Mel Flaherty visits Etc.venues managing director Alastair Stewart at his latest opening County Hall and discusses his transformation from corporate executive to entrepreneur.
Etc.venues’ latest location not only lays to rest the ghost of the former Greater London Council, it marks the birth of what Alastair Stewart, the managing director of the event, conference, training and exhibition business, hopes will be a new phase in his company’s evolution.
The 43,000sq ft fourth floor of the iconic County Hall on London’s South Bank is now more like a five-star hotel than the former offices of the long-defunct Ken Livingstone-led quango, whose abolition had left the space empty since 1986.
The venue has been open just a few months and is already buzzing with a number of conferences and meetings taking place in the various rooms. Stewart, who comes across as both direct and friendly, is rightly proud to show off the beautifully restored parquet flooring, the tastefully yet practically designed coffee lounge break-out spaces, the stunning art works on the walls and the high-tech main conference room.
The £8m transformation of this wing of County Hall has already led to a real buzz in the events industry, backed up by £5m worth of forward bookings, and Stewart believes it could be a seminal moment for Etc.venues.
“This is a real step change for our business and the brand. People saw us as a good-quality training venue brand but we are now starting to change that and open bigger and more event-related space,” he explains.
County Hall is the firm’s 15th venue (only one of which is outside London, in Birmingham) and by far its largest to date. Training events for smaller groups, usually organised by their employer or trade organisation, have been Etc’s bread and butter business since it was first established by Sally Wilton in 1992. From day one, the company made itself stand out by aiming to modernise the whole conference concept, with cleverly designed venues and highly personalised event services – all catering is done in-house, something Stewart is keen to stress gives him absolute control over quality: “Our head chefs are a vital part of our team and I’m convinced that’s why the business has a good reputation for its food”.
Stewart and his team have built on that multi-award-winning, stereotype-busting formula since his original Buy-In Management Buyout (BIMBO) of Etc backed by Dunedin Capital Partners in 2006. Wilton and her senior team have long since departed. Stewart wryly admits that it didn’t take him long to understand why so many people feel the BIMBO model is a tricky one, with the new boss often at odds with the existing management team’s way of working but that’s now all well in the past.
Quality and progress underpins everything Etc does, from the air-conditioning systems it installs to the top-end Melitta coffee machines and highly interactive technology in the conference rooms. The investment this entails certainly seems to be worth it. When Stewart and Dunedin bought the company, turnover was £9m but, last year, sales reached £43m from 15,000 events for 660,000 delegates.
Stewart’s aim was to grow the business by 20% a year – he’s got very close to achieving that thanks to a progressive and steady approach of opening around two venues a year, which have, to date, been funded from cash flow. Some will remember this as the growth aspiration of his former boss at Rentokil Initial Sir Clive Thompson, dubbed ‘Mr 20%’ by the financial world, although he doesn’t like the comparison: “Rentokil lost its way when it acquired the BET conglomerate, which the founders of my old business Style Conferences had sold – it’s taught me one thing, that when you over-diversify and lose focus, you lose your way.”
He’s a big fan of American business guru Michael Porter and one of his business mantras – that “the essence of strategy is choosing what not to do”. It has served him well – Etc has built a very strong reputation as a result of steering away from social and personal events. The opening of County Hall, however, marks the start of a new approach for the firm. The venue already has a number of non-business events in the diary, but Stewart is keen to ensure boundaries are not crossed, so any such bookings will only be allowed on an exclusive-use basis, to prevent guests crossing over with business users.
Stewart would like Etc to develop into three equal segments – one third the training and small conference venues; one third larger conferences venues with a big room for 300 to 500 people (like its St Paul’s and 155 Bishopsgate conference venues), and one third larger events venues, of which County Hall is the first.
Stewart says later this year he plans to expand County Hall to 70,000sq ft and open in Manchester, fulfilling a long-held ambition.
“We’ve blown hot and cold on Manchester for a few years now but we think we’ve found the right space and I’m impressed with the sense of optimism in the city. Our clients have told us what we offer will do well there – I hope they’re right,” he says.
Stewart says there are still opportunities for Etc to create further conference and training venues in London and sees opportunity for larger space. The scale of County Hall has enabled it to try new things and learn lessons it can also apply to its existing venue portfolio – for example, larger kitchens, significantly higher Wi-Fi capacity and conference room designs that help encourage delegate interactivity. However, County Hall has wedged open another door for Etc in the form of international business.
The firm recently sent a team to New York to sell the space to American clients. Stewart says the company is currently doing $3m of US business but expects this to grow to $10m in the next three to four years. But the international ambitions run much deeper than that. Stewart says that whereas the previous generation of delegates were happy to go away on residential training courses and conferences over a few days, the Millennials want to do everything quicker and would much rather go to a city-centre venue for a day and then go out in the evening to the bars and restaurants. He says these trends are replicated worldwide and he can see Etc.venues’ urban-venue model working well in New York, Paris and parts of Asia.
Etc was an SME just three years ago but now employs 350 people. Stewart recognises that to go from this point to being a global operation is a big jump. Growth Capital Partners, the Private Equity firm, invested in 2012, when Stewart and his finance director, Paul Keen, carried out a secondary management buyout. Stewart sees the next stage in Etc’s funding story as an opportunity for the firm to attract investment with someone who can help make the international operation ambitions a reality: “Growth Capital Partners has been an excellent investor for us and has helped us treble the size of the business in five years. The nature of private equity is that funds normally have a lifespan and this will, in due course, allow us to find new investors who can help us on our next stage of growth.”
“There are some great examples of where private equity can help a business internationalise.”
What that will mean for Stewart himself remains to be seen, although he is clearly excited about the direction Etc is headed.
“The greatest upside of the 2006 buyout difficulty was that a new finance director joined almost immediately. He was not from the conference industry and has been instrumental in our growth and challenging some of the industry status quos,” he comments.
Keen and Stewart have worked alongside the existing Etc team, bringing in new management as the business scaled.
“The trust and loyalty among the senior team is one of the big successes for Etc and what is important to me is that the team can grow as the business gets bigger,” he says.
Stewart adds that he still has a hunger for the conference venue operations and enjoys the reputation the business has developed within the industry and not just in the UK. He has also found time to mentor other small businesses and is a subscriber of the membership-based Supper Club group of some 400 fast-growth entrepreneurs who contribute time to support start-ups as part of the Start Up Britain campaign. His part was to help a fledgling digital media company, set up by two young entrepreneurs with their credit cards, to get some proper funding.
“I’ve watched them grow their business fivefold and they never let me forget the roasting I gave them in the early days for not knowing their numbers,” Stewart smiles.
Stewart is also part of a group of CEOs and founders within the Supper Club who meet 10 times a year as a forum, effectively acting as unpaid non-executive directors for each other, drawing on their respective experience to advise each about issues like funding and technology. “There’s a huge danger when you work within one industry that you become closed to new ideas, so getting out and about and sharing challenges and ideas is something I highly recommend and have had huge benefit from myself”.
When Stewart started his working life with Sheraton as a night manager (a position which, he laughs, now sounds so much sexier than it was thanks to Tom Hiddleston’s performance in the BBC drama of the same name), he soon became frustrated that his ambition to progress and work internationally was not matched by his employer.
It led, he admits, to his impulsive move from the global hotel company to the tiny Style Conferences (now De Vere Venues and part of Principal Hotels ), which was then a two-site conference operator. However, he struck lucky and ended up as managing director in 2002, overseeing 30 centres with sales of £90m and EBITDA of £30m. A change of ownership in 2006 led to him being forced out and thus begun a more entrepreneurial stage to his career as he sought backing to acquire Etc.
But he still finds the label uncomfortable: “I started in my mid-40s after being fired and I chose to buy a business – I wasn’t the founder and I’m not cut out to do that bit of starting in my kitchen or wear this overused entrepreneur tag; but I’d run a big business and was able to apply some of those skills to growing an SME into a bigger business.
“When you’ve run a large business you know it’s all about the strength of your management team, and if I take credit for anything, it’s how good they are and what a great job they’ve done.”
■ Mel Flaherty is a freelance journalist specialising in the hospitality sector. This article first appeared on the website of the Fraser Giles Partnership, the leading executive search firm focused on the hospitality, leisure and travel industries, as part of its FGP meets series. Visit www.fgpartnership.com