SUNWING: REINVESTING PROFITS AND A GROWING HOTEL CHAIN
An interview with Colin Hunter, the tour operator's chairman
12-14-2012 By: André Désiront
Even if he refuses to confirm these figures under the pretext that Sunwing is a private company, the chairman, Colin Hunter, discusses them... in a roundabout way. And he updates on the current state of Sunwing.
André Désiront: Preliminary financial results for the 2011-2011 fiscal year, published by your shareholder on Dec. 4, allow us to conclude that you made profits of $68.1 million last year. Is that correct?
Colin Hunter: I won't comment on that because we are a private company and, as we are not publicly traded, we don't disclose our numbers. But it is true that we made a profit. For several years, our competitors have spread the rumour that we won't make it through the winter. And we ended our fiscal year with profits while they generated losses.
Why are they losing money while we make profit? One of the reasons is probably because they are longer established companies than us. Longevity has its advantages, but it helps to create bad habits that are hard to eradicate. The fact that we are not a publicly traded company gives us more flexibility. We are not accountable to thousands of shareholders, we don't have dividends to pay. Our profits are reinvested into consolidating the company and launching new projects.
AD: Recently, your competitors, backed by the Air Line Pilots Association (ALPA), accused you of unfair competition because you "import" European planes and pilots during the high season...
CH: They are hypocrites because they denounce a practice they happily engage in as well. Last year, WestJet employed American Airlines pilots to operate its South program. This year they will use Thomas Cook pilots. I recently travelled from Toronto to Jamaica with Air Canada. The crew came from Aeromexico. Transat chartered aircraft and crew from CanJet.
We were accused of breaking the law. The Canadian Transportation Agency (CTA) cleared us. If the law is wrong, change the law and will we conform to the new provisions. In the meantime, we will respect the current legislation, so they can stop digging for bugs. We do not employ lawyers and we have no internal disputes department, unlike our competitors. Company employed lawyers have to justify their value by finding contentious material against their employer's competitors. It's a waste of everyone's time and money!
AD: Let's talk about your projects. Your European program remains relatively modest for summer 2013. Do you intend on expanding in 2014?
CH: As we haven't found the right jumbo jet for us, we will stick to a modest program. This year, we will continue to fly our passengers with Corsair and, in better conditions, since the carrier has replaced its Boeing 747s with new Airbus 330-300s. The cabins are more comfortable, with a new type of lighting, we are serving champagne, etc... Europe is not a priority for us. At the moment, we would rather focus our efforts on the Caribbean and Mexico. The beginning of winter can be tough.
We are continuing to expand our hotel chain, Blue Diamond Resorts. We currently possess 6,000 rooms, we have 3,000 in Cuba and 3,000 in other southern destinations. Next year, we will have 7,000, since we have reached an accord with the government of the Bahamas for the takeover of a 600-room hotel in Freeport. We are currently carrying out renovations, which should be done by next fall. The property should open its doors in September or October and it will be all-inclusive. This will be one of the rare all-inclusives in the Bahamas, along with a RIU and a Breezes. That formula should be very popular because the Bahamas is an expensive destination. And, two months ago we started selling time-share units in our Memories hotels. The early results are encouraging.
AD: You are talking about the Bahamas, a destination that mainly attracts Americans. What are your plans for the development of the American tour operator Vacations Express, which you bought in December of 2011?
CH: For the moment, we have no plans to expand dramatically. We prefer to consolidate while we wait to gain a better understanding of the American market. In Canada, there exists a long history of tour operating, but that is not the case in the United States. When I was at Sunflight, in the early '80s, there just weren't weekday flights. People left on Saturday or Sunday. Consumer habits have evolved and, today, we have no problem selling departures seven days of the week. I think we can evolve American consumer travel habits, but before that, we have to make sure that we have proper command of the market and that we consolidate our gains.
THN: Do you intend on developing your own agency network?
CH: No. When we bought Signature, we inherited Sell Off Vacations and we live it with. But we have no intention of developing a large network. Traditional distributors do a good job and I don't foresee mixing things up on that side of things. We are an integrated group, it's true, but the goal, in creating an integrated group, is to control every facet of the product in order to ensure a level of quality and at the lowest costs. We have an airline, wholesaler and hotels. For us, development needs to go through those three elements, not through distribution, which already works well.
The Sunwing Group uses its status as a private company to keep from having its financial results published. The information that filters out here and there allows us to generate some data, namely:- Revenue of $1.3 billion
- Profits before taxes of $68.1 million
- 2,000 employees
- 1.4 million Canada passengers
- 6,000 hotel rooms
- 35 per cent Canadian market share
- Translated by Zachary-Cy Vanasse