Richard Darwin explains how The Gym Group is going from strength to strength. Mel Flaherty reports.
The Resident hotel brand is ready for business after the Covid crisis, as David Orr tells Mel Flaherty.
“I really hope that emotional intelligence stays and people realise how important the industry is to the fabric of society – from a careers point of view and from a human enjoyment perspective”
This seemingly random collection of words is actually David Orr’s exact location as he shares how The Resident, the five-strong hotel group of which he is CEO, is preparing to emerge from Lockdown 3 on 17th May.
He is speaking from the company’s HQ in St James’s, central London as anyone familiar with the what3words app and interested enough to look it up will have already worked out. Orr is a big fan of this technology – and not only because it has been providing him and his friends and colleagues with some cryptic clue-based entertainment during these months when opportunities for fun have been so limited. Orr says it gives the hotel teams the ability to create interactive maps for guests to really get to know the local neighbourhoods around the hotels. This complements a core tenet of The Resident brand, which was relaunched at what we all know now was not the most ideal time (February 2020).
The hotels range in size from 57 rooms in Covent Garden to 106 in Liverpool and all possess lounges that were refurbished during the first lockdown. None of them have ever had bars or restaurants. The sites are designed to allow guests to be very self-sufficient with mini kitchen/larder space in their rooms to store locally-bought groceries. They also work in partnership with local bars and restaurants, the idea being to allow those who stay at the hotels to properly experience the local area. The name change was meant to better reflect this and the group’s “focus on providing excellent rooms, in exceptional locations and heartfelt hospitality through which it can deliver a home from home feel from which guests can easily immerse themselves in the city”.
There have been unforeseen benefits of this approach, as any hotelier trying to work out how to run a Covid-compliant breakfast or dinner service will appreciate. As well as all the reassurance offered by the now industry-standard health and hygiene procedures, Orr believes The Resident model puts it at an advantage when it comes to luring back nervous guests. This was borne out by the third quarter performance of the three hotels it did reopen (Soho, Covent Garden and Liverpool), which showed occupancy, average daily rate and revenue per available room all significantly higher than the averages for their comparable markets, albeit Orr stresses this was from a very low base.
“In some ways our limited reopening showed that our new branding got a very good response,” Orr says.
The rebranding was part of Orr’s remit to steer the company formerly known as Nadler Hotels, which he joined in March 2018, through the next phase of its growth. The Covent Garden hotel only opened in February 2019 and from June that year it has consistently held a place in TripAdvisor’s top five of all London hotels, staying at number two throughout the limited periods it was allowed to re-open from 31st July last year– no mean feat for such a small operator or for a hotel without a restaurant and bar.
Orr says despite the challenges of the last year-plus, the company is still very actively pursuing its strategy of developing clusters of sites in cities – there are operational benefits to having hotels close to each other; the Covent Garden and Soho outlets are just 14 minutes apart by foot and elsewhere in London, The Resident also operates in Kensington (the shareholder’s original hotel, originally called Base2Stay; the Nadler name was introduced in 2013) and Victoria.
Plans for a hotel in Manchester stalled after the developer of a scheme at the former Granada Studios decided it could no longer proceed with the project but planning permission was granted in November for a 166-room hotel in Edinburgh, which Orr is hopeful will open as the sixth hotel in the Resident Hotels’ portfolio in late 2023.
The company, which now has 379 rooms, has previously discussed its intentions to add 1,200 to 1,500 rooms in the UK in the next five to seven years. No amount of crystal ball gazing could shed light on how those ambitions may be affected by ongoing events but Orr, who comes across as a positive realist with a dry and gentle sense of humour, is hopeful Resident Hotels will be in a strong position to pick up city centre sites that there would even ordinarily be less competition for. The Resident has fewer rooms per location than most other brands and can be flexible in terms of conversions or new builds. The group has also built a compelling case for supporting owners with uniquely flexible management contracts, “combining better than competitor profitability with exceptional guest satisfaction.” Orr says this is another growth opportunity for Resident Hotels that is supported well by its owners, Mactaggart Family & Partners.
Orr is no stranger to rebranding and growing a hotel business. He spent almost 17 years as CEO and Co-founder of the successful City Inn four-star hotel chain (the hotels in London and Amsterdam were among the most lucrative ever in Europe), with his father Sandy Orr and his business partner Donald MacDonald.
They changed City Inn to Mint in 2010 to “give the brand a name it deserved” and move away from the erroneous budget hotel connotations of the former moniker. The word mint was used to represent the innovative freshness that research showed was the reality of guests’ experiences of the hotels (plus it was reminiscent of the hardy nature of the eponymous plant grown at Sandy’s former herb business). It just so happened that [David] Orr’s sister is also called Mint – he recalls she was not entirely happy when she heard about the new brand.
Much to Orr’s disappointment, the Mint Hotels brand was very short-lived, although he retains the intellectual property rights. Now is not the first period in recent history to overuse the word ‘unprecedented’ – the financial crash of 2009 saw Mint’s banking partner, Bank of Scotland, collapse and then fall into Lloyds, which had to be bailed out by the Government. Mint’s plans to refinance became impossible as other banks faced ruin and so in September 2011, it sold the business to Blackstone Group, the private equity firm for well in excess of £600 million. Hilton managed the hotels and by spring the following year, the Mint brand disappeared.
“Selling your business when you don’t really want to sell it and it is obviously the worst time to sell it is heart-breaking,” Orr recalls. “We started City Inn from nothing and we had 1,900 people working in Mint. Over the 17 years we had made many friends for life; both colleagues and guests.”
Another particularly painful part of the process was waving goodbye to the company’s first hotel in mainland Europe. The Amsterdam Mint hotel had been open just eight weeks; the result of eight years of aspiration and planning and now it performs very well for Hilton.
Orr admits he still harbours that desire to establish a British hotel brand on the Continent and while he insists his sense of ambition has not been quelled by recent events, he says his outlook on life has altered for the better – like many, he has benefitted from spending more time with family.
He is enjoying being back in an operational, family-owned business which in that sense bears many similarities to his own former business. In between, he had a spell as CEO of a confidential hotel concept project for train operator Eurostar (which it decided not to proceed with) and he is still chair of Urbanist Hotels, the development investment and asset enhancement consultancy he co-founded with Taco van Heusden. The firm’s only project, the controversial redevelopment of The Old Royal High School in Edinburgh as a world class circa 130-room hotel for Rosewood, is looking uncertain. Orr was very disappointed by the city council’s decision in January to end discussions with Urbanist and open up the redevelopment to bids for other uses, including a music school. Knowing the property inside and out, Orr is convinced a hotel is the only economically viable way to preserve the iconic building. From a planning perspective, the only issue was the number of bedrooms, but Orr says Urbanist has yet to decide if it will put forward another scheme.
Despite this knockback and all the question marks over consumer confidence, the ability to travel in regard to vaccine passports and further potential Brexit-related problems, Orr is feeling optimistic, and not just because of his fortunate position in a growing business.
He is grateful for government support to date with regards to the Furlough scheme, VAT and rates. He is also hopeful the smaller hospitality businesses that are so complementary to The Resident’s hotels will get a further helping hand with rents. And he believes the wider public’s understanding and appreciation for hospitality has been boosted positively.
“I really hope that emotional intelligence stays and people realise how important the industry is to the fabric of society – from a careers point of view and from a human enjoyment perspective,” he adds.
His own company has been mindful of all of that, both in terms of its guests and its teams. Resident Hotels is taking part in the Nights On Us campaign, donating 2020 complimentary room nights for ICU nurses, something he says the team feels very proud to be involved in and the owners crucially supportive of. The business has also invested in its team members, recently being shortlisted for best implementation of virtual training in the Springboard UK Awards for Excellence.
The hotels may have been shut, but the company has striven to keep moving forward. As the world begins to re-emerge, blinking in the light of tentative recovery, Orr’s experience and ability to take a broader perspective mean that The Resident is in a good place, physically and metaphorically, to push ahead during the undoubtedly challenging times ahead. Three words spring to mind – ready to go.
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