InterContinental Hotels Group’s (IHG) chief development officer AMEA, Paul Logan, is retiring effective January 1, 2016, after 40 years in the industry, 25 years of which are with IHG. Taking over from him will be Clarence Tan, who previously led IHG’s operations in Southeast Asia and prior to that, Japan and Korea.
Logan has this advice for his successor: “Avoid the bomb shots after dinner in South Korea. The concept of an equitable deal is difficult for most Singaporeans. The signing of a contract in India celebrates the commencement of another round of negotiations. The aggression inherent in an Australian negotiation is completely obliterated in the bar afterwards. Asking the same question three times in Thailand will still not give you clarity on a position and may only confuse you further. In Japan a ‘yes’ has multiple meanings and the only thing that is fast is the bullet train.”
In this candid and humorous farewell interview, Logan bares it all, including what he would miss and not miss in dealing with Asian owners, the deal he was proudest of and the one that got away.
HOTELS: Firstly, very easy question: how long have you been in the industry altogether and how long with IHG specifically?
Paul Logan: That depends from when you start counting. My father was a publican so I grew up in hotels in Australia.
From the time when I was paid for my labor, it is more than 40 years. My first real role was a junior management position at the opening of the Gateway Hotel in Adelaide (now Sir Stamford Hotel) in 1976. From there, I was recruited for my first job in Asia, in Busan, South Korea, for the opening of, what was then, the Commodore Hotel. At that time, 1978, the per capita GDP of the Philippines was four times that of South Korea.
I have been with IHG for 25 years – although technically I first joined SPHC (Southern Pacific Hotels Co.), which was subsequently acquired by IHG.
H: Over those decades, what to you was the ‘golden period’ for development for hotel chains in AMEA?
PL: I’m not sure there has been any one golden period for the development of hotel chains in AMEA, especially when we are talking about such a diverse geography over some four decades.
Each development cycle has delivered a few iconic hotels. For example, the second half of the 19th Century saw the Sarkies Brothers build some fabulous hotels that still trade today. The 60’s saw the establishment in Asia of some of the then airline-owned hotel brands like InterContinental Bangkok (1964).
The development cycle prior to the 97/98 currency crisis saw a number of international hotel chains increase their presence in Asia, with even greater growth over the most recent cycle, which many think is coming to an end. This last cycle has also seen the establishment and increased presence of a number of Asian brands across Asia as well as the U.S. and Europe, and a roll out of new brand and brand extensions by the established chains to increase share of rooms.
In some ways I think there is always a golden period given how cyclical our business is.
H: And the most wretched period?
PL: For me, it was the period after the Asian currency crisis in 97/98. A number of friends, colleagues, business partners and their families lost so much, so quickly. The social and race tensions and their resulting impact were tragic. I had hoped that the today the region had matured beyond that, although recent events in a number of countries indicate otherwise.
H: How many deals did you help seal for IHG?
PL: Any deal that is secured by a hotel company is the result of teamwork across a number of corporate functions, including design and engineering, legal, feasibility, marketing, communications and operations.
Development may take the lead and bask in the glory of the deal, but it requires a great team effort to seal it. Quite a few deals have been completed during my tenure at IHG, but I think deal counts or room counts are only one of a number of measurements of success for anyone that is part of a growth team of a hotel company.
Room numbers have an attraction for stock analysts, but equally important are the quality of the deals done in terms of earnings, tenure, the quality of relationships developed, the ability to drive future deals and the impact those deals have on brand reputation and future brand growth.
H: The one deal you were proudest of?
PL: That is a hard call. It’s similar to selecting a favorite child. That said, some of my favorites are not necessarily the most attractive or best designed properties, but those that have been delivered out of a very hard, protracted negotiation or won over intense competition. Others have been the foundations of great partnerships.
InterContinental Bangkok and the resulting partnership with the Srivikorn/Charoen-rajapark families and IHG’s partnership with the LUM family that resulted in Crowne Plaza Changi Airport are two of a number that come to mind.
H: The one deal that got away, which you most regret?
PL: An operating InterContinental resort in Phuket. We have had great success in other resort areas and have one of the best resort operations teams in the business. Over the years we have looked at so many sites and even signed several, yet an open InterContinental Resort in Phuket has proven elusive. The team has, however, promised to deliver a signing before year-end that will open.
H: One trend in Asia has been the rise of next-generation owners. How did it hit you that this was happening and impacting development?
PL: In some parts of AMEA we are now dealing with three generations of the same family. From my observation, most of these ‘next gen’ owners have completed part of their education off shore. In general, in comparison to earlier generations, they are more exposed to Western culture, have an understanding of brand, marketing and sophisticated financial concepts. Mix it with a little experience, and they will acquire the street smarts of their earlier generations and make formidable and very successful hotel developers and owners. They are also closer in age and share both psychographic and demographic similarities with a huge segment of our consumers, so their understanding of guest preferences are also sharper.
H: What would you miss about dealing with Asian owners when you retire?
PL: The meals.
H: What would you not miss?
PL: Some of the meals and the karaoke.
H: What’s the best approach to development in AMEA for chains and what are the areas in most need of improvement?
PL: The mantra of hotel development or any real estate development most often quoted is location, location, location. I think the more apt mantra is partnership, partnership, partnership. Brands, distribution systems, right product and skilled operators can all help compensate for an off location.
A poor relationship or a badly managed partnership between hotel owner and operator is difficult recover from.
H: A few words about your successor.
PL: Clarence and I have been working together for more than 10 years at IHG. Since August last year, we have been working together handing over the responsibilities in the development function.
Clarence is Singaporean by birth, has extensive regional experience and a global outlook. I have very much enjoyed working with Clarence over the years, and all who have come in to contact with him can attest to his integrity, energy, knowledge of the industry and generous disposition. He will be very successful.
H: How do you plan to retire beautifully?
PL: I have had some time to think about this. For the last 40 years, I have sold my hours each week to a company. Although I had some choice in how I have used them, they have not been entirely my own. From January 2016 that changes, and I own all my hours in the week and it is entirely up to me to what use I put them to. Some will be used wisely, others frivolously. I intend to use what little knowledge and experience I have gained over the years in helping a start-up – my daughter’s. I am looking forward to fulfilling my responsibilities as a grandfather to my two granddaughters and spend a lot more time on the boat that Tony South (his predecessor) and myself jointly own, hopefully reading about all the wonderful things this amazing industry will continue to produce.