More than managing: RBH on growing its portfolio despite the pandemic

Hotel management company RBH has not only weathered the Covid storm, newly appointed chief executive David Hart and managing director Susan Bland tell Rosalind Mullen, but the pandemic experience of hotel owners has also given the business a powerful new edge that will drive its expansion ambitions.

 

While the hospitality industry is struggling to find much to celebrate over the past hellish year, the message going out from RBH to its teams and clients is a positive one. The UK-based hotel management and services company has announced the internal promotions of a new chief executive and managing director, opened three hotels that had been signed previously, and signed up a further nine, six of which were opened or taken over during the pandemic. Next on the agenda is a new strategy to ensure ongoing confidence from owners, investors and employees to grow further.

 

Of the more than 45 branded and private label hotel properties managed by RBH, 13 have not operated in the recent lockdown, while the rest have been servicing key workers. The management company, which has offices in London and Glasgow, has an annual turnover under management in excess of £200m, and works in partnership with five international hotel brands: IHG Hotels & Resorts, Hilton, Accor, Marriott International and Wyndham. RBH employs 85 people, and looks after the 1,500 staff who work across the hotels that it manages.

 

The motivator

 

“I’m proud that so far both our business and our owners’ businesses are still trading and all are in a good position, so that is a positive to come out of this. And we’ve grown, which has been a motivator for people. We all need good news,” says chief executive David Hart.

 

 

“I’m not going to say it hasn’t been tough, because it has. We did have to get the entire management company team to agree to a pay-cut across the board, but that retained jobs and is keeping us in it together.”

 

Managing director Susan Bland adds that despite the pandemic, RBH grew its overall portfolio revenue generation index (RGI) figure from 97.9 in July 2020 to 126.2 in January 2021.

 

“In 2020, we managed to keep the vast majority of our hotels open and trading throughout the pandemic and have almost half our properties hitting budget,” she says. “We’ve claimed over £8m in furlough payments across the portfolio, which is helping hugely in ensuring each business remains viable.”

 

We managed to keep the vast majority of our hotels open and trading throughout the pandemic

 

Hart took up his post in February 2021, succeeding the company’s founder, Helder Pereira, while Bland was made managing director in September 2020. In fact, the role of managing director is a new one, created to pull together the commercial department and the operations department under one heading. “We felt our industry as a whole – and RBH – had become siloed by keeping those separate,” says Bland, who is based in the Glasgow office.

 

 

As it turns out, this more cohesive structure has made navigating the past few months easier. “We’d decided we needed this role in our business prior to the pandemic, but it really highlighted that we need it now,” Bland says. “We’ve worked hard during the pandemic to pull everyone together – owners, general managers and so on – and to build on a sense of community and family at RBH. Our message is that we’re all in it together and we’ll get out of it together. My role is the glue that holds it all together, and it has been vitally important this year to focus on that.”

 

On the executive team with Bland and Hart are Andrew Robb, Gregor MacNaughton and Vibhu Gaind – chief financial officer, chief technical officer overseeing capital projects, and chief information officer, respectively.

 

Hart and Bland may be new to their posts but they’re not new to the company. Like MacNaughton, they’ve been promoted internally, which, they say, underlines one of the company’s strengths. They stress that the executive team has a combined expertise of 70 years, which instils confidence. Hart, for instance, joined RBH in 2005 as group financial controller and became chief financial officer in 2014. Meanwhile Bland had worked for nine years at IHG as HR director and has been with RBH for a further nine, most recently as operations support officer with responsibility for operating functions such as commercial, leisure, spa, procurement, F&B, IT and HR.

 

“It’s important to draw attention to that and why people should come to us,” Hart says. “Owners want to know they are getting a strong service and their hotels are performing well; that is at the heart of everything we do and is part of delivering the growth of the business. A huge part is ensuring owners can chat to who they need to and that our functions are directed towards supporting them.”

 

To this end, RBH has 15 different functions in-house, including an IT helpdesk and the expertise to manage capital projects such as refurbishments, extensions and rebranding. During the pandemic, there has also been a push to engage with owners through the introduction of owner calls – talking to owners virtually as a group and keeping a sense of community.

 

Positioned for growth

 

In short, Hart and Bland are positioning RBH for further expansion. Despite the pandemic, they believe the third-party management marketplace is set for continued growth as owners and investors switch to independent operators to manage their hospitality assets.

 

“This has become even more evident during the Covid-19 pandemic, where investors have seen the benefits of working with experienced operators who can manage both the highs and lows,” says Hart. “Our customers are hospitality investors and we want to be their partner of choice. Our mission is to drive up asset values and maximise performance to outperform competition and increase profitability.”

 

The company’s virtual conference in March 2021 underlined this message by launching the RBH 25 strategy. It sets out three goals within the next five years: to gain 25 new hotels from existing partners; to gain 25 new hotels from new partners; and to achieve UK third-party management company market share (by number of bedrooms, rather than number of hotels) of 25%, up from 18%.

 

 

“The three targets all hang together. If we lost some hotels and gained others, we might not hit market share, so we need to achieve all three,” Hart explains. “Whether we are becoming the partner of choice will be clear in the improvement in the market-share metric.”

 

Bland adds: “We work across all the big brands and want to show we can maximise that and also challenge them to get the best out of them… Growing and taking on new partnerships can benefit the owners as well.”

 

They expect growth to come through a mix of changes post-Covid, including hotel owners wanting to review how their hotels are operated, or to try a different management company. But what they hadn’t predicted was that the new-build market would continue to present opportunities.

 

New-build surprise

 

“When we came out of the last recession, the new-build market was slower to recover than trading hotels,” says Bland. “We anticipated it would be the same coming out of this one, but that is not seeming to be the case. I’ve spoken to a number of owners and investment companies that have funds available and are looking at the new-build route as well as hotels that are trading, so the hotel marketplace will kick off quickly as we come out of this.”

 

 

Unfortunately, it’s likely some companies may fail, too, but ultimately, Hart believes the key to attracting new clients is simply the ability to demonstrate performance during one of the most challenging times in recent history. “People will look to whether their management company has performed – and whether they should look to another management company that has performed better,” he says.

 

People will look to whether their management company has performed – and whether they should look to another that has performed better

 

This is where RBH has plenty to shout about. It opened three hotels last year during the pandemic that had been signed previously. The team have also signed nine new hotels in the past year, six of which they took over during the pandemic (see below).

 

RBH is also promoting its key strength as the ability to understand the market and location of properties, and be versatile where necessary. In a recent example, one of the hotels RBH took on last year was Travelodge’s London Heathrow Airport T5 hotel, but the brand was not performing well.

 

“We spoke to a number of landlords and decided to pull out of Travelodge and rebrand it as an Ibis. It reopened in January as a new brand. It shows the kind of thing that can happen,” Hart says. “A lot of positive things are happening. We are in a good situation, so we are happy.”

 

That’s not to say it hasn’t been tough, though. “This past year we’ve been fighting for every penny. We’ve encouraged our teams to think outside the box and analyse who is allowed to travel and how to attract them at different rates to what we had previously,” Bland says. “We encourage our people to try new ideas to get whatever business we can.”

 

One hotel sales team, for instance, marketed itself to building contractors by giving out free bacon baps on a construction site.

 

But while the pandemic has obviously squeezed RBH’s financial performance, a reduction in internal overheads such as travel has brought savings, and the management company’s broad portfolio of brands across many locations has made it resilient.

 

 

“The hotel owners are our customers and we service them,” Hart says. “The nature of the structure is that as a hotel drops in revenue or profit, our fees drop, so it has been difficult for both hotel and management sides. Fortunately, the combination of the variety of hotels, locations and fee structures, with some hotels performing well, those with reduced fees performing less well or being closed, and an element of fixed fees has ensured our survival.”

 

The motivation game: keeping your key asset engaged

 

The agility of this independent management company has helped it to retain its 85 head office staff and all general managers across the portfolio. All RBH employees have had to accept a reduction in hours and pay, as have some of the general managers, but by focusing on the management team RBH has retained all its hotels.

 

“It is vital to retain that leadership and to keep them fully engaged to enable us to hit the ground running coming out of the pandemic,” says Bland. “Sadly, we’ve had to make some cuts within the hotel teams, but that has been kept to a minimum by flexing and offering reduction of hours and temporary pay-cuts to retain as many as possible, and we are now in a position where a busy upcoming staycation period may mean we have to recruit again.”

 

The 1,500 hotel staff are employed by the owners but are managed by RBH. The general managers, however, are recruited by and report to RBH. The vast majority of staff have been put on a flexible furlough, which helps them to stay engaged and feel part of the business.

 

Like everyone else, the company has had to ramp up its communication technology and flexible working practices so that employees can work remotely. In the first lockdown, RBH shut its two offices in London and Glasgow and minimised travel – pre-pandemic, the team regularly visited the UK-wide portfolio.

 

Bland, who describes RBH’s policy as “overcommunicating”, says: “Everything is changing so fast. We’ve been trying to keep people up to date with what’s happening, how we interpret events and what our plans are. A focus has been to show that we are on this journey together.”

 

RBH’s focus on health and wellbeing is not new, but its initiatives have been enhanced. For instance, an optional weekly dial-in chat for staff attracts about 60 to 70 people, whether on furlough or at work. And like many other companies, it hosted a virtual Christmas party – attracting 75 of the 85-strong RBH team – and has introduced virtual exercise classes and clubs.

 

The learning and development manager has also created virtual e-learning sessions for staff around what to expect on returning to the changed workplace. This concentrates on softer skills, such as how to provide guest service from behind a mask, how to meet the expectations of guests and how to wow guests in a different world with different expectations.

 

We don’t own the buildings, we only have our people, so focusing on them is a priority

 

“As a management company, we don’t own the buildings, we only have our people, so focusing on them is a priority,” Bland says.

 

New kids on the RBH block

 

New-build openings in 2020 (signed in 2019)

• Courtyard by Marriott Inverness Airport, 130 bedrooms, 20 full-time equivalent (FTE) staff
• Hilton Garden Inn Stoke on Trent, 140 bedrooms, 22 FTEs
• Hampton by Hilton Manchester Northern Quarter, 221 bedrooms, 18 FTEs – RBH’s 50th new-build

 

New portfolio signings 2020/21

• Five Fragrance Group hotels: the Crown, Harrogate; the Townhouse, Manchester; the Duke of Cornwall, Plymouth; the Lyndene and St Chads, both in Blackpool

 

Opening in 2021

• Ibis Budget London Heathrow T5 (rebranded), opened in January with 100 bedrooms, which will increase to 142 in March, and to 297 in November 2021, 24 FTEs
• New-build: The Westin London City, 222 bedrooms, 136 FTEs
• New-build: The Gantry London, Curio Collection by Hilton, 291 bedrooms, 95 FTEs

 

Future new-build openings (signed in 2020)

• Holiday Inn Blackpool
• AC by Marriott Glasgow