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Exclusive: John Zeckendorf hits the heights with regional focus

Mandala Hospitality Group poised for further success: A conversation with John Zeckendorf

By the age of 30, John Zeckendorf controlled a $5 billion global asset portfolio. This modest and unassuming highflyer, though, was only getting started in a career climb that now sees him atop the Australian hospitality industry.

Back in 2010, while delivering medical supplies as part of a charity mission, he found himself staring up at Mount Kanchenjunga, the tallest peak in India at more than 8500 metres. The devout Christian, whose Jewish grandfather died in Auschwitz, was moved by this experience. He began an advanced mountaineering course in New Zealand, before tackling Kilimanjaro in the African nation of Tanzania, with his then 14-year-old son, in January 2011.

This article was published in the new Autumn edition of AccomNews available now. Read it HERE

Mr Zeckendorf has now climbed the Seven Summits, the tallest peaks on all seven continents, including the greatest of all, Mount Everest. He scaled this in June 2017 at the age of 46 and became the first Tasmanian to stand on top of the world.

One of the driving factors behind his great adventures was to raise awareness and support for Pathways Tasmania – “a local not-for-profit organisation that provides hope and empowerment for people to reach their full potential, living free from addiction, homelessness and other issues that stem from these problems”.

Now as a major player in Australian hospitality, Mr Zeckendorf is going from one career peak to the next.

His Mandala Hotels and Resorts bills itself as “Australia’s leading regional hotel operator servicing individuals and groups” and operates a diverse portfolio spanning regional Australia’s top travel destinations. The group has a presence in some of the most beautiful locations in Australia. The portfolio ranges from backpacker hostels to three-star hotels, apartments in management rights complexes, and five star boutique properties.

Raised in Sydney, Mr Zeckendorf studied accounting and went on to become a Director at Price Waterhouse (now PwC) working in consultancy, insolvency, mergers and acquisitions, and property in the late 1980s and 1990s. Many of the distressed assets he came across were hotels. He lived in Hong Kong and London, before being offered the job in 2000 as asset manager for Prince Jefri of Brunei, the younger brother of the Sultan of Brunei, one of the world’s wealthiest men.

Poolside at the Mercure Cairns

Sorting out the Prince’s finances was a high-powered, hard driving job. Mr Zeckendorf could find himself on three different continents in a week, and looking after a portfolio of 70 assets that included some of the world’s grandest hotels, the New York Palace Hotel, Hotel, Bel Air in Los Angeles and the Hotel Plaza Athenee in Paris. The asset portfolio also included power stations, a theme park, marina, property developments and jewellery stores.

After an exhausting three-year stint in the job, Mr Zeckendorf returned to Australia to form Mandala Asset Solutions with Ryan Shaw, a long time colleague, in 2003. From the outset, their businesses focused on lifting the value of assets for investors. The partners identified regional hospitality as an area with great potential to add value.

An aerial shot of the Peninsula Boutique Hotel at Four Mile Beach

Speaking to AccomNews from “sunny and pleasant” Istanbul, Turkey, during a business trip, Mr Zeckendorf said he and Mr Shaw, having had experience with distressed country motels at Price Waterhouse, bought their first property, the Berry Village Boutique Motel in 2007.

Within two years the property was making a return of 30 percent. Before long they had four leaseholds – the Quality Inn Ambassador Orange, Parklands Resort and Conference Centre in Mudgee, the Artesian Spa Motel in Moree and Lithgow’s Zigzag Motel. Some of the properties were sold and many more were bought.

“We use five different business models,” Mr Zeckendorf said. “We buy leaseholds, freehold passives, freehold going concerns, management rights, and recently started external management where we manage for other people. That’s the main business we’re stepping up this year.

“At many levels, we have been managing for other owners for 16 years but mostly under a fund structure. Three years ago, we started managing for MA Financial as a professional investment firm and this led to us offering the same services to other owners.”

Regional hospitality was a winning investment for his business and his backers for a variety of factors, he said. “The regional marketplace is a much harder one for people to access because it involves a lot of small, fiddly transactions, so the big super funds are less interested in the regions.

“Managing them is very different to managing a city property which might have 300 or 400 rooms and where your ability to value add is limited because your competitors are all very sophisticated and generally quite well resourced – a lot of city hotel general managers for instance have MBAs. They know what they’re doing, and they’re supported by a sales team.

“We see much greater opportunities to improve regional properties,” he said. “We recognise that the regions are where most Australian wealth comes from – mining, agriculture and tourism.

“Regional locations also require accommodation for military, health care, education and other government services. And for those people who can’t not travel to the regions, such as government workers or contractors, an extra $20 a night makes no difference.

“As a rule, we don’t invest in capital city properties, but we will manage other people’s properties, and we do have management contracts in Perth and some opportunities lining up in Melbourne and Sydney.

“The plan is to keep growing our funds and build the external management arm of the business. We’ve been doing this for three or four years but now it’s our major push.

“We have 35 regional properties at the moment and nearly 2000 rooms and we’re growing fast.

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