Alfred Pisani and his family opened a restaurant in the villa left behind after his father died, and within 2 years borrowed a million liri from the banks to open a 156-room hotel there. At 76, he shows no sign of slowing down. He talked to Vanessa Macdonald about IHI’s plans.

In 2014, you reported a profit of just €266,000 out of a revenue of €124 million. Wouldn’t it be more prudent to build up profits before you embark on more new projects?

There are two ways of embarking on new projects. One is by taking additional cash that you have generated from your present activities, putting them into reserve for a new development. This is the strategy we followed for the past 12 years, reinvesting and reinvesting.

It is very difficult to find an outside partner when you are not known. We had to do it on our own, step by step, starting with a small investment and generating surplus to re-use for the next development.

I think Corinthia has sufficient exposure now, and today, when we go to an investment house – whether in the US or Europe – to raise funds, it is quite different and the activity stands alone.

So the approach has changed and we want to divest some properties because we feel they have reached a certain maturity in their value. Selling them would give us a profit, part of which could be used to distribute dividends, and part for investment.

IHI gave an interim dividend of 3c per share last year, its first and only – although shareholders have also been given bonus share issues. What is the dividend policy going to be going forward?

We recognise that we need to issue dividends and we are conscious of the fact that we have lagged in the issue of dividends.

You mentioned divesting properties. What do you have in mind?

Initially, when we opened hotels under the Corinthia brand, we needed time to prove ourselves. It takes time to build up a name for yourself.

If you see the formula used by many investment companies, including hotel investors, we did what many others did: we were both owners developing our own properties and managers.

The opening of our hotel in London was the latest move. It was very successful and we have outrun our competition.

So when we go to an investment house today and say we would like to build a hotel under the Corinthia brand, we find people willing to act as owners, with us as operators. This is bringing about a shift that we will take advantage of.

However, we need other types of business models. In the US, it is quite common for companies to invest, wait a maximum of 5-6 years and then selling to realise a capital gain which can then be reinvested.

This is a very aggressive approach but it has a lot of merit.

We could not do this at the beginning as the buyer would probably have changed the brand.

Now, that we are internationally known, we will sell on the condition that our brand retains the management.

So which properties are you going to put on the market?

The board has not consciously decided to do it in any particular order but if we had an offer which matches the price we feel is correct, then we would consider it.

Half the shareholding in Corinthia Palace Hotels is held by Lafico, which has been buffeted by what has been happening in Libya over the last few years. What is the impact on its interest as a shareholder?

Lafico has been a shareholder in the parent company since 1974. A total of $6 million was put up then, shared equally between Lafico and us. Since 1974, not one more penny was put into CPHCL.

The company has since evolved into a group of separate entities with their own capital – and decisions at IHI, Mediterranean Investments Holdings or Corinthia Hotels International are taken by the respective boards.

Lafico is not directly involved except for appointing directors, which is obviously very important.

But if your question is whether if, in the light of what has been happening in Libya, will this put restraints on the shareholder, the reply is that the ultimate companies are quite distant from the original shareholders.

The instability is having an impact on both Bab Africa and Palm City. What are your plans?

We are running the operations with a minimal number of employees. We have people working one week on and one week off, cutting costs to a bare minimum. Fortunately there is still income from the offices next to the Tripoli hotel as the tenants are still there. And occupancy at Palm City is still above 50 per cent because the contracts there were for long periods and most opted to keep them going.

Obviously if things stretch out longer and longer, the situation will become more of a concern. It is not an easy time.

When we go to an investment house today and say we would like to build a hotel under the Corinthia brand, we find people willing to act as owners, with us as operators

The fair market value of the Libyan investments will also be affected... You were very proud of the fact that your value to loan ratio was 70 to 30. It will hurt that.

This is an ongoing discussion with valuers and auditors. If someone were sick and did not go into work for a day, his value would not change. But with accounting standards it is a bit different.

We are in discussions with the valuers at the moment. However, using the same argument, the properties where the enterprise value has improved will be re-valued upwards and I would like to believe that the eventual setting off would be very close.

The acquisition of Island Hotels Group (IHG) took many by surprise. What are your plans for Ħal Ferħ, for the Golden Sands hotel and for Island Caterers?

Golden Sands is a timeshare, 50 per cent of which is owned by IHG, and there is already a plan for how to sell the remaining weeks. I do not see any point of change there. It is a very well oiled machine that runs efficiently.

In the case of Ħal Ferħ, there is 85,000 sq.m. of land with a building permit. It is a beautiful location with tremendous scope. We are very excited about it and now want to look at the drawings a bit more thoroughly.

If you believe in Malta, the way I do, you will believe that we are at the beginning of what we could become. We are unique in so many ways: our location, our size, our climate, our stability, our understanding of the North African and European cultures, our history and culture, our industrious population... We should aim to match the best.

We have to look at the human element: can we give a better service? Can we improve the general product of our infrastructure? Why can’t we offer the same – if not more – than the South of France? I believe we can bring our product up to the highest standards, across the country and infrastructure.

Will you keep the Radisson brand at Golden Sands?

I don’t think I would have any objections.

And Island Caterers? How would that fit in with your joint venture, Catermax?

This is a very interesting opportunity. These are two companies competing and providing the same service – both at a very good level.

I see a very strong synergy and we have to see how, over a period of time, we could bring these to work in harmony.

You are paying €37 million in cash and €13.4 million worth of shares to the IHG shareholders. Stockbroker Edward Rizzo calculated that you were paying the shareholders €1.49 per share, compared with the market price at the time of €0.57 – also pointing out many other possible complex interpretations. Do you agree with his workings?

The sellers are very sensible people and the buyers are also sensible. No deal can be done unless it is good for both sides.

You have to analyse the enterprise value of IHG and deduct any liabilities and you come to a net value of €50 million, which was discussed with the auditors.

We then said that we would like to see a style of merger included, so the 36 million shares in IHG were paid for at par in cash. The difference of €14 million was paid as shares in IHI, so we had to value the IHI shares and agreed that for every €1.49 you would get one share. So for €14 million worth of value, we gave them nine million shares. Is that fair, when you consider the stock market?

In Malta in particular, the stock market value is very influenced by perception and the issue of dividends. On both these counts, IHI is affected by what you hear about Libya and St Petersburg, which tends to push us down.

This was not a valuation of assets; it was an enterprise valuation – and on the balance sheet, it was €1.13 or so. So you get a perceptive value of €0.62 but then an enterprise value, a true value given by the auditor, and the market value, which is independent of actual performance. Of course, if you were to sell, you would not do so at that value.

We came to the conclusion that the IHI share value was €1.49.

Given your plans for St George’s Bay, taking over the Radisson in St Julians was very obvious. But why did you decide to take over the rest of IHG?

We started by discussing the hotel. But IHG felt that the hotel represented 70 per cent of their assets, and selling would dilute that. Hence they preferred a total deal.

I could see their point of view, so we moved ahead collectively, and this is why we had the element of a merger. IHG will remain IHG and whatever arrangement we make with regards to any hotels would remain internal.

What are you planning for St George’s? Will you take over the footprint of the Marina, the current San Ġorġ and the Radisson? There are persistent rumours that you will also take over the Institute of Tourism Studies. Are they true?

ITS is nothing to do with us. As regards the rest, we see it as one site...

The six-star concept will become a reality and it could persuade other hotels – and other service providers – to raise their standards but still give value for money. Then price structures will go up across the categories.

Malta can attract the most discerning clients. We get their yachts but not their owners. It could take us years, but we will get there.

Is it going to be a highrise and will it have any residential elements?

We need a development with at least two hotels of a very high standard, and we must ensure that a six-star level in terms of room size and corridor area...

What do you consider to be a highrise?

A 30-storey tower...

A 30-storey tower? We may not be too far from that. But let us see.

You estimate that the London hotel is already worth double the €300 million it cost. Are you able to command the same rates as other hotels with stronger brands? Is occupancy what you expected?

In December, we outrun our competitors in terms of rates but I cannot say that for the whole year.

Our London hotel has about 40 suites and seven penthouses. No one else has that many so when there is a month with high demand, we definitely do better as they fetch a lot of money. With more time, we aim to increase the rates of the standard rooms. By 2016, we will be matching our competitors’ average room rates – or exceeding them.

You are finally going ahead with Rome. Have you found investors for the project? Have you found the right location?

There is a sovereign fund and an Italian bank involved but we will be the developers and the managers. Discussions have been going on for around 20 months, and obviously the Italians who are selling the property demand a lot, as do the buyers.

If we do a good job for the fund and they trust us – and we believe it will be the best hotel in Rome – then we can then do this again and again in other countries.

In December, you referred to a joint venture in the US. Is your New York dream going to become a reality?

Yes, I am going there next month to try to close a deal.

At the age of 76, you still show no sign of slowing down. When will you say that you have done enough?

Let me be philosophical. I never worked because I wanted to have €5 in my pocket. I was presented with a responsibility and always felt I should give my best.

If you sow 100 seeds in the soil, nature will ensure that 95 will grow. You don’t need huge feasibility studies to tell you this: the figures are in any case never certain...

Choose good ground, water the seeds, look after them – and let nature do the rest. There is a natural energy that you just need to tap.

But in the midst of all of this, you still get problems. At times I wonder what I did in the past to deserve these!

Why am I still here? For how long? It would be great to be selfish and to dedicate my time to the simple pleasures of life that matter...

Just as a mother has a responsibility to her children, gradually letting them go, I have done the same and have relinquished some 70 per cent of the day to day operations of the group. We have extremely capable people. In the future, I believe we will be 10 times as strong as we are now.