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Exclusive: hotel tycoon Jerry Schwartz

Jerry Schwartz with wide Debbie and baby Dane

If you don’t know the name Dr Jerry Schwartz by now, then you certainly will by the end of this story. In a rare interview, Australia’s hotel tycoon reveals how he plans to restore Fairmont Resort in Leura to its former glory and how his Schwartz Foundation has raised over AUD$2 million for charity.

WORDS JAMES WILKINSON

The term tycoon is probably the most fitting title for the Australia’s leading private hotel investor, Dr Jerry Schwartz. Over the last decade, he has amassed a hotel empire in Australia of 2500 rooms across 10 properties and spanning as many brands.

He has bought properties both big and small and still retains his links to the way he started out – in pubs. In fact, he is as proud of the performance of Rydges World Square Sydney as he is of The Macquarie Boutique Hotel, just a few blocks down the street and less than a tenth of its size.

While he’s the investment tycoon, he’s by no means the traditional large-scale hotel owner. He’s hands-on and from the way he gets involved in purchasing at each (everything from beer to TVs), you could be forgiven for thinking that he owns one small boutique property.

Dr Schwartz is also immensely proud of his staff and at Awards nights across the three states and territories where his hotels are located – the Australian Capital Territory, New South Wales and Victoria – he is synonymous for being first one to get up and cheer when an award is won.

A family man (his wife Debbie gave birth to baby Dane in September 2010), Dr Schwartz is also a very giving person, with his Schwartz Foundation so far raising over AUD$2 million for charity, particularly Royal Far West and Stewart House (see breakout story).

His latest purchase, the Fairmont Resort in the New South Wales Blue Mountains town of Leura, could well prove to be his biggest challenge to date. Turning around a hotel with a ‘Fawlty Towers’ tag won’t be easy, but Dr Schwartz is committed to giving the iconic property the love that it needs to restore it to its former glory.

Just how will he be able to achieve that? HM sat down with him recently to find out.

Jerry, congratulations on the purchase of the Fairmont Resort in the Blue Mountains. How do you plan to bring the iconic property back to its former glory?
I think the important thing to remember is that while the previous management of the hotel may have been questionable, the actual resort wasn’t really the culprit. The views are just as stunning today as when Fairmont was at its peak. The grounds are beautiful, the ambience attractive and the environment in which it operates can hardly be better. Certainly, it had been allowed to run down, but already we have addressed many of those issues. Service was the key. There is a whole new management team with Geoff York as General Manager and Accor as the managers and you can see the difference already. Then we are spending many millions to upgrade all rooms, public areas and to add facilities for couples, families and groups. Already the outdoors swimming pool has been completely upgraded and refurbished. We are just in the process of finalising a new room concept for the resort that will be faithful to the original style while also meeting the needs of contemporary travelers. We have many other ideas, particularly to attract the conference and family markets, and given the early response we’ve had to the changes, I’m very positive about the future. There’s a clear market need for a vibrant Fairmont in the Blue Mountains because while there are many luxury guest houses and B&Bs, there are no resorts like the Fairmont that can cater for large groups and offer so many facilities for such a wide cross-section of guests, so this will really help attract visitors to the region — both from Australia and overseas.

It will be a challenge, but how long do you believe it will take to shrug off the ‘Fawlty Towers’ tag it has had in the past?
As I said before, I think that image was created more because of the service than the hotel itself, and I think we’ve rectified that already. We want Fairmont to be a complete part of the community, use all the experience and knowledge of local workers and reflect the Blue Mountains in every way. We have many of the people back who were working here when Fairmont was in its heyday. They are passionate, caring and you only have to look at the guest reviews to see that approach is making an impact. It is easy to lose a reputation, but hard to gain one, so it does take time. We need word of mouth to work well for us, and once we have conference groups coming back and experiencing what the hotel offers that will have a very quick multiplier effect. Once honeymooners and tourists see the new rooms, they will soon get out the message that not only does Fairmont have new owners and new managers, but also a new spirit and a whole new look.

You are turning the resort into an M Gallery property. Why did you choose the brand and Accor generally?
Fairmont Resort is very much an iconic hotel. We wanted the hotel to be able to express itself, live the Fairmont history and image, and MGallery gave us the opportunity to operate the hotel very individually, while still being able to tap into Accor’s vast and powerful distribution system. So the front end will all be about Fairmont, the back end will be Accor.

What were the main reasons behind the purchase of the Fairmont?
From a business point of view it has vast potential, and I’m always attracted to properties that have potential but need vigour and drive. Fairmont was highly successful in its prime and with the road from Sydney to the Blue Mountains being upgraded by the day, and with all the renovation plans underway, I can only see upside for the business. But in many ways, the purchase was for personal reasons. My wife, Debbie, and I had a baby son last year called Dane and his arrival really prompted us to buy the Fairmont as we saw it as the perfect place for him to grow up. The resort is so unique — I don’t know any other hotel 90 minutes’ drive from Sydney that has so much land, facilities and is so great for families. We’d like to make it even more family friendly and fun by reopening the kids’ club, offering childcare and buying a few kennels so families can take their pets. But we also want couples to come for a romantic break, so will open another restaurant that is a child-free zone.

You continue to amass a significant portfolio of some of Australia’s leading hotels. Can we take a few steps back Jerry and ask why you started purchasing hotels?
When my father was alive, he became interested in hotels, having had most of his portfolio as shopping centres.  I owned and operated pubs, in addition to my profession as a doctor. So I have always seen hotels as a pivotal part of the local community. They are about people, designed to function for people.  They require continual planning and work.  But like many things, you get back what you give.

You brand with a number of leading chains rather than just one – why do you spread the properties across so many?
Initially, this occurred because the new hotel purchase came with its operator.  I inherited different leading chains.  Then I saw the need to maintain this diversity.  It is important to have different marketing sources, as well as different basic standards: it keeps the operators honest, and gives me confidence to be more aggressive.

At the opening of The Sebel Surry Hills, you famously spoke about the decision to go with that brand. Tell us more about the conversation you had with (now former Mirvac Hotels and Resorts CEO) Andrew Turner about removing the “bank” name from the awning?
I must admit that I always had an aversion to the name ‘Citigate’, because it reminded me of a bank, rather than a hotel.  So it cost me many millions to upgrade the Citigate Sebel to a higher level Sebel.

You take a very hands-on approach to purchasing, particularly with technology and furniture. Why do you get so involved and not leave it to the purchasing or general managers?
There are several reasons for this. Firstly, apart from the frustration, it’s fun. Secondly, I feel that if I do it myself, I can get the best possible price. And thirdly, with technology constantly evolving, the only way to understand it is to actually be involved in the major decision making.

Which areas of Australia are the best to invest at present, or showing the most potential?
Obviously the higher population centres, or those areas where there is most tourism, or reason for inbound. On the other hand there is no part of Australia which will not evolve, and hotels are always at the forefront of evolution.

Would you consider investing in hotels in New Zealand, the South Pacific or Asia?
Sure. Except, I don’t like to travel too far, and if I am to have a hands-on participation with the hotel, then it cannot be too far from where I live, in beautiful Sydney.

Last but not least, if you could buy any hotel in the world, which one would it be?
I wouldn’t be able to afford it. Just like most people like to go to a hotel to have an experience that they couldn’t have at home, me too.

To read more, see the April 2011 issue of HM magazine.

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