The Island Hotels Group will start to consider opening hotels overseas within around five years, according to chief executive officer Winston Zahra Jr.
“There is nothing to stop us from growing – but I think we will stick with just three hotels in Malta,” he said.
“We have to see what business option would work best. Management contracts require a critical mass built up from having a certain number of hotels – which we do not have yet. It is more likely that we would open our own.”
The group’s current strategy is based on four distinct areas: the five-star hotel segment, vacation ownership, event catering and the Costa Coffee brand.
The group’s focus on the five-star segment prompted its recent sale of the Coastline Hotel for €14 million to the European School of English.
“We had 20 good years from the Coastline so the sale was an emotional one but one which made complete commercial sense. The property needed work and we had to decide whether it was better to reinvest or to sell.
“We knew that we wanted to focus on the five-star segment and that the Coastline, because of its location, would not really work even if its facilities were upgraded. But to be honest, the offer came along before we had really decided what we wanted to do with it and we know it will be in good hands,” he said.
The new buyers have outsourced the food and beverage services to Island Caterers so the group will remain involved with the property going forward albeit in a different capacity.
In the meantime, the time has also come to upgrade existing properties.
Two floors – 50 rooms – will be added to the Radisson Blu Resort in St Julian’s, as soon as details are finalised with Mepa, the architects and designers. A conference centre will also replace the car park alongside the hotel with the car park spaces moving underground.
“The hotel was built in 1997 and things have changed since then. We need a product which will be more in line with current trends and needs,” Mr Zahra said, explaining the rationale behind the €20 million project which will kick off by year-end.
This also means an extensive refurbishment of all the rooms and public areas, which means the hotel will be shut down for around eight months. Staff will be retained on other duties or in other group properties.
The business model will also be changed, and around 45 rooms will be dedicated to vacation ownership, a concept which has worked particularly well at the Radisson Blu Resort & Spa, Golden Sands.
“It is very popular with the British market who find it very flexible. They love it because they know what they are getting and know that they will be looked after,” he said.
Not much needs to be done at the Radisson Blu Resort & Spa, Golden Sands, built eight years ago, leaving the group to focus on the construction of the Oasis resort on the 85,000-square-metre grounds of the old Ħal Ferħ complex, only one fifth of which will be built up, to retain the exclusive feel which will appeal to its top end clientele.
“In all, 60,000 square metres of the land will be landscaped including 12,000 square metres outside the boundary walls, to create the feeling of an oasis, of quality and privacy. There is no other development in Malta which comes close from an open space perspective,” he said.
The two-year project will start once the group has the right equity base in place and it is plausible that the project will commence at the same time as that in St Julian’s, making this a very challenging period for the group, something which should worry Mr Zahra, but which actually invigorates him.
Which could explain why he has decided to compete with the exhibitions being held at the Malta Fairs and Convention Centre and recreate the old Trade Fair scheduled to be held at Montekristo Estates in Ħal Farruġ.
Mr Zahra explained that almost 70 per cent of the exhibitors’ spaces have already been sold. The catering and events side of the group has been working at the estates for a few years, building up a portfolio of weddings, parties and corporate events. Island Caterers continues to grow its revenues, with its profit holding stable.
As if all this were not enough, the group is venturing overseas with the Costa Coffee franchise through its partnership with Buttigieg Holdings, a development that was announced some weeks ago. It will open 75 outlets across Spain, while in the meantime adding two or three more stores in Malta to complement the existing five.
“The Spanish contract was a great boost for us. It will give us an international presence, something that we intend to pursue in the future,” he said.
“This is the best time to go to Spain because it is now starting the road to recovery after its recession. Unemployment is finally falling and it still generates over €50 billion every year from tourism,” he said, pointing out the help the company received from the Spanish Ambassador and the Embassy when putting together its bid.