By Anil Bhoyrul
Anil Bhoyrul meets Stelios Haji-Ioannou, entrepreneur and philanthropist, as he launches his first Gulf venture.
The music had been blaRing for several hours, while guests continued to enjoy themselves on the balcony of Stelios Haji-Ioannou’s fabulous apartment in Monaco, overlooking the starting grid of the Formula One Grand Prix. As Michael Schumacher roared to victory, the Greek tycoon and party host was nowhere to be seen — choosing to sit alone in his bedroom, contemplating his mega success.
As I left the party, he told me: “I guess I’ve done it all now, and I’m only 31 years old. I’m really not too sure what else there is to do.”
That was in 1998. Nine years on, the self-styled serial entrepreneur has done it all again, and several times over, taking his “easy” brand global, and with staggering success. From easyJet came easyCars, easyMoney, easyInternetcafe, and even easyPizza. You name it, Stelios (as he likes to be known) has made it look easy, and in the process helped himself stack up a reputed US$1.5bn fortune.
But last week, as he toured Dubai to launch his first easyHotel venture in the Middle East, the tycoon was in reflective mood, and ready to drop his bombshell: like Bill Gates and Warren Buffett, it is time to start giving back. Or more precisely, giving away.
He says: “I turned 40 last week and now I am thinking about charity and giving it all back. Bill Gates and Warren Buffett have set the benchmark, though I am a lot younger than them, so for me it will be more of a journey to get there. I haven’t thought yet whether it will be in one big bang or slowly.”
Stelios adds: “I have already given away my art collection to charity, and I suppose a lot of the money will go towards improving the environment. Because I started easyJet many people have asked me what it feels like to be helping destroy the planet. So I suppose this is a good way to answer that.”
Stelios reveals that, on top of giving away his art collection (estimated to be worth over US$10m) he has set aside several million dollars to launch a scholarship at the London School of Economics, a new fund to promote disabled entrepreneurs, and several other causes — potentially including a number of Middle East ventures.
“Typically they will be causes that have affected my life in some way. Don’t get me wrong, I am still enjoying myself doing what I do, but you see I am unemployable. I can’t ever work for anyone else, I just couldn’t do that corporate life. I don’t want to go into politics, and I’ve made enough money. There’s only so much you can do with your money, and I can’t do much more with it for myself.”
Though he will be giving it all away, the chances are that Stelios' US$1.5bn fortune is only likely to increase in the coming year, largely on the back of his easyHotel venture. Last year he teamed up with Istithmar to agree a deal which will see US$400m invested (by Istithmar) over a five year period, into building 17 hotels in 38 countries across the region, each with an average of 100 rooms. Using the easyJet model of supply and demand, and a first-come, first-served basis, prices will be as low as US$80 a night when the first hotel opens in Dubai’s Karama district next year.
Unlike the usual method of hotel construction, the easyHotel model is based on pre-fabricated pods being delivered to the site, and stacked up — each pod is a complete room that contains even the bedding and lighting. This means that from the time the flooring is complete, the entire hotel will be ready in just a 20-week turnaround time.
Stelios says: “Since I started easyJet in 1995 I have been in the business of taking risks, and starting new businesses. Every one that I have started is still trading, and some are doing better than others. The hotels I first started in London proved to be one of the more successful ventures. Transferring the easy brand from an airline to a hotel worked very well, and I think people were pleasantly surprised.”
Stelios has insisted his hotels operate on two basic principles: each guest has a private room and private bathroom. Beyond that, everything, even using the television or extra visits from housekeeping, will cost extra.
“The key has been to make it economical for the customer, and by that I mean someone who is paying for this out of their own pocket. This way of unbundling things, where you pay for everything extra, is now common in airlines, and I think the same will happen in hotels. At the end of the day people want to save money and we will be charging maybe 15% less than the competition. And the rooms will all be very clean and of high quality.”
Stelios claims his gross operating profit on the project will be a very high 70% of revenues, figures which should deliver a hefty windfall.
“I am confident about this, but then I work on a rule of thumb, which is that one third of my projects do very well, one third do okay and one third need serious attention. I take a lot of risks so naturally there will be some struggles, but unless some of my projects are not doing well then I am clearly not taking enough risks,” he says.
Once the Dubai hotel is up and running, new hotels are likely to spring up in Abu Dhabi, India, and Pakistan later next year. And Stelios himself, as always, will be one of the first guests to stay there.
“I have stayed in them before and I will again. I walk the talk, don’t worry,” he says.
That is not in doubt. Ever since launching his airline in 1995, with a US$5m loan from his father, Stelios has developed a reputation as the consumer’s champion, always looking to cut prices wherever possible.
He is often credited as the pioneer who changed the European aviation scene for the benefit of millions of consumers. easyJet PLC was partially floated on the London Stock Exchange in 2000 but Stelios remains the largest single shareholder. A serial entrepreneur, Stelios has established more than 17 ventures, the first of which was Stelmar Shipping at the age of 25. In November 2006 Stelios received a knighthood from Queen Elizabeth II for services to entrepreneurship.
Stelios floated Stelmar Shipping on the NYSE in 2001 and in 2005 he sold it to OSG Shipping Group for approximately US$1.3bn. Nowadays, acting through his private investment vehicle, the easyGroup, which owns the easy brand and licenses it to the various ventures, including the airline, Stelios sees himself more as the manager of the brand and less as a manager of one of the companies. He continues to extend the brand by creating new ventures in the areas of travel, leisure, telecoms and personal finance.
“I am always on the lookout for things that I think I can do better than other people at, and that hasn’t stopped. The ideas are still flowing,” he says.
EasyJet was undoubtedly his best idea: it is now Europe’s largest low-cost airline by revenues, with a fleet of 122 jets and growing, and carried 33 million passengers in 2006. The travel-related businesses also include easyCar, which provides low cost car rental in more than 2400 locations globally; easyCruise, introducing a younger age group to cruising in various parts of the world; easyBus, which provides low cost bus transportation between airports and city centres; and easyHotel, which is growing rapidly around the world by providing great value accommodation in city centres. The businesses outside the travel industry cover areas as diverse as Internet cafés, online price comparison, personal finance, cinema, male toiletries, online recruitment, pizza delivery, music downloads, mobile telephony, and wrist watches.
Stelios was born in Greece on the 14th of February, 1967 , the middle child of Loucas and Nedi Haji-Ioannou. He was educated in Athens to High School level and in 1984 continued his education at the London School of Economics. He also graduated from the City University Business School with an MSC in Shipping Trade and Economics.
Stelios has also been awarded a total of three honorary doctorates from Liverpool John Moores University, Cass Business School City University and the Cranfield University, all in the UK.
So does all the success and fortune make him proud and powerful? “I am proud of the achievements but I never think of power. I just wouldn’t say I am powerful. I generally like to keep a low profile. I’m standing in queues these days more than I ever did. I don’t drive anymore, I take the tube. It helps me keep a sense of perspective, of reality,” he says.
More than anything, Stelios is realistic. As our meeting ends, I ask him what the single most important thing is that he would say, is needed to succeed in business. He pauses for at least a minute, before answering: “You need a rich father. That always helps.”
In 1999 an internet café chain, easyEverything, was opened with the first five located in London. It was later renamed easyInternetcafé and became fully automated. However, after a bitter court case in which Easynet plc was unsuccessful, easyInternetcafe has now virtually closed. One major criticism was due to the lack of cleaning the computer keyboards and desk areas received, resulting in unhygienic work areas.
On the 17 December 2004, the company launched easyPizza, a yield-management delivery-only pizza company in Milton Keynes, near London. easyGroup lost a High Court case against EasyPizza, a London based pizza delivery chain owned by Mr Karl Kahn who successfully accused easyGroup of bullying and underhand practices. Unlike most other delivery chains, easyPizza facilities store pre-made, frozen pizzas. For this reason, customers must choose their pizza from a limited array of varieties — substitutions are not allowed. Also unusually, easyPizza offers discount rates for pizzas ordered in advance and at off-peak hours, a strategy to improve the utilization rate of their ovens.
Franchises began operating in early 2006, and easyPizza currently has 10 outlets.
In April 2000 the company set up the car rental company easyRentacar (later renamed easyCar), with the only rental car available being the Mercedes Benz A-Class.
The car rental business, which suffered from financial losses and a reputation for poor service has since closed, but easyCar continues operating as a rental broker via the Internet. easyCar is now profitable and operates in over 60 countries and over 2000 locations, offering a full fleet of vehicles.
In May 2003, cinema company easyCinema was opened at a former UCI site in Milton Keynes, offering screenings from US40 cents if booked well in advance. The cinema initially struggled as major distributors were not prepared to release new films to the company using the yield-management model. First-run films later became available, but at fixed prices.
Towards the end of its life, the cinema site also housed an easyInternetcafé and was a pick-up point for easyPizza. However, following a dispute over unpaid rent with the landords Odeon, which resulted in eviction, the easyCinema closed in May 2006 and reopened as an Odeon cinema. The closure of easyCinema appears to have curtailed the desired expansion into London’s West End.
Rental March 2005 saw the commencement of easyCinema DVD Rental, first announced in November 2004. The venture is a partnership with Video Island, a company operating rental services for several other retail brands. However, unlike many online DVD rental services, there is no monthly subscription. The user purchases credits at US$3.90 each (minimum purchase is 4 credits). One credit permits one DVD rental and a maximum of three DVDs can be rented at one time.
A no-frills cruise ship targeting the 18-40 age group, rather than the traditional retired market, was launched in May 2005. The vessel is known as easyCruiseOne, and the service originally operated night-time departures calling between ports in St. Tropez, Cannes, Nice, Monaco, Imperia, Genoa and Portofino but is expanding to new destination and schedule changes according to season.
It is possible to join the ship at any port and stay from a minimum of two, to a maximum of fourteen nights. Prices vary according to cabin type and demand. In a departure from the model employed by easyJet it is possible to book via travel agents as well as directly through the easyCruise website. Recently easyCruise has announced the winter departures, calling at Barbados, St Vincent, Martinique, The Grenadines, Grenada and St Lucia.
The easyCruiseOne cabins offer a simple bed and bathroom. Most do not have windows and use of a maid service during the stay will incur an additional charge.
In August 2001, credit card company easyMoney was set up with Accucard (now part of Lloyds TSB). It was expanded in February 2005, with the announcement that unbundled car insurance products provided by Zurich would be sold later in the year at easyMoney Car Insurance. In April 2006, easyGroup linked with moneysupermarket.com to provide a financial product comparison website. This coincided with the withdrawal of the easyMoney credit card.