WSBA editor, Mike Walls, spoke exclusively to Quest Chairman, Paul Constantinou about the group’s plans and philosophy.
WSBA: Can you tell our readers how Quest managed its growth amid the effect on lending markets caused by the GFC?
Paul: We need to be aligned with the way banks understand the world today. If we don't understand where they're at we won't be able to do a development. We have to understand their frustrations during certain economic climates, and same with our landlords, same with our business owners, our employees. It's that understanding and building relationships to all those stakeholders that makes it work. That’s what we talk about when we look at the business model of Quest. It's the business elements which are a hard core structure with the soft components, which we can do every day; but it's also about what influences the people. Now, if we focus purely on just one stakeholder, and it just might be a bank, that might hurt some of our other stakeholders. So that's why alignment's important for us.
WSBA: OK so how is that different from any other business where relationships are a focus?
Paul: I think what we do is that it's going to be built into the person, and what we've found is that some people find it easier to build relationships than others and some people can be very technically focused. It's all about a character trait and skills set. You can be a nice bloke but if you don't know anything, well, you're not going to go far either. It's about doing both, and I think it's developing those character traits to start building relationships. And I think everyone has these values.
WSBA: How do you select your development locations?
Paul: If we look at all the locations that we have across Australia and New Zealand, it was based upon the relationships we have with the corporate customer who was our demographic customer. So we spent a lot of time not going to them to sell them stuff; we spent a lot of time in understanding what they needed and where they needed to be. Seeing this big park (Sydney Olympic) for me, personally, is nice, great to go and see a sports game, but from a corporate perspective they see it differently. When I talked to the guys at Commonwealth Bank they don't see the other ambience. They've got to come here for work. So how can we make their time here meeting their requirements as a place they have to be? The easy research is to go on your websites and Google this and Google that, but it's all in the customer. We opened up a property in Sale in Victoria, and when we first said we're going to do a property in Sale in Victoria everyone said “it's going to fail”.
WSBA: You're mad, right?
Paul: Right, you're mad, you're an idiot and it's never going to happen. Eighty bucks a night at best. But because we knew we had the oil rigs out there and we knew we had the Air Force base out there and the contractors to it. It now runs at 80% at 170 bucks a night. But without that relationship with those corporates you'd never know. And by the time you get these things open a lot of things can change in the economic climate.
WSBA: What of the Liverpool property. How is that going?
Paul: Again, Liverpool's sort of changing its colours. Liverpool's actually been a very high demand area for defence personnel as well. Look, Liverpool in the old days, people were saying: "Well, what do you want to go to Liverpool for?" They said to me the same thing when we bought the land in Campbelltown and opened up in Campbelltown, and Campbelltown probably is a bit like our Broadmeadows in Melbourne. You've got to put someone in an area for love's sake, because they really want to be there and they can make it happen. I think it's a strategy to commit.
WSBA: How do you manage your businesses in challenging times?
Paul: The worst time I had in business was in 1990 when we had what I call the real recession, when they were opening up buildings and locking them up because they couldn't tenant them. Hotels were bad. They were selling them for nothing. So the whole property market died. We were doing business then when we opened up some of our properties where interest rates were sitting at around about 19/20%, and I'm saying, well, if you can work in those environments then it's more about how do you have a balanced approach in focusing, but if you look at that as a problem and that would scare the shit out of you, absolutely. The reality is that what is the path around it? Not through it, around it. We don't have to tackle every problem we've got. What we need to do is make sure that we know that they're there.
WSBA: You favour the franchise model. Are all your properties franchised?
Paul: About 15 years ago we kept about 20% which were corporately owned, and I said to the team, I said: "Guys, you know what? We're crap operators. Now, look at the performance of the franchisers. They're killing us. They'll eat us for dinner". They go there to make money. We go there just to perform, and I'm saying they're two different things. If you give me someone with hunger that wants to build wealth for themselves, I'll show you a highly profitable business. So we said how about we start educating some of our managers. So we look at people who would have a great character trait to step in and be an owner. I think it's about being committed to really what you want and focusing on it and getting out there and doing it. Opening up businesses like this (Sydney Olympic Park) is very important, but do I get excited because we open up another building? Not really, because it's just another one. You've done the process, and these things will now go along so long as you maintain the disciplines of that process but the true emotional part, and I stand in front of there to see an employee that was on 50 grand a year come home, and we supported that, and that's when I can shake my head and say, "You know what? I've done something".
