Checking Out

JAMES Smith is not a man who is usually short of things to say. Yet here he was, groping unsuccessfully for a word, his mouth opening and closing as he tried to find the requisite phrase; his open palm chopping back and forth as if he were trying withall of his faculties to ease the precise term from his mind.

'Traumatic? Well it is a little too heavy a word to describe things,' he said. 'Er ... how about sorrow?' came the suggestion. The Hong Kong Hilton's general manager had misheard.

'Sorry? Ah well, yes certainly I am very sorry this is happening. It would have been good if it could have carried on. When I go to the lobby since the renovation I feel very comfortable. You go to these new hotels and they are all nice and glitzy and everything but the Hilton ..., well it has got so much character. You just walk into the place and you think it is good. It is not just a physical thing, it's something that the staff exude too and it comes from them in so many different ways,' his non-stop loquacity once again restored to maximum.

The managers of internationally-known hotels are like the generals ancient Persian emperors despatched to run the satrapies of their far-flung empire. Both the managers and the generals are under the jurisdiction of a higher order, but in practice they are far enough removed from day-to-day control to make them absolute rulers of their domains.

Mr Smith's direction comes from Hilton International, but in the near-decade since he became general manager at the Hong Kong Hilton he has moulded the hotel into his own image, and in the process become the epitome of the highly-visible, autocratic, and larger-than-life hotel manager. Mr Smith, a former chairman of the Hong Kong Hotels Association, made the Hilton the official hotel for the Hong Kong Sevens, sent his chefs to cooking competitions around the world, introduced boxing smokers, the Hilton Playhouse and, of course, the annual week-long Scottish food promotion.

At the same time he revamped all facilities, climaxing with a $120 million refurbishment of the lobby. He smartened up the uniforms, introduced training programmes and managed to keep staff turnover down to the third lowest in the local industry, betteredonly by the Mandarin and the Kowloon Shangri-La, despite paying what he admitted are 'low to middle salaries'. Mr Smith also saw the hotel through the decade-long push upmarket, from a stop-over for tour parties to the infinitely more luxurious image.

History tells us that from time to time a Persian emperor would sweep through the satrapy of a general who was felt to have overreached himself and put him in his place. No one has accused Mr Smith of such overweening ambition, but nevertheless his power base appears to have been swiftly and surgically cut from under him.

It has been a month since the Hilton's owners, Hutchison Whampoa, announced that it had bought Hilton International's management contract with another 20 years to run, for US$125 million. After January 25, 1995, it will revert to Hutchison Whampoa's control. Hutchison's options are to run the hotel for themselves since chairman Li Ka-shing has established a hotels division, to convert it into a mixture of a hotel and an office, or, as most people expect, to tear the whole lot down and build an office block.

Mr Smith was phlegmatic. 'Things change. There is no place in the world where things change faster than they do in Hong Kong and that goes for what some people would call an institution as well. The problem we have is that the land the hotel sits on is simply so expensive that it's difficult to get a room rate that equals the cost. Room rates here are 30 to 50 per cent less than they would be in New York, London and other major cities.

Maybe we should have put up the room rates by that amount three or four years ago, but the demand was not there,' Mr Smith said, recalling the fallout from the Tiananmen Square massacre of June 1989 that slashed the occupancy rate by a third.

The Scotsman is remarkably unemotional when it comes to commerce. Like his compatriots, those hard-nosed Jardines and Keswicks who built their fortunes in Hong Kong during the last century, he fully understood the commercial rationale behind the buy-out. In a town where buildings are designed to last 10 years before they are replaced, Mr Smith was equally unsentimental about the fabric of the 27-floor hotel that once dominated Queen's Road but has long since been dwarfed by the building fabric around it. The decision to go ahead with the lavish $120 million refurbishment 'did not take stock of the costs of the real estate in Central'.

He made these brutally pragmatic comments in the immediate aftermath of the announcement. In a second interview three weeks later, Mr Smith admitted: 'I never anticipated that Hilton International would be bought out of its management contract; not at all.' There is a paradox in his position; Mr Smith has spent more than three decades as a Hilton International employee, advancing to the post of the Hong Kong Hilton's general manager and vice-president for Southeast Asia. He has been variously a hectoring martinet to his 1,100 staff, a fairground barker chasing custom for the hotel and, above all, a hotelier born into the trade who uses profitability as a measure of his personal success.

But after nearly a decade in charge of the Hilton, a building that is also his home, Mr Smith has clearly invested a good deal of emotion and sentiment in the operation, and especially in the people who work there. The businessman spoke first.

Touching his fingertips together as he sat in his office, Mr Smith admitted: 'Sometimes I think that I am a bit abrasive but I realise that and try to make amends for it. There are times when I think I am a little impatient, but my job is to achieve results. If I take longer to do something and get the same result, then that is fine. But if there is a time pressure, then I have to make more demands. It would be nice to have two years to do something. But I do not have that time - I have three months. If a room is not rented that night, you have already lost money.' Suddenly, the sentimental paternalist Smith hove into view. 'I have four bosses; Hilton International; the holding company (Smith never referred to Hutchison Whampoa by name, despite a score of references to them during the second interview); the clients and the employees. I want to make them all fairly happy and to make them think they are on a good team and one where they feel they belong; where they feel they have security because I think that is a major component in life,' he said, before proudly outlining how he had kept all of his section heads in his time at the hotel - other than those who had been transferred, emigrated, or had to retire from ill-health.

These are the same staff that most financial and business analysts are convinced will be looking for other jobs or early retirement by the end of this year). Hong Kong Hilton executives have been looking at how the Lee Gardens Hotel recycled or retired its staff after it closed down last year. 'We have to make provision for it and cover all the bases,' Mr Smith explained, insisting that he was still in the dark about Hutchison Whampoa's plans.

He is equally uncertain about his own future after next January. 'Right now I have no idea of what will happen to myself. Perhaps I will be transferred somewhere else, but that is some way down the line. It is up to the company but it is difficult to movesomewhere that would be as exciting as Hong Kong.' Mr Smith is a physically active man, his punishing work schedule full of meetings, telephone calls, overseas trips, the compiling of reports and simply walking through the hotel to ensure everything is to his satisfaction. He is 60 this year, although he did not mention the word 'retirement' in his conversation.

Unlike the weary-looking exterior of the Hong Kong Hilton, a testament to the paucity of architectural imagination in the 1960s, his fabric is showing no signs of age. But as the handover to Hutchison Whampoa looms closer, Mr Smith might be tempted to recall his assessment of his hotel and wonder if that spirit might apply to his career as a hotel manager. 'We have repaired the hull, but its lifespan has come to an end. You cannot go on repairing, you have to make a decision about what you are going to do.'