Hans Enderle: Chairman, City Lodge

Chris Barron talks to the foreigner who revolutionised the local hospitality industry

Hans Enderle is remarkably upbeat after a recent announcement that the hotel group he founded and chairs took a knock in headline earnings last year, and why not?

For 12 years the 67-year-old Swiss, whose City Lodge group revolutionised the local hospitality industry, has been living "in paradise" - a golf estate halfway up the Helderberg in Somerset West, in one of the most dramatic settings in the world. His most pressing appointments have been on the golf course.

"At the moment we are having a rough time," he concedes cheerfully, before once more tackling the futile task of bringing down his handicap.

"Never in living memory, or at least in my memory, has the downturn taken its toll like this time around. Occupancy in the whole hotel industry, including City Lodge, has dropped drastically from a year ago to now. And fast."

There have been other downturns, but in the previous one in the late '90s the pain was spread over three years. This time it was like going over a cliff.

Is he worried about the future of the industry? After all, he owns 10% of the City Lodge group (market cap around R2.5-billion) and if occupancy rates continue to tumble, or don't pick up soon, he could lose an awful lot of money.

If he is then he's a very convincing actor.

"The industry, I think, has a very, very rosy future ahead in South Africa," he says.

Enderle's career in hotels began in Switzerland when he was 15 and had to leave school to learn a trade, after failing the exams that would have led to high school and a more academic path.

"I wasn't clever enough. It's as simple as that."

He met a friend who was learning to be a chef and told his dad that this was what he wanted to do.

"Son," said his father, whose memories of the war years when there wasn't much food around were still vivid, "that's a very good idea. You'll never be hungry."

He trained and worked as a chef for five years and got a diploma at the hotel school in Lausanne.

One day in 1966 when he was 22 and working as a waiter (diploma or no diploma, if you want to rise in the industry in Switzerland you do it the hard way, from the bottom), he met someone whose French was so bad that Enderle couldn't help asking where he was from.

He was from South Africa and, "as South Africans do", he told him all about the place.

Enderle, who spoke French, German and Italian, wanted to improve his English, but couldn't get a work permit for England or a green card for the US. His new friend told him to come to South Africa. He was the personnel manager for Amalgamated Hotels in Joburg and he would give him a job.

He started as a receptionist at the Langham, which "tried to be a five-star hotel", earning R100 a month.

The purist from Lausanne found the local industry "terrible, really terrible", and soon went back to Switzerland.

In 1970 he got a call about a Holiday Inn chain that was being started. Would he come back and manage the one at Jan Smuts (as it then was) airport?

In 1977 he was made regional director of Holiday Inn and in 1983 chairman and MD.

Two years later Rennies, the owners, sold the company to the Southern Sun group. The understanding was that Enderle would continue as boss of Holiday Inn, but when the deal was signed the new owners told him he'd be number two. He wasn't having any of it.

"I think I am conductor material; I don't want to play first violin," he said.

If they sold him a hotel which Holiday Inn still had under construction they could get rid of him, he offered.

They quickly accepted, and he got the mines pension fund to pay the R6-million price tag and become a partner.

"It was a very simple deal," he remembers. "Most deals that are simple work."

"You can have 35% of the equity, we'll take 65%," he was told. "We'll provide all the money if you do all the work."

They gave him targets which he had to meet by certain dates. One of them was that he expand to 1000 rooms in seven years.

Thus the City Lodge group was born on August 1 1985. By the time it reaches its 25th anniversary on August 1 this year it will have grown from that half-built hotel in Bryanston to 50 hotels around the country.

Southern Sun made "a crucial mistake" when it let him go, he says.

"It never put a restraint on me," and never placed any limit on the number of hotels he could build, or how quickly he could build them.

In short, it underestimated him, and he became its stiffest competition.

Demand for hotel rooms had increased so much that rates had been pushed up beyond inflation. This was where he saw his gap. He offered rooms at 25 to 50% less than any equivalent hotel in the area.

He afforded it by creating a new concept - select service hotels, which cut out all unprofitable fripperies, such as restaurants, convention rooms and oversized lobbies.

For five days a week his target market was business people, and through "very careful research" - in other words, going around asking them what they needed himself - he gave them exactly what they wanted and not one iota more.

They wanted facilities in the room so that they could work in comfort - desk, phone, wall sockets, good lighting. That's what he gave them.

"Astonishingly", he found that they liked dining out, not at the hotel. So he scrapped the restaurant.

On weekends he attracted families and groups attending weddings and sports events with a range of specials, such as the "team scheme" and "spouse on the house".

His pioneering concept was "an instant success", and after the City Lodges came the Town and Road Lodges. He resisted the temptation to go more upmarket with each new range, and instead went more downmarket.

The rooms became smaller and baths were scrapped after his business customers told him they preferred a quick shower.

So what is the most important thing the great hotelier has learned about his industry?

"That cleanliness and quality of service are more important than luxuries.

"I never speak about profit. If you are a clean hotel and offer friendly service and everything works, the profit will come, people will come to you. Hence we are the hotel group with the highest occupancy in the land."

Enderle's lyricism about the future of the hotel industry is based on the "assumption" that the government can address crime, the breakdown of infrastructure, such as water treatment plants, and the degradation of the environment.

Certainly he himself has every intention of staying. His single-storey mansion was designed to accommodate his old age, he says, when a wheelchair rather than a golf cart might be his chief mode of transport.