|The Bahamas Investor Magazine
June 22, 2010
June 22, 2010
Some people work in the hospitality industry, others live it. Adam Stewart, 30-year-old chief executive officer of Sandals Resorts International, is ensconced firmly in the latter category. “My father was put on this earth to provide great quality service,” says Adam, whose father Gordon “Butch” Stewart founded the Sandals brand, which has two properties in The Bahamas, in 1981 in Jamaica. “He bought his first hotel when I was one year old. As a kid, I remember hotel after hotel, transaction after transaction. I mean, my old man has been dragging me around resorts since I was six years old!”
Brought up in Jamaica, the young Stewart was groomed to assume his current role from an early age, watching and learning from his father and developing an instinctive awareness of how the hospitality business operates. “It helped me to really understand the industry; to know who are the movers and shakers; and more importantly, to know what the customer wants from a resort experience,” says Adam, who became CEO in November 2006. “You don’t truly appreciate the investment and what it entails until you see it happening. And now I am older, I think I must do the same with my own son, because it really gives you a head start.”
A self-assured maverick, Butch Stewart built his privately owned, billion-dollar resort chain on a left field business concept that many at the time said would not succeed: an all-inclusive resort for couples only. One competitor famously said that “a resort for couples only would only last a couple of years.” Perhaps to his chagrin, the Stewart empire is now in its twenty-ninth year and includes 13 Sandals resorts spread throughout the Caribbean, as well as four family-oriented Beaches resorts, three luxury Royal Plantation resorts and two mid-budget Grand Pineapple Beach Resorts. Add to that, interests in The Jamaican Observer newspaper, an air-conditioning business and imported car dealerships, among other enterprises, and you have a formidable private sector group with a turnover in the hundreds of millions of dollars.
A natural successor to his father, Adam says he never had any hesitation in following in his “old man’s” footsteps into the resort industry. After graduating from Florida International University’s acclaimed Hospitality Management Program, Adam rejoined his father’s business as director of resort products, responsible for all property operations and revenues across the company’s three major brands: Sandals, Beaches and Royal Plantation resorts, which is run by Adam’s sister, Jamie Stewart-McConnell.
Having proved himself in that role, his father quickly installed Adam as CEO. “We are very different, you know, me and my old man. But in business, nine times out of ten, we instinctively think the same,” says Adam. “My father is like a wise old owl: been there, done that, seen it all. I am a little more contemporary thinking, maybe a bit faster paced. When you combine the two, when it comes together, that is what gives us the winning formula with Sandals.”
A gem in The Bahamas
As well as overseeing all areas of the everyday operations across the Caribbean resort chain, Adam has spearheaded the recent multi-million-dollar development of the Emerald Bay resort in Great Exuma, which he regards as the “crown jewel in the Sandals chain of hotels.”
The Stewarts have a long history with The Bahamas, coming here for family holidays for many years and opening a Royal Plantation resort at Fowl Cay in Exuma in 2007. Adam’s wife Jill is Bahamian, and the young family feel at home in the Family Islands. “I love fishing and being on boats. That is why we love The Bahamas so much; because it is a natural playground for us. There is nowhere like The Exumas anywhere else in the world.”
Not surprisingly then, when the opportunity arose to purchase the former Four Seasons resort on Great Exuma, his father was quick to move on it. “We know the property well,” says Adam. “Eighteen years ago we went down there and looked at the land before it was developed, but we didn’t have any intention to buy the property. Then, in June last year, we heard on the grapevine that the site was coming up for grabs and the receivers had broken the lease with Four Seasons. We quickly made some phone calls and closed the deal in 45 days.”
“Sandalizing” Emerald Bay
That deal, worth $26 million, bought the Stewarts a 500-acre chunk of paradise on the northern shore of Great Exuma island, into which they have since sunk a further $20 million to “Sandalize” the existing Four Seasons resort. “We have three architects and 16 interior designers that work for us full-time. We had a crew at the Emerald Bay site within days of closing the deal,” says Adam, explaining how the resort was up and running and ready for its first guests within six months of purchase. “When we take over hotels, we try to look to see where the previous owners went wrong. Four Seasons is an amazing hotel company, but they are a big company. We on the other hand are a pioneering, innovative company that can bob and weave a lot easier than the bigger guys. We can react quickly to what the customer wants. And what they were saying to us about the Four Seasons resort was that it was beautiful, but did not have enough facilities or entertainment. It had no soul. Basically, it was a diamond that needed polishing.”
With this in mind, the team set about remodeling the property, creating a 183-room, all-butler luxury complex, complete with star-gazers Jacuzzi, Greg Norman-designed golf course, 150-slip marina, European wedding garden and 16,000 sq ft spa facility. The hotel, which Adam describes as a “big, little resort,” will be benefitting from a further $5 million over the next few months, with the installation of an additional half-acre, zero-entry infinity pool.
“We try to listen to the customers,” says Adam, which is something he takes to heart, personally phoning any guest that takes the time to write Sandals a letter. “If the customer loves what you are doing, then the hotel will sell itself, through word of mouth and online. If our customer satisfaction rate falls below 95 per cent we have a problem. At Emerald Bay, we feel that we have answered what the customers asked for, but of course you can never be entirely certain. You can never say that you know it all.”
If past experience is anything to go by however, it is more than likely that the young CEO has got the formula right. Across the chain, Sandals resorts run at a staggering 91 per cent occupancy; 95 per cent in the seven Jamaican resorts for the first half of this year. A figure made even more impressive when considering that the recession-hit North American market accounts for the lion’s share of the resort chain’s customer base, with 72 per cent of customers being from the US. The UK and Canada make up most of the remainder, with the number of guests from Canada growing 203 per cent last year, underpinned by direct airlift by Air Canada to Jamaica, St Lucia, and Nassau and, most recently, George Town, Exuma in The Bahamas. “Airlift to the gateway is essential, otherwise it is impossible to grow a country’s tourist industry,” says Adam. “Air Canada goes where Sandals goes, because we run at full occupancy and they fly full planes.”
Adam suggests that the brand’s sustained occupancy rates are due to a consistent quality of service and attention to detail. “Last year, during the recession, value became key and people were much more risk adverse with their money. But because of our reputation and repeat custom, which is around 40 per cent, we did very well. People know what they are going to get with Sandals.”
Maintaining this level of consumer confidence across the entire brand takes constant vigilance and a strong corporate culture. “You have to keep reinventing yourself and taking it to the higher standard. We have a corporate structure that encourages that in every area. Each team’s sole purpose is to make the customer’s experience today even better tomorrow. We refuse to compromise on quality. That is what it takes to stay number one.”
One policy that Adam says is key to maintaining quality is partnering with “the best in class.” Sandals partners with Napa Valley’s Beringer Vineyards to produce its house wines, whilst family-brand Beaches sponsors Sesame Street children’s activities. Most recently, Sandals has teamed up with Martha Stewart to help organize a portion of its 30,000 weddings a year, with her destination wedding packages taking centre stage at Emerald Bay.
Another element vital to keeping customers returning is to maintain the properties. Last year alone more than $14 million was spent on the Cable Beach Nassau resort, upgrading the rooms and other maintenance. “A while ago a guest stopped me in one of our hotels to tell me that over the years she had been to Sandals 19 times and the reason she did this was because every time she came back she could see that we had spent money on the property. For me, that meant I could take the rest of the day off … job done.”
Economically, the impact of all-inclusive resorts on the local community is open to debate. Although offering direct employment, providing the guests with all their needs within the hotel complex could starve surrounding communities of much needed revenue flows. This is something Adam is acutely aware of. “The money has to trickle down into the local community and we have to be part of that community.”
In Exuma, Emerald Bay will directly employ around 300 local people, with a further 20 currently in training with the British Guild of English Butlers. But at a wider level, the resort is also supporting local businesses, providing transport to the weekly “Fish Fry” event in George Town, giving guests the chance to experience the local flavours, with all meals included in the all-inclusive package. Other initiatives include providing seeds and equipment for local farmers to supply fresh produce to the resort, local education programmes and scholarships, as well as efforts to establish a marine park and recycling processes.
Corporate social responsibility
Engagement with the local community is something that is hard-wired into the Stewart family DNA and something Adam is very proud of. “My old man always said you have to work hard, so that you have the means to make a difference,” he explains. “But my mother always said you don’t have to have anything to make a difference. She has basically dedicated her life to caring for the less privileged in Jamaica and throughout the region.”
Most recently this has manifested through the philanthropic activities of the Sandals Foundation, which was launched in 2008 and is involved in community projects in health and education and the environment. Last year contributions topped $11 million and Adam hopes to see this steadily rise to $30 million by next year, as more people get to know about it. “I watched my old man do things for people all his life, but never talk about it,” says Adam. “But I am a different generation, and I like to get up on the microphone and tell everyone about what we are doing as a company, so that everyone can get involved: the customers, our corporate partners. That’s why we launched the foundation, to make a difference to the communities around our resorts, environment and education.”
Sandals group also operates an environmental programme called Earthguard, which comprises eco-friendly policy and procedural operations for the hotels. Such programmes have existed since the launch of the first Sandals hotel in Montego Bay in 1981 and all Sandals and Beaches resorts have been awarded the Green Globe Award for environmental stewardship, which includes energy saving measures, water and waste recycling. The Earthguard programme was central to the development of a marine sanctuary in Boscobel, St Mary in Jamaica, and has diverted millions of dollars into local agricultural initiatives in areas where the hotel chain has resorts.
At 30, Adam is one of the world’s youngest CEOs. Does he find running the region’s most successful resort chain stressful at all? “I feel responsible, of course, because at the end of the day, it comes down to me. I feel a commitment to the 10,000 people that work in this organization; to provide a future that is stable, that they can take to the bank. And even though we are in the leisure business, you can never convince yourself that this is a walk in the park. But,” he adds with a broad grin, “we love what we do. And if we do it right, we make people happy. This line of work is not for everyone, but it is definitely for us.”