He's one of the most powerful men in the boutique hotel industry, owning half-a-billion-pounds-worth of properties, plus catering company Searcy's. But did Richard Balfour-Lynn pay too much for the De Vere group, and will he live to regret his decision not to sell Malmaison last year? Gemma Sharkey reports
When Richard Balfour-Lynn enters the wood-panelled office of his property, hotel and retail group Marylebone Warwick Balfour (MWB) on London's Edgware Road, he is surprisingly deferential, quick to offer both his hand and a drink. Wearing a well-tailored navy blue suit, he manages to buck the trend for high-powered, highly stressed businessmen in need of a good holiday.
Indeed, Balfour-Lynn looks full of vitality, with eyes that twinkle inquisitively. This could be down to the kickboxing he does every morning before work. "It's a very important form of release for me," he says.
Still, despite the overall impression of a man in control, Balfour-Lynn isn't comfortable being questioned. He has never applied for a job (he doesn't have a CV) but heads a range of companies, and he isn't used to answering to anyone.
MWB is only one part of his business empire but through it he controls luxury store Liberty, hotel chains Malmaison and Hotel du Vin, and serviced office firm MWB Business Exchange. He shifts in his seat when asked to divulge the intricacies of how much he owns of each of his companies, and what his exact role is in each of them.
"I'm sensitive about talking about what I have and haven't invested," he says. "I split myself many different ways, compartmentalise myself. I'm comfortable talking to the director of Liberty about menswear, or to a hotel designer."
However, since 2007, and increasingly in recent months, there has been industry speculation on the state of MWB. The fact that struggling bank HBOS is its principal investor has only served to add fuel to the gossip fire. Add to this the rumoured sale of Malmaison and Hotel du Vin, for a reduced price of £650m (down from £700m the year before), plus the hiring and firing of a lot of staff, and the industry hive really begins to buzz.
Does such talk bother Balfour-Lynn? "No," he says, "because it's wrong. It's not even nearly right. The industry tittle-tattles a lot, and it's not relevant. Any company associated with HBOS, people assume must have a problem, but the banks are hugely supportive of us. AHG [Alternative Hotel Group, of which Balfour-Lynn is chairman] has grown its operating profits by 25% from £95m in 2007 to £120m in 2008. I'd like to find other companies who've grown their profits against that."
So Malmaison and Hotel du Vin aren't up for sale again, then? "It's true that I wanted to sell Mal in 2007," Balfour-Lynn concedes, "but I don't know where that came from last year. We're not on the market. We're not selling, we're growing."
Back in 2006, Balfour-Lynn paid £1.1b for hotel company De Vere. Given that hotel property prices have been predicted to fall by as much as 20% in the coming years, after a period of unprecedented growth, one could say that he had paid over the odds. But Balfour-Lynn is adamant that De Vere wasn't expensive. "I haven't overpaid," he says, "but in today's market, unless you were given a business for free, you've overpaid. We paid a price in 2006 that we're very happy with. It's still the right price, the business is financially strong, we have long-term loans which were all refinanced in 2007, and no risk of breaching covenants until 2011."
The serial deal-maker also remains resolutely unapologetic about the closure of the De Vere headquarters in Daresbury, Warrington, in July 2008, which resulted in several redundancies.
"I don't like head offices as a principle," he says. "It's part of my whole thing against bureaucracy. I hate people squirreled away in large offices. One went to the De Vere head office and there were 150 cars there. I mean, what are they all doing? They're not influencing the business, that's for sure. I want people on the shop floor who understand what we're doing and why we're doing it."
Although Balfour-Lynn is charming and occasionally breaks into a smile during our meeting, there is a ruthlessness about him that he does nothing to dispel when speaking about the vast amount of management changes seen across the company since he took over in 2006. The group's flagship property, Cameron House, had two general managers last year alone.
Balfour-Lynn hesitates before explaining: "The thing is, I'm a street fighter in a suit. The world has now completely changed and you've got to be proactive and fight for every piece of business you want. A lot of people can't cope with that - they simply aren't good enough in today's world. People are saying, ‘It's not for me, I want a quieter life,' and there are plenty of 9-5 jobs out there. But if you want to work for us, it's 23 hours a day. And if you're successful, I'm gonna pay you a lot of money."
Despite this pitbull approach to business, Balfour-Lynn's outlook on the dramatically changing world and its economics is surprising.
"Capitalism is changing," he says. "It's not going to be what it has been for the past 15 years. There will be new rules, new values, new banking structures. We've never had a society where the Government has effectively owned the world's financial markets. You will see a far more socialist form of capitalism, which is a good thing - a whole form of social change."
Vive la révolution, indeed. But as Balfour-Lynn warms to his subject, his language becomes softer. He describes himself as a private person (he certainly doesn't court media attention in the way that some entrepreneurs might), who loves spending time with his family and at his vineyard in Kent.
He's also a fan of the TV dancing competition Strictly Come Dancing. "I'm glued to it!" he exclaims. "The fact that John Sergeant lasted so long, despite the fact that he can't dance for toffee, says so much about our charm as being British. So many countries have a huge affection for Britain, and that's growing. All my businesses are independent, UK brands that had lost their way."
Balfour-Lynn grew up in the centre of London, in Holland Park, as the eldest of four children. His mother was a housewife, his father a specialist in diagnostics.
He insists that his talent for business stems from the attitude of his father, whose motto "It can be done" can still be seen on the wall behind Balfour-Lynn's desk. "He really taught me that if you want to do it, you can," he says. "Most people are ruled by fear of failure. So I chose to do it, as opposed to not doing it."
He became a tutor helping students prepare for their banking exams at the City of London Business School, where he had himself studied for four years, and this helped his later public speaking. "Students would try and catch me out with difficult questions," he explains. It was also during this time that he decided to work for himself. In 1975, aged 23, his big break came when he managed to convince an ear, nose and throat specialist to fund a diagnostic centre next to Harley Street in London. "I noticed in the 1970s that there was a massive growth in private hospitals, but nothing in specialist diagnostic work," he says. "So I managed to persuade this doctor to fund my project." The centre still exists, on New Cavendish Street.
Over the next 10 years, Balfour-Lynn ventured into several entrepreneurial schemes, such as air-conditioning companies and textiles. "I was always, and still am, trying to find growth markets, to see where I believed there were opportunities," he says. He went on to buy the Security Pacific Europe finance bank in 1993, over which he admits he lost sleep but which ended in success.
His first venture into hospitality came with the purchase of the five Malmaison hotels under MWB. "I saw opportunity in moving away from large chain companies and the more lifestyle type of hotel," he says.
But what has motivated the man to plough through so many deals over the past 30 years? "I've always been motivated by challenge," he explains. "I like being outside my comfort zone, and I'm lucky in that I've always done things I want to do."
Balfour-Lynn is now looking at another 20 locations for Hotel du Vin in the UK and for one or two more Malmaisons, "possibly Bristol and Dublin". He's also examining international expansion of the Malmaison brand in India, the Middle East, South East Asia and Eastern Europe. The Malmaison image needs a radical overhaul, he believes. "I'm making the Mals less moody - they're too dark and formulaic," he says. "It's like anything - you need to refresh the brand the whole time. I want it to be brighter and have lighter colours."
MWB also recently opened its first Hotel and Pub du Vin, in Brighton. Although the chief executive of Malmaison and Hotel du Vin, Robert Cook, has been vocal about his ambitions to roll out the pub brand across the UK, Balfour-Lynn is not so sure. "The debate is whether we should be rolling it out versus more Hotel du Vins," he says. "My instinct is that we will roll out more Hotel du Vins than the pub concept."
As for the retail end of his interests, Balfour-Lynn is realistic about its strength in current market conditions, but is still planning to make "radical changes" to the Liberty store in London. "If you go back into Liberty's in March next year," he says, "it will look radically different. We're changing the whole ground floor, bringing back the scarf hall, trebling our jewellery offering, and making two floors of women's fashion as opposed to one. We're also stepping up the staffing levels to make it more luxury-orientated."
At De Vere, he'll change staff until the service levels are where he wants them. "I will continue to put the best people in place and I will do that unashamedly, driving service levels," he says.
And as the interview draws to a close, the notorious deal-maker offers to make a deal with me. He says: "In a year's time I bet you, you will look back on this conversation and think, ‘You know what? He's right. He's come out a winner'."
- Age 55
- Educated City of London Business School
- 1982 Creates Warwick Balfour Properties, a development and investment company
- 1994 Balfour-Lynn co-founds MWB
- 1997 Reverses MWB into a listed company
- 2002 MWB teams up with Rezidor SAS Hospitality to buy the five-strong Malmaison chain of boutique hotels for £77m
- October 2004 MWB buys the six-strong Hotel du Vin group from founders Robin Hutson and Gerard Bassett for £66.4m
- December 2005 Balfour-Lynn and other MWB directors set up Alternative Hotel Group, to buy Initial Style Conferences from Rentokil Initial for £325m
- July 2006 AHG snaps up the De Vere Group for £1.1b - 18 five- and four-star UK hotels, 16 Village Hotels and leisure clubs, the Greens health and fitness club chain and distiller and bottler G&J Greenall
- 2007 AHG acquires contract caterer Searcy's for £20m-£25m
- July 2007 Malmaison and Hotel du Vin put on market for £700m
- August 2008 Malmaison and Hotel du Vin rumoured to be up for sale again, for £650m
- November 2008 MWB launches Pub du Vin
Balfour-Lynn's top tips for business
1. You've got to be fast in your decision-making. Our senior management meet and take decisions daily, because the world is changing daily.
2. Be clear about what your game plan is
3. Be strong on revenue management because yield management is critical.
4. Hold your nerve in terms of price. If you cut your prices, it takes five to six years to rebuild them afterwards. It's far easier to build occupancy than price.
5. Don't be ruled by fear. We get things wrong I get things wrong. I got the Vector flotation wrong, but I continue to embrace challenges.
6. In the restaurant, engineer your menu to what customers actually want, and tailor wine prices so the customer can still afford it.
7. Don't court press officers - they don't bring customers in. I make sure my website is the best out there - that's where my money and energy goes.
8. Learn to read people. As a rule, I don't let any senior people join my organisation without me meeting them - I need to know they will fit our business culture.
9. Have as few directors as possible. The worst thing you can call someone is a director.
10. Re-examine everything you're doing, throw everything up in the air and start again - all yesterday's rules no longer apply, and if anyone's looking backwards then they're looking the wrong way.
Richard Balfour-Lynn is a self-proclaimed "natural interferer", which explains the staggering volume and diversity of his business interests.
He is founder and current chairman of Marylebone Warwick Balfour (MWB) Group, which is noted for its ownership of three independent companies (Balfour-Lynn is chairman of all of them): the AIM-listed retail group Liberty, owner of the Liberty store in central London and the luxury goods brand Liberty of London boutique hotel chains Malmaison and Hotel du Vin, which will comprise 30 hotels when current projects are completed and serviced office provider MWB Business Exchange, with 55 centres across the UK.
Balfour-Lynn is also chairman and a major shareholder of Alternative Hotel Group (AHG), a private company which, in partnership with Bank of Scotland, in November 2005 purchased Style Conferencing. This company comprises 30 venues and is now known as De Vere Venues.
AHG also owns the De Vere hotel collection of 18 five- and four-star UK hotels, 16 Village Hotels and leisure clubs, the Greens health and fitness club chain, and distiller and bottler G&J Greenall.
Balfour-Lynn has also bought catering company Searcy's, which recently opened a Champagne bar in London's new Westfield shopping centre.
Balfour-Lynn is also a non-executive directorship and major shareholder in English Wines, and the Fox and Anchor pub in London's Smithfield. Additionally, in Kent, he farms 400 acres of apple orchards and vineyards, producing and selling his own apple juice and sparking wine under the brand name Balfour Brut Rosé.
He also has properties in South Africa, including a holiday home in Plettenberg Bay.