He’s the president and CEO of Pan Pacific Hotels Group. Thanks for being with me here today, Patrick.
Patrick Imbardelli: Thanks for having me.
Stacey: Nice to see you.
Patrick: Good to be here.
Stacey: There’s some exciting news from Pan Pacific coming in to this particular conference. Can you start off by telling us what you’ve announced for Australia?
Patrick: Stacey what we’ve decided to do—we have three assets here, three hotels—and we’ve decided to rebrand the three hotels to our own brand: Parkroyal for the two Sydney hotels and Pan Pacific for the Perth hotel. But what it does is, it’s not just about rebranding these three hotels. It brings the Parkroyal brand, which is Australian homegrown, back to Australia. So we’re relaunching the brand, making it relevant for today in the Australian/New Zealand market, and we’re bringing Pan Pacific back, initially through Perth, and Pan Pacific was here years ago as well. So it’s not just about new brands. We’re actually launching brands that were here previously that still resonate with consumers. So we’re really excited about it.
Stacey: We want to talk about future growth for the company. I know you’re in a growth phase. Let’s talk about other markets that are important for Pan Pacific as you move forward.
Patrick: North America—very important for us. We have four hotels there. And we’d like to get into the key gateway cities in particular: San Francisco, L.A., Chicago, New York. We’re already in Whistler, Vancouver and Seattle on the West Coast. And in fact, we’ve just appointed a new head of development for North America, Todd Wynne-Parry, who used to be in Australia. He’s an American, so he’s gone back home, and he’s going to be taking care of growth there. China’s very important. And North America is a Pan Pacific brand. That’s our focus. In China, we want to expand both the Pan Pacific, where we have two hotels operating today and one under construction, and the Parkroyal brand, which we’ve got some really good irons in the fire and we’re going to be announcing some things shortly there. In Japan, it’s the Pan Pacific. We have the Pan Pacific in Yokohama. We’d like to see Pan Pacific in Tokyo, Osaka, Nagoya—those key cities. Southeast Asia—both brands are there. Parkroyal has seven hotels, and Pan Pacific has nine hotels. We’ve just built a new hotel in Bali. We just opened another hotel in Kuala Lumpur—a Parkroyal. We just opened a Pan Pacific Serviced Suites in Bangkok. So there’s a lot of activity. And so it’s Pan Pacific for North America, Japan, China, Southeast Asia, Australia. And the Parkroyal focus will be in the Australian region—Oceania, as we call it, Southeast Asia and China.
Stacey: Can you tell us a little bit more about the markets you’re entering. Why is this a good time to be growing in those particular markets? Either if we look at it from Pan Pacific point of view for your own company, and also for the hotel industry at large.
Patrick: We’re a Singapore publicly listed company. We own hotels. We operate the two brands. We’re a brand organization. We operate those two brands for other owners. And we also own and manage together. In Australia, for example, we own and manage the existing hotels. But our model is to own where we can, manage for other people where there’s opportunity and to partner with other people, other investors or equity sources, where we both can derive benefit—we put our brand on the roof, our flag is in their hotel, we give that hotel personality, and hopefully that (will generate) return on investment to the owners which we’re part of. So our strategy in North America would be to deploy equity. In Japan, we’ll deploy equity. In China, we already have a substantial amount of money invested, and we’ll invest some more with four hotels in total there. In Southeast Asia, in Singapore we own a lot of real estate, and we’re building another Parkroyal there. We’re spending nearly $300 million to build what we call a representative Parkroyal, something a little bit special in the Parkroyal family.
Stacey: A flagship?
Patrick: Flagship’s probably not quite the right word. Something that’s representative of the brand exactly where it should be positioned. So we’re taking the opportunity to do that. So our strategy again is to use our brands, use our system, use our people to drive value for the asset, and in some cases, we own the asset ourselves. And we will deploy capital especially where we need to where there’s cities or destinations where with high barriers to entry. Where brands find it difficult to get in there, we have the ability to deploy capital in those markets.
Stacey: Can you talk about why that mix of business model works? We’re seeing the larger companies get out of owning real estate when they can. I just wrote a story about Accor where they’ve got this asset-right mix. The diversity of the business model, why is that the best way to go?
Patrick: Stacey, the reason why it works well is because if you’ve got the ability to deploy capital and own real estate, you show other owners that you’re committed to what you do. Let’s take Australia for example. In Australia, because we’ve now got two Parkroyals that we own and a Pan Pacific that we own, if we sit down with an owner and say, ‘Hey, we’d love to manage your asset,’ they know we’re committed to the brands because we’ve got over $200 million dollars committed to those assets in Australia. If we were to arrive in Australia and say, ‘Here we are. We’re Parkroyal. We’re Pan Pacific. Can we put our brand on your roof, run our distribution system, train your people, etc.,’ they’ll say, ‘Well what commitment have you got?’ So you can demonstrate commitment to locations. You can use the capital to start the growth, and you might want to recycle cash later and say, ‘You know what? That was very good. The hotel’s really earning now. There’s a couple of people who want to buy.’ So you may sell the hotel and then move the cash somewhere else. You have a lot more flexibility. The other thing is, in down cycles, you can take advantage of asset values. You can buy some good assets that maybe need some tender loving care at reasonable prices, and you just have a lot more flexibility.
Stacey: I heard this morning that growth is great, but one of the challenges is finding the people to run the hotels. Can you talk about how Pan Pacific is trying to address that issue as you look to expand your portfolio?
Patrick: There’s no doubt that that is one of our biggest challenges. That’s why we also want to keep growth—I wouldn’t want to say ‘in check,’ because that’s controlling growth—but that’s why we talk internally about really taking it each step at a time. Because the worst thing you can say is, ‘Oh great. We’re opening up another 10 hotels this month, but there’s not enough people, not enough resources, you can’t do it properly.’ We’re bringing a lot of people in from outside because we’re in a growth phase. We have people from Marriott, from IHG, from Shangri-La, from Fairmont, from Accor, from Ritz-Carlton—right across the board. It’s not one dominant group, but we’re creating what we call our Pan Pacific Hotels Group culture. Our vision is, and we talk about it openly, is great people, great brands, great hotels and great relationships. People are really important to us. We’re finding that we’re attracting a lot of good quality talent now because people are saying, ‘Oh look at that. 30, 35 hotels; there will probably be 50 hotels in two or three years time. I’d like to work for an organization of that size.’ That applies to owners, too. They like working with companies that they can pick up the phone and ring the chief executive. They can pick up the phone and ring the director of marketing. It’s a good size to grow from. But it’s a challenge.
Stacey: Can you talk a little bit more about how you’ve developed that culture or perhaps clarify that culture going into this growth culture?
Patrick: What we did is, we got some groups from within the company, both from the hotels and from the corporate centers, and we got them together and said, ‘What’s important to us as an organization? What are we going to be? Where are we going to carve out our territory?’ So when we were developing our vision, our purpose and our values, we came up with, as I said, great brands, great hotels, great people and great relationships. Then we said, ‘What do we really want to do with the vision?’ And we’ve come up with—and this was articulated by many people within the group—of creating memorable hotel experiences. Whether you’re an investor, an associate, a partner, we’d like to do that. Now, the vision and the purpose are easy to articulate if you can say it’s about people, it’s about relationships, it’s about hotels, it’s about brands, and then you want to create memorable experiences, and then you can really say to somebody, ‘This is an example of that.’ With our values, most companies have got integrity, service, collaboration, etc., our values are a little bit different. We tell a little bit of a story in each one. We’re going to have some fun, but we’re always going to improve at what we do. We’re going to be part of our community, and we’re going to respect being part of that. We’re going to have a can-do attitude, and we’re going to collaborate, and they go on. So, it was formed by a lot of the people. I guess I took a little bit of ownership for it and said, ‘As the leader of the group, that resonates with me more than that.’ But what we didn’t get into was wordsmithing. So now as people come into the organization, they learn about what we’re about, they then use it, and then what we try to do is give specific examples all the time about, ‘Now we can do that, but that’s not about great relationships, now is it?’ And that’s where you’ve got to hold a mirror to your face sometimes and say, ‘Am I acting or behaving in a certain way?’ It’s not that it’s difficult; it takes time.
Stacey: What is your biggest challenge? What keeps you up at night?
Patrick: Six to nine months ago, it was the business. North America was doing tough. Singapore, a lot of real estate we own there was tough. And it was like, how do we get to outperform the market? And in most cases we were doing really well in market terms, but the market was really small and that was concerning. We had owners that we had to work with, and al that. Probably now, it’s about the people capability and making the right decisions. If two assets are available, it’s about partnering with the right partners, and if they want us to manage the hotel, could that work? Are the cultures the same? I wouldn’t say keep me up at night, but certainly gets me thinking at the middle of the night.
Stacey: Well Patrick, it’s been a pleasure speaking with you. I always enjoy talking to you and hearing more about the company.
Patrick: Fantastic. Thank you so much.
Stacey: Thank you.