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Elegant Hotels Group Plc

CEO Q&A with Sunil Chatrani at Elegant Hotels Group PLC (LON:EHG)

Elegant Hotels Group PLC (LON:EHG) Chief Executive Officer Sunil Chatrani caught up with DirectorsTalk for an exclusive interview to discuss their half-year results, the drivers behind the revenue increase and the company’s strategy.

 

Q1: We’ve just seen that you’ve published your unaudited results for the 6 months ended 31st March, if we can start by talking through the market context in Barbados at the moment, and what the general trends are around visitor numbers?

A1: The overall picture in Barbados is positive, arrivals to the island from the UK increased by 7% during the first half of the financial year versus the prior period. We think that this is partly due to the England cricket tour of the West Indies back in February but in fact demand from the UK has remain strong.

Clearly, this is good news for Elegant Hotels Group and UK guests increased to 79% of our room nights compared to 77% in the prior period. We also think the general uncertainty in the UK market at the moment has driven a trend towards the all-inclusive properties, given the added uncertainty of having the cost of the holiday locked-in at the time of booking.

Visitors from North America to Barbados were up 2% and this is an area that we’re still focussing on in order to push that number higher. There’s still quite a bit of competition on the island, particularly the all-inclusive value segments but we’re continuing in our strategy in investing in our properties in order to enhance our guest experience and to keep our offering as attractive and competitive as possible.

 

Q2: What were the factors behind the revenue increase during the period?

A2: The increase was primarily driven by the addition to the portfolio of Treasure Beach, it delivered a significantly improved performance and contributed a full year of results, having opened in mid-December 2017 following the acquisition in May 2017.

The wider trend towards the all-inclusive segment that I mentioned earlier was also in evidence of our performance with strong contributions from all of our all-inclusive properties which are Crystal, Waves and Turtle Beach. This also helped to boost our occupancy rate which was further enhanced when we targeted a tactical discount in certain areas of the portfolio.

Finally, an important point that should be noted is that the nature of our business means that we have good visibility of bookings and therefore earnings for the remainder of the financial year. As of now, we have about just over 90% of our business on the books for the rest of the year which is obviously a pleasing position to be in.

 

Q3: Can you talk us through Elegant Hotels Group’s underlying strategy and perhaps give us some examples of it in action from the period that you’ve been announcing today?

A3: Our strategy is really comprised of three core elements and has been from day one, that is the day-to-day operational excellence; the existing portfolio enhancement and expansion.

In the area of operational excellence, we are constantly looking to improve our day-to-day performance and continue to receive great feedback from guests and guest satisfaction scores. We have a range of ongoing initiatives in this area and, during the period, we successfully renegotiated our key union contract which gave the majority of our employees an increase in wages of 2% each for the next 3 years.

In terms of enhancing our existing portfolio, we’ve continued with our tried and tested strategy of what we call the ‘3 R’s’, refurbish, reposition, reprice, in our hotels in addition to the regular capex spend of 3-4% of each hotel’s revenue. This year we’re spending approximately another $1 million on special projects, recent works in this area has included a refurbishment of a restaurant at Turtle Beach, and there’s a signature restaurant on the beach actually, and the opening of a unique rum vault at Colony Club which is one of its kind.

Lastly, in the area of expansion, there continues to be a number of compelling opportunities in the Caribbean, I’ve already mentioned the success of our most recent acquisition Treasure Beach and during this period Hodges Bay Resort and Spa Antigua, which is our first management contract and our first property outside of Barbados, opened to our guests. However, it’s worth noting that whilst further expansion is key to our strategy, in the long-term we want to continue to strengthen our balance sheet before expanding further.

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Disclaimer: Statements in this article should not be considered investment advice, which is best sought directly from a qualified professional.