Some chief executives are happy to shout about their success while others do pretty much everything to stay out of the limelight. Dominic Walsh investigates.
Ever since Andy Harrison took over as chief executive of Whitbread almost four years ago, market watchers have been waiting for the bespectacled high flyer to push the button on a demerger or sale of Costa coffee to focus on hotels. It has never happened.
Ever since the Cambridge economics graduate joined the leisure giant from easyJet, the market has also been waiting for him to cast aside the caution of the past and do something dramatic strategically - for example, by snaffling a hotel rival or by pressing the fast forward button on international expansion of Premier Inn. Neither has happened.
So imagine my surprise when I heard a couple of weeks ago that Harrison had decided to throw Whitbread’s hat into the ring in the £450m auction of De Vere Group’s Village Urban Resorts. Not only that, but the word on the hotel industry grapevine was that he was deadly serious about the process and was already, even before first-round bids were due, determined to get the prize.
It all seemed to make sense. While Harrison may remain ultra cautious about expanding Premier Inn too quickly overseas, here was a business that was UK-focused yet with plenty of capacity for expansion. Here also was a midmarket business with a strong proposition and an urban cool image akin to Whitbread’s new Hub by Premier Inn sub-brand – the one strategic development of note to be initiated by Harrison since he took the helm.
Yet just as I had all but decided to start putting pen to paper to write up my nifty exclusive on Whitbread leading the pack on the auction of the Village chain, a source close to the FTSE 100 company came back to me and assured me that it would not be submitting a first-round bid. Yes, it had requested an information memorandum from JP Morgan, De Vere’s advisor on the sale process, but no, it was not interested in the business. Or at least, if it had been, it wasn’t any longer and would instead remain focused on the organic growth strategy pursued by Harrison to date.
Once I’d got over my disappointment – how could so many sources have been so wrong? – I soon realised I’d let myself get carried away with an idea that should have set alarm bells ringing much earlier. The question I had ignored was: why would anyone change a strategy that, under their tenure, had tripled the Whitbread share price, in the process creating some £4bn of shareholder value? OK, so the stratospheric share price rise would have made funding a Village deal as easy as downing a Costa flat white. But why take the risk, even such a relatively limited one?
Not that I’m suggesting that Harrison has merely played it safe since he arrived. Far from it. Rather than just picking up and running with the baton passed to him by Alan Parker, he has set highly stretching expansion and performance targets right across the group and, having achieved the first set, he has stepped straight back up the plate and set some fresh targets.
He may have eschewed the opportunity to fork out £450m or so on Village, but when you’re shelling out between £360m and £400m a year on expanding your existing brands organically, the pressure to deliver the required returns on that hefty investment remains every bit as intense as if the money were being spent on acquisitions.
What’s more, with Costa’s increasingly global aspirations going full steam ahead, why would Harrison consider spinning off such a fast-growing and successful business off? Its remarkably robust growth through the recession has proved a useful counterpoint to the comparatively tough trading Premier Inn has weathered and unless Whitbread’s share price starts to suffer a conglomerate discount, there seems little reason to upset the status quo just yet.
Andy Harrison may not be the most inspirational of chief executives in a conventional sense, and his determination to avoid doing any in-depth media interviews or profile pieces is hardly calculated to boost his personal standing. But that bothers him not one jot, which may be frustrating for us hacks, but is somehow rather admirable.
Crucially, Harrison is a very clever man and nobody can dispute his ability to get those around him to deliver the goods, week in, week out, to the benefit of customers and shareholders alike.
Risen through the ranks
Another top executive who seems to prefer keeping his personal light under a bushel is Mark Hunter, of Molson Coors. The Scot’s elevation last month to the top job at the North America-based global brewer almost passed unnoticed by the national media back here, and when I sent him a congratulatory email that also took issue with the lack of publicity he remarked that “we are keeping it low key at this stage”.
He may want to keep it low key, but the way Hunter has risen through the ranks at Bass and Molson Coors to CEO of, successively, Molson Coors UK, Molson Coors Europe and now the entire Molson Coors Brewing Company, is worthy of being shouted from the rooftops.
The former Scottish schoolboy football international may have quickly realised that he was unlikely to make the grade in the top flight of the game – despite a spell at St Mirren under Sir Alex Ferguson – but he has had no such problems in the brewing industry.
His business and commercial acumen is second to none, as his success in acquiring and building such brands as Cobra and Doom Bar have shown, while his straightforward, no-nonsense way of dealing with people, both inside and outside the company, shows that it is possible to reach the very top while retaining one’s integrity and honesty. Which is more than can be said of one or two CEOs I’ve the displeasure of dealing with.
Since I seem to have spent the bulk of this column bigging up CEOs who do not crave the limelight, I may as well make it a hat-trick and finish off with a few words of praise for Harvey Smyth of Gondola Group. Running high street stalwarts PizzaExpress, ASK and Zizzi through the last few recessionary years has hardly been a bunch of laughs, and it cannot have been much fun listening to people constantly telling him that 2-for-1s would kill the business.
Well, it hasn’t. Not only did he sell the fastest-growing bit of the business – Byron – for a premium price of about £100m, but he has also successfully sold off PizzaExpress itself. When the brand was put up for sale a few months ago, there was no shortage of pundits lining up to dismiss the £1bn price tag as fantasy land for a brand that was mature in Britain and unproven overseas.
Yet somehow, Smyth and his advisors managed to persuade those moneybags at China’s Hony Capital that here was a brand with huge growth potential around the world, particularly in China. Sure enough, when announcing the deal for a stonking £900m, Hony CEO John Zhao cited the “opportunity to leverage our local expertise to accelerate its growth in the Chinese market”.
All Smyth has got to do now is find a buyer ready to stump up for ASK and Zizzi, though even if he does you can guarantee he will do all he can to stay out of the limelight.
Dominic Walsh is the lead leisure correspondent at The Times
