JOHN SPENCE | Karma Group | Interview

First of all, congratulations on the three new properties acquired by Karma Group. Could you please tell us a little about Karma in Spain, Vietnam and India?

John Spence | Image by Heidi Barroll
John Spence | Image by Heidi Barroll

Yes of course, Well, I just come back from Spain actually. I was there over the last couple of weeks putting our plans together; try to get it open for Easter, next year. It’s in a village called Gaucin and Gaucin is one of the Pueblo Blancos, the white villages, which sit in the south of the state of Andalusia. Andalusia is the state at the bottom of Spain, famous for the Costa del Sol, places like Marbella, Malaga, Fuengirola, and these amazing tourist strips. And behind it is a very authentic Spanish countryside. The Pueblo Blanco sit on the top of sierras, on top of the hills, looking down on the coast and you can see the rock of Gibraltar from there. It’s magnificent location. It’s about an hour from the airport, or to the airport.

You get there from either Malaga or you go in via Gibraltar. The village itself dates back over thousands of years. It was famous as the location of many battles between the Moors and the Catholics in the sort of constant raging wars. Eventually the Moors were kicked out of Spain and it became a catholic nation. But for many years it was a Moorish, an Arab nation, hence al Andalus which became Andalusia, and naval towns in the area Malaga, Marbella were all Moorish towns. So it sticked in history, got a beautiful castle, its got amazing churches, its got fantastic buildings. We came across it some years ago and been negotiating for some time. And we eventually closed the deal recently. It sits just 2 miles outside the town with magnificent views, of the sierras and the rock of Gibraltar in the distance. It sits on a land large plot of land, 9 hectare, 90.000m2. It’s surrounded by state forest. Initially its going to have 25 accommodation units, plus an amazing bar, a restaurant, we got a Bodega there, we are going to have a games room, it has a beautiful pool, with Cabana and terraces around it.

And our plans are in the future to develop extra inventory, glamping inventory in the form of tents and yurts, which will sit in the woods. I also teach UCLA, University College of Los Angeles and we’ve invited the students there to join us in this project, to help us design these temporary eco-structure, which will sit in the woods, which will be separate but integral to the existing property. And it will be very green, very-very carbon neutral, very eco-structure. So I am quite pleased with that. I had them over a couple of weeks ago and everybody got some great ideas. So we think it’s going to be very attractive to all our members and clients. It’s close to the coast. It’s only half an hour from the famous beaches of the Costa del Sol. In itself it’s a great destination. It’s got amazing walks. It’s also very close to the towns of Ronda, Sevilla, and Cadiz, and these famous Andalusian cities, which got a host of culture and attractions to them.

Elsewhere in Vietnam we acquired a new property in Hoi An. Hoi An is the one of the cultural capital of Vietnam. It’s UNESCO heritage listed. We’ve had a resort there for some time. This is a new property in the middle of town. It’s got 50 units. It’s a short walk to the heart of Hoi An, where its all pedestrianized and there are no cars and you can wander around on bicycle or you paddle up the boats, amazing cuisine, amazing culture, it’s a fascinating place. It’s also very close to the beaches which are only about 10 min away by bicycle, or 2 min by taxi, and magnificent South China Sea with great beaches, great restaurants, and of course the cuisine is just outstanding in Vietnam. So, we are looking forward to that getting open. Just as soon as restrictions are lifted. I heard that’s quite positive.

John Spence | Image by Heidi Barroll
John Spence | Image by Heidi Barroll

And over in India, yes we acquired several resorts in India, we’re very active in India. It’s where it all began in 27, almost 28 years ago. We have a new resort in the Nandi Hills, which is just outside Bangalore, about 1 hour from Bangalore. We have a new property in Udaipur, which is where of course one of the palace sits in the Rajasthan and also in Rajasthan we acquired a property just outside Jaisalmer another famous city.

This is very interesting; it’s actually a tented camp. So there are some hard construction, but mostly accommodation units and common area is in tents. You got on camel safaris, it’s in the desert, it’s the Thorn desert, which is only 20 km from the center of Jaisalmer, but it’s a true desert with sand dunes.

You can get on camels, you can sleep under the stars, and you get very low light pollution, an amazing experience. And one thing we are doing is bracketing all our Rajasthani resorts together by providing transport options. And so people can go and spent a few nights in Udaipur, few nights in Jaipur where we have our resort, few nights in Jaisalmer. And we have a fleet of Ambassador cars that would drive you between the various locations and so people get a true Rajasthan experience. Which again we think is going to be very popular to many of our clients and members over the next few years.

You acquired Karma Salak in Puncak (Bogor – West Java). Would you mind to share a background story behind this?

Karma Salak, this was a bit of an accident, to be candid. I mean what happened with the pandemic is that we were really forced to overlook the Indonesian market and say, I don’t think we got enough resorts in Indonesia. We’ve maybe a bit lazy over the years. We’ve developed many resorts in Bali, and that area where that be in the Gili Islands or Bali itself, and our market was a combination of the western market and the Indonesian market. And things were very well, our resorts were full and business was good. But clearly with the pandemic in meant all of us sudden that the foreign markets, primarily the Australian market stopped.

And so we were forced to look at ourselves and say well, what does a lot more we can do in Indonesia and with the Indonesian market? And so we went out and try to identify and acquire some more resorts. And this actually is being quite a common trend all over the world, because the last two years, tourism was really become domestic. So our Indonesian resorts are visited by Indonesians, our English resorts by English or German, our Australian by Australian, and its been quite a chaotic exercise, because it forced us to look at expanding our portfolio so we can increase the attraction to the domestic audience.

And so we looked around Jakarta and one of the goals with our new acquisitions is to be quite near a major metro, near where we already have owners and members and near where we think we can attract more members in the future so that it is easy for them to go and visit our resorts, and easy to experience the Karma philosophy and lifestyle and jeune se quais, and yet be somewhere that when the world opens up, which thankfully it is at the moment, the international consumer and our international members was also be very keen to go and visit. So it has to be a combination attractive to the local domestic market and but also attractive to the international market. So Karma Salak came up. I went to see it myself and that area blew me away.

I love nasi goreng, but the mountains and the volcanoes, and the local scenery, the people were wonderfully friendly, and we found this property which seem to tick the boxes which is why we actually went ahead and acquired it. And it has been a great success. Since then we are looking at more in Indonesia. We are about to announce, literally this week the acquisition of a new property in Yogyakarta, which again I think is a beautiful area where clearly its a natural, a lot of people live, and a lot of Indonesians like to visit it for the culture, the temples etc. And I also believe just like with Karma Salak that when the Brits, the Australians and the Americans, and the Germans can once again visit Indonesia, these are beautiful locations to go and see, and again with the same logic as we have done in India, what we are trying to do is what we call split center destinations and so that the consumer can come from let’s say London or from Sydney.

They can spent a few days in Bali, few days in Karma Salak, few days in Yogya, and we are looking at other sites all over Indonesia which maybe they wouldn’t have gone to before, but because we can bracket them with Bali they will be able to go there and they’ll discover some amazing places and see that Indonesia has a host of fantastic destination for them to visit.

What is next? Where do you plan to acquire more? Maybe in Indonesia and overseas?

Well absolutely. I mean tomorrow I get on a plane to go to Scotland where we are going to be acquiring a new asset that I think is going to be very exciting. After Scotland we are looking all over Europe, as I said we recently relaunched down in Spain. We are looking at various other places in Italy, and down in Greece. In India we have some new assets that we are looking at. And further a field; we’ve got some very interesting projects in the Philippines.

We have a resort, which we hope to launch relatively soon on the beautiful island of Palawan, we’re looking at a project down in Fiji. We have a lot to build in east coast of Australia and Kiwis love to go, which is Denaral in the Manuka Islands. And most probably most exotic or far away is we are about to close on the acquisition of a piece of land in northern Brazil near the town of Fortaleza. It’s becoming a mecca for windsurfers or kite surfers and all sorts of adventure sports fanatics, and we’ve looked at a piece of land there, which has permit on to build a hotel. And that’ll be our first in Latin America region and so expect to hear more about that soon.

But yes going in on to the pandemics, I said we would come out of it with no fewer resorts then we went in. We kind modify it halfway through, and said that we’ll actually come out with more resorts. And I’ll modify again to make a very bullish call a number months ago that my goal to emerge from the pandemic with 10 new hotels and we hold the moment into it. And this is very born out, I mean, we are in a situation where we are fortunate, we got no debt, we have no partners, we got cash in the bank, we are nimble, we can buy things swiftly. Opportunities have come up all over the world, and we are able to capitalize on them.

And so while there has been many problems because the pandemic, there is also been a huge upside for us and its been a little bit of cure to take, but lots of resorts are coming on to line.

Karma Group was sponsoring a once-in-a-lifetime live reading of Dante’s The Divine Comedy. Could you please tell us a little story behind this initiative? How did it first happen?

The Dante Divine. Yes again, it was a bit of an accident really. I mean, I have been involved in the entertainment business all my life, I used to be in the music business and I have many friends still in it, I have friends in the acting world and performance world. And so we heard about that there were two things that which coincide really. One; is we heard about the 700th anniversary of Dante Aligherie’s death, and two; I love Florence, we have a resort called Borgo di Colleoli just outside Florence.

I think it is my favorite city on the planet, and this is where obviously the celebration going to be of his passing away, because that’s where Dante lived for much of his life and where’s his house he was born in, and where he has been celebrated. And it was a host of actors and actress in it, such as Hellen Mirren, Rupert Everett, Ralph Fines and various other incredible well-known actor and actresses.

We were fortunate enough to be involved in it, help sponsor it and help put it on. It was an amazing event, it went over 24 hours and it was both live in Florence and also beamed around the world. We put on in various of our properties of an sort live screening type basis. Yes that was one of those accidents of a great pleasure to be involved in. I think one of the things we like in Karma is that we always say we’re much more than being in the lodging business, we are in the entertainment business, and our job is to entertain people.

That entertainment maybe the experience that they have when they are with us. It maybe the great bars, restaurants, it maybe the wine that we make, it maybe the olive oil that we produce. We run all sorts of cultural events all on our own as we have our olive picking weekends where they go and actually pick the olives themselves and put it in the olive press down at Le Preverger, our chateau down in the south of France, that used to belong to Jean Moreau and Laura Ashley. We are running at the moment a number of events where for they get down for 3 days in all sorts of cultural events and wine tasting and what have you.

We put a lot of events like Dante’s comedy. We got involved in a lot of sports event. We sponsor a number of Rugby teams. We’ve been involved in soccer and all sorts of things over the years. So we are much more than just a hotel, and our members and our clients really enjoy that, the fact we do a lot more.

Any advice you would share to young entrepreneurs, to tackle problems and find solution, to survive and even grow more, especially amidst this pandemic?

Yeah, look, I think the answer is always look to the glass being half full. I am fortunate enough to teach entrepreneurs. I teach at Yale University UCLA. Ironic, because I am a University dropout. So I was the guy who left after 2 terms. I got no formal education, but one thing and I try to teach them often, business school and young entrepreneurs taught to be seriously good business managers, seriously good CEO’s, but maybe not great entrepreneurs. They’re taught risk aversion, rather than you should have risk embracement. To be an entrepreneur you got to be embracing risk, you actually got to look sometimes for risk, cause there then lays the opportunity. I also never be frighten of being wrong. So many people are taught business, are taught overanalyzes, like make sure you’ve making the right decision, and run spreadsheets and go through various process to make sure what you’ve doing is the right thing. But we teach them the opposite. It’s not risk aversions, it’s risk embracement.

Yes I was saying risk embracement, I mean look for risk, make decisions quickly. Where an entrepreneur in a smaller new company can beat the more established companies, is making decisions quickly and moving fast. It is a little bit like the difference between a big tanker and a small speedboat. The tanker is bigger and maybe more reliable and can go further distance, but it can’t turn very quickly. Where a speedboat is small and can turn in an instant. So as an entrepreneur, move quickly, make a decision and brace risk, don’t be worried about making mistakes, because you learn from your mistakes. And that’s how you can get opportunity and how you can beat the big boys. You have to be swift and you have to be prepared to make decisions on the day. Where’s the big companies tend to have committees and boards and all sorts of things that’s new to them and slows them down.

I think, finally I’d say, actual fact during times of disruption and uncertainty, they often are the biggest opportunities and often it’s the disruptors that succeed. We have found that during the pandemic is being a cure take, there’s been things that haven’t been so good. Of course I wouldn’t say everything is being positive by any means. But there’s been great opportunity, and that’s often the way. It’s the line worn by Warren Buffet said, that you’re in the actually see who’s wearing bathers when the tide goes out. And this at the time the companies that got too much debt, or they overleveraged, or they too bloated and they haven’t got enough profit, they have gone out of business. And so opportunity has presented itself, and it will as we come out of the pandemic, there’s going to be a boom we believe very strongly, that there’s going to be a hospitality boom because people have excess savings in their bank accounts, because they haven’t been able to go out, they haven’t had meals or staying in hotels.

They want to reward themselves for being locked down and pat themselves on the back and say, we did it, we survived, they want to get a revenge to be honest on the pandemic, or the government, or whatever, for locking them down. There is also an element of fear because people worry that the pandemic may come back, or the government may tax their money, or something may happen and there is a sense of mortality.

So we think that means that when people can go out, and they can stay and they can go out to lunch and dinner whatever, they will and they’ll spend more and they’ll enjoy themselves more. And we’ve certainly seen that. Because when our resorts have been opened and people can get to us, then they are spending more, they are staying longer, and they are having a better time, and as a certain sense of carpe diem, seize the day.

So the boom is coming for young entrepreneurs. You have the opportunity of a lifetime to capitalize on it. Just go and do it!

-HEV-