Meet the billionaire holding out for take-off

After years of delays, proposals for a third runway and new terminal at Heathrow Airport have been blocked by a landmark ruling from the Court of Appeal, on environmental grounds. It is a crushing setback for the contract’s bidders, not least for self-made billionaire Surinder Arora (pictured), who is leading a rival bid against the airport’s operator to build a terminal serving the proposed runway. The entrepreneur, who is one of the largest landowners at the airport, entered the process expecting to spend at least £100m on an application for a development consent order. His team has already trawled through some 8,000 pages of documentation to prepare for the next stage. Just last month he stepped back as chief executive of his hotels business, Arora Group, to focus on the bid, becoming its executive chairman. Steve Pateman, from Cardiff’s Hodge Bank, was hired as his replacement. Arora had also enlisted more than 300 consultants to work on the project full-time – firms including construction giant Bechtel, engineering consultancy Royal HaskoningDHV, architects Scott Brownrigg, law firm CMS and professional services provider RPS Group. The ruling does not provide the most positive outlook for the Heathrow West project. But for Arora, the battle is far from over. “It was disappointing, not only for us, but for lots of businesses and individuals,” Arora tells EG. “There are always two sides to a story. Some people want expansion; some don’t. From a UK plc perspective, and as a leading global player, it was disappointing… but we have to move on.” Both Arora Group and Heathrow Airport Ltd have since appealed against the ruling to the Supreme Court. The government itself, however, has not appealed. Although parliament waved through the expansion in 2018, its opposition included current prime minister Boris Johnson, who had once vowed to lie down in front of the bulldozers to stop the project going ahead. Regardless, the hotels tycoon remains upbeat. The heightened focus on the climate emergency will strengthen Arora’s application, he says, since the project’s main selling points are that it can be delivered more quickly and affordably than that of its competitor – inherently making it a greener scheme. “For us, in a bizarre way, the decision was not great for the project as a whole, and causes a lot of issues and uncertainty, but it does actually shine a light on the environmental issues, and we’ve been talking about that for a while,” adds Carlton Brown, Arora Group’s chief financial officer and chief executive of the bid vehicle. “That hadn’t really landed home. But now it gives us a better platform on which to build, to demonstrate our environmental credentials.” Aiming high The hotelier unveiled his bid to serve a third runway at Heathrow with a new terminal in 2017. Since then, the group has been busy preparing its competing bid for a development consent order – thought to be the first competing application of its kind in the UK – to be submitted after HAL’s own application. Among Arora’s key selling points for leading Heathrow’s expansion – and by extension, breaking up HAL’s management of the airport – are costs, speed of delivery, sustainability and experience in hospitality. Arora suggests that HAL’s proposals are overpriced, exacerbated by its frequently revised cost estimates. Its latest masterplan cost for expansion totals £32.5bn; the original estimate was £14bn. He believes Heathrow’s investors, which include Spain’s Ferrovial and the Qatar Investment Authority, are incentivised to spend more on development because they can gain more return from it, through Civil Aviation Authority regulations. Therefore, its “monopoly” will affect airlines, if they are charged in line with the rising value of Heathrow’s assets, with costs ultimately having to be absorbed by the passenger too. Arora says his Heathrow West terminal can be built much more cheaply than HAL’s, and much faster. Some £10bn less, he says, and delivered by 2032 – 18 years earlier than HAL’s estimated 2050 completion date. “Heathrow is a huge business. It’s about time there was actually competition,” says Arora. “I’ve always said in life that competition is a good thing, if you believe in yourself and can deliver the quality, the service and the standards at an affordable price.” If his application for a development consent order progresses post-appeal, Arora reckons the group could spend anywhere between £3bn and £10bn on its involvement, depending on HAL’s proposal for the runway. “If it will hypothetically just cost £3bn, we could probably fund it ourselves,” he adds. “If it’s £10bn, then we’ll be bringing in investors and debtors. But the list of investors that want to come into a project at Heathrow is long. There’s so much money out there in the market.” Business first Rivalries aside, Arora believes the expansion is fundamental in a world that is shrinking in terms of connectivity. According to Arora, the airport risks falling behind its peers, which are expanding in Madrid, Paris and Amsterdam. He also highlights Dublin Airport’s €320m (£283m) North Runway project, which is expected to open next year. “The one great thing that the UK has been the best at is being entrepreneurial, and open to the world for business,” he says. “That’s something we must not take our eye off.” Sustainability is another issue close to Arora’s heart. He has five grandchildren – a sixth is on the way. “We want to expand in a sensible way, so that our children and grandchildren will say, ‘Those old people actually made a difference to the environment,’” he says. “That should be high on the agenda.” He argues that the “real issue” at Heathrow is not the environmental risk associated with a new runway; rather, it is the pollution caused by the motorways around the airport. Aircraft, on the other hand, have become “more efficient and quieter”. Arora also points out that he has seen up to 29 aircraft queuing on a runway for take-off – the amount of fuel being burned, he says, shows that Heathrow “needs” the new runway to offset this. Heathrow is a huge business. It’s about time there was actually competition Surinder Arora Stopping at nothing Dealing with daunting odds is second nature for the Indian-born entrepreneur, who is well versed in breaking through barriers to achieve success. Arora came to London as a teenager in 1972, speaking only Punjabi. A former British Airways clerk and wine waiter, his own career in real estate started after he bought four derelict homes near the airport in 1993, to convert them into accommodation for British Airways crew. This was followed by his first hotel launch in 1999, when he opened the 350-bedroom Arora International Hotel at Heathrow. Since then, Arora has expanded the group’s portfolio to more than 100 properties across its three divisions – hotels, property and construction – with more than £2bn of assets under management. Of these, 15 are hotels, with the 16th under construction; his portfolio includes more than 6,000 bedrooms, mostly at Heathrow and Gatwick. The remainder includes offices, car parks and small industrial units. The group tends to partner with hotel brands, including Sofitel, InterContinental and Crowne Plaza, under franchise agreements. Ongoing projects include the redevelopment of a hotel in Windsor, which will bring in Accor’s Fairmont brand. The group is also in the final stages of tender on another deal. “I’m still very upbeat about the UK market, and we’re happy to keep on expanding,” says Arora. And how will Arora, the serial challenger, keep up with the industry disruptors? “When I look at Airbnb, they are obviously a huge success, but they also have a lot of issues,” he says. “Some guests might not get the experience they expect, whereas if I book into a four- or five-star hotel, I more or less know what I’m getting. “We have to move with the times. Technology is moving forward; some hotels in Japan have only seven or eight staff because everything is robotic. But that doesn’t mean to say that we can have a change and not have a human face, or smile, in the service – that’s crucial, and will always be there, in my view.” Creating a £1bn fortune Last year, Arora was elevated to billionaire status, after the value of his portfolio soared. The latest accounts for Arora Holdings show that total assets were worth nearly £1.1bn during the year ended March 2019. Spending his wealth on charitable causes is important to Arora. Last year, his family raised £1.1m for the Royal Marsden Cancer Charity and Macmillan Cancer Support, through the Arora Charitable Foundation; previous donations have gone to institutions such as the specialist Evelina London Children’s Hospital. This year, Arora intends to raise money for the British Heart Foundation and Diabetes UK. He says there is a responsibility to give back, “big time – and we’re not stopping yet”. On a personal level, Arora philosophises that the pay-off from amassing his fortune will ultimately be limited. Having said that, it has clearly emboldened him to take new risks. “To me, it’s not really when someone’s got a million, or a billion,” says Arora. “We’re all human beings who come into this world with one [certainty]: we come with nothing, and we go with nothing. “So, when Carlton warned me a few years ago, ‘Are you sure you want to do this? You could end up spending more than £100m in the DCO, and that’s speculative,’ I said, ‘Carlton, I never imagined when I came to this country that I would be blessed with so much. Whether we then go with £100m less or more is irrelevant.’ So I’m not driven by money; I’m more driven by the challenges.” To send feedback, e-mail pui-guan.man@egi.co.uk or tweet @PuiGuanM or @estatesgazette