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David Taylor, CEO of Kew Green Hotels, on why the quality of a hotel portfolio matters more than the number of flags on the map.
There is something undeniably appealing about growth. More hotels, more rooms, a bigger pipeline and a few more pins on the map. It looks good in a presentation, gives people something to talk about and, on the face of it, suggests a business moving in the right direction.
But there is a question we do not ask often enough: growth in what, exactly?
If the answer is simply the number of hotels under management, I am not sure that tells us very much. A larger portfolio does not automatically mean a stronger business, and a longer pipeline does not necessarily translate into better returns. The real measure is whether growth creates value for the owner, improves the performance of the hotel and strengthens the wider portfolio.
Hotels are complex businesses. They combine property, operations, people, service, logistics, technology and commercial performance, often under one roof and usually under considerable pressure. Getting that right takes more than changing the sign above the door or adding another property to a company website.
We have seen plenty of movement across the sector in recent years, with hotels changing hands, changing brands and changing operators. Some of that is healthy. Markets evolve, owners reassess their priorities and new opportunities emerge. But there is also a temptation to pursue growth for its own sake, with increasingly competitive commercial terms and less attention paid to whether the relationship will work over the longer term.
The danger is that the wrong kind of growth does more than disappoint. It absorbs management time, stretches resources and can distract from the hotels already in the portfolio. In the worst cases, adding more properties makes the underlying business weaker. At Kew Green Hotels, we want to grow. We have ambitions for the business and we see genuine opportunities to expand. But I am far more interested in building the right portfolio than the biggest one.
That means working with owners who share our outlook and understand that the long-term success of a hotel depends on more than extracting the maximum cash in the shortest possible time. Hotels need to remain competitive. They need the right investment, the right people and a clear understanding of their position in the market.
That does not mean spending money for the sake of it, or installing an expensive spa because somebody thinks it might look good in a brochure. It means making sensible, informed decisions about the things that actually drive performance: the quality of the product, the guest experience, commercial strategy, sustainability and technology that improves efficiency and deliver a long term and sustainable return.
It also means being prepared to make difficult choices. We have been reviewing our portfolio carefully, and where there is no shared ambition for a hotel or no willingness to protect its future potential, we have to question whether that is the right thing for all of us.
I would rather work with an owner who wants to improve the value and performance of one good hotel than take on several properties where the only objective is to get through the next quarter with as little investment or collaboration as possible.
For me, a genuine growth mindset is not about collecting hotels. It is about helping each hotel become a better business: stronger commercially, better for its guests and more valuable to its owner.
Get that right, and growth will follow. However, it will be growth worth having.
