Paddy, you started your real estate career in Ireland. Why did you move to London and then all over the world?
We always bought and developed properties in London, initially shops in Knightsbridge. Our first two hotels were in Dublin, where we now have The Clarence, The Dean, The Devlin and three more under construction, all managed by my son Patrick. We went to Argentina fifteen years ago, where we bought a stud farm in Pilar and a winery in Mendoza. In 2003 we bought the ancient Château La Coste vineyard in the South of France.
Is Château La Coste a very large vineyard?
We produce one of the only organic rosés, and at 700 acres are now the biggest organic farm in France. It has become something very special, with buildings by Tadao Ando and Renzo Piano. Frank Gehry has done a music pavilion, Richard Rogers is creating a gallery for exhibiting drawings. We have an amazing gallery for Louise Bourgeois, whose giant spider sculpture is in the lake. I like sculpture and space, and we have created a brand new 5 star hotel with 28 villas and 7 apartments in the forest, many with pools and courtyards. We have an Argentinian chef, Francis Mallmann, who I asked to come to France after tasting his unbelievable steak in Argentina.
You own and run Claridge’s, The Connaught and The Berkeley, three of the most prestigious 5 star hotels in London. The hotel group you bought also included The Savoy. What is the story?
We like hotel ownership and already ran hotels in Dublin, so there was hospitality in our blood when I was offered this project on a Wednesday in 2004. Five partners including myself closed the project on Friday of the same Friday week. We paid £750 million for the four hotels that I came to see that Saturday, but when I went to The Savoy I got a feeling it didn’t fit in with the other three hotels. There and then I decided to sell it, and after I understood that the under-bidder was Prince Alwaleed’s Kingdom Holdings I called him. He said to come down to his boat, which was moored off Cannes, the next Saturday. The Friday night I had dinner with my old friend Bono in Cap Ferrat, and when I told him I was trying to sell The Savoy Hotel to Prince Alwaleed, Bono said he would like to come with me. In the morning we drove to Monaco, flew by helicopter to Cannes, and went out to the Prince’s yacht. Instead of me trying to sell The Savoy to Prince Alwaleed, Bono sold it for me. He had stayed and recorded there and he knew more about it than I did, and he did this amazing sales job because he loved and knew the hotel. Within an hour we had a deal for £250 million. Afterwards Bono insisted that our driver should join the two of us in our champagne celebration, even though he had to get back fast to his house at Eze-sur-Mer to receive Robert de Niro and his family as guests. That’s the kind of person he is. And we had been castigated for spending too much at £750 million, but now had £250 million back and the three best hotels in the world for £500 million!
“We spend our money to improve the asset and to improve our guests’ experience.”
Paddy McKillen explains the works to visitors in Claridge’s basement.
Do different kinds of clients prefer Claridge’s, or The Connaught, or The Berkeley?
Claridge’s is heads of state and Hollywood, very glamorous with a big lobby. The Connaught is more private and discrete, very European. The Berkeley has North American customers who love shopping in Knightsbridge, a younger clientele.
Are Claridge’s, The Connaught and The Berkeley all equally expensive?
The Connaught is the most expensive. It is the most successful hotel in the world for occupancy, with 120 rooms, all different. The average room rate when it is full is £1,100 to £1,200.
Do these hotels compete with each other?
Each hotel manager is in competition with the others, and the managers vie with each other for business, but if one hotel is full they automatically send a guest over. Claridge’s is the mother ship and has 200 rooms, and eventually will go to 280.
When you bought these hotels what did you do first?
The private equity firms that we bought them from had not invested a penny in the hotels or their infrastructure, and we immediately closed The Connaught down for urgently needed repairs for nine months. We had to take the roof off, all we kept was its façade. We dug new basements for a new kitchen and ballroom and spa, and it was rebuilt. Now we have a beautiful restaurant run by Hélène Darroze, and two award winning bars that are 70% used by external guests, and we have just introduced the chef Jean-Georges. The Connaught is the place in London for power breakfasts, and next year we are reopening and recreating the famous Connaught Grill. We manage and own our hotels, which is unusual. Generally managers and owners have arguments, but we don’t have the same grief because we own the real estate. Even though the businesses are very different I understand both hospitality and property.
Are you also improving The Berkeley?
We are putting new terraces on forty of the rooms. We are also creating an as yet unnamed fourth hotel on a separate site near to The Berkeley at 33 Knightsbridge. It is designed by Lord Rogers and is his first hotel, a new contemporary hotel for London with a private members type style. We are trying to reinvent hospitality. For example, so that we can ‘cotton wool’ the overseas guests we will have a special arrivals channel at Heathrow, and a car service from the plane to their room. There will be no check in and no check out. I want our guests to be able to walk straight in and out, and not to have to check their bill in front of other guests. It will be the same price bracket as The Connaught, but we will be offering a lot for that.
You mentioned adding a lot more rooms at Claridge’s. Is there a secret major change happening?
Yes. Nobody knows what we are doing, but we are doubling the footprint of the hotel. We are going up an extra three floors and adding 80 rooms, and going down deeper than the current height of the hotel for new back of house facilities. Our main aim is to create more facilities, like the gym and the spa and the saunas, bakeries, laundries, new kitchens, pastry kitchens. We want to improve and replace the services, to create better products, to enlarge the offering to our guests. There has been no infrastructure investment at Claridge’s for 50 years. We are doing something that will last for the next 100 years.
How are you permitted to do this extraordinarily deep subterranean work at Claridge’s?
Unlike The Connaught, which is on a long lease from the Grosvenor Estate, and The Berkeley, where we own half the freehold with the Grosvenor Estate, we own the freehold of the site for Claridge’s, which goes back over 200 years, before the Dukedom of Westminster was created in 1874. Unlike most of Mayfair, which the Duke of Westminster owns, here his Grosvenor Estate can’t boss us around. We are one of the very few institutions which have their own land, which is very unique.
“We manage and own our hotels, which is unusual.”
Who are your clients?
50% of our clients are American. The rest are from the UK, Europe, South America, and the Middle East is 11%. Only a small percentage are Asians. The Chinese love luxury products, but not yet luxury accommodation. They usually stay in a hotel brand that they have in their home country, they follow brands they know like Sofitel or Hilton. They don’t know our Maybourne Hotel Group brand or Claridge’s.
Which of your three 5 star London hotels has the strongest brand?
Claridge’s by a long shot. More expensive than The Berkeley and less than The Connaught, the history and legacy of Claridge’s is special, and goes back generations, when amazing people stayed here. In the archives we have found hand-written letters from when Queen Victoria was visiting Empress Eugénie. Prime Minister Winston Churchill came to stay here just after the War, when he had lost the election and no longer had a home in London. The legacy of traditional service is amazing. Three of our doormen are here forty years. They know the guests, where their wives like to shop, and their kids’ names. We have twenty front-of-house staff who have been here over thirty years.
What do you think about clothing etiquette and dress codes nowadays?
I think it is scandalous for a hotel to have a dress code. It is all nonsense. I don’t care if our guests come in nude, as long as they don’t upset other guests. Our new guests are a much younger clientele. We have a big flow of customers from San Francisco, 29 years old tech people. We have billionaires and top models who come in with runners and jeans with holes in them. Who am I to be the arbiter of their taste? We cannot say to a guest that they are not dressed properly. Those days are gone, but our employees are still perfectly uniformed.
My two partners at the time did an illegal trade with the Barclay brothers. They didn’t respect the pre-emption rights and offer their shares to me, and the Barclays, who are aggressive investors, gambled on their illegal transaction. One morning the Barclay brothers arrived and said, “We own 64%. You are out of here.” We had an ugly court case for five years, during which the hotels were like a ship at sea without a rudder and suffered from two conflicting managements, but in 2015 the Barclay brothers gave up the fight and said, “We can’t get you. We are going to sell.” Throughout this the Qataris were always offering me assistance in the background. They loved the way I was defending the hotels, and when I got a deal agreed with the Barclay brothers I invited the Qataris in. They agreed to buy my shares at a premium to a certain level so I could clear all my debt, and I was still able to hold 36% on the upside. I got a different type of deal with the Qataris, and now I am the sole manager and boss.
What is the proposition of your hotel restaurants?
You can’t run a generic restaurant in a hotel anymore. It needs to generate its own aura and publicity through iconic chefs. Chefs are more famous than rock stars now, so to get a chef in your property has a certain attraction. That’s why we have Marcus Wareing at The Berkeley, and Jean-Georges and Hélène Darroze at The Connaught. Daniel Humm will be the new chef for Claridge’s.
Paddy at the base of the Claridge’s basement work shaft which is enabling the addition of five new storeys, each of 11,000 squre feet, beneath the renowned London hotel.
Mr and Mrs Tadao Ando and Paddy McKillen.
Tadao Ando’s water sculpture at The Connaught Hotel, London.
Paddy with the architect Michael Blair.
Paddy, his wife and daughter, with the French-American artist Louise Bourgeois, whose Crouching Spider is at La Coste.
“We are trying to reinvent hospitality.”
What are your plans?
Our main thrust is to develop the hotel brand, as we are doing in Knightsbridge, and we are looking at Paris, New York, LA, and Tokyo. We are building a hotel in Kyoto that Tadao Ando is designing. Small and cute, it will be finished in October 2019. In the Far East our main business is in Vietnam where we have been for 25 years and are doing a biotech campus, and hotels, and quarrying rock, and road building.
How do you manage to do all this?
With good people. I hire from within, and am very serious about giving our people an opportunity to progress. I have a very strong rule that we should look within our own staff to promote to a new position.
Is money your driver?
No, absolutely not. Challenge is important. Hospitality is my driver. In Japan recently I got a call at 3 a.m. from a guest who wanted to book their grandmother into afternoon tea at Claridge’s, and I love that. It doesn’t bother me taking those calls at all. It’s in my blood.
What is your main job?
Management. I am a simple innkeeper, but I am also a development manager of hotels. We are spending £500 million pounds on developing Claridge’s and the new hotel in Knightsbridge, but we are very prudent and we don’t waste a penny. We spend our money to improve the asset and to improve our guests’ experience. That is number one. When they leave we want them to say, “Wow! That was an amazing experience!” Upgrading helps that.
Will the business of luxury always exist?
I think so. Louis Vuitton LVMH just bought the Belmond luxury hotel group for $3.2 billion, so they believe in luxury and the hotel sector. There is a lot of competition, but we punch above our weight.
Claridge’s is now also famous for the Christmas tree that you give designers the opportunity to make?
I started it with John Galliano, and now every year we ask a different designer. One year Jony Ive, the chief designer of Apple, and Marc Newson asked if they could do it. The Berkeley Christmas tree this year is by Richard Rogers, and The Connaught is by Sir Michael Craig-Martin. This year at Claridge’s, Diane von Furstenberg’s amazing ‘The Tree of Love’ is one of the most popular ever.
London, December 2018
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Portrait of Paddy McKillen with Ai Weiwei.
Images courtesy and © Paddy McKillen.