When red-light means go

THE prospect of a real estate investment in Singapore's red-light district would make most investors hesitate for fear that a seedy surrounding would depress prices. But for entrepreneurial hotelier Choo Chong Ngen, only a couple of things mattered: opportunity and cash flow.

Mr Choo is today one of Singapore's wealthiest businessmen, best known for the Hotel 81 chain whose iconic blue and white neon sign is dotted across the city. Last year, his fortune was estimated by Forbes at about US$2 billion, earning him a spot among Singapore's top 20 richest individuals.

His own newly established holding company - Worldwide Hotels - estimates his entire portfolio of hotels and investment properties to be worth a stunning S$3 billion. The portfolio includes six hotel brands, 38 hotels and over 6,500 rooms.

However, few would know that his rags-to-riches journey started with a capital of S$50 from his mother when he was just a teenager - supplemented by a loan of another S$6 - to sell textiles at a market.

Now 63, his is a journey distinguished by determination, tenacity and an enviable equanimity that has sustained him through numerous crises.

Says Carolyn Choo, Mr Choo's daughter and the group's managing director: "We set up Worldwide Hotels to hold our group of hotels and brands this year. Our vision is to be the world's leading Singapore brand in the tourist-class hotel sector. We're very focused on the economy and mid-tier sector, and we've acquired four hotels overseas."

The first overseas foray was in Thailand, where Mr Choo entered into a management contract with the Travelodge group in Pattaya and Bangkok last year.

The target is to acquire 20 hotels over the next five years. This is expected to need a capital investment of over S$500 million, roughly half of which is expected to be bank financed.

All this was unimaginable in Mr Choo's youth, when he had to leave school in his teens to help the family make ends meet.

Speaking Chinese partly through an interpreter and partly in halting English, he says: "I started buying land 30 years ago, and I kept buying until now. If I didn't buy then, I wouldn't be able to buy now because the price is very high. But 30 years ago, it was very cheap. I was very lucky.

"When the market is bad, land becomes cheaper. But hotels still make money, so I keep investing."

When he was 15 he started to sell textiles. He began to work with a neighbour who paid him S$30 a month, but he didn't think this was sustainable.

His mother gave him S$50 to buy cloth to start selling on his own in the pasar, or market. But even this was insufficient, and a friend lent him S$6 more.

BY THE time he was 21, he had saved enough to buy a shophouse unit, with the help of a bank loan of 50 per cent. The loan was to be repaid over 10 years. By the time he was in his 30s, he had invested in more than 30 shop units, all generating rent.

"When I bought the first shop, every month I collected S$1,000 to S$2,000. It was very good. I kept at it, when I had money, I bought more (units)," he says.

From shophouse units he expanded into apartments. His first foray into development was a site in Geylang where the land cost S$1.5 million. He built 20 apartment units on the land, which were launched in 1992. He eventually built a total of more than 100 apartments units on four plots of land in Geylang.

From there, it was a short hop to a hotel development on land in Geylang that he already owned. He obtained government approval for a hotel in 1995. He was unfazed by Geylang's sleazy, seedy reputation. After all, by that time he had managed to sell more than 100 apartment units in the area. "There was good food, a lot of traffic, a lot of people," he says.

Ms Choo says: "It was all opportunity-based. (The development) would only do well if it had a niche and an opportunity. If everyone went into Geylang at that time, (he) wouldn't have been able to invest at a low price."

Ms Choo, 40, is the eldest in a family of four children. She completed a Bachelor of Business degree from the Nanyang Technological University in 1999, and also obtained a Master of Professional Accounting degree from the Singapore Management University in 2002.

She became a company director for the family-owned business around 1998 at the age of 21, although she started her career in a bank. She joined the business full-time in 2002.

EVEN without a formal education, Mr Choo proved to have not just a strategic, long-term vision, but also an eye for efficiency and design. He worked with architects on the construction of the hotels, for instance. Once they were up and running, he would visit the hotels - in the early years at all hours of the day and night, even well past midnight.

He himself designed and improved on devices such as luggage and laundry trolleys to beef up efficiency. He had them custom-made, even though customisation was actually more costly than ordering them off-the-shelf.

Mornings are spent in meetings at the head office. In the afternoons he visits his hotels - "no more at midnight", Ms Choo laughs. "His friends go shopping; he visits hotels. He thinks it's more interesting ... Satisfaction comes when he sees a problem that he can immediately think of ways to address. He's very happy doing that," she says.

To be sure, the Worldwide Hotels group is grappling with challenges that face other establishments in the hospitality sector. Staffing, for one, is an uphill climb, and so is pricing in a sector where competition is stiff. The economy segment of hotels has fast become crowded with new entrants.

Ms Choo says: "The average hotel rate from a travel agent is around S$60 a night at Geylang. That hasn't changed much for 25 years. Labour costs have gone up a lot. The only way to survive is to pay attention. Think of better ways to run the business, and become more cost efficient. (Mr Choo) is very focused on improvements."

THERE is an easy rapport between father and daughter. Her financial education began early. "When I was 11 or 12, he would discuss with me how the house instalment is to be paid, the car instalment, utilities, tuition money to instil financial prudence."

Today, Ms Choo is clearly on top of things; on the day of the interview in February, an acquisition was being completed in Malaysia. Another was in the process of completion in Australia.

Mr Choo says he had no business mentor, but was fuelled by a passion for the hotel business. In Singapore or overseas, he would visit hotels, walking into nooks and crannies that others would blithely ignore. "I learn and look at other hotels. Look at their linen store. I walk into every corner, and see how I can change and improve on the design."

Ms Choo's mentor is clearly her father. "My dad shared all the reasons behind his strategic vision, the pitfalls to avoid. I also admire his traits that are important factors for success. He is very humble, he listens to feedback from staff. He is never high-handed. He is very hardworking, very focused.

"He is very steadfast. Even in periods of downturns, he is not easily worried. He has a long-term vision. Through all the crises -Lehman Brothers in 2008, and before that Sars and recession (in early 2000s), we held on. We have not sold any hotel."

During the 2008 financial crisis, Mr Choo made the sole bid of S$51 million for a site at Kallang Road, which was eventually developed into V Hotel Lavender. Due to the crisis, banks levied a high commitment fee for financing, and he ended up completing the purchase in cash.

Mr Choo says: "I've gone through many crises. But the hotels were collecting revenue. When the market is bad, land becomes cheaper. The hotels make money so I kept investing."

Among other lessons, he admonished Ms Choo to be more vigilant when a business deal seems too good to be true, "as it's probably not true". "He also advised me not to enter into business partnerships based on friendship alone. He believes financial prudence and business reputation and credibility are very important."

NOT surprisingly, Mr Choo has chosen education as his philanthropic passion. Over the past six to seven years, he has given roughly S$8 million to four Singapore universities to fund bursaries, including the National University of Singapore and SMU.

Late last year, the Hotel 81-Choo Chong Ngen Foundation was set up under Credit Suisse's SymAsia Foundation. Credit Suisse serves as the philanthropic adviser.

Through the foundation, Mr Choo pledged S$2.5 million to five polytechnics, including Nanyang Polytechnic and Ngee Ann Polytechnic, to establish an endowment bursary. Each polytechnic is to receive S$500,000 and the government will match the donation by 1.5 times, bringing the total donation to each institution to S$1.25 million.

"I like to tell people to study. If you don't study, it's hard. You must study to be successful. In this day, there are no such cheap buys and opportunities as I had," he says. W