UK: A bargain break for Jarvis - Jarvis Hotels.

UK: A bargain break for Jarvis - Jarvis Hotels. - Running Hilton International's 147 hotels wasn't enough for John Jarvis. He wanted his own hotel. So he bought a chain of 40.

by Chris Blackhurst.
Last Updated: 31 Aug 2010

Running Hilton International's 147 hotels wasn't enough for John Jarvis. He wanted his own hotel. So he bought a chain of 40.

John Jarvis can remember the exact moment when he quit dreaming and took his courage in both hands. It was October 1989. As chairman of Ladbroke's leisure division, he had just spearheaded the purchase of Hilton International. His brief had taken him to Shanghai to attend the opening of the city's 800-room Hilton. On the flight home, he was in reflective mood. "It had been a very hard opening," he recalls. "Every piece of stock had been flown in from Hong Kong - it had taken a lot of organising. I was still awake on the in-bound flight to London. I found myself thinking, 'That was a fabulous hotel, it will make a lot of money for the Ladbroke shareholders. But it will not do a lot for John Jarvis'."

That flight was the "trigger point". He began to think seriously about forming his own hotel chain. At Christmas he went to see Ladbroke chairman Cyril Stein. A month later, he left his £250,000-a-year job and rented a one-room office. His ambitions were modest. "I left with no money. But as I had been the one to front the Hilton deal I was quite well known in the City. I went to Candover, the venture capital people. We formulated a plan to raise £50 million and buy five or six hotels."

His plans quickly changed, though, when Allied Lyons put its 40-strong Embassy Hotels chain on the market. "Commentators were suggesting a price of £250 million," he says. "I didn't make a move. I decided to let the hysteria of £250 million settle down. I was a buyer but not at that price."

The sale was being handled by S G Warburg. Jarvis went to rival Kleinwort Benson and put together a bid worth £163 million. In July 1990, less than six months after walking out on Ladbroke, he was chairman of his own hotel business. Jarvis and his management colleagues own 15%; the banks own the rest. Three or four years from now, he predicts, the company, now named Jarvis Hotels, will seek a stock market listing.

For Jarvis, the Embassy purchase represented much more than just the chance to run his own business. He was born in 1943, in a hotel, the Parkway in Leeds. His parents were hotel managers, not for themselves but for other people. His childhood was spent moving from one hotel to the next. "I never lived in a house until I bought my own," he says.

Like his parents he loved the industry and followed them into it, but he also vowed that one day he would have his own hotel. He learned the theory of the trade at South Devon Hotel College, scoring top marks in his City and Guild exams. From there, he went as a trainee, in 1963, to the Savoy Hotel Company. He stayed just three months. "I looked up the ladder and said, 'Jarvis, if you hang around here you might be a department head when you're 50.' It was too slow."

Determined to stay in the hotel and catering business, he decided to take lessons in the toughest market of all, in fast food, in the US. He moved around the country, hopping from one fast food operation to another, and absorbed the valuable message that the future of the hotel and food industry "had more to do with retailing and distribution than haute cuisine".

After two years he returned to the UK and set about putting his beliefs to the test. He joined the Rank Organisation's banqueting division as catering manager. One job led to another - and by the time he left in 1975, he was operations controller, overseeing motorway service areas, restaurants, dancing and bingo halls.

In 1975, he went to work for Cyril Stein who was looking to diversify away from betting shops into hotels. Jarvis was given three hotels to manage and told to grow the non-gaming profits. Ladbroke Hotels expanded to comprise 68 hotels. But it was not enough. "With my passion for branding and my understanding of marketing I felt we needed to buy a brand; Ladbroke needed to own a brand." As ever, he aimed high and bought the world's leading one, Hilton International, for $1billion. No sooner had he taken over running its 142 hotels in 47 countries than he resigned - and made his best deal.

His strategy owes much to his days in the US: aggressive marketing and costing, bargain breaks, all-in deals, money back guarantees to companies hiring the Jarvis "Summit" in-hotel conference centres. It seems to be working: Jarvis Hotels profits rose 11% in their first year before dropping 6.5% in the second - at a time he stresses, "when the sector average was down by 30-35%".

His aim is clear. "We don't want the tag of being 'the best hotel in town', we want the tag of being 'the best value hotel in town'." For once, nobody is telling him otherwise. "They are my hotels, not anybody else's."

Chris Blackhurst is Business Features Editor of The Independent on Sunday.

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