David Michels: It's the morning after the night before, but Hilton's boss is on a winning streak

He has a poker face and he's flushed with profits, as the card-playing head of the gambling and hotels group explains to Abigail Townsend

A question. Is putting an inveterate gambler in charge of the world's biggest bookmaker not dissimilar to handing Wayne Rooney the keys to the brothel? Most would argue: maybe. But for Hilton, the FTSE 100 hotels chain and owner of Ladbrokes, the decision seems to have paid off. Its chief executive, David Michels, spent last Wednesday night hosting his weekly poker session before emerging bright and early the next day to produce a sparkling set of interims.

Profits were up a mighty 72 per cent, thanks in part to a fragile recovery in the hotels sector but also to a strong run by Ladbrokes. Group sales were up 42 per cent to £5.63bn. Current trading, boosted by a summer of sport, was also strong, and analysts set about upgrading final forecasts. At the presentation, Michels said he was "delighted" to be unveiling the figures to the City.

His enthusiasm shines through at all times, however - not just when he has a decent set of numbers to show off. He first got a taste for the industry aged 11, when he "carved the beef on Mondays" at his father's London restaurant, and has never looked back. "Hotels and betting are just fun, aren't they?" he explains. "They are theatrical, because that's what customers want. If you are going to lose money, you'll do it in the nicest surroundings you possibly can."

Yet some now argue that customers, particularly the internet-savvy ones, have come to care more about price than service - the traditional USP of the high-end hotel.

There is weight in the argument. It's just not one he agrees with. "If you fly to Paris, you are going to go the cheapest way as long as you leave and get there at about the right time. But when you get there, you really care about where you sleep, where you have a bath, where you might make love. You are not going to stay in a one star if you can afford a five star. Hotels are not a commodity."

Michels, 57, has been with Hilton (formerly Ladbroke, until the name was changed in 1999) for the best part of 20 years, except for a period when he left, and the group then bought the company he was running. Before that he spent 15 years at food and drinks giant Grand Metropolitan. So while he may be "delighted" with the interims, he also has enough experience to be realistic. "Hotels peak and trough - and if you want things to be good, have a bad year before. So of course things are better. But this is by no means a full recovery."

While the industry finds its feet, Michels is concentrating on expanding the chain and on improving the brand. The hotels may be four and five star, but Hilton's reputation has lagged its rivals. "We had a brand that was corporate, city centres, conferences. But in the last few years we have opened some cracking resorts." So for every airport Hilton, you can also now stay in the Maldives or at an "eco-lodge" deep in the Amazon.

All that would be job enough, but Hilton also owns Ladbrokes, which has more than 2,000 shops and an extensive online and phone division.

And like hotels, this is an industry in flux, mainly because of the upcoming Gambling Bill, which promises to overhaul and update piecemeal legislation and give the industry a shot in the arm.

Overseas operators are scrambling to get a piece of the deregulated action, and Michels admits that, depending on how the Bill pans out, Hilton should be involved.

"Its biggest effect is likely to be on the casino business, which we don't have. But it's likely that with two brand names like Ladbrokes and Hilton, we will enter the market, or try to. We would be crazy not to." The plan would be to convert some existing resorts into casino complexes, and tentatively look to open in London as well.

Meanwhile, Ladbrokes continues to berate the Treasury and anyone who will listen about betting exchanges, though there is something in Michels' manner that hints at defeat. The Government is proud of the exchanges, and the concerns of the traditional bookies about tax have largely been resisted (they claim there is an uneven playing field to the disadvantage of their own operations). Even Michels has to admit: "Since the betting exchanges have existed, betting worldwide has become so much more popular and populist that we have been making money all the time we've been complaining about them."

Will Ladbrokes ever launch its own exchange? "I have no idea, though it wouldn't be an awfully clever thing to do while the Treasury is still debating it.

"We're a traditional bookmaker. This is a different field and, if we are ever to launch, we would have to think very carefully. I don't think it's a given that the traditional firms will enter, but it's always a possibility."

The same "will they, won't they?" hangs over the wider group. Michels says the board looks at separating the two businesses "at least once a year". While he will not rule it out long term, there are no imminent plans.

So in the meantime he is getting on with running the company he has and enjoying his life. He has nothing planned for retirement beyond, he quips, "getting stuffed and put on someone's mantelpiece", and wants to stay as long as he's able.

Out of work, he plays tennis, sneaks the odd cigar and enjoys telling a good yarn, such as when he served Cliff Richard in a Greek restaurant in Great Yarmouth or the time telex was introduced. As with all new technology, no one understood it - except an "18-year-old pimply boy" working in one of the hotels. "For three months he ruled the company," recalls Michels. "He was even taken out to lunch by the chairman."

And then there is his gambling, particularly cards. One rumour relates how Michels stayed up all night - before a results presentation, obviously - as he successfully fought to recoup the £100,000 he was down. Not, of course, that he would ever admit to such a thing. "The most I've ever won is about £3,000, £4,000. The most I have lost? About the same."

But then this man is a poker player - and as he admits after a pause: "I'm not telling you the truth."

BIOGRAPHY: David Michels

Born: 8 December 1946.

Education: hotel management course at Hendon Technical College.

Early jobs: waiter at various restaurants, including Simpson's in the Strand.

Career (1966): various roles at food and drinks group Grand Metropolitan.

1981: sales and marketing director, Ladbroke Hotels.

1983: managing director, Ladbroke's leisure division.

1985: managing director, Ladbroke Hotels.

1987: senior vice-president, sales and marketing, Hilton International (after hotel chain's acquisition by Ladbrokes).

1989: deputy chairman, Hilton UK, and executive vice-president, Hilton International.

1991: chief executive, Stakis.

1999: head of Hilton International.

Since 2000: chief executive, Hilton.

Other positions: non-executive director of British Land; trustee of the Anne Frank Trust.

Comments