Dolphin Cove mulls expansion into hotels across Jamaica
Dolphin Cove is considering rolling out marine parks across large hotels in Jamaica.
The tourist attraction's dedicated facility at the Moon Palace Jamaica Grande Hotel, which is located in Ocho Rios and is scheduled to commence operations when the resort opens next month, will be the testing ground for the company.
Stafford Burrowes reckons that it will take just a few months to assess the viability of the expansion model, given that the latest addition to its portfolio will experience a piece of the summer tourism season and will, shortly thereafter, go through the slowest period of the year - September to November.
The Dolphin Cove executive chairman told Wednesday Business that other hotel operators have expressed interest in setting up lagoons as habitats for the sea mammals at their properties. But his interest lies with the mega hotels which have been expanding in recent years.
"There are 1,300 additional rooms that are being constructed now," he said in an aside following the company's annual general meeting held at the Courtleigh Hotel in Kingston on Monday.
Dolphin Cove has been operating a small, dedicated facility at Half Moon resort in Montego Bay for some time now. But the 730-room Moon Palace provides a distinct advantage over the operations at the Montego Bay-located resort with its 197 rooms and suites and 31 villas. Apart from higher room count, the Ocho Rios hotel will pursue a high-volume, high-occupancy rate model which should translate into a proportionate increase in revenues.
That's not to say that the Half Moon lagoon doesn't hold its own. It brings in about seven per cent of Dolphin Cove's revenue, although it has the lowest operating margin - 13 per cent, compared with 30 per cent across the company.
In any case, the marine attraction needs to step up its expansion plans as its revenue growth has been slowing down since 2011 - the first full year of the company's Hanover operation, which is the only site to be opened since the company listed in 2010. In 2011, Dolphin Cove experienced operating revenue growth of 28 per cent in US dollar terms - the currency in which it earns.
In 2012, sales growth fell to 12 per cent before slowing down to three per cent annual growth over the following two years. For the first quarter of 2015, revenue climbed by just one per cent above year-earlier levels.
The company also has to contend with the second five-year period of the tax concession for listing on the junior market of the Jamaica Stock Exchange, which kicks in at the end of 2015 - that is, it will have to start paying half the income tax rate, or 12.5 per cent of its pre-tax profit, whereas it had a full waiver on paying income tax since 2010.
Slow expansion into the Caribbean, where efforts have been focused up to recently, has not helped. Land was acquired by Dolphin Cove in St Lucia in 2012 and in Turks and Caicos Islands (TCI) the following year for the development of new tourist attractions outside of Jamaica, but neither has come to fruition as yet.
Burrowes said that the Turks site is the closer of the two to beginning operations.
"We are currently doing an EIA there (TCI)," he told Wednesday Business.
He expects that location to commence operations in 2016, more than three years after starting to pursue expansion there.
It took less than a year to lock down an agreement and set up a park at Moon Palace, even with months of delay for re-opening the hotel due to worker unrest.