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The rise of Arora

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The rise of Arora
Written by:

Former BA customer services officer Surinder Arora has quietly built up his company Arora International to become operator of two of the UK’s latest landmark hotels – at Terminal 5 and the Oval. Rosalind Mullen met him

Walk into Surinder Arora’s office and you immediately clock three things: he’s successful, he’s tidy and he likes golf.

It’s a vast room, with windows on three sides commanding views across Heathrow’s runways. At the front is a terrace devoted to a neat Astroturf putting green (a man is grooming it when I arrive) where Arora can perfect his golf handicap. From here he can also keep a close eye on his biggest project to date, the 600-bedroom Terminal 5 hotel, which he will open under Accor’s Sofitel brand in March 2008 when BAA’s £4.3b terminal launches. Total cost of the hotel will be roughly £200m and the expected turnover will be about £50m a year once business stabilises.

Few independent hoteliers would have pulled it off. Arora wanted the T5 hotel badly, but appreciated that his brand couldn’t compete against international giants such as Accor in selling 600 bedrooms a night.

“BAA wanted [to complement] the £4.3b terminal, so it was looking for an international five-star brand. There were things that needed to be put together, because they wanted an international flag and we wanted to own and run our own hotel.”

It was a tough call. Most companies don’t franchise their five-star flagship brands, others only want to bring in a franchisee simply to manage the hotel. Accor was of the same view, but Arora clinched the deal by showing them how well his company runs hotels – particularly with regard to customers and service.

Both sides now seem happy. Accor gets a franchise fee and Arora gets to partner the largest hotel company in Europe. To seal its trust, Accor has already allowed Arora to use its Sofitel brand at Gatwick. Arora points out that some hotel giants are so strict about their brand that the franchisee doesn’t even get a choice of carpets, but while Accor is part of the design team and does have some stipulations, it also allows Arora leeway.

“At T5 we are enhancing their spec,” explains Arora. “We want to spend more money on the product. We will have superior, de luxe and executive bedrooms – 200 of each. In executive, for instance, we will have TVs in the bathrooms.”

It’s powerful stuff for a family-run company that opened its first hotel just eight years ago, mainly to accommodate airline crews. It’s now a growing UK brand, with two hotels each in Heathrow and Gatwick, plus one in Manchester City Centre, which Arora owns with Sir Cliff Richard. This side of Arora’s business turned over £40m in 2006-07 with draft audited pre-tax profits of £8.5m and the hotels now attracting bookings from US, Japanese and other international guests.

But it doesn’t stop there. The Arora Family Trust has a further nine hotels in its portfolio, following a £300m deal in February 2006 to buy the Airport Hotels Unit Trust from various investors. The fund is managed by BAA Lynton, the commercial property arm of BAA. The approximate value of the total property portfolio, including the T5 Sofitel when completed, is more than £700m.

Entrepreneur

Clearly Arora, 48, is an entrepreneur in the true sense of that word. Born in India, his parents gave him away when weeks old to an aunt. It wasn’t until he was 13 that he was reclaimed by his mother – by now living in the UK, where he had brothers and sisters he didn’t know. It was, perhaps, the making of him. Thrown into a new family and encouraged by his ambitious mother he went on to work 20-hour days, holding down multiple jobs, including a role as a customer services officer at BA and sales associate at Abbey Life. By 1993, having reached the level of branch manager at the latter and being named second top salesperson in the country, he quit to concentrate on property acquisition.

“I never had the luxury of private education or university, but I worked hard and had some luck. Luck is when preparation meets opportunity. Anything is possible,” says Arora.

It all started with his brainwave of providing quality accommodation for airline staff (see timeline opposite). Initially, it provided 100% of business, but since the opening of the Sofitel at Gatwick in 2004, more than 90% of clientele is now commercial and leisure and less than 10% is airport business.

“I have flipped the model and proved to bankers that I can run any type of hotel,” says Arora.

Certainly, the deal with Sir Cliff in Manchester three years ago took the Arora brand away from airports to a city centre site. Its second foray into non-airport hotels will be at the Brit Oval cricket ground in Kennington, London.

“The team has proved to the outside that it would be more than capable of running any operation, regardless of airlines or leisure business,” says Arora.

The four-star hotel at the Oval will have 170 bedrooms. The project is being carried out in partnership with Surrey County Cricket Club and will include a new grandstand. Projected build cost is £36m and annual turnover is expected to be £5m.

“It’ll be tough, but we are planning to open in 2009 in time for the Ashes, which are being hosted at the Brit Oval. The grounds are also bidding to host the inaugural Twenty20 World Cup,” adds Arora.

His recent deals seem to mirror his love of sports. In 2005 he took a minority stake in the prestigious Wentworth golf club in Surrey, in partnership with clothing tycoon Richard Caring, and has made numerous improvements, including clamping down on new memberships, thus reducing traffic by 20%.

Hotels are never far from his thoughts, so it’s no surprise that he has plans to develop one there, too. It will be on a much smaller scale than his current projects, at about 40-50 bedrooms, and he says it will be a six-star product to complement the club.

Arora clearly enjoys heading what is now probably the biggest family-run hotel company in the UK and relishes being able to move fast to seal a deal.

“We don’t have a five- or 10-year plan, but I have always had dreams. It’s a family business, so we make decisions and move quickly. It has helped the company to grow,” says Arora.

Family business

Not that many close family members are directly involved. His wife, Sunita, helped in the early days but has only recently returned to the business – mainly getting involved with interior design – after raising their two daughters and a son, aged 17, 21 and 23. His children have yet to decide whether they will come on board. He describes the rest of the senior team as “part of the family” and says many have been with him since day one.

All, except the 141-bedroom Manchester hotel, are owned by Arora and his wife – and, of course, Royal Bank of Scotland and Allied Irish Bank, which have supported him since he started out. Arora bases his successful relationship with these banks on being reluctant to over-promise, preferring instead to over-deliver.

“The banks have seen the development of the company – and we always achieve our annual figures,” explains Arora.

The company has about 6,000 bedrooms, including the proposed Sofitel but excluding the Oval. There are other projects that will take this figure to 7,500 in the next few years, but Arora is reluctant to discuss them.

Looking further ahead, he says he would look at opportunities abroad if they present themselves, but adds that he will stop expanding the company when the family culture and atmosphere can no longer be sustained.

Hotels and property are what make him tick – to the extent that catering at his hotels is outsourced. Among his many jobs, Arora ran a wine bar when young and found it “a real pain”.

“I thought, why do it if you don’t enjoy it? So, I brought Compass on board, which does the catering at all the hotels and will do T5. It’s the world’s largest caterer, so our team can concentrate on the hotel offering.”

Arora – who lists Richard Branson and Royal Mail chairman Allan Leighton as heroes and says he still sees himself as junior experience-wise when he meets others in the business – admits that his success has been hard-won and that family life was compromised in the early days.

“Sunita understood that if we wanted a nice life, someone had to pay the price, so I didn’t spend much time with my kids,” he says.

But there is a happy ending. Besides now sitting on a massive property fortune, he also schedules some time to himself, playing golf on Monday and Tuesday afternoons to improve his handicap, and taking family holidays.

“Instead of working harder, I’m working smarter,” he says. “The market is strong for hotels in London, and with 2012 coming up it is even more positive.”

Surinder Arora timeline

• After school Arora works as a customer services officer at BA for 11 years, also holding down a job as a sales associate at Abbey Life and other part-time jobs – including a stint as a waiter – to pay for the training for his pilot’s licence. In his spare time he develops a row of houses opposite Heathrow Airport into a B&B for airline staff, growing the HSA Motel from 19 to 50 bedrooms.

1988-89 Leaves BA and becomes sales manager at Abbey Life. Recognised as Abbey’s second-best salesperson across the country and is made a member of the Chairman’s Club.

• 1991 Branch manager at Abbey Life.

• 1993 Leaves Abbey to concentrate on property acquisition and development. These include the development of a B&B at Heathrow Airport to house airline staff, which forms the basis for Arora International.

• 1997 The B&B is demolished to make way for the Arora International Heathrow hotel, which opens in June 1999 with a BA contract to accommodate its air crews. It is joined in 2001 by the Arora Park hotel at Heathrow and the Arora International Gatwick/Crawley.

• 2004 Arora becomes the first group in Europe to win a franchise from Accor for its upmarket Sofitel brand. This is put to immediate use when Arora buys the 500-bedroom Le Meridien London Gatwick hotel and rebrands it the Sofitel London Gatwick in October.

• August 2004 Arora wins the highly prized contract to open the only hotel at Heathrow’s new Terminal 5, which comes on stream in 2008. The £200m, 600-bedroom Sofitel London Heathrow will be one of Europe’s largest luxury hotels and conference centres, with facilities for up to 1,500 delegates.

In between the Sofitel deals, Arora opens a smaller boutique property, the 141-bedroom Arora International Manchester, in a joint venture with Sir Cliff Richard.

• 2005 Arora – a keen golfer – teams up with Richard Caring to buy the Wentworth golf club near his home.

• 2006 Arora pulls off his biggest deal to date to buy nine hotels in the Airport Hotels Unit Trust for £300m through the Arora Family Trust. The properties, which continue to be run by BAA Lynton, included Hilton and Renaissance hotels at Heathrow and Gatwick along with the Radisson SAS, Express by Holiday Inn and Hilton hotels at Stansted.

• 2007 Arora seals a deal to build a £36m 170-bedroom hotel plus grandstand at the Oval cricket ground. Expected opening is 2009.

Arora International

  •  Arora International – Heathrow
  • Arora Park – Heathrow
  • Arora International – Gatwick/Crawley
  • Arora International – Manchester
  • Sofitel London Gatwick
  • Sofitel London Heathrow (2008)
  • Arora at the Brit Oval (2009)
  • www.arorainternational.co.uk

Sofitel London Heathrow

  • Where Terminal 5, with direct link between hotel and terminal
  • When March 2008
  • How big 600 bedrooms (1,300 sleepers)
  • Conference capacity 2,800 people
  • Retail Boulevard with shops
  • Get fit Health spa and gym
  • Dining Five food theatres with 15 styles of cuisine for conference delegates, fine-dining restaurant, brasserie, bars

Arora’s partner: Accor

  • More than 30 years’ experience in hotels.
  • Brands from one to five stars (including Novotel, Etap, Ibis, Mercure, Formule, Suitehotel and Sofitel).
  • Nearly 1,000 franchised hotels, including 700 in Europe.
  • Offering the franchisee access to an international reservations system and a wide range of skills including marketing, loyalty programmes, information technology, technical, purchasing and human resources.
  • www.accorhotels.com

 

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