Nordic Hotel Billionaire Returns to Scene of Biggest Failure
Billionaire Petter A. Stordalen, Scandinavia’s biggest hotel owner, says the one time in his career that he did everything wrong ended up being a lesson in how to protect his fortune.
The Norwegian national, who won a reputation for building his hotel empire at breakneck speed last decade, learned his lesson after rushing into the Danish market. He lost 800 million kroner ($133 million) from 2000 to 2011 following a property bust that forced him to sell all 12 hotels there. He has now returned to the scene, cherry picking two hotels in Copenhagen.
“Last time we did business in Denmark we did everything wrong,” Stordalen, 50, said in interview over breakfast at The Thief, his newest six-star hotel in Oslo. “I expanded too fast. This time we do it differently with brands that are better defined, stronger management and a plan to stay only in Copenhagen.”
The lessons are helping Stordalen build his empire, and his personal fortune, even as much bigger competitors including Starwood Hotels & Resorts Worldwide Inc. and InterContinental Hotels Group Plc (IHG) sell properties.
For the former triathlete, the trick is to make every hotel opening a lavish event that dazzles guests and steals newspaper headlines. In the past, that’s included arriving on a hotel roof by a bright blue helicopter. He’s even descended from a ceiling with a disco ball while playing drums for an opening in Gothenburg, Sweden. At a hotel opening outside Oslo, he set fire to a guitar for dramatic effect.
“He’s untraditional in the way he communicates,” said Torgeir Silseth, chief executive officer of Nordic Choice Hotels AS, which has 171 hotels in the Nordic and Baltic regions. He’s worked with Stordalen since he entered the hotel business in 1996. “He talks about his kids, his worries when he wakes up at 4 a.m. and his worst fears. He’s much more open and sharing, way beyond what is normal in business -- a bit eccentric.”
The approach has worked. Stordalen is now Norway’s ninth-richest man worth 10.2 billion kroner ($1.7 billion), according to an annual ranking by Norway’s Kapital magazine.
The native of Porsgrunn, a small town about 160 kilometers (100 miles) south of Oslo, runs his business through the Home Invest Group, a private company which includes Nordic Choice Hotels, a property business and an investment firm. Stordalen’s companies had sales of 6.2 billion kroner in 2012.
Stordalen started working at his father’s grocery store and then struck out on his own at the age of 12, selling strawberries in the local town square.
He became manager of a shopping center in Trondheim, northwest of Oslo, at the age of 24, before he finished college. Then in 1992, when a financial crisis in Norway pushed the shopping center operator Steen & Stroem ASA into bankruptcy, Stordalen rallied investors to save the business.
By selling off the individual stores and inventory, Stordalen said it took him and his two business partners 48 hours to transform a company with 45 million kroner in annual losses into a profitable enterprise.
In 1996, Stordalen was fired as chief executive officer of Steen & Stroem after falling out with fellow billionaire, Stein Erik Hagen, one of the company’s largest shareholders.
Stordalen sold his shares in Steen & Stroem to buy what was then called Choice Hotels, which had 40 hotels. During the first three years he bought one new hotel every other week, folding in on average 50 more employees with each purchase.
“It was a time of a lot of commotion,” Silseth said. “It was mostly frustrating because so much happened and there were so many changes but the system, structure and organization was always behind. Speed is his strongest asset and is what built the company, but it’s also what could be dangerous.”
Stordalen took Nordic Choice public in 1997, holding on to 40 percent to finance an expansion. By 2005, he was fed up with investors who couldn’t look beyond the next quarter’s bottom line and bought out the company for 462 million kroner.
Today, he doesn’t need help financing his business. “Cash flow is the most important thing,” Stordalen said.
Home Capital, the investment arm of Home Invest, has 1 billion kroner in bonds and shares. That, combined with returns in property business and his model of only borrowing up to 65 percent of the value on his properties, gives Stordalen the cash flow to expand his business.
Over the next five years, he wants to add 29 hotels to the Nordic Choice chain. Last year he returned to the shopping center business, buying Sektor Gruppen AS and its 14 malls in Norway with a partner for 7 billion kroner.
Stordalen’s next big thing is turning his entire empire into an environmentally friendly enterprise. He spent 20 million kroner on getting a green certificate on a recent hotel and his business is ranked the third most sustainable in Norway, according to the Sustainable Brand Index.
“I want to show that it’s possible to do things differently -- to be environmentally and socially responsible and still earn money,” he said. “Tax is the cost of civilization and there can be no business on a dead planet.”
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