Home' Hotel Management : HM APL 2016 Contents Lancemore Group
CEO, Julian Clark
How do you see the hotel industry in
Australia generally at present?
At a national level I think we are in a unique
opportunity -- whereby both domestic and international
demand is rising and we are becoming a Tier One
industry. Never before can I remember tourism being
on the financial pages as much as it is, nor has it been
more needed by Australia to be a source of GDP and
jobs growth. So we are in a golden age in some respects.
On a more granular level, it depends on what lens
you are viewing it from as the story is different at an
operational, investor and construction point of view.
From a demand point it is obviously region dependent.
We are still on the up in Sydney, Melbourne, Queensland
leisure destinations (and I think these markets have
plenty more to run). Hobart is firing and Canberra is
starting to awaken. Meanwhile we are past the peak in
Darwin, Brisbane and Perth. Adelaide is in the middle.
From a cap rate perspective, without interest rates
declining further I think if we are not at the top of this cycle we are just
before or just past it.
From a development perspective I would say the same thing -- in terms
of projects announced and intending to go ahead. Clearly the new supply
will be coming in over the next three years. It will be interesting to see
what impact it will have on each market. The other thing of interest is the
growth of new supply in the form of shared accommodation -- I personally
don't think that we as an industry totally understand the impact that is
having, and will have. So that's the detail. At a helicopter level, I am still a
big believer in the Australian stronger for longer tourism story. The only
question in my mind is how new supply will affect the profitability of these
hotels. It is also worth noting that many regional areas continue to do it
tough, and not just in the post-mining boom areas.
Tell us about your business and how you have grown it to date.
Our business is a family owned hotel company that currently operates 7
hotels, 4 of which we own. We have a few more hotels in the pipeline at
the moment also that I will announce soon enough, one of which is a new
brand that I think will be hugely successful in Australia. Lancemore Group
started in 1986, so we have been around for a long time. I came on board
in 2007 and took over the CEO role in 2008. Since then we have been
more aggressive in our growth plans and have changed our growth modus
operandi. We are mainly growing through management agreements but
are happy with bolt on acquisitions also. I quite like owning the property
but we are restricted by the size of our balance sheet and the company's
risk appetite. That is how we grow the number of hotels we have. How we
grow the P&L for our existing hotels -- great people, the right strategy, a
great social operating system and culture that ensures performance with
a good dose of hard work. Then a celebration at the end of it all when we
are kicking goals. Our view is that we will only grow our
portfolio by being successful for our current owners. It's
a pretty simple formula, but one we find owners clearly
What developments do you have coming up?
We have announced The Lester in Adelaide, which
will open in late 2017 and there are a few other hotels
that are signed but not financially closed yet so I will
announce when they are closed. We are also focusing
a lot of time on some asset management opportunities
for our existing hotels. Indeed, over half of our portfolio
are undergoing either a partial or full refurbishment in
the coming 12 months. There is plenty to keep us busy
and I am super-excited about the next 2-3 years.
Where would you like to expand,
given the opportunity?
I laugh every time pure management companies say 'we
had a gap here so we filled it'. The reality is that aside
from a few brands, most of us are more opportunistic than that, although
we all have priority markets. For Lancemore our priority markets are to
extend our capital city presence in all major Australian and NZ cities as
well as major upscale resort markets -- although finding the right product
in the latter can be challenging for our boutique brand. Having said
that, we will consider all hotels that fit our brands and our third party
management platform gives us a large amount of flexibility so long as the
deal makes sense for everyone.
Where do you see yourself and the business in 10 years?
10 years is a long time. Hopefully, I am still CEO of Lancemore and I
still love what I do. Hopefully, Lancemore as a company will continue to
strengthen its reputation as being a leader in boutique hotels and white
label hotel management for both customers and owners. I also hope that
we maintain/strengthen our culture and be a great place to work. We
want to focus on Australia and NZ first, but by 10 years' time we may
have spread the wings a little further. We are an ambitious company. n
Lancemore Group started as a small family company
that owned several hotels in regional Victoria. Now,
under the leadership of CEO, JULIAN CLARK, the
company continues to grow under a range of models,
including the en-vogue white label management
style. HM sat down with him to find out more.
Exclusive interview by James Wilkinson
Lindenderry at Red Hill
28 HM The Business of Accommodation
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