London-based hotel owner and management company KE Hotels is preparing to open the Moxy Manchester City in early December in partnership with Marriott International.

While it is only its third hotel, there is much history behind the firm and its operations, according to Anil Khanna, KE Hotels’ managing director.

“We are four [Khanna] brothers, and we started in California in 1989," Khanna said. "My brothers opened a hotel in Northern California, then one in Florida, and I came to California [at age] 20 for eight years. Eventually, I wanted to come home, so I started [United Kingdom] operations."

The U.S. branch of the company, Khanna Enterprises, currently has a portfolio of six hotels, all located in California and including the Hilton San Diego Mission Valley, which it bought this summer. Khanna Enterprises also owns the Sheraton Agoura Hills, close to the Santa Monica Mountains just outside of Los Angeles.

The British Khanna brothers owe their connection to California to their father, who had an import-export food business and worked extensively on the West Coast.

“[My Father] really liked California and was keen to move there when we were all young, my mother less so, so we did not, but one of the contacts he made there was with a hotel broker," Khanna said. "That had to have been in the early to mid-80s, so the hotel businesses came a little by accident."

Khanna said he had little experience in the hotel industry when he started and needed to learn quickly on the job.

Upon arriving back in the United Kingdom when he was 28, Khanna bought the Best Western Westminster Hotel in Nottingham in 2001 and the 87-room Best Western Plus Oxford Linton Lodge in 2003. The latter property is still held by KE Hotels.

Khanna operated those two hotels for four years, and then bought a hotel in Kenilworth, Leicestershire, that was converted from a Macdonald Hotels asset to a Holiday Inn in August 2008.

“Then the [Great Financial Crisis] hit. Those were challenging times, but they began to trade well. We sold the Westminster hotel in 2014 and the one in Kenilworth in 2017,” he said.

Perhaps KE Hotels' largest splash was its acquisition of the 65-room Abbey Hotel Bath, now part of Marriott International’s Tribute Portfolio, which sits in three Georgian buildings and has been a hotel since 1890.

“Bath is a great market, but we bought it in 2018, then renovated it and then came along the pandemic, so it has a been a very tough 18 months, but we have seen the market in Bath bounce back quickly, and we are in a great position now,” Khanna said, adding the property could grow by about 15 guest rooms.

There also is talk of expansion at the Best Western Plus Oxford Linton Lodge Hotel, he said.

KE Hotels owns all three of its properties. The common thread between them is they are in higher-end properties located in city-center locations.

“There were some established relationships with the brands, but that is more in the U.S.," Khanna said. "The scene is very different [in the U.K.], so again that is something we started from scratch. The Moxy development has been a four-year program, and there have been challenges with contractors, one of whom went into administration."

Now weeks from opening, the Moxy Manchester is being converted to a hotel from an eight-floor hat factory.

“Moxy is a boutique, limited-service product that is aspirational. The Manchester hotel draws inspiration from two Moxy hotels in New York City, the ones in Times Square and Chelsea,” he said.

Khanna said that the plan is to continue growing KE Hotels in the U.K., even within the current landscape of high competition among investors.

“Most companies are looking at the long-term view, and the pandemic is not affecting pricing [or] the desire to own hotels. There is a lack of stock and lots of interest,” he said. “I want get the Moxy up and running, stabilized over the next 12 to 18 months, and then we will start looking at other hotels or sites."

Future KE Hotels' properties will likely be affiliated with hotel brands, he added.

“We have always seen the benefits of branding. When we bought the Abbey it was always with the idea of branding it, too,” he said of the formerly independent property.

The Moxy Manchester City is in the Spinningfields area of Manchester, and Khanna is very keen on having his hotel add to the vibrancy of the district.

“We are very excited to develop our bar within the bar scene here. There will be a lot of focus on this operationally," he said. "This is a central location, and Manchester is energetic and young. There are some excellent bars and restaurants, and we are not competing on the food side with the high-end restaurants but to be part of the community.

“We do this with all our hotels. We are looking forward to when events and groups business comes back,” he added.

Khanna said the Moxy was a lengthy project, which included the preservation of the asset. The development utilized Corten-steel cladding to protect the building’s listed 18th-century façade and knocked down the entire building apart from it and built back up.

As the property is surrounded on three sides by buildings, the work took time and skill, Khanna said.

“Yes, we’ve all had a tough couple of years, but [hoteliers] are all fighters, and we will come through this," he said.

Khanna added that Manchester is trending as a hot market for hotels.

"Manchester is buzzing, with the return [to Manchester United soccer club] of [Cristiano] Ronaldo and the recent Parklife [music] festival,” Khanna said.

KE Hotels is faced with the same operational problems experienced by most hoteliers globally, Khanna said.

Finding the right employees has been a challenge.

“It’s the labor market. I do not agree with the government position that paying more will lead to more staff or better quality," he said. "Pay rates are going up, but the quality of applicants is going down. And Brexit will hit this year, and it already has hit foreign labor. The press has negatively branded the conversation. It is not just front-line staff that it is difficult to hire, not just those on minimum wage."

Difficulties in supply chains, notably in linen, are also apparent, he said.

“By spring next year, after some ups and down, the economics will level out. Markets have bounced back very well," he said. “In Oxford, we stayed open to host [National Health Service] key workers, and our team did an amazing job. No other hotel in Oxford was open, so we retained our hospitality team."

Khanna said he has noticed some hoteliers poaching and bidding on team members from their competitors.

“The government needs to relax its guidance. The points needed [by foreign employees to work in the U.K.] means it is almost impossible to hire. I find irritating the comments of [Prime Minister Boris Johnson] when he said this is all just a matter of pay levels," Khanna said. “This is a similar problem in the U.S. but for different reasons. A lot of employees in California moved to Arizona, for instance."

Hotel guests are coming back as countries reopen their borders to international travel, and that puts more pressure on hotel labor challenges. But Khanna said the industry will adapt.

“We have moved to excess demand from no demand, but hospitality is flexible. [The integration of] automation will be [sped] up, and everyone is thinking outside the box. That might remove a little of the experience, which of course the brands are not all in favor of,” Khanna said.

Khanna said the U.K. government’s furlough scheme and economic help during the pandemic fundamentally saved the hospitality industry.

“But now times have moved on, and our key focus is to get back into the working mind set,” he added.

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