The Interview: Poker face still smiling after 40 years surviving a busy life of leisure

David Michels Chief executive of Hilton Group
Click to follow
The Independent Online

David Michels failed his two-year hotels course at Hendon tech in the mid-1960s but still managed to become one of the world's leading hoteliers as chief executive of Hilton Group.

Mr Michels, the poker-playing son of German Jewish immigrants, flunked his college exams largely because he spent most of his school days in the smoke-filled toilets of the now defunct Clarke's College learning how to play cards.

Failing exams was something of a habit for the hotelier, now 58.

"My father, being a typical immigrant, wanted me to be more British than the British. He tried to get me into all sorts of schools like Haberdashers and City of London but I failed the entrance exams for all of them."

But Clarke's suited his slightly more louche priorities down to the ground. "It was the most wonderful place to be educated but not learn anything."

The young Michels, however, was not completely without redeeming qualities and while at Hendon he won a student-of-the-year award from Grand Metropolitan. "They didn't bother to ask me if I had passed my exams and they gave me a job."

This Lucky Jim start to life meant he spent the first 15 years of his professional career working his way up in the old leisure conglomerate, a business that had interests ranging from Berni Inns to Watney's Red Barrel, and reached sales director. At Grand Met he came under the tutelage of the late, great Sir Max Joseph who pioneered a management style his successors described as a "light grip on the throat".

"He was a fierce dictator and everyone who worked with him was scared stiff."

Suffice it to say Mr Michels is a rather more approachable character with a disarming line in self-deprecating wit who enjoys life to the full. He's a chief executive with a sense of humour and a boy's own lifestyle to boot. Smoking 40-a-day, playing poker and, slightly surprisingly, playing tennis have been passions all his life, although the smoking has had to stop.

Just back from opening a hotel in Barbados, he's now laid back and happy in a swish executive lounge at the Metropole on Edgware Road and looking forward to his next round of Texas Hold 'Em.

"The great thing about poker is you can't get injured. The last person to get hurt playing poker was Wild Bill Hickok who got shot," at which point his mobile phone rings and it's his doctor calling.

"There are two calls you always have to take; your mother and your doctor. That was him checking I'm still alive, which he reckons means I must be alright."

Mr Michels is one of those gamblers for whom the internet has offered a new lease of life - or at least a new, more convenient way of losing money.

"Excuse my language but online poker is a fucking brilliant invention."

But why? What is it that's so great about peering at a computer screen playing a virtual hand of cards - a pastime the stock market thinks so compelling it has ascribed one website, PartyGaming, a £6.5bn, yes that's billion, valuation.

"You have to be a poker player to understand. It's unlikely that online poker will make you a poker player but vast numbers do play poker already, most people learn it at school and you need six to seven people to play it. Now, getting six to seven people together on a Friday night is hard because people are married, they have kids or there's always the one who doesn't turn up. But the minute you invent it online, at home, poker players are united.

When you play privately at home people argue as well. Someone wants to play for $10, someone wants to play for $15 and the flash gits always want to play for $50. You can 'walk' to the type of poker you want to play online and that's enormously attractive.

"Someone like me who loves playing, I've been a player all my life, has found you can click on the net at three in the morning, unfortunately, and enjoy yourself and lose your money." And a valuation on the fast-growing PartyGaming that is 30 times its operating profits?

"I honestly, honestly don't know. I don't know how to value a company. They justify it on the cash they're producing. They're getting about £400m of cash and on that basis it's real. Will they continue to grow at that rate? It's impossible."

Mr Michels has a vested interested because Hilton Group owns Ladbrokes and Ladbrokes owns a burgeoning internet gaming business, including poker, which the company's interim results, announced by Mr Michels on Thursday, showed was growing at 50 per cent year-on-year.

"Online gaming in general is an enormous growth business. Even after four years we're still amateurs at it, most people are. We've just launched fixed-odds betting on the stock market on our website, punting on whether the Footsie will be up or down in the next five minutes. That's for serious punters. There are hundreds of different ways of doing things on the net.

"Do you know what the next big thing is going to be? Betting in play. There are five days in an Ashes test. Now, you can bet £10 on who is going to win but you might get a bit bored waiting for the result. But if you can bet on how many runs Charlie is going to make when he's in or, in golf, who's going to win the next hole or in football, will the next corner score, its enormously popular and people can do it for very small bets."

The success of his internet gaming business will not, however, tempt him to float it off on the coat tails of PartyGaming.

He will, however, countenance a demerger of Hilton's hotels business from its Ladbrokes betting operation once someone does the maths and proves to his satisfaction a split will add value to shareholders, something he doesn't think will happen for at least five years.

Having hotels and betting together is a complete coincidence, he admits, the final two pieces of the old Ladbroke Group conglomerate which he joined after Grand Met in 1981 and which has since been slimmed down. Confusingly a few years ago the group flipped its name from Ladbroke to Hilton, emphasising its hotels business.

In 1991, having got as far as deputy chairman of Hilton UK, Mr Michels went off to become chief executive of his own business, Stakis, a rather tired Scottish-based hotels company which he turned round and sold to none other than Hilton in 1999 which he rejoined as the boss.

Hotels, of course, suffered after the World Trade Centre atrocities and betting came to the group's rescue. Now betting is having a tough time. Longer opening hours at the bookies shops have increased costs but not profits. More people have been betting but the nags in the first six months of this year went against Ladbrokes. Last year, the first six months were phenomenally good for bookmakers, in particular the Greek's triumph at Euro 2004.

"If you want to have a good year, have a bad one the year before. That doesn't always work with the board. The fundamentals are that betting is more popular than it has ever been. With more people spending more money on it, we'll do better out of it in the long term."

It's a pretty basic lesson, albeit an expensive one for most of us mug punters, but it is at least one lesson any exam-failing teenager can usefully learn.

Playing poker

Age: 58

Pay: £1.86m

Education: Clarke's College, north London, and Hendon tech.

Career: Joined Grand Metropolitan in 1966 after failing hotel course at Hendon. He joined Ladbroke in 1981, becoming managing director of Ladbroke Hotels, in 1985. He was then promoted to run Hilton UK in 1989 and then left to run Stakis in 1991 returning when Hilton bought Stakis in 1999 as chief executive.

Interests: Poker, tennis

Personal life: Married, with two grown-up children.

Comments