Issue link: https://maltatoday.uberflip.com/i/1120492
23.05.19 10 INTERVIEW Taking leisure and entertainment Simon De Cesare B.Sc MBA (USA) is the CEO of the Eden Leisure Group, a family owned business in the Leisure and Hospitality sectors. He speaks to Business Today about the Group's business, Ian and Kevin De Cesare's vision and legacy and his concerns about the future of the tourism industry MASSIMO COSTA Eden Leisure Group's entrepreneurial journey started in the late 1960s, and in 1980 moved its operations to St Julian's, diversifying into entertainment. ELG now includes two hotels, a cinema, a radio station, and more…. Was this massive expansion planned all along? I don't think it was a case of having a 40-year plan or vision going forward. My grandparents opened our first hotel – the Eden Rock Hotel – in Sliema back in 1967. Later, my father and uncle expanded the business to St Julian's in the 1980s. I think the expansion was the result of the successful businesses which they opened in the 1980s – the nightclub Styx, later Styx 2, and the Eden Beach Hotel which we opened up in this area. ese were one of the first commercial enter- prises in Paceville and St. Julian's. We built on our success, and grasped at opportunities which were lacking in Malta at the time – such as the fact that at the time the island had about 30 single-screen cinemas, which were all poorly invested in and were lacking the new technolo- gies. We noticed there was an opportunity for us to open the first cinema multiplex with digital surround sound, in Malta, and these ended up being extremely success- ful. Another thing which cropped up was the liberalisation of the radio market, which was an area we went into straight away. ere are still a lot of radio stations out there on the market, but Bay Radio has undoubtedly been the most successful in terms of audience numbers. It's about always looking at what the next chance could be – whether it's an interna- tional opportunity, or a new legislature, or the opening up of markets. For instance, the launch of our casino in 2015 was a result of the fact that the gov- ernment was looking to have another op- erator in Malta. e same happened when we saw a great opportunity in bringing in the first brand- ed three-star property – Holiday Inn Ex- press. In 2008 we had a gross profit of around €8 million, 10 years later in 2018 this had doubled to around €16 million. Last year, our company had €186 million worth of assets. Your group includes about 11 different diverse units, all focusing on entertainment. Which one of these units is the most fun for you to work with? ey're all very different. I moved into the CEO post at the start of 2017 and before that I was director of operations. I think the area which was probably the most fun was the cinema, because it is so diverse on a week-to-week basis with the film product changing all the time. One has to come up with different marketing ideas each week through which you try to excite the public to come and see the film – whether it's traditional events, midnight screenings… And which is the most profitable? e InterContinental is by far the largest and biggest contributor to the Group. But the entertainment basket as a whole is also very successful by itself. None of our oper- ations post any losses. In fact, our princi- ple of not tolerating businesses which lose money for too long has been an important strength for us. We've had our share of failures – one looks at the ice rink and our foray into mobile telephony– but we've realised there were flaws with their busi- ness models, and we moved on. Typically, we'd try to convert these into a business that works. Take the ice rink – this was converted into the InterContinental Are- na Conference Centre, which has been a huge boost for the hotel. All of the businesses are successful, and, on the entertainment side, all the different units have different needs and investment requirements. So far, we've been very for- tunate to be on a very good streak where all our units have improved year-on-year for the last five years. Some business-101 books advise against mixing family with business. But this is not what you did. What is the secret behind the De Cesare's success? Is it easy to work with family members? In Malta, most businesses traditionally are based on family. Recently, due to our growing size and the starting of our suc- cession plan from the original founders of the company, we've amended our business to move away from a typical family outfit. We underwent significant restructuring since my father, who is one of the founding shareholders, retired in 2017. We now function as a disciplined com- pany with good corporate governance and shareholders value at its core. We brought in external directors, and we've put in place family policies and an under- standing between all the family members of what is expected from them. ere is also a progression system based on merit, more so than it would have been were it a traditional family business. is has posed its own challenges, but, ultimately, I think it was for the benefit of the business. Nobody can be guaranteed a job here unless they perform and are the best person for that job. Such a system will allow us to go on for the next 10 to 20 years, contrary to the typical third-generation family business- es, which statistics show only have a 12 to 15% chance of success. When my father and uncle first started the business, they held two different roles. My father was more disciplined and feet on the ground , while my uncle was more creative and looked at other opportuni- ties to go forward. ey were a very good team, and it worked extremely well for 30 years. When your father Ian and uncle Kevin De Cesare first set out on their journey, did they always envisage St Julian's and Paceville becoming the entertainment mecca they are now? I think there was a general appreciation of the understatedness of the area and the proximity to a bay. Malta's tourism prod- uct was very small at that point. ere was clearly a lack of entertainment options available to the Maltese public back in the 1980s, and that's what fuelled the success of the business at that particular point. Did they know that it was going to turn into this? I don't think so. I think they were convinced of the business model that they were going into. ey realised there was a lack of good hotels on the market, and very few, if any, state of the art disco- theques and nightclubs, and no multiplex- es with digital surround sound and fan- tastic projection. ere was one bowling alley in Malta when we built ours but it closed down shortly afterwards. ese were the defining factors rather than the actual location. I would hazard to say that the potential projects, which are earmarked for this location in the coming years, could actu- ally end up being quite a negative or detri- mental aspect. Tourists who come to this area and are faced by cranes absolutely everywhere. ere are places which have become more attractive, such as Valletta. I've expressed concern about the future of the tourism industry, because over the next few years the number of hotel rooms is going to double, and it's just simply not feasible and sustainable to expect the Everyone seems to be getting into small hotels without any real experience or understanding of the business, and they're probably over-paying for land and for the building, because contractors are very hard to find at the moment