Expanding one of B.C.'s largest family businesses is no holiday.
But over the past few years, Northland Properties, run by the Gaglardi family, has managed to take advantage of various opportunities to expand its hotel and restaurant empire in the half decade since the global financial crisis. The number of Sandman hotels has continued to grow, as has the number of Denny's, Moxie's and Chop Steakhouse locations across the country.
Over the past five years, while national economies have struggled by historical standards, the company has recorded double-digit percentage growth in a number of metrics. According to information provided for Business in Vancouver's Top 100 Private Companies list, its number of employees worldwide has jumped 64% to 12,500 this year from 7,600 in 2009. Some of that growth has been in B.C. with employee counts in the province rising 31% to nearly 6,000 from 4,550, ranking them 12th on BIV's list of the top 100 national and global companies operating in B.C.
Consolidated revenue for the company has grown 40% between 2008 and 2012 to $713 million from $509.3 million. And the company has remained profitable during that time.
Tom Gaglardi, president of Northland Properties, spoke with BIV about the company's growth and opportunities for further expansion outside of Canada.
Q: Where has the company's growth come from over the past few years?
A: We've just stayed focused on growing our core businesses, which are hotels and branded restaurants. All of those have grown pretty substantially over the last five years. We usually have four to six hotels under construction and acquire ones along the way.
We've just acquired two hotels in the last two months, a 224-suite property in Mississauga, Ontario, and a 151-room hotel at London's Gatwick Airport, which is our second U.K. asset.
Q: How long have you been in the U.K.?
A: About three years. We opened our first hotel in Newcastle, and then we acquired this hotel at Gatwick Airport. We are just about to acquire a third property in Aberdeen, Scotland, which, after renovations, will be a 186-suite property.
Q: Will these hotels be Sandman-branded?
A: It will either be Sandman or Sandman Signature, but the Gatwick property will be rebranded in January. The Aberdeen acquisition is really a redevelopment. It's a former hospital. But it's an extremely strong market in Aberdeen, so we're excited about the prospects of that.
Q: What led you to expand in the U.K.?
A: My brother wanted to go to school somewhere else, and he finished graduate school in the U.K. When he went to the U.K., he decided he wanted to stay. So, we did our first deal there, and we've done extremely well. As a company, we plan to do what we do in Canada in the U.K.
Q: Are there significant differences between markets?
A: Surprisingly not. I think that's one of the reasons why we became comfortable. Two of our top hotel executives are from the U.K. and grew up in the business there, so we have a lot of confidence because we have the experience internally. But it's remarkable to me how similar the systems are there.
Q: Are you concerned about the prospects for growth given Canada's slow economy and the U.K.'s economic troubles?
A: The Canadian economy is growing, but the U.K. economy isn't. So you've got to be very prudent and smart in the U.K. because I don't think anybody can be as bullish about the future of the U.K. as we are about Canada. Having said that, there are tremendous opportunities to acquire assets at well below replacement costs. There are some things going for us there. The business has been beaten up so badly it's been tough to get capital. When it's tough to get capital, the people who have it can create a lot of opportunity.
Q: Overall, how many projects are in the works now?
A: We're up to 47 hotels, including those in the U.K., with another four under construction, and we've got eight more sites that are going to be entering construction over the next 12 months.
Q: How has the Sutton Place acquisition in 2011 benefited your business?
A: It's been great for us because it's gotten us in the five-star space. It's been a strong business. If you look at the new supply worldwide [of hotel rooms], most of it has been in the three-star level and below. I think those people with premium hotels have done pretty well as there's less competition. It's been a good space for us. I think we've learned a lot, and the assets we've acquired are really great assets and perform really well. We've got plans to build a new Sutton Place in downtown Calgary; we're excited about that.
Q: What are your plans locally?
A: We are building a new hotel near the Abbotsford airport at Mount Lehman and the Trans-Canada highway. Half of it is up. But we've added quite a few in the Lower Mainland. We built a new Sandman Signature on the south side of the freeway in Langley. On the north side we have a Sandman, which was built back in the late '90s.
Q: Why do you have two hotels so close together in Langley around the 200th street exit?
A: We see the Langley-Abbotsford corridor as its own market. You have the airport in Abbotsford. It's close to industrial [businesses] right on the Trans-Canada, which is the lifeblood of that market. But you have a whole epicentre there that isn't reliant on Vancouver. The Golden Ears Bridge made 200th street and the Trans-Canada centre ice for the valley.
The Abbotsford airport is a growing engine. You've got the Tradex in Abbotsford. Langley, north of the Trans-Canada, has tremendous industrial. It's a strong market in its own right. It's a place that businesses want to come to be active. Industrial parks create great generators of hotel room [bookings]. It's really a key intersection and that's why we want to be there.
Q: So it's not really a tourist market that drives the new development there?
A: Weekends you've got tournaments and things, but it's not a high tourism area. You do generate tourism in the summer months with the Trans-Canada there. It's 'rubber tire tourism'. But there are different generators.
Q: Are all these new hotels supporting the restaurant side of the business?
A: We have four main brands that we're building, both stand-alone across Canada and in our hotels. They are managed out of our Calgary head office, but a typical Sandman now has 150 to 200 rooms, and we'll include one to three of our restaurants. In 2013 to the first quarter of 2014, we're opening 17 restaurants across Canada.
Q: What are the growth prospects for your company?
A: We're getting to the point where we are running out of opportunity in B.C. We own a lot of rooms in the Lower Mainland, and it's prudent to invest elsewhere in terms of geographic diversification. The next eight projects I referred to, none of them are in B.C. They are in the East; two are in the U.K. and one is in Texas. We're just acquiring our first piece of land in Texas. It'll be our first entrance into the U.S. market. Part of it stems from the fact that I spend time there now. It's a marvelous market, which is growing.
Q: How are the Dallas Stars doing financially?
A: We had a great off-season, and we've increased our season ticket base substantially. The team was in financial distress when we acquired it, and we're way ahead of our plan in terms of fixing it. So we are happy with the progress we've made in the short time we've owned the team. It helps to win on the ice. That's what we're watching for now. •
