Luxury resort firm Karma Group plans to list in Singapore within five years as it expands its footprint in the region.
Founded by British entrepreneur John Spence in 1993, the company operates 26 resorts worldwide, including a hotel at the foothills of the Bavarian Alps, a chateau on the French Riviera and cliff-top villas in Bali, Indonesia.
Six more properties are under development in Australia, Brazil, Bali, Crete, Japan and Sri Lanka.“We thought about a listing a couple of years ago and came to the conclusion that we didn’t have enough scale, so we intend to add more resorts, increase the revenue of the company,” says Mr Spence, Karma Group’s chairman.
Karma Group has over 1,500 rooms across more than 10 countries – 40 per cent of the rooms are in Asia, particularly in Bali and Goa, India. The resort owner has his eyes set on the Indochina region next, after recently opening a 28-room boutique hotel in Hoi An, Vietnam. The plan is to have two or three properties in the area that can be offered as holiday packages.
“Our top priority is Siem Reap in Cambodia. We have got a shortlist of about 10 properties to look at in Siem Reap. The combination of Angkor Wat and Hoi An is a logical one… We will be looking at Laos or Myanmar a year from now,” adds Mr Spence, 55.
There is also an intention to set up a representative office in China next year to tap the country’s growing middle class. However, opening a new resort in China is still some way off as the firm has yet to identify any development sites.
Resorts under the Karma Group typically have between 20 and 200 rooms each, with an average occupancy in the high 80 per cent range.
The company booked turnover of US$120 million (S$167 million) last year, with Ebita (earnings before interest, taxes and amortisation) at US$16 million and growth at a compounded annual rate of 18 per cent over the past four years.
Not bad for a wannabe rock guitarist who dropped out of the University of York after just six months. “I was reading English literature. It was fine but I got bored… I dropped out, I thought I was the best guitarist in the world in the 1980s in London. Turned out I could not even get a job as a guitarist in a punk band.”
“I was reading English literature. It was fine but I got bored… I dropped out, I thought I was the best guitarist in the world in the 1980s in London. Turned out I could not even get a job as a guitarist in a punk band.”
Mr Spence soon found himself working for a music agency as an agent representing a myriad of bands, including Bananarama, Culture Club and the Eurythmics. His key duties were working with concert promoters to put together tours as well as spending hours each night scouring clubs and pubs for the next big thing.
“The experience in the music industry was fantastic… I was 20 years old and I was running around London in my convertible Porsche while my friends were studying to be lawyers and accountants at the university. I thought I was king of the castle!”
But after four years, he was burnt out and decided he needed a break from the fast-paced music industry. He went to stay with his mother for three months in Tenerife, where he took up a job selling property, despite having no prior experience in the real estate business.
“I gave it a go. I was very good and ended up selling a lot. I spent nine years with the company and never went back to the music business.
“In 1993, I decided to start a venture myself,” says Mr Spence, adding that he was “blown away” by the development potential in Goa, when he was in India to speak at a conference.
Armed with personal savings and cash from a mortgaged flat, Mr Spence “took a punt” and bought his first site for development in Goa, marking the birth of Karma Group. The firm expanded in India, then to popular destinations in South-east Asia such as Bali and Phuket, as well as to Australia and Europe.
Mr Spence says the hospitality sector has changed, but he still remains bullish about its prospects, despite sluggish global growth. “The hospitality sector is very resilient; holidays are one of the last things people will give up.”
However, he notes that having a diversified portfolio of properties in different countries helps the firm manage risks and cope with economic uncertainties. Karma Group made its first foray into Britain a couple of years ago, by signing a long-term lease for the St Martin’s Hotel in the Isles of Scilly. Mr Spence is on the lookout for more deals in his homeland.
Far from throwing his plans off course, Britain’s vote to leave the European Union in June presents good opportunities for the industry, he believes. “Brexit may mean that more British people holiday in England. I think English hotels are going to have a boom… if the pound is weak, people are more encouraged to come.”
Even though it has been decades since he left the music industry, the resort owner still feels he is very much in the entertainment business, as holidaymakers “expect to be entertained, be it the cocktail barman making a good cocktail or the sushi chef slicing fish”.
Taking it one step further, Mr Spence recently teamed up with Sanctum Hotel Group in a 50:50 joint venture to open luxury rock music-themed hotels around the world, including in Los Angeles and the Bahamas.
“The first one opened in London, Sanctum Soho Hotel… we believe there is a big gap in the market for 40- to 50-room boutique hotels which are full of rock and roll paraphernalia and where bands stay when they are on tour.”
Having cut his teeth in the music business in the 1980s, Mr Spence says he has learned some valuable lessons that still apply today.
“The first thing is the importance of empathy and personal relationship with your clients… It’s about having a long-term relationship and leaving a bit on the table, and looking at how the other party can win in the negotiation too.”
This story first appeared on The Straits Times Online.