Heading up Malaysia’s leisure, spa and tourism developments

Darrell Metzger has a twinkle in his eye. Mild-mannered and mischievous, his calm demeanour belies the task he’s working on. As chairman of the Executive Committee Board of Directors for Destination Resorts, Metzger is in charge of making sure his team delivers on its promise – to invest in and create world-class, leisure and residential developments for the Malaysian market. And to make them profitable too

Destination Resorts is a subsidiary of Khazanah Nasional Berhad, the investment arm of the Malaysian government, tasked with developing industries that will benefit the nation’s long-term economic interests.

Alongside its sister company, Themed Attrac- tions, Destination Resorts is responsible for enticing more international travellers to Malaysia through the development of the country’s leisure and tourism industry.

While Themed Attractions is in charge of creating entertainment facilities and attractions, Destination Resorts is pro- viding the investment, development and management expertise for destination resort and hotel-related projects – all with spas – in the region. Although they’re both run as separate companies with their own CEO, Metzger has a role in each of them, ensuring they leverage the oppor- tunities between the two. He reports to Nadziruddin Basri, the managing director of Destination Resorts.

SPA TOURISM
Destination Resorts has three integrated leisure developments underway, all of which include resorts and hotels with spas. There are two in the southern region of Malaysia in the state of Johor, and one on the island of Langkawi, and they’ve already attracted some of the top branded resort owners and operators around the world such as Amanresorts, Shangri-La and Sheraton. Although the government’s Economic Transformation Programme for tourism doesn’t specifically include a focus on spas, Metzger knows Destina- tion Resorts can’t afford to ignore the importance of this market.

“Part of having great destinations is to have very well known, impressive spas,” he says. “We know we need to build off Malaysia’s natural assets to get people to come here rather than Phuket or Bali, so we’ll make sure we have as good or better spa facilities than they have in those places.” This could prove a wise move, considering that over 50 per cent of the target market will be Europe and the Middle East, where people expect no less than a luxury spa in a five-star hotel.

This sentiment is echoed by Basri, who says: “Destination Resorts, as a developer of premier, integrated facilities, will position Malaysia as a complete hol- iday destination for all travellers. We will bring out the best of our country’s natural wonders and complement them with world- class leisure and tourism products.”

To ensure it delivers, Destination Resorts is exploring joint venture opportunities with hotel partners which have a proven track record and which have a philosophy that’s in line with the concept and positioning of its projects. As its goal is to become the lead investor in resorts and hotel brands in the country, Destination Resorts owns a “not insignificant” shareholding in each of the branded hotels being built.

In 2012, Destination Resorts also be- came the majority (51 per cent) sharehold- er in an existing hotel group called Archi- pelago Hotels & Resorts. The Asia-based company was established in 2010 and has four, five-star hotels with spas, which it owns and manages in Malaysia. They include The Datai Langkawi, The Carcosa Seri Negara, The Club Saujana Resort and The Saujana Hotel Kuala Lumpur.

Under the partnership, Archipelago will run hotels and spas for Destination Resorts where branded partners aren’t involved. On top of this, Archipelago will retain its own identity and operate as its own company outside of Destination Resorts. Longer term, says Metzger, the plan is for Archipelago to grow its newly launched Datai Hotels & Resorts brand in other regions – something that will fit well with the government’s objective of building quality Malaysian brands.

LOOKING FOR INVESTORS
Although the resort developments are primarily being funded by Khazanah, Destination Resort’s aim is to get private investors involved to operate them. Khazanah’s total investment in Destina- tion Resort’s current portfolio is almost MYR7bn (US$2.3bn,E1.8bn, £1.4bn) – one of the largest in the region for a leisure-based development. According to Metzger, the government doesn’t need to run the developments as the principle shareholder, but isn’t looking for an exit strategy just yet.

“When most developers sign a deal, they don’t want to get involved with oper- ations –they just want to buy, build and leave,” he explains. “We’re not doing that. We’re building communities and we’re committed to it.” Having said that, a large component of the three current projects are residential properties and these will be developed and managed by the UEM Land Group, which also part of Khazanah.

A LAND OF OPPORTUNITY
Metzger isn’t fazed by what needs to be achieved. Although he regularly jokes about “getting too old for this” and pretends to be unsure about his position – “I forget what my role is here!” – you get the impression this is his way of taking the shine off him- self and giving the limelight to others. He’s already proven himself a master of leisure development with the runaway success of Sentosa island in Singapore, which together with his team at Sentosa Leisure Group, he transformed from a tired looking island resort into Resorts World Sentosa – one of south-east Asia’s top tourist destinations.

But his role at Destination Resorts is slightly different. It comes with the added challenge of bringing a new product to a market that isn’t well-versed in high-end lei- sure offerings. On top of that, in creating a success of Sentosa, he’s made his current job harder as he now has to compete with the well-visited tourist offering of Singapore as well as with the nearby and popular tour- ism destinations of Thailand and Bali.

While Malaysia is well known for its shopping and beaches, tourism is mainly focused around the city and city-based hotels, plus a few island resorts known mainly to backpackers who enjoy diving.

“People’s perception of Malaysia is that it’s underdeveloped and underutilised, but that is the great opportunity,” explains Metzger. “We have all this land, friendly people and all the natural resources you need, as well as the infrastructure. The government has already put in the hospi- tals, shopping centres, schools, universi- ties and some housing. So now it’s time for the fun stuff – the entertainment and the places to stay.”

Metzger thinks the government’s plans for the tourism industry will only benefit Malaysia. He says that creating resorts for people to come and stay will create jobs, stimulate tourism overall and do good things for this developing country.

Managing director Basri, is also keen to point out that Destination Resorts is dedicated to delivering a long-term tourism plan. “We are committed to developing in- tegrated destinations and introducing new, innovative attractions that offer a unique holiday experience for the whole family,” he says. “Our portfolio is diverse and will continue to grow as each project unfolds.”

Metzger says the key to ensuring the success of each development and the brands within it, is maintaining the per- sonality and standard of each one. While Desaru Coast and Iskandar Malaysia are high-energy destinations aimed at fami- lies, Teluk Datai is about relaxation and privacy, and this is reflected in the hotel brands in each location. Whereas the Sheraton Resort and the Plantation Hotel face directly out onto the entertainment offerings at Desaru Coast, in Teluk Datai, the private villas and resort hotels are nestled in the rainforest to offer guests reflection and peacefulness.

Metzger sees Destination Resorts’ ongoing role as ‘place managers’. By that, he means they’ll make sure that “no Sev- en Eleven stores will open in the resorts... it may look less attractive before and after you exit the resort, but while you’re inside it, it will be perfect.”

He explains: “If you’re the landowner and you earn a percentage of rent from each hotel, retail area, restaurant, con- vention centre and golf course, you have the motivation to keep the resort looking and working right because that’s what’s bringing the money in. If a developer starts farming things off to third parties and gives them a free reign to operate it how they want – which is common – you lose control over standards.”

Metzger says, until they find a manage- ment company that can take over Destina- tion Resorts’ role to the right standards, they will remain in charge.

Ever the optimist, Metzger talks about when (not if) Destination Resort’s devel- opments will be a success. He concludes: “Malaysia’s got such a lot going for it. It’s the right time, the right place and we’re the right company so this is an exciting time for tourism in the country.”