Chow brothers John, left,and Michael have an estimated value of 400m. Photo / Dean Purcell
Chow brothers John, left,and Michael have an estimated value of 400m. Photo / Dean Purcell
They have ruffled feathers on the way to making an estimated $400m. Now Michael and John Chow are launching the first 5-star hotel in Rotorua. The publicity shy brothers talk to Corazon Miller.
In 1999 the Chow brothers found themselves asset-rich but pocket poor and laden with a hefty mortgage.
The proud owners of a $1.2 million building in the centre of Wellington had pinned their hopes of success on fried chicken, setting up the Chicken Palace on the old bank's ground floor.
Six months later it folded. Wellingtonians, it seemed, did not have a taste for the crispy morsels.
Other plans to transform it into a multi-level restaurant facility and a hotel also fell through, leaving the ambitious businessmen some $100,000 out of pocket.
As the pair stared failure down the barrel, John and Michael's parents came to the rescue. Their Hutt Valley home was sold to give the brothers capital to feed their teetering business. The first floor of their property in Courtenay Place became their temporary home.
John says it was one of the worst times in his life. "I was reluctant to face the real world. After I finished work I was hiding in my room and Michael at the time was standing up and looking after everything," says the 46-year-old. Everything was on his shoulders." The pair changed tack and - after an off the cuff suggestion - opened the Mermaid strip club. Two years after facing bankruptcy their fortunes changed rapidly.
Since then, the trajectory has been in one direction - and in the past two years the property magnates say they have doubled their assets, year-on-year to an estimated $400m. It's a difficult claim to validate. The brothers agree to a rare interview with the Herald on Sunday but are at times evasive and at other times vague on detail.
Part of their business is listed but not all. This means they can run much of their company answering only to each other and their lenders. That is how they like it.
The Chow brothers are reluctant to discuss their sex industry beginnings. They say the adult entertainment side of their business accounts for only 10 to 15 per cent of their annual revenue. But the keystone in the foundation of their empire can't be ignored completely.
In the brothers' Auckland waterfront offices, Michael says getting into that business was never the plan. A prospective tenant came through the building and suggested the idea and a seed was planted that eventually grew into a pillar for their business.
Michael, 41, describes it as a gateway. "It allowed us to get into the property sector; then we got into other businesses."
In 2003, two years after they opened their first strip club, New Zealand decriminalised sex work with its passing of the much-debated Prostitution Reform Act.
It paved the way for the brothers to delve further into the sex industry to establish other strip clubs and brothels in Wellington and Auckland.
The move rapidly earned them vociferous opponents. There was public opposition to plans, which later fell through, to open a "super-brothel" in Auckland, then there was the "turf-war" with a competing brothel owner.
In 2014 the brothers faced off with then owner of Calendar Girls Jacqui Le Prou in court after she opposed their application for a liquor licence and raised allegations they allowed patrons to get excessively drunk.
The Chows won - and they've become used to the feeling. Today, they insist, the strip clubs and brothels are well managed. They say they are in regular contact with the Prostitutes Collective - an organisation that seeks to support the rights, health and well-being of all sex workers.
The collective declined to comment on the Chows but said "almost without exception" all operators in the Wellington area were engaged and willing to address any issues. "We accept that it's not everyone's cup of tea," says John. "But if there is no demand then we can't run our business."
In the New Zealand-Chinese community the success of their business has met some opposition. Their "rags to riches" story was shared at a conference celebrating Chinese in New Zealand - Going Bananas - in 2015, but some boycotted the event and others walked out.
The rags before the riches was the early years in New Zealand where the brothers' parents came in search of a "better life and a good education for the children".
They turned their backs on a successful recycling business in Hong Kong to open Tong Shan Takeaway on Courtenay Place in Wellington.
"It was tough for them not having English as a first language," says Michael. "But I think I can speak for my brothers and sisters when I say that they did the best thing bringing the family here to New Zealand."
John was 13 and Michael 8. They struggled to fit in, which only cemented their shared ambitions.
Demolition crews pulled down the Palace Hotel on Victoria Street, opposite Sky City, after large cracks appeared on the building. Photo / Dean Purcell
Michael began working for his parents and had his first taste of success when he earned enough to buy a much-coveted for BMW.
"It was my pride and joy and most of all it was brand new. I had worked very hard in the takeaway, saving every cent to be able to hand over cash for it."
The brothers took over the family business and set about rebranding as a 24-hour operation, which doubled in size under their management and enabled them to buy their first property in 1999.
Over time they adapted and now call New Zealand home.
Michael lives in Wellington, with his wife and three girls, 2, 4 and 6. John is based in Auckland, with his wife and two teenage children, a 17-year-old boy and a 14-year-old girl.
"I remember at school and even university, people called us the Ching Chong Chinamen," says Michael. "I think over time, seeing us work hard and grow our business success, people don't say that any more. I think we've earned greater respect."
A year after the 2001 opening of Mermaids, the Chow brothers bought another Wellington building in Willis St.
Property records show it was bought in July for $1.9m and, after being converted into a hotel, was sold in 2007 for $7.9m.
In 2004, the brothers bought Top of Tory - a block of commercial land on Tory St. QV records show part of the section was bought for $8.8m and today has a CV of $13.5m.
Every year since, the property magnates have continued to build their empire, and made a large purchase in Auckland or Wellington almost every year.
They have undoubtedly benefited from the property boom but they also boast of having an eye for a bargain.
An eye for detail, on the other hand - or the lack of - is where the Chows have ruffled feathers. There have been allegations of damage to heritage buildings and, in a notorious Auckland case, a building that fell down.
In 2011, the 124-year-old Palace Hotel on Auckland's Victoria St was reduced to rubble after renovations caused large cracks in its walls and destabilised its structure.
A council-commissioned report later found the owners had failed to ensure it was being safely renovated - but Auckland Council ruled there was not enough evidence for a successful prosecution.
A year later, John and Michael narrowly escaped prosecution when they pulled down Wellington's historic Settlement cafe and eatery without applying for an archaeological authority to do so.
Ian Cassels, director of property developers The Wellington Company, says the brothers are known to not muck around.
"It's effective business, but might not gain them a lot of friends."
The next enterprise - John's pet project - is to establish Rotorua's first 5-star hotel. Renovations on the Pullman hotel are due to begin in July and will be managed by top hotel chain AccorHotels. It is due to open late 2018 or early 2019.
So far it has been well-received in a town that relies heavily on the tourist dollar. It is one of a number of projects the brothers are embarking on through a labyrinth of companies.
A number of businesses come under the Chow's management, including -private lending firm INNO Capital, and recent acquisitions within the last two years: Stonewood Fire and Stonewood Homes.
They also own at least 18 properties; employ 220 direct staff and have 500 different subcontractors.
Getting the finer details of these properties from the brothers proves difficult. Repeated requests for clarification are often refused. The National Business Review put the total net worth of their businesses in 2016 at $150m - within the Rich List's top 100.
In 2013 they scraped in at the bottom of the list.
John and Michael, however, estimate their assets are in excess of $400m. And they are targeting a $1 billion portfolio by 2020.
Michael says his dream was always to be successful in business.
"You know kids often establish early on what they want to be, whether it's a vet, a school teacher, a rock star or maybe an accountant. I didn't have that as a child."
The brothers shared a business dream - despite inevitable rivalries getting in the way from time to time.
Both say the business wouldn't be as successful without the other. "We have different points of view, even after working together for 25 years," John says. But, he says, they are stronger together.
"Yeah, of course. Better working together, otherwise we wouldn't be here."
A growing portfolio
•10 properties in Wellington •4 properties in central Auckland •3 properties in Otahuhu •1 property in Rotorua •$100,000 debt after first failed venture in 1999 •$400m estimated value of assets today
