‘If you want to work together, I have no problem with it,’ I said.
The brief discussion with Mohinani at that apartment on 55th Street, Second Avenue, Manhattan, New York, prepared the road map for my American journey. Rahul and Sushil scouted possible locations in New York, Washington, San Francisco and some other places in the US. We mobilized the brokers in all those cities. They would keep me updated, and I would give them my feedback.
Still, we had to wait for almost one and a half years to identify a project we really liked. That was a Radisson Hotel close to JFK Airport in New York.
22 December 2006
I could not sleep that night. I was so restless that had I been a bird, I would have flown instantly to New York.
We were about to sign an agreement to open our first hotel in the US. But I was in the Maldives, entrusting Rahul to follow up on the deal. I had no idea they would be ready to finalize the deal so fast. Rahul and Sushil had been negotiating with the Radisson management for a month in room number 1724 at the Hilton in Manhattan. That night there was a sudden breakthrough in the negotiations.
I would call Rahul every now and then to inquire about the latest position and conditions being offered. I would feel reassured as soon as I spoke to him; however, no sooner would we hang up than I would become restless again and call him back.
‘Now get some rest, Papa. Don’t worry about the deal. I’ll take care of it.’ When Rahul said those words to me, it was 4 a.m. in the Maldives but 9 p.m. in New York. They were at the tail end of the negotiations. According to Rahul, only a few legal clauses remained to be settled. They were in a mood to strike a deal that night.
I lay down in bed but could not sleep. As soon as I closed my eyes, I would become overwhelmed with anxiety, as though Rahul were desperately trying to contact me but my mobile phone was somehow switched off.
I would get up and look at my phone.
At one point I dozed off, only to be jolted awake by the phone ringing. I leaped like a deer to get it but before I could even say ‘Hello’ Rahul shouted at the top of his voice, ‘We made the deal!’
My eyes, dulled by lack of sleep, suddenly dilated.
‘Finally, we have taken our first step into America,’ Rahul said.
Doubletree is a brand of the Hilton chain. A hotel can seek Doubletree franchise if it meets all the standards set by Hilton. After buying the Radisson, we upgraded it to a full Doubletree.
Many other opportunities in the US have come my way, but for the time being this is the only business we have there. More than anything else, this hotel has given us the satisfaction of showing that a family from a small country like Nepal can successfully expand its business the most powerful country in the world, that too in New York, one of the world’s most expensive cities.
16
Iconic Properties
An important thing I have learnt in life is that you do not necessarily need to create something big. If you want to make a mark globally, you should create something that the world loves. It can be a product, property, or anything else. Working on this realization has helped me establish myself in the hospitality business in a very short time. Today, through our joint ventures, we are associated with some of the world’s most iconic properties.
Taj Exotica and Taj Vivanta
As I mentioned earlier, when we wanted to start our hospitality business, destiny took us to the Maldives. We could have always retained Taj Lagoon as a mediocre property that charged US$80 per night. But I was part of the effort that transformed Taj Lagoon into Taj Exotica, run by an equal partnership between the Taj Group and us. Today it is known all over the world and is considered one of the three best hotels in the Maldives.
It was not an easy task to carve out this niche for oneself in a country with a culture of raising the bar when it comes to the quality of hospitality. While those in the hospitality business all over the world compete to offer cost-effective products and services, the Maldives is a place where everyone resorts to one-upmanship in another way. If your property can charge US$1100 per day, your neighbour will strive to create a similar property that can charge as little as US$500 per day.
To carry forward that legacy, we transformed a property called Coral Reef into Taj Vivanta. That was our second resort in the Maldives. We feel proud to be associated with these properties, which continue to earn international awards.
Taj Samudra
Taj Samudra, which hardly charged US$20 dollars a day during the period Sri Lanka was mired in conflict, has been transformed through huge investments into the best hotel in the country. Everybody talks about it. The presidential suite is of 6000 square feet, probably the biggest in the whole of South Asia. These days, if Sri Lankan officials have to conduct meetings with very important guests, this suite is their venue. Our hotel has added to Sri Lanka’s distinction and reputation. It has become an iconic property, something in which the whole nation takes pride.
The Farm at San Benito
The wellness industry has become a big business today. Everyone wants to feel and look good. There are some big properties in the West that movers and shakers from all walks of life, including Hollywood stars, patronize for wellness treatments. We decided to bring that luxury to Asia, taking over an average property called The Farm at San Benito in the Philippines and upgrading it. The whole world now knows about it. It has become a symbol for wellness and has earned a reputation for the organic food we grow inside the property. No alcohol or meat is served at The Farm, and yet the whole world wants to go there.
Taj Safaris
Unlike Nepal or Africa, India was not particularly well known for its wildlife except, perhaps, for the Bengal tiger. We brought in CCA, a respected wildlife tour operator in Africa, and created a circuit in Bandhavgarh, Pench, Panna and Kanha, dotted with lodges in those parts of Madhya Pradesh that were not even accessible previously. Nobody had gone there before because it was so difficult to reach the inner recesses of the dense forests inhabited by a host of wildlife. But we knew that trekkers and wildlife enthusiasts are not put off by physical hardship. They are the sort of people who are excited rather than deterred by such challenges. If someone yearns to see a tiger in its natural habitat, he or she deserves a chance to fulfil that wish, especially if he or she is prepared to pay handsomely for the experience. At the same time, however, we also need to provide a degree of comfort and luxury to those who go on safaris. With that in mind, we created Taj Safari Lodges.
Jetwing Vil Uyana and Jetwing Sea
I am personally very passionate about one of our investments in Sri Lanka under our joint venture with Jetwing. It is Vil Uyana in Sigriya, the golden triangle of Sri Lanka. Vil Uyana, over the years, has won many accolades, distinction and recognition as Sri Lanka’s best and unique eco-friendly resort. It not only commands the highest tariffs in Sri Lanka, but its design, service standard and the overall ambience are considered to be unparalleled in the country. It is situated on agricultural land, with walking routes along paddy fields surrounded by man-made water bodies. We have created a destination that has been highly rated by travel magazines and blogs.
Zinc Hospitality
It is not that we are only interested in iconic properties. We also operate many other kinds of properties in many different parts of the world, as I have mentioned in the previous chapters. We are promoting Zinc in Africa and Nepal. However, I have always wanted to be associated with dream properties, the sort of places where people might go only once but remember the experience for the rest of their lives. I am thankful to God that I have had the opportunity to create some of these iconic properties. I am so proud of them.
Our plans of growing Zinc in India under Zinc management did not gain much ground. In retrospect, I have to admit that the decisions we made—of partnering in the Greater Noida project, of opening a GLOW, and of acquisition of the site in Kochi—were too far ahead of their time. Our efforts to build a vibrant organization in India at a huge investment proved to be
ineffective, and the plans had to be shelved. We had already got these projects designed by a Singapore-based firm with high-quality Singaporean designers, and had done everything possible to get them going. But I concluded that greenfield ventures are not the wisest projects to undertake in India. This is not only our experience, but that of many of the world’s other hotels. The cumbersome approval processes related to land and the many other requirements simply make such projects unviable. We quickly decided to divert our focus to other markets and kept these projects on hold. We shifted our energies to Sri Lanka and Africa, where a lot has happened, which I will discuss in the following pages.
Concept Hospitality
A few years ago, the opportunity to acquire a controlling interest in Concept Hospitality, a company that had thirty-five flags under well-known brands like The Fern, Fern Residency and Beacon, had come to the table. Our friend Homi, who is also a very well-known hotel consultant, had brought the deal, but soon we learnt that it had gone in favour of the Singapore-based Silver Needle, a company promoted by Nadathur, in partnership with Narayana Murthy, of Infosys. Perhaps Rahul had heard somewhere that the deal with Silver Needle had run into problems. I had written off this deal in my mind, but Rahul kept pursuing it. Two years later, Rahul called me up one day, hugely excited, ‘Concept is back on the table.’ I was surprised. I called up Homi who said, ‘Yes. You have to give full credit to your son, Rahul, who had been pushing me for the last two years even though I was not very optimistic. It was his sheer persistence that has brought the deal back to the table.’ It took us six months of negotiations to strike a deal with the private equity firm Busi from New York for Concept.
Param Kannampilly, founder of the company, has an immaculate reputation in the hotel fraternity in India. His son, Suhail, is equally dynamic and runs the operations seamlessly. In the Silver Needle deal, so far as I know, Param’s and Suhail’s role would have been negligible. But in our case, we were looking to not only acquire a company but also people with a proven track record, whom we could trust 100 per cent and who could drive CG Hotels & Resorts to greater success. The Concept acquisition was a perfect fit in this respect. An ideal partnership had been sealed.
We stitched together our global and regional presence, integrating all our regional management companies in Africa, the Middle East, Sri Lanka, Nepal, Thailand and China. Concept brought in a strong management platform with a strong team of professionals—not to mention its own three brands—to consolidate and drive these scattered regional entities. The deal was formally announced during HICSA 2015. Our new corporate holding company, CG Hotels & Resorts, replaced the erstwhile Zinc Hospitality. CG Hotels & Resorts not only has Zinc under it but also encompasses Fern and GLOW. Today, eight global offices operating eighty-eight hotels under eight different brands in eleven countries come under CG Hotels & Resorts. We are in the process of creating the necessary infrastructure in terms of global sales and marketing and a strong technical service team to support our global expansion. A new, strategic growth plan is being crafted to bring 200 hotels under the eight brands into the CG fold by 2020. All the required organizational changes are in place, rebranding has been done, and our new website is in the process of being launched. It was also a logical move, therefore, to house the headquarters of CG Hotels & Resorts in Mumbai, where Concept is located. We are looking to soon open a much bigger office in our own premises, to perhaps create a company that will one day operate the largest number of hotels with a much bigger geographical footprint.
17
Destination Dubai
Around nine years ago, I had taken part in a retreat in Egypt organized by the Young Presidents’ Organization. My wife and our youngest son, Varun, were with me. When we were returning, Rajiv Gujral of the Taj Group joined us.
Before leaving Egypt, he proposed that I visit Dubai with him for two or three days. ‘I have some work there,’ he said. ‘You should take the opportunity to have a look at Dubai.’
I was not very interested in Dubai. I had been there several times while negotiating for Nabil Bank with Emirates Bank International. It was largely a desert. A decrepit market by the sea, I thought. Dubai was also largely perceived as a haven for gold trade in the region.
This image of Dubai was so strongly engraved on my psyche that I had never returned there after the Nabil Bank negotiations. Even when I travelled to Europe or America, I did not transit through Dubai.
‘No! Dubai has been transformed,’ Rajiv told me. ‘Just go there once. You won’t believe your eyes.’ He managed to persuade me to go with him.
By the time we reached our hotel in Dubai from the airport, I was already repenting having lost touch with Dubai for so many years. Looking this way and that out of the car, I saw that the roads were much wider and more inviting. Huge buildings and flashy malls had sprung up. Construction work was taking place at an astounding pace. I was staring at Dubai as though it were a child I had last seen years ago that had grown up into a handsome youth.
‘You’re right,’ I told Rajiv. ‘This place is on the move.’
That stopover in Dubai was enough for me to get to know the city inside out. Sheikh Mohammed, the ruler of Dubai, had devised a plan to transform the city into the most sought-after destination in the world. And how was he going about it? By creating everything to attract tourists: ponds, lakes, islands, mountains, even snow . . . everything nature had held away from Dubai.
He envisioned a man-made city with all the beauties of nature.
Today Dubai is like Indraprastha, the abode of the Pandavas in the Mahabharata. It has the biggest shopping malls, the tallest towers, the best designed buildings, leading financial centres, the best hotels in the world, Formula 1 race tracks and World Islands, a copy of the map of the world. And the list is still being added to.
I was looking for an international destination for my real estate business, and here it was in front of me—Dubai.
I told Rajiv: ‘I’m going to stay a few more days. I want to explore business opportunities here.’ He felt quite proud because he was the one who had talked me into coming to Dubai.
I started to explore projects that I could invest in. I sounded out real estate brokers. One of them took me to the Jebel Ali zone to show me a project under construction. Two hundred buildings were under construction in that busy hub of the city.
‘This is the biggest housing project in Dubai,’ he said. ‘If you buy here today, you can sell it at a 20 per cent profit within three months.’
You could purchase a house by depositing 10 per cent of the total price in the first three months—in other words, make a 20 per cent profit for 10 percent investment in the property, making for a 200 per cent return on investment. But what about the risks? What if the houses could not be sold? The realty market in Dubai was going viral. While sellers were queuing up in other places to dispose of their properties, buyers were lining up to purchase properties in Dubai. Multinational companies from across the world were thronging there.
I liked the scheme. But I had one reservation. The real estate company demanded a three percent commission for the sale, and that was a huge sum. I asked for a few days’ time and went to meet the hospitality manager of the project developer, a company called Nakheel. As soon as I introduced myself as a partner in Taj Asia, he was impressed. ‘Taj has only one hotel in Dubai. You ought to open more,’ he told me.
‘We won’t directly be involved in hotels in Dubai. The Taj Group itself handles that,’ I told him. ‘But I’ll definitely convey your message to them.’
We opened up to each other easily during that first, brief meeting. He took me to meet his chief executive.
Nakheel is a leading state-run construction company. To meet its head was a huge opportunity for me. If I could make a good impression on him, then we could possibly work together on projects in Dubai, and not just the one at Jebel Ali. But how would I impress him at our first meeting?
Shaking hands, exchanging business cards and com
plaining about the three per cent commission on the sale price of a house were not going to help. I came up with another strategy. I told him, ‘We are a worldwide company. We believe in fair business practices. We have partnerships with many multinational companies, including Taj, Suzuki and National Panasonic. We are bankers ourselves. We are the ones who look after Nepal Arab Bank, which was once operated by Emirates Bank. I have come here to invest, as I was impressed with Sheikh Mohammed’s vision of the future.’
‘Why do you say that?’ He was palpably nervous.
His nervousness only boosted my confidence. I told him bluntly, ‘People within your company, through the brokers outside, are demanding a three per cent commission from me on the purchase of a property at Jebel Ali. I was not expecting this in the realm of Sheikh Mohammed. If the property is actually underpriced, I am ready to pay more. But what is the meaning of underhand dealings involving commissions? If I get to meet Sheikh Mohammed someday, I’ll definitely tell him that such practices are undermining the realization of his dream. I’ll say that those who want to invest in Dubai should be encouraged, and not discouraged by dubious activities.’
As soon as I said this, I could see he had become so nervous that his lips were parched. I saw two possibilities: either I would get a good deal, or I would be chased out of Dubai.
I had hit the bull’s eye. He started to defend himself.
‘What you have heard is absolutely false,’ he said. ‘We don’t have any policy of seeking a three per cent commission on sale of property.’
Making It Big Page 29