Page 20 - GIF

Profile
Playing games helps build hotel tourism drive
Continued from page 18
progressing a £7-8m, seven storey, 3-star hotel development also on Gibraltar’s east side at Devils Tower Road, to create a 120-bedroom Holiday Inn Express. “Since the closure here of the Queen’s Hotel 18 months ago, we identified that there is a gap in the market for a budget offering,” he says.
“The other hotels are, in the main, 4-star rated – the ratio between 4-star and 3-star is clearly wrong against any international survey - and Gibraltar clearly is lacking in budget hotel accommodation,” Callaghan rationalises, so an agreement was signed with InterContinental Hotels Group to privately finance work to start on the Holiday Inn Express at end-February, with a 17 month build time.
Almost all hotel occupancy is 3-4 days duration - very few for 7 days – “making it very difficult to present a positive hotel feasibility study that would allow repayment of a large capital loan, given the occupancy experience”, he points out.
Substantial outline development plans for Callaghan’s Caleta Hotel were submitted in early 2014 and approved on appeal late last year. This involves building 50-70 luxury apartments, with prices at today’s equivalent of £400,000, for high-demand single bedroom apartments, a revamp of the existing 4-star hotel but with 70 fewer rooms, and construction on part of the site of about 40 rooms as a separate 5-star hotel or aparthotel.
Detailed plans for the overall development continue to be prepared, but the project, expected to start there later in 2017, “cannot commence until hotel bed stock is increased on completion of the Holiday Inn Express", Callaghan explains.
In the meantime, the hotel will continue usual operation, renovation of a final floor of rooms having just been completed, while in the main building all the public areas – restaurants, conference and entertaining areas - shortly will have been upgraded.
With a total envisaged cost of £50m+ for the hotel redevelopment, Callaghan is candid: “We certainly can’t fund it ourselves; we will need to get partners with the vision that we have, to join with us.”
New airline
On the death of his father-in-law, the young Callaghan took a 50% stake in the Gibraltar arm of a tourist business, the UK-based Exchange Travel (ET) and in the 1970’s, Callaghan persuaded ET to begin commercial flights to Gibraltar, initially with
twice-weekly services. “It was the first commercial operation
to bring planes to Gibraltar that were not controlled by GB Airways or its associate, BA [British Airways]. We broke what effectively, was a controlling situation by the Gaggero family [owners of GB Airways until sold to easyJet in 2008], who undoubtedly did a particularly good job, but they were the only people flying here and it was really difficult for others to get in.”
That ground-breaking initiative required Ministerial support and “subsequently Exchange Travel, became big operators – they bought more people than anyone else to Gibraltar at the time.” Calllaghan had shares in ET’s ground handling company and when in the early 1980’s the company shed that activity, “I and my team ran it and we developed the business. It helped the hotel considerably, because we were in charge on the ground and we were able to see that we got our fair share of the tourist business coming into Gibraltar”, Callaghan recalls. “We were the lead hotel with Exchange, but they gave business to every hotel in Gibraltar, as indeed did BA with The Rock and others.”
But in the late 1980’s there was a setback: “The ET business folded; we were back to having only GibAir / BA flying to Gibraltar, so we needed to find an alternative - another way for people, who wanted to stay at this hotel, to get here.”
Over several months in 1996 Callaghan worked to convince Monarch Airlines to add scheduled flights to The Rock, and along with Joe Bossano, the then GSLP Chief Minister, they forged an agreement for two flights a week service, starting in 1997. [Weeks before that agreement was signed Bossano lost the General Election and the following GDP Chief Minister, Peter Caruana, made it one of his first acts.]
Incentives to fly
“The agreement not only provided permissions to land, but because we had to persuade an airline to fly here, they also received a financial incentive in the form of ‘marketing assistance’ in quite a large sum,” Callaghan relates, but emphasises: “I wouldn‘t describe it as a subsidy, but certainly it was a huge step for Gibraltar, and I believe similar arrangements continue to this day with various airlines.” This year, Monarch will fly 17 weekly services from four UK airports.
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A ‘pairs blitz’ at the Tradewise Chess Festival
grand prix, Cannes for the film festival, there’s Rio’s Carnival, the New Orleans Mardi Gras and, in my view, Gibraltar could similarly become known as a capital city of chess”.
Now the Caleta is adding Gibraltar’s first International Backgammon Tournament in late February with support from the European Association of Backgammon and the government. With some 200 entrants already booked, he believes this new event has the potential to be similarly successful to chess even though considerably fewer play backgammon, which presents “a small, but
probably more affluent total market”, he notes, adding: “We are at the forefront of the tourist industry in Gibraltar; I think we develop, and have new ideas, that are put into practice against a very difficult background of there really being no growth in the [hotel] industry.”
Competition hits trade
This year the Caleta Hotel’s trade is anticipated 10-12% down to end-March, but Callaghan maintains that this was anticipated, “because of the sudden competitor, Sunborn” – a 189-bed floating hotel at Ocean Village that opened with a government special aid early in 2014.
“It hit us a bit. They came into the market as a 5-star hotel for which there is no market locally in any large number, and of course, they [Sunborn] are now marketing in our 4-star market,” Callaghan says ruefully. “In the future? (Pause); to be honest, I’m not sure.”
His strategy now is to diversify by
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Gibraltar International
www.gibraltarinternational.com