Expanding your brand through partnerships

This is a very solid growth strategy for a company that started with one property in the Royal seaside town of Hua Hin in 2001. Some of you may wonder how you would launch so many hotels and resorts so quickly. 

In the case of Anantara, we gained a lot of knowledge from the owning company Minor Hotel Group – an owner, operator and joint venture partner. This knowledge provided a valuable insight into the various partnership formats which ensures that we understand the needs of the partner company. 

Here are a number of ways to achieve this goal and expand a hotel brand at a rapid pace:

 

Hotel management agreements

There is no secret formula in sourcing new management agreement opportunities but there are a few essential factors. You need the right people who represent the brand and its values and you need to approach negotiations with an open mind, after all, the aims of the owner and operator are the same – to establish and run a profitable business. 

What we’re finding as a growing Asia-based hotel group is that we’re able to better understand and relate to the concerns of our Asian owners, more than, say, a large operator based in North America.

Management agreements need to be clear and concise so that all parties can understand the details. I would advise that the management agreement remains simple and streamlined, as the ultimate goal is to avoid referring to this document because a solid working relationship is in place. Should you encounter a few bumps along the way, they should be resolved face to face, often times this ensures a very successful result.

The best advice I can give to owners and operators in entering management agreements is that apart from having a good lawyer/adviser to help you through the process, ensure that you partner with like-minded people/companies. You must have the same vision, goals and business philosophy as your partner to ensure a successful and balanced partnership. Such alignment of interests and the right chemistry can lead to a long-term and fruitful partnership. One of Anantara’s partners has grown from a one hotel deal, to five beautiful properties and a very strong working relationship!

Lastly, hotel management agreements are ideal for overseas expansion where you may not be familiar with the local market and the nuances of doing business in that particular country.

 

Management rights schemes

In the years to come, we may well see more opportunities structured as management rights schemes; that said this concept won’t exceed the popularity of management agreements. Australia is a mature market for management rights schemes, but they are still not that popular in Asia. The beauty of the management rights model is that it is attractive to developers, who can sell off their individual units and make returns, whilst the management company runs the property as a hotel.

 

Hotel-related sales and purchase

The fundamentals of hotel-related sales and purchases have not changed much but there are major differences between on-market deals and off-market deals. On-market deals involve so many more moving pieces, which take a huge amount of time and energy. Off market, or private deals, are much more manageable and controllable, and in addition you tend to have a higher degree of confidence that they will ultimately be successful.

 

Joint ventures

We’ll continue to see joint ventures, as they serve an important purpose. As mentioned, it is stating the obvious, but a good joint-venture partner is one who shares your vision and approach, who is communicative and responsive. It is like a marriage – in fact, it is a marriage. We spend time with them – there is no substitute for getting to know your partners, their business philosophy, the way they handle themselves and deal with adversity, etc.  Joint ventures are also a very strategic way of entering new markets where as a foreign company you may not have the local business expertise.

As with all topics we’ve covered in this short article, it is essential to have an experienced team and advisers who can help you through the process – it will save you time, energy, money and prevent undue exposure and mistakes.

 

Dillip Rajakarier is chief executive of Minor Hotel Group.