Island Hotels eyes ambitious expansion
The Island Hotels Group is poised for ambitious local and international expansion after the company is floated on the Malta Stock Exchange later this month, the chairman and chief executive have told The Times Business in an interview.
The group is to launch its planned flotation on the Exchange through an equity and bond issue that will raise €20 million from the public. The offer opens for public subscription on September 22.
As former chairman Nazzareno Vassallo divests his 50 per cent stake in the company, half of the resulting 17.6 million shares are to be acquired by Mr Zahra's two sons, chief executive officer Winston J. Zahra and director Trevor Zahra at par (€1). Manchester United footballers Gary Neville and Ryan Giggs will each acquire 3.12 per cent with an investment of €2.2 million. €0.25 million in equity has been reserved for the group's staff.
The remaining €6 million will be made available for sale to the general public. A €14 million eight- to 10-year bond issue is being launched in tandem with the initial public offering, bearing a coupon of 6.5 per cent. The pre-allocation period runs until September 17.
The Zahras say that going public will present a host of opportunities for the group to grow at a much faster rate now that "a very solid platform" from which it can meet future challenges has been laid.
As the global economy limps out of the most severe recession in decades, Island Hotels Group has a portfolio of plans for expansion.
The future project for the Radisson Blu Resort and Spa Golden Sands includes the development of units in the Sunrise Tower and the development of conference spaces into new-concept, larger format suites for vacation ownership. The group also has its sights on the development of the old Ħal Ferħ complex if it manages to conclude discussions with the government after the group was the only company to tender for the site a few months ago.
Planning permission is in hand for a stand-alone conference centre to cater for 800 delegates at the Radisson Blu Resort in St Julians, where all public area facilities and landscaping, pool and facade are to be upgraded. Depending on market conditions, the group is also to examine configuring the resort to cater for other tourism segments, including the possibility of vacation ownership.
Island Hotels have also been granted a permit to extend the Coastline's capacity from 207 rooms to 310. There are also plans for the development of a conference centre.
New business will be identified for Island Caterers as it seeks to add new venues to its portfolio and explore international opportunities. Its growth will be shaped through the possible acquisition of local operators and the development of contract catering.
Holistically, Island Hotels Group - which was conceived with a seed capital of the equivalent of €375,000 and registered a group profit after tax of €3.9 million in 2008 - is ready to seek its fortunes overseas in earnest.
Its prospects include furthering its relationship with the Rezidor Hotel Group by developing properties under their brand names and capitalising on its affiliation with Saga. Possibilities also exist through the relationship developed with Mr Neville and Mr Giggs. Growth can be achieved through the acquisition of under-performing properties in Malta as the group paves the way to building a solid European company.
The group chief executive emphasised that despite all the negatives, Island Hotels, which today employs just under 1,000 people, has pursued its investment programme and the business has been "extremely successful, especially when one takes the overall economic scenario into consideration".