Well, so Rocco, thank you for joining us today.
Well, great to be with you. Thank you for inviting me.
I think to start off, we're in Italy at an Italian hotel investment conference. Obviously Italy is very strongly associated with your family. It would be great to get a sense of how important it's been to the Rocco Forte Hotels brand and any projects you've got at the moment in the country and any future plans.
Yeah, well, it sort of happened because obviously I started from scratch again some 27 years ago and so there was no clear plan. It was pragmatic—our development, as projects came along, we decided whether they interested us or not and went into them. And we seem to have developed quite a footprint in Italy, and that's where our main concentration is at the moment. Over more than half our business is in Italy now. So with a strong presence here, we have a regional office, so with any project we can hit the ground running. We don't have to learn about the systems in Italy, understand the difficulties that you find in Italy with planning and so on. So we have a greater advantage over a lot of operators coming in from overseas. Everything that comes up in Italy tends to come to us at an early stage, so we can quite quickly decide whether we like the look of the project and get there as one of the first people at the table, which of course also helps.
We've got a number of projects under development. The most recently announced one was a small hotel in the center of Bari, an old palazzo—Palazzo Catlutro—which was being restored and we're turning it into a 35-bedroom hotel. We have another project in Puglia, in Ravello, which we're doing with the Benetton family. We have obviously the hotel in Milan which was announced quite some time ago and has been delayed a bit by COVID, a bit through construction issues, which should open next year. It's going to be the latter half of the year rather than the early half. And a hotel in Naples which is already under development—an old palazzo there, a 45-bedroom property which would be quite unique in Naples. Naples doesn't really have a class hotel at the moment so this will provide it and I think it'll be very successful as a result. And we're looking at a number of other projects around Italy which are at quite an advanced stage and I can't yet talk about them.
What are you looking for when an opportunity comes? Is it the city, the location within the city, is it the building itself—all those things. How do you assess a project's viability?
Well, obviously at the beginning you want to be in the major cities, and we now have representation, or will have over the next two years, in all the major cities except Venice, and we're still looking to find something in Venice which is of course very difficult. But there are a lot of other areas of Italy. The attraction of Italy as a tourist destination is unique. There are a lot of destinations in Italy where you can go and open a hotel and achieve very high room rates, and there are very few countries in Europe like that. The Amalfi Coast, for example. We opened in Sicily in Taormina—there was no hotel at that level. Obviously the Villa was always a grand hotel but it hadn't been run as a luxury hotel for some time.
Are you making the markets? If you're saying these places you can achieve the rates, that makes it worthwhile making the effort to be here?
So we'll continue to expand in Italy, but obviously if we want to be an international company then we've got to move further afield. We're getting ourselves organized now because we'd like to be in the States, we'd like to be in Spain and some other parts of Europe. We don't have enough people on the ground at the moment. We have a development team which is run by my son now, based in London. It's relatively small. We don't have anybody on the ground in the States or in other parts of Europe, and that's what we're working on now, so we get to hear about projects early. At the moment we hear them late in the day and usually they're already dealt with—the operators have already been found.
Taking on that kind of question—last year I think it was, you had the investment from Saudi Arabia's PIF buying a 49% stake in the company. Has that helped you with these expansion plans going forward? Has that made it more of a priority?
Yes, because it's given us—there was an injection of capital into the company as well as buying some of the existing shareholders out. CDP came out at that stage, and then I had a number of my sisters—my father invested money in the business when I first set it up and a number of my sisters were not involved. I have five sisters, so only Olga is involved in the business, and so they were rather reluctant shareholders. So I wanted to—it was the right thing for me to do—to get them out of the business. That's what they wanted. And so this opportunity came along, I decided to see if the market would be interested in buying a stake, and PIF came along exclusively, went ahead with them, and we did this deal. But there's an injection of capital into the company as well, and that's given us a bit more flexibility than we had before.
Initially we're accelerating the refurbishment program in our existing hotels. For example, this current year—our year ends in April and most of the work is done in the winter when the hotels are quieter—we're spending over 40 million in the existing hotels, which is at least twice as much as we spent before in any one year. So there's an accelerated program of refurbishment taking place. But in terms of even when you're going for management contracts, which is the easiest way to expand without capital—nowadays there's key money and things like that—and we're in a better position to be able to compete in that area than we were before as a result of their investment. They're very good partners, they're very obviously financially very strong, they have a long-term vision—they're not in and out as some funds are—and therefore it gives us continuity. Together with the family, which is also—I have no intention of getting out. If I wanted to get out I'd have got out now. I want to continue running the business for the foreseeable future and eventually see my children doing the same. So we take a long-term view of things and they're completely aligned with us on this.
Did you see an opportunity kind of post-COVID I guess to really accelerate the growth of the company? Is that why you were looking, or was it just a general evolution of how you were growing?
No, I mean there was a moment when I saw that there were transactions in the marketplace at quite high multiples, so I thought that was an opportunity and I wanted to test that. I got Rothschild involved and we went to the market, and that's how the PIF offer came forward. I mean, there's been of course a significant increase in room rates in the luxury sector since the opening after COVID, and of course that's made a big difference to the overall profitability of luxury businesses as a result.
