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 Up Front With Martin B. Deutsch

martin RENAISSANCE MAN

BY MARTIN B. DEUTSCH

January 1, 1995 -- His name is James Choi; his friends call him Jimmy. He is trim, elegant and erudite, a Chinese executive whose financial skills were honed at the University of Toronto. He was drawn into the hotel business — but not by design.

Choi joined Hong Kong-based New World Development in 1988, when the company was only dabbling in hotels. Six years later, he oversees the largest hotel chain headquartered in the Asia/Pacific region as worldwide president and vice chairman of Renaissance Hotels International (RHI), a vast division of New World.

Choi joined Hong Kong-based New World Development in 1988, when the company was only dabbling in hotels. Six years later, he oversees the largest hotel chain headquartered in the Asia/Pacific region as worldwide president and vice chairman of Renaissance Hotels International (RHI), a vast division of New World.

Choi was in New York recently to announce a new branding strategy for the Renaissance and Stouffer properties in this country and to discuss some of his own views on business travel and the hotel industry. The 28-unit Stouffer group, acquired in May 1993 from Nestle, will carry the Stouffer Renaissance appellation until the spring of 1996, when the Stouffer name will be dropped. RHI will operate two brands worldwide: upscale Renaissance and mid-priced Ramada International.

Sitting in the dining room of the Renaissance Hotel near New York’s Times Square, Choi talked first about the Cheng family — he’s known them since he was 14 years old — particularly its patriarch and chairman, Dr. Cheng Yu Tung, a “one-man show” who went public as New World in the early seventies, after amassing a fortune in such diverse activities as real estate, jewelry and shipping. Dr. Cheng first got into hotels in the early 1980s with properties in Hong Kong, including the New World Hotel, and real estate deals involving Hong Kong’s Grand Hyatt and Regent hotels. (The Regent reverts fully to the Chengs in about eight years.) Dr. Cheng and his son Henry, who is managing director of New World and chairman of RHI, also opened the first joint-venture hotel in Guangzhou (Canton) on the Chinese mainland.

New World plans to build an additional luxury property in Kowloon during the next three years — another vote of confidence for Hong Kong’s future beyond 1997.
When Choi joined New World he immediately put his financial training to work spearheading the divestiture of the company’s shipping division. “It had no great future,” says Choi, “and we found a six-month window…to liquidate the ships and recover most of our costs.” The following year, 1989, Ramada Hotels in the U.S. was put up for auction and “Henry [Cheng] and I took a look at that.” Choi closed the deal for Ramada around the world. Shortly thereafter, New World spun off Ramada in the U.S. to another company, but kept the up-market Renaissance group.

Not long after this acquisition, “the whole industry went into a tailspin,” says Choi, “and I thought, well, I cannot sit on the sidelines during the hard times, so I jumped in.”

A further indication of New World’s reach: Dr. Cheng recently bought Donald Trump’s loan from Citibank to help develop the mammoth and controversial Riverside Project along the Hudson River on Manhattan’s Upper West Side. With 70-percent equity, Dr. Cheng has total control,” says Choi, adding that no hotels are involved in the ambitious project. Ground will be broken early this year.

Growth has come fast, but it hasn’t been easy, says Choi. “I think I’ve gone through the worst of hotel times in the past five years…[with] the Gulf War and recessions in America and Europe.” During this period, Renaissance streamlined its hotel operations, revamped its management structure to enhance the company’s value by acquiring “critical mass.” During 1992 and 1993, two golden opportunities to expand the hotel base were presented to New World: Lufthansa’s Penta Hotel chain of 13 properties and Nestlé’s Stouffer group in the U.S. Choi declined to reveal the purchase price (“You knew I wouldn’t,” he chuckles.), although the rumor mill spouts figures as high as $1.5 billion just for Stouffer. RHI bought 49 percent of Penta’s stock, but in essence got full control.

Finally, the bad times that were dogging Choi in the early 1990s have turned around, and the hotels are benefiting from higher rates and increased occupancies, he claims. Some of the older properties, particularly those in Hong Kong, have been rebuilt as office towers to improve the bottom line.

Choi also feels that the talent drain — which has plagued the British Crown Colony since the agreement to return Hong Kong to China in 1997 — has been reversed. He cites the return of many Hong Kong professionals and managers who’d gone abroad, mainly to Canada and Australia, to secure passports from those countries. They’re returning with a guarded optimism about China’s role after the transition. “The outflow is down to a trickle,” Choi believes.

Other positives: The new $13.3 billion airport at Lantau Island is “very much on schedule,” reports Choi. When it opens in 1997, trains will connect the facility at Kowloon in 25 minutes, versus 80 minutes by car. Meanwhile, contrary to what some other Hong Kong executives believe, Choi claims that current air service via Kai Tak “is still okay.”

Change is also continuing in the U.S., where the Renaissance Americas operation is being consolidated in the Cleveland suburb of Solon, at what has been Stouffer headquarters. Tom Stouffer (no relation to Stouffer) took the helm as the new president of Renaissance Hotels for the Americas. Stouffer has been with Stouffer since 1954. He’s held executive posts in finance, operations, development and administration.

This is a key assignment for Stouffer. At this critical time of transition, perception among U.S. consumers and travel agents is a justifiable concern. First, costumers “have to know Renaissance and Stouffer are one family,” says Choi. Second, two years from now, the Stouffer hotel name will be history. Had the new owners switched to the Renaissance name overnight, there would have been “uncertainty” among Stouffer clients. Hence, an “interim marriage” of the names to familiarize the market with the change and eliminate any confusion.

The business traveler hasn’t been ignored in all of this. Choi, a frequent traveler himself, outlined several programs designed particularly for this audience: club floors in each hotel; an enhanced package for frequent stay guests in the Club Express program; participation in American Express Membership Miles; RSVP, which rewards those who book others into Renaissance rooms; and the extension of the Stouffer policy eliminating surcharges for all 800-number, credit card and collect telephone calls. Plus, all bathroom amenities are now “environmentally friendly” products from Bath & Body Works.

On the frequent flyer front, Renaissance, Stouffer Renaissance and Ramada International have tie-ins with Lufthansa that stem from the Penta deal. And Lufthansa’s marketing link with United Airlines is a possible avenue for a mileage program in the U.S. Also, Stouffer has a mileage deal with USAir, and negotiations are under way to include the Renaissance properties.

A new renaissance hotel will open this year in Sao Paulo and the following year in Rio de Janeiro, marking the company’s debut in South America. Choi’s objective for expansion in the U.S. is to acquire existing properties in such cities as San Diego, Miami, Pittsburgh, San Antonio, Charlotte, Tucson and Milwaukee, as well as additional hotels in New York, Chicago and Boston.

All the properties — Renaissance and Ramada — are now linked to Renoir, a customized global reservations system for RHI. The single reservation system drives a further synergy. “Maybe there are price advantages for the corporate customer,” Choi points out. A company that buys in volume across the board with RHI will obviously be a candidate for a “deal,” he says.

Not everything is rosy at Renaissance. Turnover at senior and middle management levels in recent years has been fierce, a condition typical of mergers and acquisitions, although Choi insists “we have a strong management team in place now, dedicated to high service levels and a satisfied costumer…who [we hope] wants to use the full line” of Renaissance products. “Now, most of the former key people are gone…We are a low-profile, lean and mean organization.”

Choi’s company has also been entangled in a pair of nasty lawsuits involving the management of six disputed Stouffer hotels in Mexico. One case in the U.S. against Inter-Continental Hotels Corp. was ordered to another venue; Stouffer has since appealed. Litigation is still in progress against Presidente Hotels in Mexico.

With or without Mexico, Choi is one busy guy. This is the man who just six years ago did not “design” to get involved in the hotel business. Today, his plate is filled with some 151 hotels and 47,000 rooms.

With RHI’s home office locale in Hong Kong, Choi is forced to be a frequent flyer. In 1992 alone, he flew a series of one-week journeys 10 times on this convoluted itinerary: Hong Kong-Frankfurt-London-N.Y.-Washington, D.C.-N.Y.-Tokyo-Hong-Kong. I hope Choi collects frequent flyer mileage.

This column originally appeared at Frequent Flyer magazine.

Copyright © 1991-2006 by Martin B. Deutsch. All rights reserved.