Richard Hartman is back as CEO of M&C Hotels in London -

Three days into his new job he talks to Yeoh Siew Hoon about why he wasn't yet ready to die; how he feels about the "hottest seat" in the business, what he brings to the M&C table; and the state of the global hotel industry.

Did anyone seriously expect Richard Hartman to stay retired after he left InterContinental Hotels Group last September? The answer would be a flat no.

Hartman (pictured left) himself knew that. "I had never intended to retire from work. I don't know what I'd do. I was born working."

And so when news of his appointment as CEO of Millennium & Copthorne Hotels hit the newswires this week, there was very little surprise.

The fact that it was M&C as well was no surprise either – Hartman's links with Chairman Kwek Leng Beng go back a long way when he was running IHG in Asia Pacific and prior to that, Sheraton and it seemed a natural fit that the two should come together.

Hartman continues, "In Britain, you are supposed to leave your job at 60, take a cruise to Patagonia, come home to tend your garden and do your crossword puzzle and wait to die. I can't do that."

Actually, Hartman tried retirement when he was 52 after he left Sheraton following the acquisition by Starwood. "I thought at that time I was the luckiest person on earth, I had enough money and all the time in the world for myself.

"But after I returned to Australia, fixed the apartment, bought a car – the biggest thing in my day was driving my kids to school. I knew if I continued, I'd be dead by age 60."

So at 62, Hartman is not only not dead but in full charge of a company considered to be one of the most challenging to work for among hospitality groups. His five predecessors had an average tenure of less than two years – the last one, Peter Papadimitropoulos,lasted only six months. And there are already bets out there to see how long Hartman will last.

I know real estate

Three days into his new job, Hartman is not getting drawn into that debate. Instead he says, "I've known this company a long time, it's based in the UK. There were other things I could have done, but it would have involved commuting to Dubai, for example.

"This is a known entity and I know I'd do better in a company that has real estate in it."

Says Hartman: "Some of the brands are shedding their assets and are becoming branding and marketing companies. They have diminishing interest in managing assets.

"As branding companies, they tend to focus on the brand, which is understandable. But a hotel owner is more interested in leveraging the brand. I think there is a divergence of agenda implicit in that business model."

What he does best, he says, is managing assets and M&C owns more than 90% of its 110 hotels.

As he sees it, owning hotels means having more control of them. "I didn't want a job where I'd have to beat up the hotel operator and I didn't want a job where I would have to deal with difficult owners. I am the owner."

The balance between managed and owned

Asked how he felt about occupying "the hottest seat", he says, "It's had its challenges. But there are good things about the company – it's almost debt free, it has strong financial support, it's got a lot of assets that are making money.

"Compare this. It has 110 hotels and its market capitalization in the UK is £1.2-£1.3 billion. IHG's market capitalization is £2.2-£2.3 billion and it has 4,000 hotels.

"Which is the easier to run?"

Looking back on his career, Hartman says that when he worked for Sheraton, it owned a lot of hotels. "Sheraton was a pretty well-balanced company – between owned and managed. Where it went wrong when its focus on ownership was where it needed to be rather than where it would make money."

When he joined IHG in Singapore, the first thing he did was buy Southern Pacific Hotels Corporation. "That came with management agreements and owned hotels. Then I bought Regent Hong Kong, regarded as the largest real estate transaction in the business at the time."

He adds, "IHG and Starwood were never asset light but there was a lot of pressure from shareholders and analysts and so they had to shed assets."

Asked if he felt M&C had the right balance between owned and managed assets, Hartman says he is in no hurry to address that balance or to create a global management company.

"To create a viable management company in 2008 – in the face of asset light companies which are doing a combination of management and franchises – that would cost hundreds of millions of dollars and you wouldn't see a return on investment for seven years.

"The answer is to find our own style, our own niche."

Getting the fundamentals right

But first, he says he needs to get the fundamentals right – that means defining the right customers, putting in the right standards and processes and recruiting and training the right people.

"We have to redefine or refine the three brands. We must get the qualifiers right first before looking for the differentiators.

"Millennium is a strong name, I like the sound of it, and it's got good properties in good locations – New York, London, Beijing, Bangkok, Kuala Lumpur.

"Copthorne is very well-known in the UK and has a fairly loyal following. Kings Gate is a New Zealand and I've yet to get into it."

At the end of it, what he wants to do is create a financially strong company that is attractive to investors, customers and employees by getting the fundamentals right and optimizing the profit.

"Notice I didn't say maximizing the profit – that you can do by getting rid of room service or something like that – but it's doing it right.

"In my five years at IHG, what I learnt is when you have performance optimization, you make everyone happy."

Asked to name a "financially strong company that is attractive to investors, customers and employees by getting the fundamentals right and optimizing the profit", Hartman says, "From the outside, Shangri-La seems to be doing a pretty good job."

"But we are not like them," he stresses. "They don't have 100 hotels, they don't have a four star brand – well, they have but nobody knows it – and they are not listed on the London Stock Exchange."

The innovation in mid scale, stylish hotels

Hartman too is well remembered for his remark that the hotel industry has not seen any innovation since the turn-up on the toilet roll but today, he feels there has been one area of innovation – the development of the stylish mid-scale, three to four star, hotels offering aspirational business travellers rooms that go beyond the utilitarian.

"In the late 90s, Barry Sternlicht started W which was supposed to be a stylish hotel for aspirational travellers, who wanted to stay beyond the Ramada and Holiday inn. It was a pottery barn room, very stylish, very retail.

"It didn't work until it found its way upmarket and now Barry's idea has turned into the highly successful W.

"I believe this could revolutionise the industry – the Ikea-type room with things you would find at home."

But innovation is tough in a business where "today's differentiator becomes tomorrow's qualifier," says Hartman.

Technology too is not going to be the differentiator, he believes. "The top four companies spend US$100 million a year on technology. Thirty years ago, they spent maybe a third of it – but who has a technological advantage? None of them do.

"I think you've got to tread water with technology – look hard at what needs to be done and what doesn't.

"The whole thing with intermediaries and how some of the big companies want to move away from them – you've got to ask, does it make sense to work with people who bring you business or fight them?"

As for his plans for the M&C regional office in Singapore and if there will be any changes, Hartman says, "There are no changes at the moment. I am not saying there won't be. I don't know if we have optimization there but I will be spending the first few months in London before I head off to Singapore or Denver.

"Then you'll be seeing a lot more of me."

Yeoh Siew Hoon, one of Asia's most respected travel editors and commentators, writes a regular column on news, trends and issues in the hospitality industry for 4Hoteliers.com.

Siew Hoon, who has covered the tourism industry in Asia/Pacific for the past 20 years, runs SHY Ventures Pte Ltd. Her other writings can be found at www.thetransitcafe.com. Get your weekly cuppa of news, gossip, humour and opinion at the cafe for travel insiders.