Recession? An opportunity

Tumas Group today launches a €20 million, five- to seven-year bond issue to maintain operational cash flow. George Fenech, chairman of one of Malta's most successful and diversified organisations, outlines the group's achievements, its ambitious plans for new ventures, and its handling of the slowdown.

George Fenech could have retired years ago.

Instead he says he is working harder than ever - the stacks of company reports, presentations, documents, plans, and CDs on his enormous desk at his personal office on the 21st floor of the Portomaso Business Tower are testimony to that.

Sitting with his back to the panoramic view of the coast and surrounded by all the things that exhibit his passions and achievements - reference books on everything from luxury hotels to cigars, figures of horses, company awards, framed photographs of his family - it is clear Mr Fenech is very much in control of the sprawling Tumas Group.

The chairman admits the current economic downturn demands increased business focus, but he is largely optimistic. Most of the group's 35-odd operations are doing well - plans for development projects are forging ahead, and the hospitality operations' budgets have been adjusted.

"The recession has hit but it has not been painful. Positive things will come out of it," he points out. "Various opportunities will arise from the current situation and investors will be spoilt for choice if they are able to grasp them - and if they have been wise."

He likes to boast of the group's contribution to the economy and points out that Portomaso's ripple effect has spilled over into the neighbourhood, bringing huge returns for owners. The old houses behind the luxury village are now fetching several thousand euro - while the group recently acquired 1,000 square metres of land over Spinola Road for over €3 million.

Mr Fenech is truly a chip off the old block - just like his late father Tumas, it is obvious property development is his primary passion. He is proud that Portomaso, completed after the Hilton Malta centrepiece was opened in 2000, and at the time considered hugely ambitious, paved the way for other luxury developments to be realised by Maltese entrepreneurs. It proved that there was ample demand for high-end property from locals and foreigners. The business tower - of which 55 per cent has been retained for lease by the group - is fully occupied.

Further inland, Mr Fenech envisages the strip parallel to the Mrieħel bypass from the Malta Financial Services Authority building to the business centre which currently houses Forestals' new headquarters and Deloitte's local firm, will be a premier financial district within five to 10 years. Both buildings were built and are leased by the group - as is HSBC's Operations Centre, the British American Tobacco premises, and the Pricewaterhouse Coopers office in Qormi.

Tumas Group has acquired an additional 10 tumoli of land along the Mrieħel strip, jointly with Gasan Group, to be developed into dedicated business blocks as demand for high standard office space abounds.

Mr Fenech has only recently entered into local partnership ventures - and only with Gasan Group. He says he is very decisive and is too impatient to wait for other people to make up their minds over projects, but there is chemistry between the groups, hence the establishment of Tumas-Gasan Group of Companies Ltd.

Among their joint ventures is Ta' Monita, a luxury living development on 18,000 square metres in Marsascala, inspired by Portomaso and the Tas-Sellum estate in Mellieħa. Eighty-six per cent of Tas-Sellum's 150 villa apartments have been sold to local and foreign buyers.

The group's hotels - the Hilton Malta, and the four-star Dolmen Resort and Topaz hotels - have continued to hold their own within adjusted parameters for the challenging season ahead.

"Budgets for the hotels were reviewed in December and January," Mr Fenech explains. "The Dolmen's occupancy was up by one per cent in January. By the end of May, occupancy reached our projections but the room rate fell slightly. We have also achieved the target occupancy at the Hilton but the rate has been adjusted as well. The market situation demands that forecasts are made fortnightly. We have to be realistic as the trend for late bookings continues.

"The Topaz is not sold as an upmarket hotel but it is run professionally and the results are more than satisfactory. We are fully aware of the present circumstances and we are working to meet the challenge. Besides, there is a promising future for all the hotels."

The group's working relationship with the Hilton brand led to a unique opportunity to diversify and venture overseas. In mid-2004, work commenced on the 173-room superior Hilton Evian-les-Bains on Lake Geneve between Geneve and Montreax owned by Tumas Group and managed by the premier hotel chain. When the project risked falling behind schedule, Tumas Group took over from the turnkey contractors to complete the project on time and within budget. It officially opened in July 2007 and instantly became a feather in the group's cap.

Just over a week ago, the government named VGT Group the preferred bidder for the privatisation of one of the business units of Malta Shipyards, which includes the shipbuilding and steel fabrication facilities in Marsa.

VGT, a consortium comprising Tumas Group and Portek International Ltd, the Singapore-based port operator, made plans to transform the former Marsa Shipbuilding site into a container storage facility, public last week. The move would take advantage of increased container transhipment activity in the Mediterranean. Rather than compete with Malta Freeport, Mr Fenech says it would complement it and attract more business to the island. The 600-metre stretch of land along the coast in Grand Harbour would be used to connect the Marsa area to the quayside at Ras Ħanzir in Kordin where VGT's cargo operations are based.

The final business model for the project now relies on the outcome of negotiations with the government.

With talks underway with a German company to attract a private jet maintenance facility to Malta, the local Kia car dealership, two successful casinos and a private jet leasing firm, Tumas Group may still be a family business at heart despite employing over 1,500 full- and part-time employees - but it's no wonder George Fenech's workload shows no sign of lightening. He seems to like it that way.