For Subscribers

Get the complete article now!

TWST: Would you give us a general overview of C.H.E. Group (London: CEU.L)?

Mr. Cook: We are a relatively small publicly listed company on the UK London Stock Exchange. We have two major strands to our business. We are the owner, operator of a number of hotels, and we're also the master franchise holder, under license from Choice Hotels International, to develop the franchise system for the Choice brands throughout most of Continental Europe, except for Scandinavia.

TWST: What is your insight into the current condition of the market and what do you see as the most significant developments in your industry over the next few years?

Mr. Cook: I suppose the most important effect on the market today is that since September 11, 2001 the entire industry -- and especially in the Western world -- has been impacted because people are concerned about travel. What we’ve got to do is to get past that and obviously the current situation of the war on Iraq needs to be resolved and people have got to start feeling comfortable that it is safe to travel. We have had 18 months now of operating in this environment, but I think as soon as it is clear that the war is over business and tourism will start to pick up. The entire industry has got to attack the market to encourage people to travel whether it be for business or pleasure.

TWST: What are the key elements to that?

Mr. Cook: Some of it of course is actually outside our control. I think we certainly have to work with the airline industry, which obviously has also been significantly impacted. If the hotel and hospitality sectors work with the airline industry to encourage people to come back, then we obviously have to make it attractive in terms of the rate structures and a value for money experience and also identifying the pleasant places you can go to in the world. So there is a lot of marketing to be built up front. From our own group’s point of view, we have an additional issue, which is that the Group has been through a very difficult last two years and effectively had to be restructured. We now almost have a totally new management team, which included bringing in a new Chief Executive, who has worked for a number of major hotel groups, and the likes of myself coming in as Finance Director, having been with Millennium and Copthorne Hotels. We have been brought in to assist the Company to actually get over the problems of the restructuring of the last two years and I believe we are now in a position that we can demonstrate that the Group has now stabilized and can look forward to developing going forward. So the most important part of our corporate strategy is to actually recover confidence in the group. Obviously when you are going through a restructuring program, you get some adverse comments not only from the national and industry press, but also in the investing world and the buying public.

TWST: What is your current geographic footprint and your approach to expansion?

Mr. Cook: Because we have two businesses – our owned and leased hotels and the franchise business – it actually differs from country to country. So for example, in the UK we have some 38 properties that we operate and we have over 50 franchisees. Whereas in France, we only have 8 hotels that we operate but we have nearly a 160 franchisees. Therefore, the business demands on us are very different in France than they are in the UK. That doesn't mean that we differentiate between our owned and leased hotels and the franchised hotels in respect of revenue generation. But in terms of administration and control it's very different in the UK because we have many more of our own properties. As to where else we are; we have two hotels in Germany and 40 franchisees. We have a minority shareholding in a joint venture in Ireland which currently consists of 9 hotels, with a further 13 under franchise. We have 18 in Italy, 16 in Portugal and 10 in Spain all under franchise. They are the main countries at the moment. We have half a dozen other areas in Europe with less than 5 hotels, but that gives us a great expansion opportunity. We have recently taken on a new director of franchise sales and his role is to develop the franchise business over the next few years, not only in the UK, but also throughout other areas in Europe.