The sky is the limit: The rapid rise of Australia’s fastest-growing hotel group
What does a decent night’s sleep in a hotel mean to you?
For some, it boils down to convenience: a microwave to heat up meals, a small kitchenette to prepare breakfast, and enough beds and space for the family to comfortably cohabitate without driving each other mad.
For others, it’s all about the luxury: of fluffy robes and feather pillows, of opulent furnishings, and all the other trimmings that come with decadent five-star service.
Others still are happy to do without all the mod cons in exchange for a great value price-point.
The minds behind Mantra Group are all-too-aware of the many diverse desires of the modern traveller. They seek to appeal to the masses but at the same time, they don’t want to risk cannibalising one brand with another – which is why they have cleverly developed just three distinct yet complimentary brands, Mantra, Peppers and BreakFree.
“We have a footprint that includes all key gateway city and iconic leisure destination around the country and we're starting to grow internationally, and our aim is to cover what most of the consumer bases want with three brands. It starts with our value brand BreakFree; we then have Mantra, offering something for everyone with a broad selection of accommodation ranging from hotel rooms to apartment-style product, which is a real competitive advantage; and ends with our premium brand, Peppers,” explains Tomas Johnsson, Chief Operating Officer, Mantra Group.
“We’re a bit different to traditional hotel groups as we are based on the Gold Coast, compared to our competitors, who usually have a head office in the USA, London or France. We are a proudly Australian company and we think we are a little more dynamic than other organisations in that we have grown from scratch and really created our own success.”
Through its three distinct hotel brands, the group offers upwards of 21,000 rooms each night in high-rises and hotels scattered throughout Australia, New Zealand, Indonesia and Hawaii.
In recent years the company has adopted an aggressive growth strategy with a firm goal of becoming Australia’s leading hotel group.
It’s clearly working: in 2006 it boasted just 41 properties within their stable, and this number has trebled to more than 126 properties today.
“Part of why we have been so successful is down to the way in which we leverage our core operating model,” shares Michael Moret-Lalli, Director of Acquisitions.
“A large part of our business, is our own balance sheet risk. We own strategic real estate within our hotels and management rights that anchor us as a business and we are structured largely like an owner-operator as a result.”
The ability to be flexible whilst driving three brands forward with a $25 million-plus annual marketing spend is “absolutely a result of our owner operator leaning,” Moret-Lalli says.
“As an organisation, we are very agile and deploy our own capital to secure hotel operating rights for ourselves, or work with third party owners under a management agreement, depending on the opportunity,” he adds.
Another key to success has been the ability to drive strong cost efficiencies through a centralised approach to managing the dozens of hotels within the Mantra Group portfolio.
“We have structured our corporate office to operate a centralised services platform, which provides for a lot of financial savings at the hotel level of the business. There are not a lot of extra cost structures in back of house, as functions such as payroll, sales and marketing and HR are all done corporately and supplied to each hotel,” Johnsson says.
“This translates to some really strong efficiencies and the result for our investors is a lot of cost savings, all because we structure ourselves differently. We are also perceived as being the best strata managers in this country and in the world, with some systems that are very unique. All of this means we can offer our partners and our third party owners a really compelling story that leads to excellent returns; our average 50%+ gross operating profit margins at hotel level is best in class, which at the end of the day what investors are looking for.”
The business now operates the second-largest network of accommodation (by number of rooms) properties in Australia, with Mantra Group’s recent growth leading to its listing on the ASX in June 2014.
In its first year as a public company, it was elevated to the ASX 200 ¬– proof if ever it was needed that the group has come a long way since its humble beginnings.
Though the business has undeniably grown in leaps and bounds, Johnsson counters that its core culture and “people ethos” remains as it was back in the day, when the group’s head office occupied a single floor of office space.
Today, with more than 5,000 staff internationally – including around 450 at the group’s head office on the Gold Coast – Johnsson estimates that around one in six employees has been with the company since the beginning.
“First and foremost, we have a genuine culture. Many of us started here early in the piece when the business was formed, and so we know, like and trust each other as colleagues and friends. We knew we were building something prior to the curve and we’ve gone through those early years together with genuine engagement,” he says.
“Out of our current employee base of over 5,500 people, there is a significant core of people that has worked with each other through those early years and has gone through many challenges together. The growth spurt and success that has come about from that, is really the result of all of those early years of hard work.”
Building and sustaining a positive company culture is no easy feat, though Johnsson believes its success may be owing to its hard-working but playful style, which he says is “part of our DNA”.
“We pride ourselves on our strong culture – there’s a real can-do attitude that is evident within the team. We are agile in our approach and have more fun than the average hotel company,” he says.
With trust and purpose at its centre, the business has been able to build more formal employee retention and growth strategies from that platform.
For instance, it has cultivated a system to support the career growth of women within the company.
“Mantra Group offers flexibility and the opportunity to work either part-time or with flexible working hours, where possible,” Johnsson explains.
Mantra Group also offers ongoing training and leadership programs, and has an initiative designed to move people through the organisation – nationally and internationally – as ‘rising stars’. An employee that joins the company at a hotel in Sydney, for instance, could demonstrate exceptional skills and then pitch for a role at one of the group’s foreign properties.
This could see Australian talent redeployed for roles as far away as Hawaii, the site of its newest international hotel, Mantra Ala Moana.
Offering six food and beverage outlets and more than 1100 hotel suites, its new Waikiki property is “a really good example of our growth strategy internationally”, Moret-Lalli says.
“We look for markets that our Australian customers know well and as such our brands have immediate penetration, so we see some great opportunities to expand and quickly achieve traction. We have some aggressive plans in terms of growth to complementary offshore destinations,” he continues.
“That said, Australia is still our core market and where we see most of our growth in the next 12-18 months. Australia is a mature market and opportunities are hard to come by, but because of the flexible business models we offer – from hotel management agreements, to leases, to management letting rights of serviced apartments and also franchising – it gives us the full spectrum of solutions to take to the market.”
Johnsson adds: “Hotels and hospitality are amongst the super growth industries in Australia. When you look at the broader picture, there have never been as many airports and planes being built here as there are right now, with more and more people travelling. It’s a really great space to be in and we feel very positive about our industry.”