What is it like to grow up in the shadow of a father like Dr Hari Harilela? And what is it like to work in a
company where your father is chairman and boss?
Aron Harilela talks about how he is carving out his
own niche in the Harilela Group.
25 May 2001
Q: What is it like to be born a Harilela?
Aron: It’s difficult. Fortunately, I moved out at 13 to go to a boarding school. Living in the family house with the parents and all the privileges would not have been healthy. But because my formative years were spent alone, I managed to establish myself as an independent entity.
So I hope I haven’t grown up with that silver spoon in my mouth.
Q: Did you have a choice about entering the hotel business?
Aron: I always knew I would, since I was four or five years old. I always liked it. Guess it’s in the blood. Father was talking about it for such a long time.
Q: How do you balance your new thinking with your father’s traditional approach?
Aron: Take for example the W in Sydney. It was very non-traditional, a converted warehouse. It did not fit in with the physical structure of a hotel. It was difficult. I was scared my father would come in and make changes. But he actually liked it and encouraged me with the project.
You can merge traditions with modernity well – it’s like a physically traditional hotel having modern guestrooms.
Q: Is W just a fad or is it here to stay?
Aron: I don’t think it is just a trend but it is a hotel for a very specific niche. I categorically state here that all my involvement will not be in high end hotels.
I went into W Sydney not because I wanted to change the company’s focus but because it seemed like a good investment with that strategy in that location.
Q: What about a W in Melbourne? I understand Starwood is talking with you about that.
Aron: I don’t know if Melbourne would be the right city for a W. I haven’t looked yet at other South-east Asian cities as well.
Q: Your father’s loyalty to Holiday Inn and Bass – do you think that’s old-fashioned?
Aron: No. If it’s a good relationship, it’s a good relationship. But it is also not disloyalty if we go with other brands.
Q: What else can management companies do more for owners?
Aron: A lot of times, management fees do not directly relate to what is delivered to the hotel. They are more related to expenses and salary within the management company and don’t directly relate to what is delivered to a hotel.
I am questioning what makes up a management fee. Some management companies, when they send their people to our hotels, charge us.
Q: Why don’t you set up your own management company then? Do what Robert Kuok has done?
Aron: We might look at setting up our own management company. As you see a drop in the business through GDS – before it was 30 percent of business, now it’s 10 percent – you question the value of a GDS-based distribution channel. Plus with the way the Internet is evolving, if management companies do not develop a strategy to deal with the lack of control on the web, they will have less and less value to an individual hotel.
Q: What is the biggest value of a management company then?
Aron: Distribution. Also support to the hotels. If a hotel is not performing well, they blame market sentiment. If a hotel is performing well, they say it is their management.
Owners are caught in the middle. Management companies are looking to plant flags on the map and increase their share prices, more than looking out for individual hotels.
Q: How do you get on, working with your father? Are you caught in the middle as well?
Aron: We get on very well. We discuss a lot of things openly. I am lucky we have an open relationship.
Q: Where would you like to take the company?
Aron: I have certain ideas about what I want to do. The key is, I want to bring the company to a much more professional standing. You must understand, it started off from an acquisitive standpoint.
I want to bring in quality talent – a group of people who can look after group revenue management, engineering and operations, who can focus on our hotels.
The next stage could then be setting up a management company. Shangri-La has done this very well in terms of setting standards for their hotels and getting the room rates. They seem, on the outside, very professional.
Q: What are the biggest mistakes owners make?
Aron: They go from Strategy 1 to Strategy 2. They mushroom without any strategic focus.
We now have nine hotels which are 100 percent owned by us. It is time to refocus and relook at where we are and where we are going.
I want to make it a more professional company, more international.
Q: Your father says his heart is in Asia, yours is in Europe.
Aron: I disagree with that. My heart is also in Asia. It has great potential. I love Thailand and Malaysia. But when I want to invest, I look less with my heart than with my brains. For example, I will not invest in Manila.
