6 MARCH 2002

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Beating bureaucracy in business

Silvio Debono of the Seabank Group, and Tony Zahra of Alpine Holdings, have developed and opened the Grand Hotel Mercure Coralia San Antonio in St Paul’s Bay, which is under a 10-year management contract to Accor, the world’s second largest hospitality and leisure operator. Here, Mr Debono speaks to MIRIAM DUNN about the challenges that such a major project bring.

How did the Grand Hotel Mercure Coralia San Antonio concept come to you?
The idea first came to me a few years ago, when I was on holiday in Tenerife. I stayed at a hotel which gave me everything I could possibly want from my ideal holiday. I felt completely relaxed. Everything was welcoming and soothing – from the décor to the landscaping. When I returned to Malta, my mind worked on the question of what made that particular hotel so good. How could I possibly reproduce the effect back home? I decided that when the right opportunity came along, I would go for it. Then the Hotel Hyperion was put on the market. After talking things through with Tony Zahra, we decided to go ahead and buy it. The rebuilding project was certainly not plain sailing all the way – for example, it took us longer to get our permits than to carry out the actual construction work. It was one year before we got the green light, but then we took the whole project from start to finish in just nine months. The San Antonio has actually been hosting guests for a few months already now, though the formal inauguration by the prime minister took place just a few weeks ago.

How should these problems be solved for others who want to take on major projects such as this?
Time is money, and with all projects, from the smallest shop to the biggest hotel, there has to be a timeframe in which to get things moving. We fully understand that the Planning Authority has its duties and obligations, but there has to be a certain degree of understanding and cooperation. The Planning Authority and business people should be thinking in terms of partnership with each other, rather than opposition to each other. We have a common goal, after all: that of getting Malta ahead. I’m happy to say that I have seen a marked improvement over time, but not everybody understands the exigencies of business. Delays in government departments or authorities may mean little or nothing, but in business they are significant. Interest has to be paid on bank loans. People have to be paid. Contractors have to be engaged. Future business has to be hauled in, and commitments met on time.

Are you concerned that the events of 11 September will have a negative impact on the Grand Hotel Mercure Coralia San Antonio’s performance?
No. Life goes on and, as the hotel’s manager has already said, the wheel has begun to turn in our favour. Under Accor’s management, the San Antonio is performing beyond our expectations. There have been times over the last few weeks when not a single room was available. We have had inspection visits from foreign tour operators who have expressed their satisfaction. You should remember that Accor has a powerful, worldwide sales and marketing network, and that its branding plays a crucial part in the hotel’s success. People the world over know and trust the Accor name. Also, this hotel is a first for Malta: a four star plus, which is somewhere between a four star and a five star, with full conference facilities and resort amenities. It has certainly filled a gap in Malta’s tourism product.

Would you like to see more support from the government to help improve Malta’s tourism product?
Most definitely. The government could certainly do more in terms of upgrading the infrastructure and public areas, to bring these on a par with countries that are competing with us. Developers are investing in hotels, but the facilities outside them leave much to be desired. I am all for encouraging cultural tourism, but other markets cannot be tapped because we do not have the facilities. If we need better beaches and more golf courses, then let’s go for them. The government must get moving in this respect – the work should be done before the product is marketed, rather than vice versa. We know that competition is tough, and we need all the support we can get to help beat it.

The hotel’s holding company, San Antonio plc issuing bonds shortly. Can you tell us more about this decision?
Not before we have the green light from the Malta Stock Echange, since it would be against the rules. But I can say that we are doing this to assist in the financing of the project. It is a little bit antiquated to think in terms of the banks as being the only option for project finance. There are other means, and corporate bonds are on the up and up elsewhere in Europe. Also, people like bonds. They offer a better rate of interest than bank deposits do, particularly now that bank interest rates are being cut. It gives some satisfaction to investors, too, to see the fruits of their investment as projects grow and perform. It is a way of doing business that inspires confidence and creates a sense of participation.

Do you think that entrepreneurs in Malta are adapting to changing market trends?
It is important to change with the times, and to keep ahead of the trends rather than trailing behind them. The way we have dilly-dallied over providing Malta with a golf course of international standards is a case in point. Unfortunately, some people are stuck in the old style of doing business and seem completely unaware that they cannot continue in that fashion without destroying their chances of survival. You even come across business people who think in terms of the cash that comes in as being all profit – theirs to do with as they please. This may seem incredible, but it happens.

Do you think Malta shows signs of being in recession?
No. It appears that people are observing problems outside Malta and then adopting a cautious approach in reaction to them, just in case. Or they may have had shares which were adversely affected in the on-going bear markets. But there’s money around. It’s just that people aren’t spending that much of it; they’re putting it away. There are many millions deposited with our banks. The government has come up with a way of repatriating some of these funds through its special exemption scheme, which is valid only for this year.

How did you get started in business?
I was born and bred in Mellieha, and started work at the Arches restaurant 20 years ago. I then took over a small bar, which I converted to a restaurant. Then I acquired the Seabank Hotel, which was then a guesthouse with just nine rooms. It has since become a hotel with a disco, pizzeria, and restaurant. Now we also operate the Hard Rock Café (Malta), the Tunny Complex and have a 33.3% stake in the Porto Azzurro Complex and of course, own – with Alpine Holdings – the San Antonio.

What do you see as the key ingredients of a successful business venture?
A clear vision, keeping your objectives firmly within view, careful cost control, and flexibility from all those involved, including employees. If you want to make it worth, then you have to do whatever it takes. I have great faith in Maltese people – our human resources are excellent. We learn quickly, and we are industrious and hard-working. But I think that the unions do need to be more flexible in their approach, and always bear in mind that businesses must make a profit, as otherwise jobs are on the line. There is no place for unrealistic demands.

The Business Times, Network House, Vjal ir-Rihan San Gwann SGN 07
Tel: (356) 382741-3, 382745-6 | Fax: (356) 385075 | e-mail: editorial@networkpublications.com.mt