Bending with the bamboo

By MARK STORY

Having turned 70 late last year, CDL Hotels' Singaporean managing director Tsang Jat Meng is ready to pack it in and go home if the board suddenly asks him to walk. But even though he's at an age when most Kiwi CEOs are 20 years past their use-by-dates, Tsang is delivering record profits for New Zealand's largest publicly listed hotel operator.

Comprising three businesses (CDL Hotels, Kingsgate International Corp & CDL Investments) CDL Hotels NZ is a subsidiary of London-listed hotel group Millennium & Copthorne Hotels. Its 28 hotels through New Zealand have 3576 rooms between them and employ around 2400 staff.

Best known under the names Millennium, Copthorne and Quality Hotels, CDL has had an absolute cracker of a year, breaking former profit records. Not surprisingly, the board is in no hurry to replace the dynamo it plucked out of retirement three years ago.

Tsang describes himself as the accidental businessman - his road to fortune wasn't something he foresaw in his tea leaves as a schoolboy during the Japanese occupation.

At 20, after nearly three years as a cadet inspector, he was preparing for a career with the police. But fearing that he'd get caught up in the wave of anti-Chinese sentiment that rankled Singapore during Communist-inspired workers' riots of the early 1950s, his school-teacher parents packed their only child off to London.

After marrying a Singaporean girl in Britain, he returned to pursue a career in engineering. An unexpected mid-life jump from a career with Shell to co-owning a stock-broking firm in Singapore - plus an unlikely series of chance encounters and impeccable connections through his first wife (a senior legal counsel) - eventually brought Tsang to New Zealand.

CDL's largest shareholder, powerful Singapore-based Hong Leong Group, bought a controlling stake in Tsang's stockbroking firm when he exited the business in 1989.

For 11 years he had a fairly mainstream semi-retirement, managing his own business investments and taking on a number of directorships, including with CDL. This, and Tsang's substantial shareholding in the hotel group, meant the Hong Leong Group saw Tsang as the ideal caretaker CEO in 2000.

Driven by self-confessed greed, together with the thrill of the business challenge and a fondness for New Zealand, he decided to take up the offer to resuscitate the three businesses comprising this poorly performing company.

A casualty of the Asian economic crisis, CDL was in bad shape when Tsang took the reins and its share price was around a third of the $0.66 it was worth 10 years ago.

The success Tsang is having since embarking on what was supposed to be a sixth-month stint with CDL in July 2000 has earned him nominations for CEO of the year. Under his stewardship, the company's net profit rose from $1.5 million in 2000 to $10.7 million in 2001 and a record $17.1 million last year.

What makes Tsang's success with CDL even more impressive is the fact its all been done by remote control. He doesn't actually live in New Zealand, never has and never plans to.

A treaty arrangement between New Zealand and Singapore allows him to put in lengthy stints at the Queen St head office (typically two months) without having to cop global taxation on other assets.

Playing turnaround CEO, says Tsang, fits his highly competitive streak and willingness to try new things. "Whether it's business or golf, I don't like to lose. I have a high regard for team players and a disdain for losers, and have paid-off a lot of deadwood since taking CDL's reins."

While a scorned former sales director once dubbed Tsang "God" he prefers to describes himself as ruthless, yet fair. He attributes much of the company's successful restructuring to an Asian-style sense of fairness he's brought to the business.

He says Kiwi firms could learn from the Asian art of mutual back-scratching. To that end, he expects major suppliers to reward that patronage by staying at his hotels. "If they don't play ball, I'll find suppliers that will," says Tsang.

Having implemented cost-efficiency measures for the group's hotel operations in Singapore, Tsang also proceeded to significantly strip unnecessary operating costs out of the local business.

Much of the company's 60 per cent profit improvement on last year is attributed to Tsang's decision to dispose of failing property services subsidiary, Knight Frank, plus New Zealand's tourism boom. International visitors accounted for 63 per cent of CDL's guests last year.

But in an attempt to staunch lost US and Japanese business following the September 11 slump in 2001, and the subsequent withdrawal of the last US carrier to New Zealand, United Airlines, Tsang boosted domestic marketing. "Building up the domestic base will provide a buffer for any fluctuations in international visitor flows," he says.

The decision to offer packages to corporate clients and invest in hotel upgrades seems to be working.

Ironically, Tsang's inevitable departure from CDL will coincide with the capital market final realisation that the huge share price discount ($0.21) to net tangible asset backing ($0.62 a share) is no longer warranted. Given CDL'S significantly stronger balance ($108 million less debt) shareholders may even see a dividend this year.

So is there life after CDL for Tsang? Between his personal business interests and the numerous directorships he holds worldwide, golf will just have to wait until he has more time to work on his handicap. Tsang hates to lose.



Tsang Jat Meng's CV:


* Born: Singapore

* Age: 70

* Education: Dip mech engineering Uni of London 1957, dip of organic chem Royal Melbourne Technical College 1963.

* Jobs: Engineer Shell 1959-1971, co-founder of Tsang & On Stockbrokers 1972 1989, deputy chairman Singapore Stock Exchange 1983-87, managing director CDL Hotels July 2000 to present

* Home life: Married, three children

* Interests: Tennis, golf, travel