LONDON—By carefully choosing its partners, selecting key business locations with growth potential and being involved in all aspects of construction, development, ownership and management, Arora Hotels has found success.
But Arora’s story began in 1999 when owner and Chairman Surinder Arora started providing accommodations to British Airways’ cabin crews at its first asset, Arora International Heathrow. Today, privately held Arora is a diversified real estate company that its executives said has the scale to take advantage of synergies across its specialist property, construction and hotel divisions and also provide property- and asset-management services to outside clients.
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Kaushal Niraula, Arora Group |
Kaushal Niraula, Arora’s director of strategy and new markets, said Arora recently underwent financial restructuring to “improve leveraging, increase autonomy and to support the next phase of our growth.” The company has planned two new builds connected to London Heathrow Terminal 4, another new build at the airport’s Terminal 2 and the purchase of the franchise and occupational lease of the Hilton London Stansted Airport.
“We will continue to focus our expansion by geography, sector, property activity, operational capability and management team,” he said, “and this structure provides us three distinct directions to achieving diversification: Direct proprietary activities through asset and property management, property construction and operational capability in hotel and facilities management.”
Arora’s portfolio consists of eight properties and 3,217 total rooms throughout the United Kingdom, and its pipeline includes three hotel projects with 1,048 total rooms. The company has either ownership or management connections with Hilton Worldwide Holdings, InterContinental Hotels Group, AccorHotels and Whitbread, as well its own Arora brand. Arora recently opened its flagship property, the 453-room InterContinental London The O2, in July.
Harvesting the fruits of franchising
Niraula said The O2—which is part of a lease agreement with IHG—further indicates Arora’s development since the company’s beginning.
“The franchise agreement with IHG was Arora’s next natural step, a step we see as evolutionary rather than revolutionary,” he said. “The franchise agreement was a strategic move for both IHG and Arora, as the hotel offered a new, large-scale events space to not only London, but also Europe.”
Arora’s pipeline will maintain the diversity of the company’s existing portfolio, Niraula said, whether that means opening an in-house Arora Hotels property or finding a franchise partner.
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John Donaldson, Arora Group |
“Operating via a franchise model enables flexibility to determine the most appropriate, existing brand for each asset,” he said. “The decision as to which international brand to partner with is dependent on a number of factors, driven by the suitability of the hotel brand for the local area and demographic and customer base, as well as the competition from other hotels in that area.
“While each project is tailored to the local market, by partnering with global brands we have become an outward-facing product to international clients and customers, which is hugely important to us.”
Transitions and Arora’s future
In July, longtime industry fixture John Donaldson retired as Arora’s executive director. Under Donaldson’s watch, Arora’s hotel wing grew to approximately 1 million square feet of commercial real estate, and the company currently manages property assets worth more than £1.5 billion ($1.9 billion). Donaldson said he intends to remain with the company as an advisor to Arora Holdings’ board of directors.
“The opening of the InterContinental London The O2 illustrates how our capabilities now exceed our traditional expertise in airport locations,” he said.
Niraula will assume many of Donaldson’s responsibilities, and both executives said Arora’s flat structure enables it to move quickly and adapt to market conditions. Niraula said Arora has no immediate plans to raise public equity.
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Raj Shah, Arora Group |
“Ultimately, the flexible private company structure enables us to dovetail specialisms across construction, property and hotels together, to create a strategic advantage,” he said.
Involvement in projects from start to finish is another one of Arora’s priorities. The company has a construction division—Grove Construction—to better streamline development.
“The generic trend in the hospitality industry is simply to operate hotels, without direct investment in bricks and mortar,” Donaldson said. “We pride ourselves for doing the reverse, which gives us both an asset and trading interest in our businesses, which often work in different cycles, thereby giving us additional financial strengths.”
Donaldson said that while Arora has expanded its sights, the company continues to regard airline-crew accommodation as a strong business platform. Corporate meetings, conferences and exhibitions business is an increasing focus at Arora, and Donaldson pointed to The O2’s 48,500-square-foot ballroom—now one of Europe’s largest pillar-free facilities—as evidence the company is continuing to grow its event business.
While Arora executives are aware of current challenges the company faces, the move within the company is onwards and upwards, according to group commercial director Raj Shah.
“Our biggest challenge is the retention of staff and their skill sets, and in an industry that often sees a high level of staff turnover, we are extremely committed in investing time in training,” Shah said.
Shah added of the company’s approximately 2,000 employees, 90% are in its hotels division, which has grown by approximately 500 members in the last two to three years.