Minor Hotels made a number of headlines this year when it announced its intent to buy up Chinese conglomerate HNA’s shares in Spain’s NH Hotel Group and to eventually launch a takeover bid that Hyatt Hotels failed to supersede.

But the truth is that Minor Hotels — which is just one part of its own massive conglomerate, Bangkok-based Minor International — has been making headlines for some time, quietly building itself up into the 68th largest hotel company in the world by number of rooms. If Minor succeeds in its takeover bid of NH Hotel Group, the two combined would make up the 19th largest hotel company by number of rooms.

Minor International itself has a market capitalization of $5.16 billion, and its three primary businesses encompass 2,100 restaurants, 300 retail trading outlets, 160 hotels, and 60 spas spread out among 40 different countries.

Skift recently spoke to Minor Hotels CEO and Minor International Chief Operating Officer Dillip Rajakarier to learn more about Minor’s approach to growth in the ever-competitive global hospitality market. What follows are 10 takeaways from our recent conversation with Rajakarier.

1. Minor Wants to Make NH Hotel Group Better

When Skift spoke to Rajakarier, he said Minor’s shareholders had unanimously approved its attempt to increase its shares of NH Hotel Group to 44 percent, and he said that “hopefully the whole [takeover] process should be complete by October.” After that, it’s up to NH Hotel Group’s shareholders to determine whether they want to accept Minor’s tender offer.

“Under the tender offer, we have to make an offer to 100 percent of the shareholders,” Rajakarier said. “Then it’s up to the shareholders whether they would like to tender or not. If they don’t tender then we will stay in that 44 percent [of share ownership]. If they do tender, then we might get more shares.”

He continued, “For us, we are OK either way. We are happy to stay at the market shareholder at 44 percent and add value to the business and grow the business and actually create shareholder values for the initial holders, which includes us.”

Minor’s intentions, Rajakarier added, are “to keep the two public companies as separate companies” with Minor based in Thailand and NH Hotel Group based in Spain. “We will then help with the expansion plan and also the integration in terms of where they are branding, and where they are sharing resources in terms of people, and that’s how we would add more value.”

The combined loyalty base for both brands — 12 million for Minor and 8 million for NH — is also attractive, he noted. “In terms of selling, to bring guests from Asia, like where we are from, to Europe and where NH is strong, in Europe and Latin America, for guests to come and visit our hotels.”

“I think in the short term, we will need to make sure that the transition of NH, that it works really well and that we are getting our returns and that the shareholders are benefiting and the expansion plan is on track. All we are doing is we will be supporting the board and the management team of NH hotels, and keeping them a public company. We will bring in some good corporate governance and then we will make sure that NH continues to grow.”

2. Hyatt’s Last-Minute Interest in NH Hotel Group Was …

… An “embarrassment.”

Hyatt actually approached the board expressing interest, saying that Minor, that our bid price is pretty low compared to where its actual value should be and that they would be keen to look at the portfolio,” Rajakarier said. “I think Hyatt came back way too late to the process. I don’t think they really understood what they were coming to and basically, they made an approach to the board on Thursday [July 26] and then on Monday [July 30] they had to retract their expression of interest and they made a public statement, which was an embarrassment.”

When asked if Hyatt’s claims about Minor’s bid price being too low were true, Rajakarier said, “I think Hyatt has actually done us a big favor by highlighting how much value NH Hotel Group has in the marketplace. Basically, yes, it is true because we did manage to get the shares at a lower price and our intention is to create shareholder value and actually, our intention is that we would like the other holders to stay with NH because now they can see the actual value of NH and the full potential of NH going forward. They will be able to get a much better price in the future.”

3. Asset Right Versus Asset Light

While so many major hospitality players are pursuing an asset-light strategy where they own little to no real estate and instead grow by establishing management and franchisee contracts, Minor thinks hotel companies should be able to do both: own real estate where it makes sense and manage hotels where it doesn’t.

“For us, our strategy is not asset heavy or asset light,” Rajakarier explained. “We call it asset right. In places where liquidity terms are higher, we want to own. In those where they aren’t, we don’t invest in assets. In those places we will only manage hotels. For us, it’s a balance between asset light and asset heavy. That’s been very successful for us over the years. We will continue in that strategy.”

4. Having the Right Talent Is Crucial

“Talent is important these days, because we’re in the business of people,” he said. “If you don’t have a strong team, especially a strong management team that can deliver the numbers year in and year out, you lose credibility in the marketplace. Therefore, shareholders start to lose trust in you and the share price starts to go down. … The management capability to deliver on the numbers is very, very important.”

“The war on talent” is one that weighs heavily on Rajakarier’s mind as well. “I think the hospitality industry needs to really wake up and really embrace this because otherwise there’s going to be an issue in terms of quality of people, the training and not being able to meet expectations of that guest experience, as well. That’s something the hospitality industry needs to wake up and work toward.”

5. Minor Will Only Buy When and Where It Makes Sense

“You know, we look at transactions all the time, and the only way we would be interested is that we feel the transaction is lucrative to our shareholders, and then we would look at it,” Rajakarier said. “Because, otherwise, we won’t.”

And as for where it would pursue growth, Rajakarier said, “We’re not looking at brands now. We’re looking at locations.” Those places include the Middle East, Africa, and Asia.

“For us, it’s more about getting into some of these emerging markets and emerging market destinations where we can create travel experiences for our guests and make sure that we are also profitable at the same time as well. It’s not about buying more brands; it’s about the brands we have. How can we leverage our existing brands into some of these new locations? That’s what we are looking at.”

6. Minor Isn’t Just Hotels

“We have the hotels, we’re food, and what we call lifestyle and fashion,” Rajakarier described. “This whole business, of course, is very complementary to the hotel business. When you look at food and beverage, even our hotels produce about close to 35 to 40 percent in terms of food and beverage, and therefore we also operate the food chains as well. It’s complementary, as well.”

Food, in particular, is a very complementary fit for Minor Hotels, he said, mentioning Minor International’s investments in UK-based restaurant group Corbin & King, as well as Benihana (outside of the U.S.).

“We feel like our hotels also need good food concepts, which we can actually bring in as a value add to our hotels, and to owners of hotels who look to us to manage their hotels, as well,” he said.

7. Travel in Asia-Pacific Is Becoming Even Stronger

Rajakarier said that as the Chinese travel market grows, Asia-Pacific regions, including Thailand, stand to benefit.

“If you look at the Chinese market, it’s one of the top markets by population size. But, the thing is, what people fail to understand is that it’s only 8 percent of the Chinese population who are traveling today,” he explained. “It’s only that number of people who have passports at the moment, who are actually traveling outside. Now, I think with increasing wealth and increasing the middle class, I think that once that population starts to grow, whether it’s 8 percent, or 10 percent or 11 or 12 percent, you know, that’s a big number when you have a population size of 1.3 billion people.”

That is already playing out: In fact, tourism to Thailand accounts for approximately one-fifth of the country’s economy, and the Thailand Ministry of Tourism estimates that Chinese travelers will contribute nearly a third of the destination’s $63 billion in tourist revenue for 2018.

“I think today there’s a lot of regional travel from the Chinese, but at the same time, they are also now going further, as well. And this is where we can easily drive that traffic to Europe, because there are places where people, when they start to travel, they go to London, New York, and places like that. Also, they go to some of the top destinations in Asia, like Thailand, Bali and the Maldives.”

In short, “the demographics are changing and there’s a lot of Asian travel, because Asia continues to grow stronger, and that is something which will happen all the time, and that what will happen.”

8. Thoughts on Airbnb

Rajakarier said, “We would consider Airbnb as another distribution channel” but that “it depends on which segment you’re operating in.”

He also said that while Minor hasn’t really looked at entering into the private accommodations space like its peers Marriott, Hyatt, and AccorHotels have done, the company is pleased with its investments in branded residences. Still, when asked if Minor would consider getting into homesharing, he said, “I think I would say, ‘Never say never.’ If they have opportunity and if it’s going to add value then of course we will.”

9. Personalization in Travel Is Already Possible

When asked if true personalization is possible in travel, Rajakarier responded, “Absolutely.”

“I think today with the big data you have, you can actually personalize someone’s stay, because you know that this person’s habits and you know what they want. The one thing I could say is that everyone talks about luxury, and we never talk about luxury. We always talk about customer experience, and we always try and create very specific guest experiences, which are most specific. It’s tailor-made. And also the guest will go back with the sentiment, ‘Wow, we’ve never had this in other hotels.’ That’s what we strive for under the Anantara brand.”

Echoing the comment made by Minor International founder and CEO William Heinecke, Rajakarier said, “We were the first people to talk about guest experience and everyone else just talked about luxury. Everyone’s got luxury today, because the hardware, you can create hardware, which can be super luxury. You can spend $500,000 for a key, or you can spend $5 million on a key. You can create the hardware, but what is difficult to create is to create that guest experience through the software, which is your people. It’s not the brand that makes the people, it’s the people who make the brand. This is where most hotels get it wrong.”

10. … But Hotel Brands Can Easily Lose It

When asked if Minor Hotels wants to become its own marketplace of brands to an experience platform of its own, similar to what Marriott, AccorHotels, and Airbnb are doing today, Rajakarier said no.

“I think sometimes the mega brands, they lose the personalization, they lose the customer touch, they lose the guest allure, they also lose the soft touch as well, which is their asset, which is what’s creating the value for these companies,” he said of those pursuits.

He added that Marriott’s 30 brands are “totally confusing” and that “the brand segmentation becomes quite challenging as well.” For that reason, he said, Minor “never wants to compete against our own brands.”

“We don’t want to be the biggest hotel company, but what we want to be is the best hotel company in the world,” he said. “I always say most of the companies, they don’t die of starvation, they die of indigestion, which means they are unable to transition from one brand to another brand. When you do a consolidation, it’s not easy. I really hope some of these big hotel chains will not die of indigestion.”

Photo Credit: Minor Hotels CEO Dillip Rajakarier recently spoke with Skift about the company's plans for growth. Minor Hotels/Minor International