Elegant Hotels Group PLC (LON:EHG) Chief Executive Officer Sunil Chatrani caught up with DirectorsTalk for an exclusive interview to discuss their half year report
Q1: Now, in your comments today, in today’s announcement, you mentioned a ‘rebased market’, what do you mean by a rebased market and what factors have impacted the performance during the period?
A1: When I say rebased I refer to new market conditions, as we say internally ‘the new norm’, but more specifically it is the revised numbers put out in the market place as a result of the weakening of the sterling over the last 12 months. With the weakening of the sterling, we had to change our core strategy and focus on very sensible strategic discounted programmes as the demand for the luxury accommodation softened. We continued our capex programme to further improve our product offering and to provide differentiation when compared to our competition. To this end, we are pleased with our reported results for the first half of the year and with more than 95% of our business on the books, we are confident of meeting market expectation for the full year.
Q2: Can you talk us through some of the actions you have taken to address this impact?
A2: Well, with the weakening of sterling we had to change our rate growth strategy and focus on very sensible and strategic discounted programmes as the demand for luxury accommodation softened. We continue the capex programme to further improve our product offering and to provide the differentiation when compared to our competition. We are pleased with our reported results for the first half of the year as a result of the actions taken and that is differentiating and stealing local market share as the market was not growing, this is what we had to do to remain competitive.
Q3: Can you talk us through your plans for Treasure Beach?
A3: We acquired Treasure Beach after the half-year, so after 31 March 2017, so our numbers don’t reflect anything other than the actual acquisition coming after March 31st. We are presently operating without the brand and we’ll close it for renovations in July 2017, the plan is to complete major renovation over the next few months, upgrading all the rooms and public areas ??? our strategy of refurbish, reposition and repricing. This hotel will then be reopened in November 2017 as Treasure Beach by Elegant Hotels.
Q4: You’ve signed two contracts during the period, one in Antigua and the other in St Lucia, can you explain a bit more about the two contracts and how they’re progressing?
A4: We signed a management contract for Hodges Bay Resort and Spa, now called by Elegant Hotels, in Antigua and this property is currently under construction and the owners expect to officially hand it over to us by November 2017. It is currently not adding any revenue to our top line but it is expected to be earnings-enhancing in the financial year 2018 and this will be one of the most modern properties on the island if Antigua.
We also signed a sales and marketing agreement with The Landings Resort and Spa by Elegant Hotels in St Lucia and this property was already operating and we commenced the marketing services with immediate effect. The property is now branded and there are some outstanding brand elements that are still to come but in essence, the hotel is now fully operational as an Elegant Hotel.
Q5: Can you give us a bit more detail on Elegant Hotels’ expansion strategy, both in Barbados and further afield into the wider Caribbean market?
A5: This is an interesting one, our expansion strategy remains the same and is consistent with what we said at the time of the IPO, there are a number of underperforming properties out there in the market. The market’s that we have identified as having a good opportunities are St Lucia and Antigua, both of which we now have a presence. We did 2 acquisitions in Barbados which required financing but we entered both Antigua and St Lucia in an asset-like manor and that is through management contracts. We also have opportunities that we’re constantly evaluating and as you would expect, 1 out of every 10 that we evaluate will make financial sense, if we’re lucky, but we think there are good opportunities out there, what we’re finding now is that there are more opportunities as a result of the current market conditions and we’re actively reviewing some of them.
Q6: Can you talk us through some of the renovations and improvements that Elegant Hotels have made and new dining concepts that you’ve introduced across your hotels?
A6: We’re constantly changing the dining offerings where we do a dine-around programme that allows guests to go from one property to another property aided via our water taxi or by a different mode of transportation.
We’ve been committed to our renovation programme above and beyond what a typical hotel would re-invest each year, in the last year alone we added the coffee shop at Turtle, an ice-cream shop as well, and a coffee shop and wine bar at Crystal. We’re also closing The House for a major renovation programme that will see a new bar concept, a new spa, gym, lounge and dining facilities, The House will be completely transformed without losing the charm or character of being a home away from home that it is already known for, hence the name ‘The House’.