Jetwing Hotels close to doubling room stock

Once thrown into the deep end, Hiran Cooray says “This is a second birth (for the company)”

Did he have a choice? “Not really,” laughs Hiran Cooray, the amiable Chairman of Jetwing Hotels asked whether he had a choice of profession when pushed virtually into the deep end by his father at the age of 25 as managing director of the company.
In a wide-ranging interview and rare peep into the behind-the-scenes of one of the country’s best-known families involved in the leisure business, Mr Cooray goes down memory lane recalling the ups and downs of an industry that he has grown up with, the special relationship with his father – Herbert Cooray -, and in particular recalling a meeting with President Mahinda Rajapaksa in 2007 where “I felt an absolute idiot to ask (along with others) to stop the war.”

Jetwing Vil Uyana

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On when his father started the business:

1973. That was the time in the early 1960s/1970s when Bentota was coming up as a resort area.
My father was a builder, building hotels. On one occasion, a Swedish tourist operator Vingresor asked him why don’t you built your own hotel? My father said he can only built hotels but doesn’t have the expertise to run it. The Swedish operator said not to worry, “we’ll” help you.

My father was involved in building the (Geofrey Bawa-designed) hotels. His father, my grandfather who was also a builder was involved in Bawa’s first designs.
On the origins of the family:

My grandfather is from Mahara, Ragama and my grandmother is from Kosgoda. My mother’s family is from Dankotuwa, Kochchikade.
Are there still links with these places?

There is a cousin in Ragama, cousins in Kosgoda. My mother lives very much in Dankotuwa she shuttles between Dankotuwa and Colombo from the ancestral home.

On his sister Shiromal and himself getting into the business:

The company was evolving at the time. I started in 1987. My sister, who is older, started with my father but went into advertising – JWT locally then relocated to Hong Kong and did advertising. She came back and rejoined my father in 1991 or 1992. I joined after higher studies in the US after completing a business management degree.

Did you get into the leisure sector
because you wanted to or ?

Not really there was no compulsion. But in a way our environment at home was all about the leisure sector at the time.
After you joined in the 1980s how did the company evolve?

The growth is mainly due to my father. When I graduated and came back in 1987 that was one of the worst times for Sri Lanka. I was telling my father there was no point in returning. The company didn’t have money. We were barely existing.
At the time we had the Blue Oceanic and the Royal Oceanic – now Jetwing Blue and Jetwing Beach and Yala Safari. He told me to come back and be managing director of the company.

Hiran Cooray’s different expressions, in an interview with the Business Times, reflect the growth, consolidation and innovation of the Jetwing Group. Pix by M. A. Pushpa Kumara

Me? MD at 25 years old? He said if (Fidel) Castro can run the country (at a young age) why can’t you run this company?
I was terrified but my father had a lot of faith (in me). In the past 25 years in this business, I have seen the ups and downs. More downs. Only since 2009 have we had a clear field ahead.

After I returned, my father started buying properties. One thing he told me and that has been ingrained in me was that one must pay all the dues on due dates. We had borrowed a lot of money from banks but always paid on time. No default.

That eventually became one of the successes of the group. His philosophy was that the bankers and the suppliers must be paid on time. When you pay on due dates and if you are at some point struggling, you can call the bank manager and ask for 2-3 weeks time. With that kind of record, they respect your word.

When we say 45 days credit to a supplier, its 45 days; nothing more.

My father started buying land and properties which to my business (theoretical) mind never made sense. We were buying in a downward economic trend. Unfortunately he died in 2008 and didn’t see the end of the war and the group’s post war growth. He kept saying this war will end.

We were talking to the authorities hoping that the war will end but he said this will end. And the war ended for which the President must be given credit.

When I was President of the Tourist Hotels Association in around 2007, we pleaded with the embassies and also asked the President to end the war.

We got an appointment with the President. We had a big delegation – John Keells, Aitken Spence, etc. We were going to make this appeal to the President to stop the war.

When we asked him this, he removed his glasses and said: “Mehe, yuddha genna kathakaranna epa. Meke mata onne yudda hayak nevai. Meke mata angilli gahanna beha. Mama bara deela thiyanne yuddha hamudawatai evara karanna.” This was 2007 and we were thinking the President was crazy.. here we are struggling to survive. He then told Treasury Secretary P.B. Jayasundera and Central Bank Governor Nivard Cabraal to inform banks to give this sector ‘Sahanadara denne.”(relief) I will do that, he said but not stop the war.

I felt an idiot making such an idiotic statement etc. Many of our members were grumbling after the meeting but the fact remains that the war ended two years later. Many hotels are doing well now.

On Jetwing room stock:

We have about 540 rooms. We will add another 400 new rooms, almost double.

On the potential for tourism in newly opened areas in the north and the east:

These are areas that need to be marketed. Unfortunately our marketing efforts are not good at the moment. We need to market these in other destinations, not only hotels but also restaurants for people to spend the week or 10 days. That needs to happen.

I think that will (eventually) happen. In two to three years time this is bound to happen.

Passikudah for example is an all year- round destination. There is 2.5 km of sea front and one of the best beaches we have. It is outstanding.

What about the product lines that Sri Lanka is offering – budget hotels, boutique hotels? Are we competitive or overpricing ourselves?
There is lot of talk about pricing. To me pricing is purely perception and value for money. At the moment there are a fair number of companies including ourselves, John Keells and Aitken Spence and others who have spent a lot of money on the existing properties to upgrade and added value in services. This development has not been communicated to the world.

This is the issue. For example if you have a consumer who uses a Morris Minor car, you can’t convert his car into a BMW or Mercedes Benz and ask him to buy (it) because his market level is a Morris Minor. We are not reaching out to the BMW customer instead (we’re) trying to convince a Morris Minor customer to buy a BMW.

Take Jetwing Blue and Jetwing Beach – these were hotels that were sold at US$30. We have now completely upgraded. We spent $19 million; the rooms are now state of the art and we are selling at $180-200 per night.

So the same traveller who spent $30-40, 20 years ago is now asked to pay $180-200 but must be wondering what nonsense is this? In his mind it is still a $40 per night customer. It is marketing communication that we have failed. This is something needed for the whole country because we have a 5-star island and now we are completing the 5-star island with very good products. That needs to be communicated to the world.

What do you mean by a 5-star island?

One of our best assets is that in a small island with a small space not many competing destinations can boast of what we have. We have the best of beaches. Whatever it is the beach will be the number one draw to attract people – whether it be Europeans, Asians, Americans. We have nature in abundance. Still over 40 per cent of Sri Lanka is under green cover including the plantations and forests.
Not many countries have this. Unfortunately we are not talking about this. Again no other country can talk of the biggest land mammal and the sea mammal – elephant and blue whale. Within a matter of hours you can see whales and elephants.

Infrastructure is also good. The southern highway and the road from Passekudah to Arugam Bay is fantastic. We need to talk about this.

There is a lot of focus on environmental issues and nature preservation in the Jetwing culture of running hotels. Explain:
This began with my association with PATA. In 1991, I went for the PATA conference in Bali with my father and the keynote speaker was a man called david Suzuki, a Canadian-Japanese environmentalist. He spoke about the need to protect nature, etc. I was a rookie at the time and it took me a couple of years to understand this philosophy.

My father was also looking after the local communities. At Negombo we work with local communities and have no problems. None of our hotels has a fence. We are continuously interacting with the locals, religious bodies, etc. we teach children English.
Where is Jetwing heading in the next five years?

We don’t have any targets in terms of rooms. We have selected areas that need development one being Jaffna. We were very keen to go to Jaffna. During 2-3 visits to Jaffna and talking to people, we were told that Jaffna needs economic development.

Was it business or being part of economic development that drove your interest in Jaffna?

It was more about helping in the economic activity. When our partner said he had a property and invited us, we agreed to join up. Construction is about to start. We see a lot of potential in the east coast too. I think in terms of the group, this is geneally what we’ll do in the next few years.

Any plans to diversify into non-leisure sector areas?

At the moment, no because our energies are focused on what we are doing now and at what we are best at.
We are really on a second birth – pre 2009 and post 3009. So we need to capitalize on the post-war development.
What about overseas projects?

The overseas development slowed down a bit because of the development back home. We focused on Laos and Vietnam and still manage these properties and we own a property in New Zealand but we have slowed down because of the re-focus back in Sri Lanka.
On the government target of 2.5 million tourists by 2016:

I have no problem in having a target and working towards it. That’s my view. For, even if we don’t receive 2.5 million, we’ll at least get close to that. There’s a goal and something to work for. If there is nothing; no targets then there is nothing to work for.
There is debate; there is discussion; some are working towards it (targets); some are laughing about it. All kinds of things are happening. But the fact that the President has made a statement and people are working towards it is good for the industry. There is focus from the Government, there is focus from the industry; more hotels are being built; more airlines are coming in; so things are happening.

Eventually we would get to that number. I too have my doubts whether we will reach this number by the targeted year but it doesn’t matter because something is bound to happen.

On source markets and the shift to India from the UK or Germany:

I think the developments are positive and healthy. We are no longer dependant on any market which is how I like to see the country move forward.

If we depend on China alone, that is also not good because Chinese travellers have their herd mentality. They may come to Sri Lanka this year but go somewhere else the next year.

Europe is our main bread and butter with 40 per cent of the arrivals and we hope this would continue with the British and the Germans who have come over the years. We have the Arabs coming in May to July. The Chinese and the Indians come year round while the Europeans are here during the winter. So the product mix is very healthy.

On tourism and economic development:

At the moment tourism accounts for 2.1 of GDP. Ideally it should be 5 per cent which may take another 10 years to get to that point.
Staff numbers? We have 3,000 in both hotels and travel.

On partnerships with big chains:

We are not involved in any at the moment but big names like Shangri La are welcome as it’s good for the country. Furthermore it means we have to improve our product to match up to those standards which is good for the industry as a whole. If we don’t we’ll die a natural death.

Any more no-frills hotels?

If it works in Negombo (Hotel J opening next month), why not.

Source:http://www.sundaytimes.lk/130310/business-times/jetwing-hotels-close-to-doubling-room-stock-35485.html