From selling groceries in Santo Domingo to CapitaLand in Singapore, Miguel Ko has had a remarkable journey to the top
It was a love affair that started in 1979, and even though he left hospitality per se in 2012, after departing from Starwood, Miguel Ko always kept his ties with the industry. The recipient of the HICAP Lifetime Achievement Award 2021 speaks to Yeoh Siew Hoon about his journey that took him from Shantou (also known as Swatow) to Singapore, via Hong Kong, Santo Domingo and the US and his take on hospitality, technology, real estate and, of course, people.
Like every industry, hospitality has emerged into a shared economy and hotel companies need to open up their four walls to share with everyone – everything is now shared.
He may have lost his voice for about six months in 2019 when he was being treated for stage 3 cancer, but his voice still rings as true and clear as it did when I last interviewed him in 2004 when he was president Asia Pacific of Starwood.
Then, at the height of Starwood’s glorious days in the region, Ko told me, “I love Asia, I love Singapore, I love the hotel business.”
Seventeen years later and now chairman of CapitaLand and deputy chairman of CLA Real Estate Holdings (Ascendas-Singbridge) since April, Ko’s still living out his love for Asia, Singapore and his voice as a leader, hotelier and human remains true to him – if anything, it’s even more resolute and defined, given his personal battle with cancer.
“I feel like a new man, like I’ve been given a new life, I am very appreciative,” said Ko, who was born in Swatow, China and moved to Hong Kong with his parents when he was five years old.
He’s appreciative too of the honour of being bestowed the 2021 recipient of the HICAP Lifetime Achievement Award, which will be presented at the 32nd annual HICAP, scheduled to be held October 20-22, 2021 at the Fairmont Singapore & Swissotel The Stamford. “Hospitality is in my heart,” he says.
Even though he left Starwood in 2012 as chairman and president Asia Pacific for personal reasons – he went to Canada to spend time with his ailing father – Ko has always kept one foot in hospitality. He remained as non-executive chairman of Starwood for three more years and stayed involved in hotel REITs, through his time as group CEO of the former Ascendas-Singbridge until its combination with CapitaLand in 2019, and now as chairman of one of South-east Asia’s largest diversified real estate companies, of which lodging (The Ascott Limited) is a major business pillar.
I met him in his predecessor’s office in the corner of a very large building (CapitaLand’s headquarters of course) in downtown Singapore. You can tell that Ko is still getting used to the new office. “I get awfully lonely here,” he laughs. With Covid restrictions, there are not many people in the office anyway and he’s on the side of a floor with only four people at the best of times.
Ko, you see, is used to being with people. He loves people. He knows they are what’s gotten him through all the good and bad times, and to where he is today.
When his family left Swatow for Hong Kong, they also left all their wealth behind. “We lost everything,” said Ko. At 16, he was sent to Santo Domingo, capital of the Dominican Republic, to work with a distant relative at his provision store. “I lived in Santo Domingo, that’s how I got the name Miguel,” he laughs.
He saved enough to go to the US, finished high school and educated himself – he doesn’t talk about it but he holds a B.A. in economics from the University of Massachusetts and a Master of Business Administration from Suffolk University. He is also a Certified Public Accountant by the State Board of Accountancy in New Hampshire in the US.
It was accountancy which got him into hospitality and back to Asia. He was recruited to join the internal audit team of ITT Sheraton headquarters and from there, was offered a controllership of Sheraton Hong Kong in 1979. He rose up the ranks to become ITT Sheraton Asia Pacific president at 38 years old.
“I fell in love with hospitality,” he says of that time. But what gave him grounding was the “understanding of financial metrics”.
“That’s always helpful to make business decisions. In the hotel business, it is easy to fall in love with the bricks and mortar – beautiful design and luxurious amenities – but profit and loss orientation is important for hotel owners. You know that old saying, deliver six-star service and one-star profit?” Ko grins.
It was his ability to speak the hotel owner’s language that gave him the grounding to expand Starwood’s portfolio when he was recruited by chairman Barry Sternlicht to rejoin the company in 2000.
Between 1992 and 1999, Ko took a break from hospitality to run Pepsi-Cola International in the region. “I took a detour, it was a fun business, competing with Coca-cola was packed with adrenaline. I learnt a lot about marketing, branding and thinking very strategically and when you are in a number two position forever, you learn how to compete in adverse positions.”
But he missed hospitality and returned to Starwood, cognisant of the fact that Asia, in particular China, was at the start of an economic trajectory which would change global power in the world. “My first visit to China was in 1983. I believed in China, that it would lead in innovation and its growth has exceeded even my own expectations – and I was considered the outlier in those days. Now in most MNCs’ boardrooms, China is taken very seriously.”
In three years, Ko took Starwood on an exponential growth path, opening almost one hotel a week to become the leader in five-star hospitality in the region. But he’s proudest not of the number of the hotels but “the people we developed”.
Today, if you look at most of the hotel companies in the region, many of the key positions are occupied by former Starwood executives who left after the Marriott acquisition of 2016. That $13 billion deal grew Marriott but the necessary integration sucked the heart out of a well-oiled team.
“I am most proud of the culture and values that were engendered. Mostly, we had a lot of fun,” he says.
“I believed in China, that it would lead in innovation and its growth has exceeded even my own expectations – and I was considered the outlier in those days.” (Pictured: Raffles City Chongqing, China)
“Hospitality has emerged into a shared economy – can you think of one area that is not shared today?”
But as fond as he is of the good, old, fun days, he is looking forward because, even before Covid happened, things were already changing. “Like every industry, hospitality has emerged into a shared economy and hotel companies need to open up their four walls to share with everyone – everything is now shared. Rooms – distribution, F&B – delivery, guest comments – social media, revenue management – centralised externally. Can you think of one area that is not shared today?”
Ko’s love for hospitality and building people were important reasons that lured him back into a full-time job with Singapore’s Temasek Group to help it integrate its two groups, Ascendas and Singbridge. “The company was involved in industrial parks, business parks and the hospitality arm was important for me. We created a lot of value and four to five years later, the combined group with CapitaLand has S$135 billion of AUM (Assets Under Management).”
Now CapitaLand is in the midst of a major corporate restructuring that will see the asset management company split from property development. “We are privatising the property development to be 100% Temasek-owned and place the asset management business under a separate listed vehicle. It’s an asset-light, capital-efficient model. It’s not that different from hotel companies – like Starwood – the same playbook but in many other asset classes.”
In his time with Ascendas-Singbridge, Ko had to learn about other asset classes, beyond hospitality. “When I take on any new project, I look at three things – I need to contribute, I need to learn, I need to have fun. Ascendas-Singbridge ticked all three boxes.”
I love building teams, building people, building culture. I love being part of growth. There is nothing as boring as status quo.
Now taking on the new challenge of being chairman of CapitaLand, he says, “What I want to achieve is not individual but to work through people and teams. I love building teams, building people, building culture. I love being part of growth. There is nothing as boring as status quo.”
Well, Covid has certainly shaken status quo for every industry, not only in hospitality but across all real estate and asset classes.
“No one can say they were prepared to handle a pandemic like Covid,” says Ko. “Every executive learnt along the way. It’s a matter of understanding you are going to come out it of one day. Yes, it’s longer than SARS but you will come out of it, and so managing the long-term integrity of the business is very important.
“It shouldn’t be a slash and burn approach. You don’t panic, otherwise all the staff will panic, then you make short-term tactical adjustments with longer-term strategy – short-term decisions that are anchored in ensuring the business will be stronger coming out of Covid. This is why we took the advantage to restructure the company, we will come out of it stronger. We have a great team, great CEO, great people.”
He admits there were difficult moments when “we had to shut down malls, hotels, especially in France, and then business parks in India, when most people did not go to work”.
“But when you run a multinational across different parts of the world, you go through different stages, and you use the experience of one to help the other.”
In February 2021, CapitaLand Limited announced a net loss of S$1,574.3 million for FY 2020 against a profit of S$2,135.9 million in FY 2019. The net loss was mainly attributed to revaluation of investment properties, and impairment of projects and equity investments totalling S$2,498.1 million, which are non-cash in nature.
“Hospitality has emerged into a shared economy – can you think of one area that is not shared today?” (Pictured: lyf Sukhumvit 8, Thailand)
Hospitality, as an asset class, has a bright future – “I am positive about the demand side”
Going back to his comments about how the four walls of hospitality had been breached by the shared economy, he says, in the day of old, a strong hotel company required three things – strong brand, strong distribution and strong loyalty.
“Today, it’s gone beyond that. Now challenge is coming from everywhere. In accommodation, we have Airbnb, unique lifestyle hotels, hotels that are one of its kind within a destination. Everyone wants to maybe not eat your lunch but share your lunch. It’s a very different business now where hotels no longer have captive audiences, but you are sharing everything.”
In hospitality, there is also divergence taking place between the investor who wants to invest in hard assets (like REITs – real estate investment trusts) and asset-light management companies (brands such as Marriott).
Says Ko, “Some companies try to go between the two but that’s a tough spot. If you are asset-light, you need scale to earn the fees. If you have anchor assets, there’s the lower but steadier return – that’s where a REIT comes in. So where do you pivot? That decision is critical. It’s always been a tough balance, but it’s been crystallised during Covid – you can’t do both.”
He did not say it outright but it is clear he is referring to a fairly common model in Asia – owner-run management companies that try to do both – own assets as well as run their own management company which manages other people’s assets.
Having said that, he believes hospitality, as an asset class, will grow bigger and faster than other assets after Covid. “There is so much pent-up demand in leisure travel. People will travel a lot more, especially in emerging markets. And people are dying to gather at conferences again. I am positive about the demand side.”
Even with business travel, he sees pent-up demand in the initial period where people will travel to see staff and customers. “But once that stabilises, there will be more efficient travel. Business travel will be a slower growth sector.”
Technology will transform hospitality in “how we will deploy staff to serve you in the way you value. Check-in may not be of value anymore but in value-added services, staff will play a crucial role. I don’t think it will go to minimal staff. Maybe in two- or three-star, there will be a move towards having fewer staff but in the higher end, people still want to be pampered.”
“There will be a whole transition of retail to more offline-online experience stores.” (Pictured: Funan DigitaLife Mall, Singapore)
Retail, office space will change as offline-online blends further
Real estate is also not going away but the usage of space will be different. Using CapitaLand’s new Funan (DigitalLife) mall as an example, which is more lifestyle and experience than just retail, and also houses Ascott’s co-living brand, Lyf, Ko said the offline-online connection will become more and more blended – a place where e-commerce stores will have physical spaces to provide consumers with “touch and feel”.
“Transactions may not happen in the mall. People are still social animals, they still want to go to the Apple Store to touch, feel and then maybe buy online later. There will be a whole transition of retail to more offline-online experience stores.”
Interestingly, the biggest innovation in the retail space is happening in China and the offline-online explosion has accelerated in the last five years, led by consumers, says Ko.
In office spaces, while Covid has certainly upended the notion of working from the office, Ko says it was a trend that started much earlier where people saw offices as not just a place to work but a social space for collaboration. “It is not new and interestingly, real estate companies were more conservative in providing the workspace of the future.”
Not anymore clearly. CapitaLand has its Bridge+ product offering plug-and-play workspaces. “Office space will be different – fewer fixed offices, more open spaces, more flexible spaces. How much physical space a company takes will be determined by how much the employee enjoys going back so you have to make it worth their while to go back to the office.”
Personally, he likes to work in the office. “I find every opportunity to be in the office. Of course, I can do many things on Zoom and Teams, but I like to be around people.”
As for when he will travel again, he says, “I have many bookings. Many have lapsed, I am just waiting.”
And with that, he echoes all our voices.