Cara Hotels in bid for Le Meridien
By Mark Ramotar
Guyana Chronicle
March 7, 2007
GUYANA-BASED Cara Hotels group yesterday confirmed its planned acquisition of Le Meridien Pegasus Hotel in Georgetown, with founders and owners Paul Stephenson and Shawn McGrath optimistic the major deal can be closed in three months time.
“We - Cara Hotels - are confirming our intention to acquire Le Meridien Pegasus Hotel in Guyana,” Stephenson, 49, told the Guyana Chronicle in the presence of his business partner, McGrath, 45.
“We already have an agreement with the Directors of the Pegasus in London but there are certain aspects of the transaction that still need to be finalized and this should be completed within the next 90 days,” he said.
Over the past several months, McGrath and Stephenson said they have both been in regular contact with the Directors of Le Meridien Group in London, which owns the Pegasus in Georgetown, and they have since worked out most aspects of the deal, including the acquisition cost.
“We have been in contact with the Directors of Le Meridien (in London) and we have already agreed on the acquisition price and we are now working on closing the deal,” McGrath said.
He declined to give details on the acquisition price but said it is “obviously a very substantial sum”.
“We are about 95% in closing the deal; it’s just the final aspects of the deal that we are currently working on.”
“Realistically, we are talking three months or 90 days to close the deal,” Stephenson said, nothing that what is left to be done is mostly paperwork. “We just have to finalize the investors, the shareholders agreement and the banking agreements and getting all the legal paper work done.”
He said, too, Le Meridien Group in London is “pleased” that a “Guyanese hotel company” in interested in buying the hotel, instead of an overseas company.
“The feel I get is that they (Le Meridien Group) are pleased that it is a Guyanese hotel company that is making the approach to acquire Le Meridien Pegasus in Georgetown.”
Stephenson, who was the General Manager of the Pegasus Hotel from 1986 to 1994, and McGrath, who was the Deputy General Manager of the Pegasus from 1989 to 1994, both have a wealth of knowledge and experience in managing hotels.
When the two left the Pegasus together in 1994, they co-founded the Cara Hotels group in Guyana with the opening of Cara Suites on Middle Street, Georgetown in January 1995.
With hotels in Georgetown, Guyana; Castries, St Lucia; and Pointe a Pierre, Trinidad, Cara Hotels is a company that addresses the needs of the modern business and leisure traveller, according to the charismatic and forward-thinking businessmen.
“Over the years we have offered our guests a special brand of hospitality that makes us their number one choice and keeps them coming back, year after year,” McGrath posited.
HOTEL TO BE RENAMED ‘CARA SUITES PEGASUS’
“Our plan is to re-establish the ‘Peg’ (short for Pegasus) as the leading hotel in Guyana,” Stephenson said.
After the acquisition, Stephenson and McGrath said Le Meridien Pegasus will be renamed ‘Cara Suites Pegasus’.
An initial US$1.5M will then be spent on rebuilding and refurbishing the bedrooms, foyer, poolside area and Savannah Suite.
“The refurbishing process is earmarked at US$1.5M to get the property back to the level where Shawn and I left it in 1994,” Stephenson said.
The rooms, he said, will be transformed from the way they currently are, in terms of décor and will have more modern amenities and facilities.
When this refurbishing process is completed, an additional US$3.5M will be spent on building an entirely new wing at the hotel where an additional 75 luxury rooms will be installed, along with a conference facility large enough to accommodate 500 persons, a new leisure facility and tennis courts.
The area between the seawall bandstand and the current tennis courts will be the section that will be utilized to accommodate the planned expansion, according to Stephenson.
The two hoteliers also said they have applied to the Guyana Office for Investment (Go-Invest) for incentives under the Tourism Development Act. They are scheduled to meet Head of Go-Invest, Mr. Geoffrey DaSilva next week to confirm the support from the investment agency.
“You need these kinds of incentives; it keeps the bankers happy and the other investors happy,” Stephenson said. This will be followed by more formal meetings with the government, including with President Bharrat Jagdeo, as early as next week.
Located just minutes from the heart of Georgetown’s business district and diplomatic missions, Le Meridien Pegasus has for a very long time, been Guyana’s premier luxury hotel.
The establishment of the spanking new architectural masterpiece in the form of the Buddy’s International Hotel at Providence, East Bank Demerara, opened two weeks ago, has since challenged the Pegasus as the top hotel in the country.
Le Meridien Pegasus is situated on the sea wall near the mouth of the Demerara River, affording guests cool breezes from the Atlantic Ocean.
EX-EMPLOYEES
The businessmen noted that they both worked for the Pegasus Hotel in the later part of the 1980s and early 1990s through management contracts.
“Shawn and I had the privilege of running that company from the early 1986 to 1994, so we certainly know that property well,” Stephenson said.
“Our final swan song managing Pegasus was the visit by the Queen of England,” Stephenson said, in reference to the visit here by Queen Elizabeth 11.
Stephenson also believes standards at the Pegasus have dropped over the years because it has been a main player in the sector for a long time and is probably going through “an ageing process”.
“In the hotel sector, when you are a long term player or a main player in the sector for a long number of years (you find) that hotels can go through a process of aging and maybe this is a timely acquisition by Cara which is coming in with fresh eyes, a fresh heart and fresh feel.”
“So I think this is a natural progression,” he said, adding that there were too many rumours on the intended acquisition that needed to be clarified.
“We want to set the record straight; we have been after this acquisition for sometime now, several months in fact, and some people in Guyana got to hear about it.”
“…but there seem to be a lot of rumours going around, some factual, some not and so Shawn and I decided to get specific things in place before speaking to the media and setting the record straight,” Stephenson told the Guyana Chronicle.
“We have been in Guyana for some 20 years now and sometimes what people don’t know they will make up,” he asserted.
He made it clear that the planned acquisition of Le Meridien Pegasus Hotel is “strategically linked” to Cara Hotel’s expansion.
“Cara Suites has done very well, Cara Lodge has also done very well – it’s a very unique and historical property, so the core business, having started in Guyana has done very well and the reason we are so interested in the Peg is because it is a natural development process…”
“Having succeeded in Guyana, to expand is something we wanted to do for sometime and the acquisition of the Pegasus, in terms of the room stock - can take us up to 187 rooms as the Cara Group within Georgetown,” he said.
“This is all part of consolidating our presence in Guyana and we affirm that we are a Guyanese hotel operating company,” he added.
With this impending acquisition, Stephenson said it will “firmly establish Guyana as the main operating base of Cara”, and he dispelled rumours and suggestions that the group had jumped ship by establishing other hotels in other countries of the region.
“The acquisition of this hotel makes good economic and business sense for Cara; it’s a commercial decision – in terms of improving our vision of the company, in terms of purchasing power, better financial management and better employment opportunities among other things.”
According to him, the National Insurance Scheme (NIS) currently has a 3% or 3.5% shareholding interest in the Pegasus, and there is every likelihood that that shareholding interest by NIS will remain unchanged after the planned acquisition.
The businessmen said they have been in talks with two other investors they want to bring in on the deal, and meetings have been scheduled with two more potential investors later this week or next week.
“There is a very formalized, sensible financial structure that we are putting in place to acquire the Pegasus,” Stephenson said.
“Shawn and I might be doing well but we certainly are not Donald Trump and we cannot acquire a property of that size and magnitude so we have to gain the support of the local commercial banks.”
“We have support from two local banks who have expressed an interest in providing us debt,” he said.
Stephenson also dispelled talk that he and McGrath had “won the jackpot”. “No; we did not win the jackpot …this is a very strategic investment structure that Shawn and I had put together where the mechanism will be the Cara Hotels Group of Companies as the shareholders.”
“So far we have one Guyanese investor and we have one overseas investor (and) we have now been approached by two other local investors who we will be meeting with later this week and next week to see what they are bringing, or are willing to bring, to the table,” Stephenson said.
“While not disrespecting our overseas interested party, Shawn and I have a preference to have a 100% Guyanese-owned and operated situation at Pegasus,” he told this newspaper.
The businessmen are also not worried about competition, declaring that they have already worked out their marketing strategies which will be based on offering excellent and efficient services of the highest standards to customers.
“We are not overly concerned. We are prepared to enter into a competitive market and we know we can succeed that way because we have done it in Guyana before,” Stephenson contended.
The hoteliers said they are not intimidated by the newly opened Buddy’s International Hotel or the soon to be established Marriot hotel which is on the cards to be built a stone’s throw away from Le Meridien Pegasus.
“I am not intimidated by Marriot (because) they will have to take up arms on our home ground, with local support and the goodwill we have here locally,” Stephenson said.
“The sector is expanding and it is going to get a lot more competitive and we are positioning ourselves to be a competitive player in the game,” he said, while lauding the favourable investment climate that currently exists in the country.
Stephenson is also very optimistic and confident that with his and McGrath’s skills and experience, they can certainly improve and lift the standards at the Pegasus in the coming months, once the deal is finalized.
“With our combined skills and experience…we are confident we can do a better job with that hotel (Pegasus),” Stephenson added.