03 Jun 2014
Words Tim Admin

'Knowing what matters' is their Mantra

‘Mantra’ is a Sanskrit term for sounds or words considered capable of creating transformation. So it was no accident that, in 2009, a determined band of hotel executives chose it as their company’s new flagship brand name. Transformation was indeed what they were about. The Mantra Group, operator of Peppers, Mantra and BreakFree hotels, retreats, resorts and apartments, is one of our largest Australian-based accommodation operators. With 114 properties in its expanding portfolio, and more than 4000 employees under its wing, the group generates $500 million + annual turnover. Hard to believe it is little more than four years since the business emerged from the financial wreckage of MFS Limited. Their name change (formerly Stella Hospitality Group) signaled a fresh start after a major financial restructure. CEO Bob East and fellow Mantra executives hold a minor equity stake in the business, which is majority-owned by private equity group CVC Asia Pacific. He says the team was always confident the company they inherited, while in need of ‘transformation’, was essentially a strong business. So they set about liberating it, selling off under performing assets and strategically reinvesting in key destinations. This year, Mantra posted its fourth consecutive profit increase and, while adding significantly to the bottom line, has also paid down substantial debt. This has been achieved during challenging economic times. Imagine what is possible now, as the tourism sector lifts. “I think the future for hotels and resorts in Australia is bright,” East says. “There is limited supply growth, while demand is increasing. Inbound tourism is up, and domestic tourism is also pretty healthy. We are seeing year on year growth. It is a good time to be in the industry.” His confidence is reflected in Mantra Group’s growth path across Australia, New Zealand and South-East Asia. Currently, 17 new properties are at various stages in the pipeline. Indonesia, is a key target, with six hotels to be on board by the end of this year, and up to 20 over the next two years. Mantra Group already has 13 resorts in New Zealand, and its Australian tally will lift by five new properties in 2014. Growth will continue under the group’s three-brand strategy. Peppers, now numbering around 30, is the indulgent high-end range, 4.5 to 5-star escape destinations in spectacular locations. Mantra hotels, resorts and apartments (54) fill the mainstream market position – well-located 4 to 4.5-star properties known for high standard rooms, facilities and service. BreakFree is the 3 to 3.5-star “quality but affordable” provider. East sees no need at this stage to introduce new or different brands to drive growth. “Mantra is a name with vast recognition. Actually Kent Davidson (Executive Director, sales marketing and distribution) came up with the brand and we sat around the table and devised it in-house. But we couldn’t profess to have known just how universally understood it would be,” he admits. This widespread affinity for the name is very handy as Mantra pushes into Asia. “In Indonesia, people actually call their child Mantra because the word is so significant.” East puts Mantra Group’s successful growth down to a strategy summed up simply as ‘knowing what matters’. “It means our energy and resources are directed to where they will achieve the best returns,” he explains. “We know what matters to our stakeholders – investors, owners, guests, staff and suppliers". “At an operational level, it means maintaining focus on our objectives, including growing asset value, maximising profitability and exploiting new IT opportunities.” Mantra Group currently manages assets worth over $7 billion. Flexibility to adopt the optimum operating model for each property has proven vital to forging successful partnerships with established accommodation owners, developers of new product, and industry intermediaries. Management agreements, marketing services agreements (franchise-style), buying management rights, leasing, and equity ownership are all options. The team also has significant strata title expertise, positioning it strongly as mixed-use developments become the common model for the construction of short-term accommodation, and a trend toward strata titling existing hotels emerges. Within Australia, Mantra Group aims to add a minimum of four new hotels a year. In the premium Peppers space, where stunning coastal, wilderness and vineyard leisure destinations have predominated, a new CBD push is underway. Peppers is preparing to launch its first inner-city 5-star hotel, Peppers Dunmore in Brisbane, in 2014. And a luxury boutique Peppers hotel has been announced for the $300 million M Docklands project in Melbourne. Mantra’s popularity has soared on the recommendation of affable tennis legend Pat Rafter. Engaging Rafter as brand ambassador was another inspired in-house idea hatched by the Mantra team. “To be honest, we felt the brand wasn’t known quite well enough, and we wanted to build it quickly,” East reveals. “Pat stayed with us quite a bit at Salt Kingscliff. Trust and friendliness are two of our most important brand values, and he embodies both. His personality, style, a home-grown Aussie success – it all just struck a chord. “So we said, ‘look, you obviously like our product, how would you like to be our brand ambassador?’ He considered it, visited more of our properties, and said ‘yes’. “In those commercials, it really is his family, his car, his surfboard. That’s just who he is and how he holidays with his family. Pat gives our brand a personality.” The third product, BreakFree, is ticking along nicely with close to 30 properties, East says. But he does admit taking a critical look at it when the group first restructured. “It was clear there was enough customers and demand to warrant retaining and building the brand. We have massaged and cleaned it up, brought it up to standard, and now it’s growing steadily.” Since Bob East joined Mantra’s forerunner in 2006, his enthusiastic leadership style and vision, coupled with a talented and committed executive team, has seen the group grow from 41 properties to 114 and rising. Obviously ‘knowing what matters’ is a powerful ‘mantra’ driving not only transformation, but also advancement and reward. For more information, visit www.mantragroup.com.au