Nearly a year after becoming a publicly traded company, Playa Hotels & Resorts has announced a deal with Sagicor Group Jamaica Limited that will make Playa one of the largest owners and operators of luxury resorts in Jamaica. The move further consolidates the all-inclusive market as well as strengthens Playa’s industry leadership in the island nation.
Kevin Froemming, executive vice president and chief marketing officer for Playa, discusses what went into the agreement and how it will benefit both companies and Jamaica in the years to come.
Tell us about the merger with Sagicor Group Jamaica Limited on the business side of things. How do both companies benefit moving forward?
With the acquisition of the Sagicor group of hotels, it puts us in a position where we are in the top three for the most guestrooms in Jamaica. Sagicor had good resorts in great locations, and it is a very professional organization.
From Sagicor’s perspective, it wanted to continue to invest in Jamaica and this sector. But that wasn’t its expertise (it is one of the top corporate insurance companies in the country).
Sagicor now has two seats on our board of directors and a substantial amount of shares in Playa — it wasn’t an all cash deal — including $100 million cash and $200 million of stock. That allowed the company to continue as investors. So, as Playa grows, Sagicor’s portfolio grows as well — without the risk. One of the challenges that Sagicor had by being so highly leveraged in Jamaica is that sometimes you’ll have a problem in a single destination. Being diversified, such as we are, is a major benefit.
If there’s a problem in Jamaica, you’ve got Mexico. If there’s a problem with some of your resorts in Mexico, then you have the Dominican Republic. It balances itself out.
At the same time, we’re creating a breadth of properties for our resellers, too. We can make a lot more noise together than Playa and Sagicor could have separately.
What brought about this transaction?
It’s like anything else in life: Your relationships and your partnerships really mean a lot as you move forward and put things together. My roots go back to Jamaica. Playa’s chairman and CEO Bruce Wardinski got along very well with Richard Byles, Sagicor’s chairman; and Christopher Zacca, its new CEO, worked with me when I was at Sandals Resorts. All of us go back a long way, so when we sat down to talk, we had a history of working together.
We want to be one of those major players, and by no means are we done with growth and other deals that can put us into new destinations, such as St. Lucia and Aruba. We’re also very interested in getting into Asia. We think our product would do extremely well in destinations such as Phuket, Thailand, and Bali, Indonesia, as well as Bora Bora in French Polynesia. Those are all priorities for us going forward.
How will the move affect Jamaica’s tourism industry?
From a trade standpoint, I think it’s great because we’ve spent a lot of time on relationships, and this just solidifies our ability to deliver more product to travel agents in meaningful ways.
I have nothing but appreciation for what travel agents and tour operators have done in embracing this product. We’ve put together a lot of loyalty programs for them and are constantly working on tools for the industry to be able to sell our products better. The response from the travel agents has been terrific; they were very excited about this.
Being the first publicly held, all-inclusive company is a big step for our industry. It provides more and better product. You’re going to see more Hyatts launching, which I think raises the bar for all-inclusive resorts moving forward. Hyatt has an internal scoring system that they use for all its hotels. Each month, our resorts consistently rank at the top.
As the product improves, the destination is going to be viewed in a positive light. At the end of the day, hotel rooms breed more air traffic, which strengthens tourism.
The Details
Playa Hotels & Resorts
www.playaresorts.com
