Home Human Resources NewsEntrepreneurial News Meet Surinder Arora, the £356m London hotelier you’ve never heard of

Meet Surinder Arora, the £356m London hotelier you’ve never heard of

by LLB Editor
11th Jun 13 9:29 am

He owns 16 hotels, a golf course and a private airfield. What’s he going to buy next?

He’s a multimillionaire who co-owns a hotel with “brother” and best friend Sir Cliff Richard and has acquired a private airfield in Buckinghamshire. He also owns a stake in Surrey’s Wentworth golf course, where he often tees off with the world’s eight-richest man, KP Singh.

Meet Surinder Arora, owner and chairman of Arora International Hotels, which has earned him a fortune of £356m according to The Sunday Times Rich List.

The hotelier’s portfolio includes 16 four- and five-star hotels in areas near Heathrow and Gatwick airports. His Sofitel London Heathrow is the only five-star hotel at Heathrow Terminal 5. Some of his hotels operate under the Arora brand, and others are acquisitions, including the Hilton, Radisson and the Holiday Inn Express near Stansted airport.

Arora’s story is straight out of a Bollywood potboiler of the eighties. Born in Punjab, he was adopted by an aunt who didn’t have any children. His mother later convinced her sister to let Arora accompany his biological parents to London in search for a better life. Arora remembers landing at Heathrow as a 13-year-old, and only later learning who his biological parents really were.

Arora never went to university, but holds a pilot’s licence. He spent his youth learning English and doing multiple jobs including working as a junior clerk at British Airways and doing graveyard shifts at the Renaissance London Heathrow hotel.  

“Six months ago I bought the Renaissance hotel where I use to wait tables in the mid-seventies,” says Arora, beaming with pride as we chat in the busy lobby of his Sofitel London Heathrow at Terminal 5. Dressed in a simple grey suit, he doesn’t come across as a flashy hotelier. He’s soft-spoken but sharp – his eyes keep scanning his hotel, probably checking how his guests are being served.

His posh English accent betrays his Indian roots. Yet, he’s very animated, as Punjabis tend to be, when he speaks of his business.

“After doing multiple jobs, my family and I managed to save some money to buy a row of houses opposite Heathrow. I then saw the opportunity of turning them into a bed and breakfast accommodation for flight crews. A lot of people liked the idea but there were a lot of question marks on whether I could pull this off.”

But Arora was determined to build his own hotel brand from scratch rather than start a franchise of one of the large chains, despite plenty of advice to the contrary. He finally convinced the banks to give him investment to launch his own-brand hotel.

So in 1999, Arora finished construction of his first hotel – in time and under budget. Being the ambitious entrepreneur that he is, he started building his second and the third hotels within three months of the first opening, and soon found himself at the head one of UK’s fastest-growing hotel chains.

Today, The Sunday Times Profit Track 100 puts Arora Hotels on the 22nd spot with a £14.6m profit, with 85% profit growth per annum.

“I knew I was not launching a five-star brand but I honestly felt that if I am able to provide a four-star hotel with three-and-a-half-star prices and five-star service, it will take off.”

Wooing the big names

The hotelier has got Sir Cliff to inaugurate all his hotels, apart from one, which was inaugurated by Prince Philip.

“I wanted someone famous to open my first hotel so a common friend introduced me to Cliff. We just hit it off, became great friends and now he’s like a brother.” His joint venture with the pop legend, in Manchester, comes with Cliff-themed rooms with guitars and other memorabilia decorating the lobby.

Out of Arora’s 16 hotels, he says his favourite is probably the one in which we’re sitting now. In 2004-05, when then-Heathrow-owner BAA was planning to build Terminal 5, Arora started dreaming of being the only hotel on the terminal.

“I approached BAA and asked them if I can be invited in the tender process. The first thing they said was that it’s by invitation only and the next question was what brand I was planning to put there.

“When I said Arora, they told me they wouldn’t even consider me because they were building a £4.5bn terminal which would have nothing less than a major international five-star brand.”

Arora then went around asking major hotel companies for a franchise. Most of them said they were happy to back him but on the condition that they would operate the brand and not Arora. After a fair few rejections, he approached Accor Hotels, the largest hotel company in Europe. Again, the chain was only willing to give Arora a franchise on budget brands IBIS, Novotel or Mercure, but not the five-star Sofitel.

Arora then called Accor’s then-MD Michael Flaxman and tried to convince him. Flaxman agreed after checking the hotel’s service by sending mystery guests to the property. Now that he had a franchise from a five-star brand, Arora Hotels joined the race for the only five-star hotel at Terminal 5.

“The last two in the shortlist were us and Marriott, and everyone in the market thought: Arora, no chance, Marriott will win the bid. But thank god!

“I remember I was in Scotland when I heard the news that we won the bid. I was so thrilled, I drove around a roundabout five or six times,” Arora says, his eyes lighting up.

Trouble in paradise: BA checks out and the “vulture raid” on Arora’s kingdom

While the hotel at Heathrow Terminal 5 was a landmark in the hotelier’s career, he’s seen some big clients checking out.

BA approached Arora recently to say it’s going to end its contract by the end of the year.

“The market has been really depressed for the last three to four years so BA’s decided to move on to using budget hotels, as I couldn’t agree with them on rates. Of course, it’s always tougher to get new business, but this is not the first time I will be doing it.”

Indeed it isn’t. Back in 2001, Arora got a major blow when the 9/11 attacks happened just six weeks before the launch of his new hotel in Gatwick.

“It was incredibly difficult but we worked really hard to make it work, and within three years we were planning extensions for the hotel. Therefore just because BA moved on doesn’t mean we have to sit back and shut down.

“There are plenty of fish in the water: I will try harder or wait longer to catch them.”

There have also been recent reports suggesting that the business is struggling to pay up some of its £500m of bank loans.

Last month, Davidson Kempener, a Wall Street fund, bought a £200m chunk of Arora’s loans from the loss-making nationalised Irish lender Allied Irish Bank.

His answer? No sweat.

“You see, at the end of the day, nothing has changed from our point of view. The Irish bank, who are pretty much bust themselves, got instructions to get their debt book down by £20bn. We are one of their bigger clients in the UK, so they decided to sell the debt off.

“So, instead of Allied Irish Bank as our bankers we have Davidson Kempner. I am very happy to work with them. I’ve always serviced all my debts and will continue doing it. It’s business as usual,” he says with a shrug.

From the O2 to Oval cricket ground

Next up, we discuss the hotelier’s plans to expand brand Arora. His next bet is his undisclosed stake in a £185m hotel development next to the O2 Arena.

“The 452-bedroom luxury hotel will have a 3,000 sq m ballroom that will put the 1,500-seater Great Room at Grosvenor House to shame,” he says.

Another big project is a hotel near London’s Oval cricket ground that is expected to be completed by 2016.

“You know, I am an old mug who loves challenges. I’ve probably aged 30 years in the last five because of them. But that’s what I get out of bed for.”

How many million
s would the projects add to his wealth pile? We’ll keep an eye out for The Sunday Times Rich List 2014.

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