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The Peak Interview: Race To The Top

Hotelier Ted Fang has built up one of the fastest-growing hotel businesses in China, but there’s no looking back for the entrepreneur who can’t seem to slow down.

TED FANG IS A MAN IN A HURRY. More to the point, he’s a businessman who is acutely aware that the time he has on this earth to achieve something of significance is finite.

This existential streak underpins almost everything the entrepreneur does, from his punishing work schedule to the improbably lofty goals he has set for the hotel business he and his two half brothers, Harry and David Tan, founded just over a decade ago.

It explains why their Beijing-based Frontier Group, which holds the master franchise for the American hotel chain Days Inn for Greater China, is the fastest-growing mid-tier hospitality chain on the mainland. From just one Days Inn property in 2004, the chain has grown to around 150 today.

Yet, this number is far from the 1,000 hotels that Fang wants to open over the next decade. It is not a target born of hubris but, rather, his belief in the power of the Chinese consumer and a hyper- accelerated timetable for success he has set for himself.

“I’ve always wanted to do exciting things, and you have only so much time in life. I could have picked anything to do in life, but I picked an area where I can grow as fast and as big as possible,” says the Beijing-based hotelier, 47, who oversees the strategic direction of the group as its president and, soon, its executive chairman. He describes his role in the company as the guy who invests and finds the money. Not surprisingly, he is also the “more ambitious and pushy one” among his brothers, he admits.

Fang’s need for speed was apparent early on in his career, when the pace of his first job at an oil-trading operations company failed to feed his already-burgeoning ambition. It was the ’90s, and for anyone who wanted to grow an enterprise in double quick time, there was only one way to do it: Enter technology.

He left oil trading to start his own software company but soon found it too difficult to attract the talent needed to expand it significantly. “In 2000, I went to Silicon Valley and met many very smart people, and realised we were no match for them. They had talent, a huge market, forward-looking investors with an appetite for risk, and a stock market that can let companies list even without profit. You need talent who want to work with you to create something massive and interesting,” he explains.

Fortunately, a bigger opportunity soon came knocking, one that would tick all the right boxes. In 2002, his brother Harry, who had spent over 25 years in the hospitality business in China – including a decade-long stint with Shangri-La Hotels and Resorts – asked if he would be interested in launching a three- to four-star chain of hotels on the mainland, a segment he felt was sorely underserved.

Together with a group of ex-Shangri-La employees, they launched Days Inn in China way before anyone was interested in the mid-tier segment, a move that allowed them to expand with little competition. But being ahead of your time can be a painful process and, for the first six years, Fang says the business “suffered like hell”.

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“We were nobody, apart from having people with experience. We had to do a lot of work going out there to talk to people, to get them to believe in our company and product,” he recalls.

They were eventually rewarded for their perseverance as the fast- growing Chinese economy and improving transport networks brought a wave of demand from an emerging middle class flush with cash. Waiting for them in cities across the mainland were scores of Days Inn properties offering them a level of comfort and service they had not previously experienced.

The brand is now the second-biggest player in its segment, and he thinks there is a “good chance” it will become the market leader in the coming years. Despite the group’s success, Fang has no desire to move into the more glamorous premium end of the market.

For him, it’s a simple case of mathematics. The industry’s growth – and his company’s profits – is to be found in the vast middle ground of Chinese travellers, rather than the crowded luxury market.

And that’s unlikely to change as the Chinese government cracks down on ostentatious spending by officials, even as it reorients its economy towards domestic consumption and away from exports. Essentially, this will lead to more spending overall, but with more of that going to affordable options, such as a Days Inn room.

“Because of the austerity measures, many government officials are not allowed to dine at five-star hotels and that plays into my hands. But the bigger story is that many middle-class Chinese have become affluent, and can afford to stay at a three- or four-star hotel,”
he says.

“I’m not concerned with any economic slowdown. My business is the Zara of the hotel business, we want things to be up-to-date, nice- looking and comfortable, but not expensive,” he adds.

The challenge going forward is to find enough talent to fill their expanding franchise. While there is no shortage of Chinese wanting to join the service sector in order to ride the consumption boom, many will need to be properly trained.

INDULGING A PASSION FOR DESIGN

While Fang has so far shunned the luxury end of the market, he is looking for something beyond the utility and convenience of a brand like Days Inn. He describes his next venture as a design-centric brand, yet one that is not typical of the design hotels that have sprouted across the globe in recent years.

Right now, he is looking to open a handful of these hotels in key cities in China, and the group is in the midst of negotiations to secure a location in Shanghai on the Bund.

This project is one that feeds his passion for interior design, one of the few indulgences he allows himself amid a work schedule of constant travel and meetings. For the new brand, Fang is looking for something contemporary and modern, something akin to a stripped- down W Hotel.

“I want something clean and functional but not Zen. I firmly believe that there is a huge market for a simplified W Hotel. A lot of the details at a W Hotel would increase the cost a great deal. I’m targeting guests who appreciate a nice-looking hotel but with more interesting room rates. I wouldn’t call it luxury or boutique,” he says.

The design of the rooms would also cater specifically to the Internet-savvy business traveller, with free Wi-Fi a given, and the placement of ports and power points configured to make “a tech- savvy guy feel at home”.

A FRENZIED LIFESTYLE

With so much to do, there is so little downtime for a man constantly on the move. Even a holiday abroad becomes a work trip, as friends talk shop every time they enter a hotel. Instead, his idea of unwinding involves flipping design and architectural magazines at bedtime.

Fang, who is single, describes himself as “super disorganised”, perhaps as a result of having too much on his plate. “I’m a complete right-brain person. I’m shocked that I can’t even organise simple things,” he says. To cope, he has a few assistants helping him sort out the jumble of details, schedules and to-do lists that make up his workweek.

Which is just as well for a person who shows no sign of letting up, until he hits the improbably high targets he has set himself amid a very tight deadline. Yet, that could well be the quality necessary to thrive in a market that moves and changes as quickly as that of China.

Nor is he confining his ambitions to hospitality. But, with so much more to do in that area, even the hardworking Fang cannot yet find the time to explore other ventures. Which might explain his rush; there is much more to accomplish in the time allotted to him. “There isn’t much time to accomplish what I want to accomplish. It’s hard for me to take my mind off work. To sit and not think about it is tough.”