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Nobody envies the job of a CEO these days, but Clarence Tan, who will take up the group CEO position at newly-privatized Millennium & Copthone Hotels starting April 2, is set for a tougher ride.
Singapore-based City Developments, which now owns the hospitality subsidiary wholly, announced his appointment on Monday. Millennium & Copthorne was delisted from the London Stock Exchange last October, after a protracted two-year battle between City Developments and smaller shareholders to take the company private.
The chain’s last CEO, Jennifer Fox, lasted all of three months in the job. Since her departure in September 2018, there has been no dedicated CEO, with the chain overseen an interim CEO, Tan Kian Seng. Two other directors, Sue Farr and Gervase MacGregor, also left in the latter half of 2018.
Business has not been going too well since 2018, blamed on the trade war, Brexit, increasing minimum wage levels in many of its hotel locations, and disrupters such as Airbnb, among others.
Apart from inheriting an organization that has seen a good deal of instability, and reporting to a real tough boss, City Developments and Millennium & Copthorne executive chairman and Singapore tycoon Kwek Leng Beng, Tan will have to lead Millennium & Copthorne during the worst crisis ever to hit the travel industry, the coronavirus.
Brave or Foolish?
A source close to Tan said he was motivated by the opportunity to join an owner-operator chain, to protect a legacy brand such as Millennium & Copthorne and, most of all, to groom talent, as he himself was given the chance to grow by companies such as then Raffles International and InterContinental Hotels Group, said the source.
In an official statement, Tan said, “The evolving Covid-19 outbreak continues to greatly impact the hospitality industry globally. Amidst the operating challenges and uncertainty, I see a significant opportunity to reshape M&C’s strategies and reposition the business. M&C has a distinctive asset portfolio with latent value to be unlocked.
“With teamwork and the right strategies, I believe that we will be able to overcome this difficult period and set a firm foundation to further grow our hospitality business.”
Tan was with InterContinental Hotels Group for 17 years and left the chain in February as its managing director for Southeast Asia and Korea following a regional restructure. Under his stewardship, the business delivered $1.2 billion in hotel revenue to InterContinental Hotels Group at a healthy margin and added to its system size and pipeline, according to a statement from City Developments.
As the first CEO for the privatized Millennium & Copthorne, he is expected to spearhead a turnaround in the performance of M&C’s global hotel portfolio which comprises 150 hotels and 43,500 rooms worldwide, many in key gateway cities. Reporting to Kwek directly, he will work closely with City Developments’ leadership team to deliver sustainable hotel performance by focusing on achieving synergies, cost efficiencies and driving profitability.
“I’d certainly say he’s well qualified for the job and City Developments would benefit from letting Clarence do what he determines needs to be done. Question is whether they will let him, or are simply expecting him to implement changes they have determined are needed,” said Robert Hecker, managing director for Pacific Asia at Horwath HTL.
“I would expect investment will be needed in systems, technology, right personnel, et cetera, not just controlling/reducing operating costs. So the key will be getting support on the investment side to achieve sufficient gains in capability, performance and value.”
Currently, all is sweet. Kwek believes given his wealth of international experience in hotel operations, management and finance, Tan’s leadership “will be critical in navigating M&C through near-term global and macroeconomic challenges, as well as driving portfolio performance enhancements through significant cost-efficiency initiatives and building brand equity.”
“With his extensive and distinguished career in the hospitality industry, and strong business, financial management and business recovery capabilities, I am confident that Clarence will play a key role in this integration and transformational process, elevating M&C into a formidable global hospitality group,” said Kwek.