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Q&A with Bob East

 Here is an exclusive extract from an interview with Mantra Group’s CEO Bob East in the October 2012 edition of HM.

By James Wilkinson

Bob, thanks for your time. Mantra Group was under a sale cloud for a number of months now – what is the latest on that front? The company will maintain its current ownership and shareholder structure, despite some significant offers considered.  Given the company’s financial success to date and forecasts for continued growth, the decision was made by the Board of Directors to further grow and develop the business by maintaining the current shareholders and leadership team, under which the business has prospered to date.
Mantra Group is a profitable and growing business – to sell for the sake of selling would benefit no one.  We set a high benchmark for any interested parties to meet and were prepared to continue under the current structure should the benchmark not be met and I am confident that continued growth and expansion can be achieved moving forward.

The group posted some impressive results for the 2011-12 financial year. Talk us through them and what you are initially expecting for 2012-13. That’s correct – we were very pleased with our results, which really reflect the strength of the business. We saw a 9% growth in profit to reach $60.6 million for FY 2012 with overall room revenue for the Group across our Australia and New Zealand properties up by 6.2%.  RevPar growth was also strong with a 5.8% increase across our 22 CBD properties and 5.2% over our 85 resort properties.

How much of an impact is the mining boom having on your properties across Australia and which areas will continue to be hot-spots for the medium-term? The impact is most prevalent in Perth, Brisbane and Darwin where demand far outweighs supply.  Mid-week accommodation has become increasingly challenging for both corporate and leisure guests and whilst this means our hotels are full, we are also aware that educating these guests on their travel habits is important to ensure sustainability for the destinations – being smarter about the nights they stay and applying the same long term booking processes applied to flight bookings are just some of the things we encourage.

Peppers, in particular has been seeing significant expansion over the last 12 months. What have been some of the standout properties to have joined the group and what expectations do you have for expansion over the next 12-18 months? Peppers is going from strength to strength – five new properties added to the Australia/New Zealand network in the last 12 months with a number of acquisitions and projects in the pipeline. We are finalizing the new peppers CBD hotel concept and we will announce our first property later this year.
We are very protective of the Peppers brand and ensure that any property taking on the Peppers name lives up to the standards that 25 years of operation has built. So all of the properties are standouts in their own way.  Peppers Cradle Mountain Lodge is an iconic Australian property; Peppers Rundells Lodge is our first in an  Australian ski destination; Peppers Parehua Martinborough our first retreat in a New Zealand wine destination; Peppers Awaroa Lodge is a unique eco retreat in the Abel Tasman National Park and the newest addition, Peppers Carrington Resort is our first in the Bay of Islands region.

How about the New Zealand market? You have added several properties recently in NZ and what are your general expectations for success. New Zealand boasts some of the world’s best boutique retreats and resorts. The scenery and friendly culture make NZ on of my favorite destinations. We will continue our expansion there in retreats and we will announce Auckland and Wellington hotels early next year.

What’s the latest on your property in Fiji and could we see further expansion in the South Pacific? The Peppers Naisoso Island project is on track for completion in late 2013 and we are very much looking forward to offering the Peppers experience to Fijian holidaymakers and showcasing the brand to international guests as well as Australians and New Zealanders already familiar with the brand

How about your long-held desire to enter the South East Asian market, particularly on the back of strong outbound Australian traffic? We are in the process of securing resorts in Bali and also hotels on Papua New Guinea. Whilst these destinations are vastly different, the Australians visiting are keen to stay with brands they know and love. 

On the reverse, Asian markets are now turning to Cairns and even more arrivals are expected with the arrival of China Eastern and China Southern in the fourth quarter of 2012. What impact are you expecting? This is great news for TNQ and will build on the already increasing numbers of Chinese travelers we are seeing into this region.  Our Mantra properties in Cairns experienced record numbers for Chinese New Year celebrations this year with Chinese travelers also venturing further out to Palm Cove indicating that they are becoming more familiar with the region and looking to explore further afield.  These travellers accessed the region via charter flights and I am confident that with extra routes by China Eastern and China Southern, the region will become a favourite for this market.

Domestically, is the Far North Queensland region still struggling from an Australian traveler perspective? Our resort properties in Cairns, Palm Cove and Port Douglas reported a 7% increase in revenue for FY 2012 showing that the region has well and truly bounced back from summer of 2010 once again enjoying its place as a favourite Australian holiday destination.  The support shown to the region by Tourism Queensland coupled with our own tactical marketing campaigns have worked well and despite the Aussie dollar encouraging travellers overseas, we have been able to offer some very competitive deals ensuring the destination is accessible to all travellers, including families looking for quality and affordability.

Congratulations on how well the Pat Rafter campaign has been executed across a range of markets.. Has Pat been as successful as you expected and can you give us any insight into future campaigns with the tennis star? It’s been an absolute pleasure working with Pat Rafter.  He is certainly someone that enjoys holidaying in Australia and you can expect to see him out in the network over the next twelve months continuing to highlight the CBD and resort product within the Mantra brand.

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