Surinder Arora, Founder of the Arora Group

If you have ever missed a flight at Heathrow, there is a decent chance you slept in one of Surinder Arora’s hotels without knowing it. He owns twenty of them, more than 8,200 rooms, and the hotels are only part of it. He also owns offices, retail, golf courses, car parks and a construction business. He is one of the largest private real estate owners in the UK and one of the wealthiest men in the country. He came to Britain from India as a teenager with little education and no money, and what he built looks a bit different to most of the industry. The Arora Group has no investment committee and does not track IRR. When his bank asked for a three-to-five-year plan after the first hotel opened, his answer was “guys, I don’t have a three- or five-month plan, let alone a three- or five-year plan.” Twenty hotels later, there still isn’t one. “I have never seen myself as a strategist. I am an opportunist. If I see an opportunity, I will take it.”

One thing to keep in mind throughout. Surinder has raised very little outside money. There is no fund life pushing an exit and no LP providing their own suggestions. So much of who Surinder is as an investor and businessman is defined by his freedom from constraint. He alone has defined his destiny.

In the mid-1990s Surinder ran a 20-bedroom guest house on the A4, directly opposite the Heathrow headquarters of British Airways crew, and the crew who stayed with him kept saying the same thing. “We love New York and we hate Heathrow.” Why? “The hotel’s owned by BA. We get treated like royalty, good security, good service. At Heathrow we get put into different hotels every time.” Most landlords would have nodded sympathetically and gone back to changing the sheets. Surinder looked across the road at the land he happened to own. “If I build them a crew hotel, when they land, instead of being bussed around to other hotels around the airport, they can walk across. That’s how the journey started.”

He got planning permission against the odds, and then went back to British Airways before he built anything. “I convinced British Airways to sign a contract before I started building. They’ll buy my 300 bedrooms for five years, whether they use them or not.” Pre-letting is hardly novel, but it is the only reason a guest-house owner with £600,000 of bank debt got to build a hotel at all. “BA didn’t have confidence in me, neither did my wife, and even the bank was saying, are you mad? Construction can run over time, over budget.” His answer was simply, “that’s the challenge I’m going to take on.”

He owed the bank £600,000 at the time, and sitting on a consented site around 1997 he could have sold for £15 to £20 million and never worked another day. Even his bank manager said, “just sell up and go lie on the beach.” Instead he spent another £18 million building, and “by the time we opened it, before we started trading, it was valued north of 50.” When I asked what kept him off the beach, “I just love the challenge.”

He heard Heathrow was building a new terminal with a hotel attached, so he went to see the man who ran the property side and invited himself onto the tender. “Would you include me on that tender? And he said, what brand? I said, Arora. And he said, no thank you. We’re going to build a four-and-a-half-billion-pound terminal, and it’s going to be a five-star international brand.” Instead of arguing, he asked one more question before leaving the office. “If I bring a brand with me, would you put me on the tender list? Absolutely.”

So he rang every big hotel company for a franchise, and every one said no. They all wanted the site themselves, and none would hand a five-star flag to an owner they couldn’t control. He narrowed the field to the two brands with no Heathrow presence, Sofitel and Hyatt. Hyatt in Chicago had never heard of him. Sofitel’s UK boss turned him down flat. Surinder wrote to the chairman of Sofitel in Paris. “I wish, before saying no, someone would come and see my properties and see how we run them.”

Silence, for two and a half months. “Then I get a call saying, we’ve been sending mystery guests to your properties. We have never franchised to anyone before, but we really like the way you operate, and we’re going to give you a franchise.” He won the tender against the big boys. When I asked how he had even found the chairman’s contact details, “that’s easy, even before the internet. If you can’t do that, you’re in the wrong business.” This is a man who once addressed a letter to “the manager of hotel contracts” at BA and hand-delivered it. “I’m not shy of those things.” At no point in the story does a connection help him. Every approach was cold.

When I asked whether the group has an investment committee, he more or less gestured at the room. “You’re looking at it.” He wasn’t joking. An hour before I arrived, he had been reviewing an external technology investment with his son Sanjay, his CFO and two colleagues. Those five people were the deal team, and also the approval. The discussion started around £100,000. Surinder was ready to go to a million, and when told that leading the round would mean £5 to £10 million, that was fine with him too. “Between the five, the decision’s made in half an hour and we move on.”

It works because of the people around him, three managing directors across construction, property and hotels, a CFO of sixteen years, and now his son as chief executive. The former Home Office and Ministry of Justice building in Petty France, a quarter of a billion pounds, was done, in his words, “on my WhatsApp.” It exchanged in two days. “No survey, no searches, no debt, no planning, subject to nothing. That’s the reason you win the deal.” His entire risk assessment was one sentence. “I’ve got two and a half years of government income. My only risk is if the British government goes bust or doesn’t pay me my rent.”

Surinder prices deals in his head. His third hotel he worked out over lunch, in about twenty minutes.

His general manager then took two and a half months over the formal business plan, and on a project worth more than £10 million the two of them came out £10,000 apart. He has trusted his own arithmetic since the first hotel, when the bank made him commission a feasibility study from PKF and he told the MD the numbers were wrong. “What do you know about hotels?” came the reply. His numbers were right.

What he needs from a deal is simple.

Le Meridien shows the second test at work. He bought the hotel in 2006 with a car park attached, sitting in front of the terminal, and where the deal sheet said 180 parking spaces he saw room to build. He put rooms on top of the car park, wrapped more parking around the hotel, ended up with around 580 spaces and a 701-room Premier Inn above them, the biggest in the chain. The hotel’s yield was fine. The uplift is what made the deal.

The one thing he is rigid about is debt, and that started in 2008. “In those days, I didn’t fully understand the consequences. It was just, my properties, my assets, I’m borrowing from a bank. That’s it.” What he swears he will never do again is over-gear. Where a lender might offer him 70 or 75%, he takes far less, often under 50%, and the group as a whole sits in the 30s. “That’s a lovely position to be in. If the market dropped 50% tomorrow, we can still manage.”

2008 also rewired how he treats lenders. “We respect our lenders as our stakeholders, as our partners,” he said, “because when, pardon my language, the shit hits the fan, the lenders have their shareholders to report to. They need to know they’ll get their money back.” “I work as a farmer, not a hunter. I’m not looking for a quick kill.” A long relationship is worth far more to him than shopping a deal around “to get another 5 or 10 basis points.”

His founding line hasn’t changed in thirty years. “I always talk about treating staff like family and guests like royalty.” “They need to have the Arora DNA. You can only be family if you give me 100%. If you don’t give me 100%, I’m gone.”

He calls himself old-fashioned. “I don’t do remote working. I don’t do hybrid working. I come in every day, and I expect my team to come in every day.” “My HR would say, oh my God, it’s difficult to recruit. Before, you could recruit one in five. Now you recruit one in fifty. So be it. That’s just the way I am.” So he demands a great deal. What he gives back, by his account, is family. “If you look after people, they look after you.” The results are easy to check. A head of construction of 26 years. An HR head of 21. A head of IT past 20. A CFO of 16. When I asked for a mantra, “I love my people.”

The obvious question is what to copy, and the honest answer is that if your business model is predicated on external equity, you mostly can’t. The five-year hold, the 60 percent leverage, the committee, the IRR, none of these are mistakes. They are what other people’s money costs. Surinder’s rules only work because the money is his, and that is the real thing to take from him. He understood, or perhaps just felt, that the structure of your capital decides what kind of investor you are allowed to be, and he chose the structure that let him be this one.