By Brad Foster

Serial hotel buyer Dr Jerry Schwartz turned the tables on editor Brad Foster more than once during a one-hour interview recently, with Brad now vowing to grow his hair longer and think more seriously about his financial future.

I like being on time and it appears as if one of Australia’s wealthiest men, Dr Jerry Schwartz, does too. In fact, I prefer being a bit early than late which was why I arrived 10 minutes prior to my appointed slot at Rydges World Square to interview the man who runs Australia’s largest privately owned hotel group with 13 hotels and 3000 rooms to his name.

I enjoyed being dressed casually for this interview. Having seen photos of Dr Schwartz before, I knew he was definitely no suit and tie man.

After a pleasant greeting, Dr Schwartz, or Jerry, ordered me a latte and a cappuccino for himself and offered me something to eat. I declined. He grabbed a tiny croissant to nibble on and then punched in numbers on the locked door that would take us into the Rydges World Square bar that was at that time closed to the general public.

The door stayed locked.

A helpful soul nearby put in the correct numbers and we were in. It made me wonder afterwards whether, with so many locks and keys and numbers in his possession – and his head – it was another reason why Jerry was trying to fast-track keyless entry technology for his hotel guests. But more on that later.

With everything he does, Jerry Schwartz must be a busy man but he really doesn’t appear to be. He’s a husband and dad for one, with three children under eight. In early 2018 he and his wife purchased the six bedroom Vaucluse house Phoenix Estate for a reported $67 million. In 2017 he opened the $500 million Sofitel Darling Harbour, in August 2018 he added the Four Points by Sheraton at Sydney’s Central Park to his portfolio, and in the same month he was the special guest for the 30th anniversary of the Fairmont Resort Blue Mountains, another of his hotels.

Two days each week he works in his plastic surgery practice.

In-between, if there is any in-between, he is buying new things, most recently Blue Sky Airlines which will fly charter services between Sydney, Newcastle and the Hunter Valley, is considering buying new hotels, dealing with banks, assisting charities where possible, building wind farms, and examining better ways to be more environmentally proactive.

And, it appears at least, that this sixty-something gentleman does it all with an air of casualness that really is quite soothing. Perhaps I should take up cycling or marathons like Jerry does. (He reportedly rides his bike from Vaucluse to his surgery in Matraville at least once a week).

The area general manager for Central Sydney & Inner City at Rydges World Square, Simon Cox, walks past us as we talk and stops to say a quick hello when Jerry sees him. Jerry asks him if he has had any luck with the ticketing solution to a wine tasting event he is putting on in the Hunter Valley. Simon says he had a meeting with someone and is making progress.

Growing the business that his parents began, Jerry’s Schwartz’s hotel ownership has gone beyond the Sydney city limits, stretching to the Hunter Valley, Newcastle, Canberra and Melbourne. He is all too aware, in the case of the Hunter for example, that it’s not just the bricks and mortar that is needed to attract people to a destination, hence his interest in the wine event.

His father, Bela, was a dentist who, along with his wife Eve, a dental assistant, created a substantial property business after emigrating from Hungary at the end of WWII.

“My father was into apartments and then shopping centres and then hotels. He died in 2000 at which time I think he had three hotels, and then my mother and I took over the business and got another two hotels,” Jerry explains.

“She died five years later. The second hotel with her was the Mercure Sydney. After 2005 I’ve just kept acquiring hotels. It’s been pretty organic.”

The growth in hotel ownership has seen Jerry reduce the time he spends in surgery. And that’s just  fine with him.

“It’s really good doing this [cosmetic surgery] part time because you don’t burn out. You do it full time and you can burn out. To make ends meet in medicine you have to work really hard. Especially in cosmetic surgery. I have an operating theatre and nursing staff, medical insurance and all that, so you have to work really hard just to cover your overheads.”

He chooses to have different hotel management companies running the hotels he owns which probably means more work in the long run, but as Jerry explains, it’s good for all involved.

“Of my 13 hotels, seven of them are with Accor, four of them are Rydges, one is IHG, and one is now Marriott.

“The more hotels you have the more you understand and you can’t get bullshitted. A lot of the hotels I have inherited the management company that was in place at the time. When the management agreement expires you have a beauty parade and you sit down with everybody and decide on what is the best fit for the hotel that you have.

“They’re all different and they’re all obviously good. Certainly if I have seven hotels with Accor then that shows that I have a fantastic relationship with them.”

I ask him if he has ever had any desire to create his own group?

“It has been mentioned. I don’t think it would work. The biggest leverage you get from a hotel group is distribution, and international distribution, and certainly, if you put your efforts into that you might get good at it but you’ve got the experts there already anyway. I put my efforts into other areas – acquiring hotels and improving on them and pushing the management companies.

“It’s really difficult as a small player to get decent distribution.”

Jerry flips the interview around and asks me how long I’ve been working in the industry. I tell him that it’s been more than 20 years now and that I enjoy it because people – the ones who stay longer than a heartbeat – are very passionate about what it is they do.

And he agrees.

“It’s a great industry.  There are very passionate people working in hospitality.”

I ask him why hotels? Why not apartments or shopping centres like his father started in?

“As I said my father started with apartments. And it was lucrative. And then he moved to shopping centres. He made his move into hotels because at that time hotels weren’t in vogue so you could buy them cheaper; you could buy them at a better rate.

“When he got into hotels they weren’t the flavour of the month. In fact, many hotels were struggling. When he was starting in hotels I invested in three pubs and, a bit like hotels at the time, pubs before poker machines were struggling. In two of those pubs I put accommodation and I found that there was so much more scope. That was my first involvement with the industry and all the different facets of the industry and I enjoyed it.”

What Jerry quickly discovered was that if you focused on one type of asset – “if you put all your involvement and focus into one area” – that it works far better.

When he decided to build the Sofitel Sydney Darling Harbour to provide direct accommodation access to the brand spanking new ICC Sydney, some in the business thought it was a risky move. It was, after all, the first five-star new build hotel in the CBD since the 2000 Sydney Olympics.

Built at a cost of half a billion dollars, his decision appears to have paid off, with Jerry’s purchasing not letting up since.

His Sydney properties have meant that he has been able to grow into regional areas including the Hunter and Newcastle and focus on some of his pet areas of interest including technology and sustainability.

On the technology front he has been working hard to introduce keyless door entry for guests – for the past two years, in fact. And there have been frustrations.

“My desire was to make Sofitel Sydney keyless when it opened. As it has turned out, another of my hotels, the Crowne Plaza Hunter Valley, is the first hotel in Australia to have keyless entry in its villas.

“Now I’m just getting the Sofitel one working but it’s taken over a year to have Accor validate the safety of the system. They all say – the management companies – that they are coming up with a system, but other than Marriott, which is really Starwood, nothing’s really happening.

“At the moment you have an RFID keycard which you hold against the door and it opens. But you can actually download this keycard onto your phone. What’s even better is that you can pre-check-in  before you even arrive at the hotel. It’ll then give you a key and tell you what room you’re in and you don’t even have to go to the reception desk.”

Once keyless entry is in place and functioning, Jerry sees that there will be a major shift within hotels.

“The role of reception will be minimised. You’ll always have people who love the face to face interaction and who want to go to reception to book in. But it will become so much more like it is at the airport where you pre-check-in, check-in your own bags, and then go to the terminal and get straight on the plane.

“When keyless entry is there the foyer will then have a different function. It will be more of a meeting place.”

And speaking of meetings, does Jerry value the meetings industry and will meetings continue?

“Well they have to,” he says.

“You think in this age of technology where it’s so easy to communicate that it would have minimised the need to hold meetings but it’s not the case. We have so much information that we have to share that information.

“And, if we do want or need to have a meeting then it’s nice to have that meeting in a nice venue and it’s nice to have other drawcards. That’s why I push the Blue Mountains and the Hunter particularly. The Fairmont is one-and-a-half hours from Sydney so if you’re going to have a meeting then why not have it up there in such beautiful surroundings?”

Meetings and events is also imperative to the success of his hotels.

“Take the Fairmont in the Blue Mountains as an example. Weekends and holidays you get your leisure. During the week, when school’s on, if you didn’t have meetings and conferencing the hotel would be empty. It’s absolutely vital.

“Same for the Crowne Plaza Hunter Valley. That’s why I built an exhibition centre there to try and attract the MICE business and that’s been really successful. Outside the leisure period, it is busy with meetings and events.

“Even in the hotel industry we need to have meetings.”

What else is changing in hotels?

Ten years or so ago it appeared as if hotel restaurants were on the way out, at least in Australia. That appears to have changed, with many hoteliers hiring creative chefs to manage their kitchens.

Jerry related this question of mine to the early days of when poker machines went into pubs and pubs were making a lot of money from them.

“That’s flattened off a bit so the pubs are adding new things like boutique dining. And it’s much the same in the hotel industry. They always thought, particularly the larger international brands, that they needed to have a food and beverage area but they usually worked at a loss. They had to be boutique and quiet and high standard and all of that, but they were always too expensive. Generally, the guests wanted to go and explore the city so they didn’t go to the hotel restaurant. It was for the busy businessmen who wanted a quick dinner.

“You have all these hotel dining areas now that tend to be more of a destination than simply a place to eat. For example, where we are now, this is called The Cidery. We used to have a cidery plant downstairs where we made our own cider. This is the bricks and mortar pub that goes with the cidery. This is the destination pub that goes with the cidery. And it gets really busy.

“I also have a brewery in the Hunter. That originated from Sydney where I had a microbrewery in one of my pubs and we outgrew it so we moved it to the Hunter.

“The other Rydges in Albion Street, just about two or three months ago we put a brewery in there as a bricks and mortar destination for our brewery. Hotels want to utilise their food and beverage areas that attracts people and we’re doing that.”

Another stronger focus in hotels is that of environmental matters and, of course, Jerry’s group is taking a lead in that as well.

“It is true that if you do the right things you can save money but you have to spend a lot of money before you start making savings,” he explains.

“I actually employ an environmental officer and his role is to get involved in these projects. And we’re doing a lot of exciting projects. One of them is building the largest private solar farm in the southern hemisphere which will have 15,000 solar panels on 10 acres in the Hunter Valley. That’s a $10 million project. What we’ll be doing is making energy to put back into the grid, the local grid in Cessnock. I’ve got solar panels pretty much wherever I can [in my hotels].

“We’ve got careful management systems that regulate all the energy we use in the hotels; we have water detection systems to see if you’re losing water, automatic lights that switch off the power… many things.”

Better environmental management, ensuring ongoing profitability and his charitable endeavours – “most of my money I put back into the hotels to improve the hotels, a bit of money goes into my house and my own personal desires, and some of what’s left over I give to charities” – I asked Jerry what his motivations are.

“Making the most of life while we’re here. I’m in a lucky position where I can do bigger and better things and I enjoy doing bigger and better things. I don’t like getting bored.

“I like to spend a lot of time with my three young kids and my wife. [I] play with them, swim with them, play in the pool, go boating – we’re really lucky we live by the water.”

No mention of his $67 million house in Vaucluse here. Just that he lives by the water.

Another pet project he’s enjoying is the construction of an Aboriginal cultural centre on 40 acres in the Hunter.

“My wife keeps telling me that’s enough. With the tax system we have you have to keep getting more projects which cost you money so you can minimise your tax rather than giving money straight to the ATO.

“There’s no real end point. It’s not to make more money. I don’t have shareholders and I don’t have huge overheads other than my mortgages. I have to do something with the money that I do make so I put it back into my hotels to make the product better.”

Is it getting harder to borrow money? I ask.

“So hard. You have to plan for over a year to make it happen. I wonder how people do it. I’m lucky because I have a good history and background but if someone comes along from scratch and wants to borrow money. It must be very hard.”

Here’s my chance. Some financial advice from a mega-wealthy individual.

“I’m not real good with money,” I say.

“Yes but you can be,” he says.

I relate how I was doing freelance work for a time and ended up paying the tax department back the more I seemed to work.

“You have to work as a contractor and have expenses.  The more expenses you have the less tax you pay. The encouragement with negative gearing is that if you do have some spare money you can buy something which initially loses money which then goes against the tax that you have to pay. The problem is though once your investment starts making money you will have to pay tax unless you buy something else and you start over again utilising the profits that you’re making.”

All very interesting. We’re not too dissimilar after all. Like me he has a home loan. And a few others by the sounds of it.

Our time is up although Jerry appears as if he’d stay all day if it was necessary.

I think I have enough, I tell him. I have more questions but only a limited number of pages to write this up. We’re doing a few longer form interviews in our magazine I tell him but it still means I can’t fit everything in that I’d like.

He asks whether people read longer form interviews anymore.

I tell him I hope so.

The Schwartz Family Company has properties including:

  • Rydges World Square
  • Rydges Central Sydney
  • Hotel Ibis World Square
  • Hotel Ibis King Street Wharf
  • Mercure Hotel Canberra
  • Mercure Hotel Sydney
  • Victoria Hotel Melbourne
  • Rydges Newcastle
  • Crowne Plaza Hunter Valley
  • Novotel Newcastle
  • Sofitel Sydney Darling Harbour
  • Four Points by Sheraton at Sydney Central Park
  • Fairmont Resort Blue Mountains, M Gallery By Sofitel

The company also owns the Lovedale Brewery in the Hunter Valley and the Hunter Valley Conference & Events Centre, Sydney Brewery, Blue Sky Airlines which partners with Sydney Seaplanes, and a medical centre.

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