Elegant Hotels Group PLC (LON:EHG) Chief Executive Officer Sunil Chatrani caught up with DirectorsTalk for an exclusive interview to discuss the acquisition of Waves Hotel and Spa in Barbados and future acquisitions opportunities
Q1: If I can start by asking, what was the criteria you used when deciding that Waves was an attractive acquisition target for the Elegant Hotels Group?
A1: The truth is we’ve always had acquisition strategy laid out and Barbados was the obvious target where we’d want to have the first acquisition, it makes it so much easier to manage having the resources on the ground so it was a very obvious choice to have something in Barbados because we are quite familiar with the island, we knew quite well what was available and what was not. This is a direct competitor to our all-inclusive properties so we’ve known the property for a long time, we’ve been watching the performance and the owners are a typical ‘mom and pop’ type operators who are at the stage of retiring and those are the kind of targets that we’re looking for. So they’re looking to come out, it’s the right time, the property needed some work but it sits on the prime West Coast beachfront property which is what we refer to as the ‘Platinum Coast’, very close to our properties. We know that with some refurbishing and repositioning in the market, what we’ve done for the last couple of years, that it will benefit from the expertise that we have. Again this is going to be a 4 star product on trophy land but it’s not a trophy asset.
Q2: So what are its strengths as a property and how does it fit in with Elegant Hotel Group’s existing portfolio?
A2: The truth is it’s location, location, location! All of our properties have fantastic beaches, four of them on the West Coast which is the Platinum Coast, this one here adds to that beach frontage we already have which is quite significant. It’s a platinum coast with a wonderful beachfront and it’s close to our other properties so we have services doing the normal water taxi services and so on. There’s a lot of interchangeability between the properties so guests can go from one property to the other property via water taxi and with the addition of Waves, some of our guests can do the spa which is a big feature of that property actually so they can go to Waves and use the spa facilities there and similarly the guests at that property can go to our other properties and enjoy our diamond experience where we have our diamond-run programme, tennis courts and so on that they can use.
Q3: What will this acquisition mean for Elegant Hotel Group’s market share of the quality leisure tourism stock in Barbados?
A3: Well this is now going to take us to over 550 rooms on the island, we are the largest player with the additional 70 rooms, we are now going to have approximately 29% of the quality room stock on the island and the property is going to benefit from the platform that we have. So we can add these rooms without having to increase any major overheads or any costs, it’s really just addition to existing overheads that we have already, we’re just going to add these rooms and benefit from it.
Q4: Now, you referred earlier to the hotel as being refurbished, repositioned and ultimately re-priced, can you give us a bit more colour on how this process will work and what’ll mean for the performance of the hotel and how will it benefit from being part of the Elegant Hotels Group?
A4: Well we’ve done these things over, we went with the history of the portfolio, we’ve taken on one property at a time, year after year, and renovated and we’ve seen the improved return on the investments over the years, this is no different really especially being in Barbados as well. So we’re going to take this one, I have my team coming in who are going to look at the design concepts, we’re going to decide exactly where we want to pitch it and position it in the market and we’re going to make sure that it’s not going to cannibalise our existing revenues in terms of going after the same type of guests. So being a direct competitor in the past certainly helps us now to reposition this properly, not just in Barbados but for the niche market that we think it exists for it but also within the portfolio so we don’t cannibalise revenues of the other properties. Having the design or the concept in place, we’re then going to renovation/refurbishment programme and the re-pricing it into the market, the re-pricing is really going to come from the old management more so and because the property is on an island, we’re certainly going to benefit from more efficiency in terms of cost reductions and better way of operating the hotel.
Q5: Now in terms of future acquisition opportunities, will there be more to come in Barbados or will you be looking further afield into the wider Caribbean market?
A5: Barbados is clearly our core market and we will continue to look closely at a number of opportunities but we’re also looking at markets where the distribution strength will help which includes the likes of St. Lucia and Antigua. There are other islands as well but we want to stay closer home and again having this first acquisition in Barbados was really the one that we wanted to get done quickly. So we’ll roll this one out and there are other opportunities, we are looking at others but it’s within Barbados and the other islands of Antigua and St. Lucia where we’ve always set the targets so we’re looking at.