Turks and Caicos: Interview with Mr. James Nappo
Mr. James Nappo
Chairman (Freedom Group Management)
Being a British Overseas Territory with an independent government, the Turks and Caicos Islands have a unique position in the Caribbean. Their 35,000 inhabitants enjoy a high standard of living with a GDP per capita of almost 24,000 USD, among the highest in the Caribbean. However, there are many countries in the region that compete in similar sectors; tourism, real estate, and financial services, for example. What main advantages set Turks and Caicos apart from the rest of the Caribbean?
The Turks & Caicos has several inherent economic advantages. In addition to a legal system with ultimate adjudication by the Privy Council in the UK, the TCI uses the US Dollar as its functional currency, the country has an investment grade rating from the major rating agencies, no material external third party debt, enjoys a location highly proximate to the US and has a baking system that is both Patriot Act and FACTA compliant. All of these elements, taken as a whole, provide a stable environment for investment and economic growth.
Turks and Caicos was strongly hit eight years ago by the global financial crisis and a mismanagement of the local government that forced the British government to take over for three years. However, according to the International Monetary Fund, since 2012 the country’s economy maintains a steady growth. To what do you attribute this economic performance?
Disciplined oversight and financial management coupled with strong growth of the destination over the past few years.
Tourism is the mainstay of Turks and Caicos’ economy as it generates more than half of GDP directly and indirectly. In 2015, the country received over 1.3 million visitors, which makes it a leader on this field. How can the tourism sector maintain the growth?
The destination enjoys a unique niche in high-end tourism market and has been regularly awarded the designation of #1 island in the world as well as regularly wining praise as the world’s best beach. These physical attributes along with close proximity to US and increasing notoriety of the destination among the celebrity set well positioned the TCI to the fastest growing destination in the Caribbean over the last few years.
In its two years of existence, Freedom Group has been able to manage two of the best known resorts in Grace Bay; The Royal West Indies and The Regent Grand. What is the history of Freedom Group?
Our group acquired two management companies on Grace Bay Beach over the last two years. Most resorts on Grace Bay are in fact condo resorts where individuals own the condos and a professional management company, like Freedom Group, manages the property like a resort. The Group was founded on the principle of developing a cooperative model between management companies and the condo owners – a mutuality of respect. As Chairman of the Board of Freedom Group and a condo owner myself, this has allowed the organization to see issues from both sides and advance the model. This is evident in the excellent results at the first acquisition, The Royal West Indies.
In both cases, The Royal West Indies and The Regent Grand, the units belong to private owners that have acquired the property and trust you to manage it in terms of renting and maintenance, which makes them stakeholders in the business. What makes them confident in your company’s services?
The senior management team consists of 6 professionals with over 140 in the hospitality industry and most of that time operating in the condo resort model in the Caribbean. This deep expertise along with the scale of operating two resorts and our recent expansion into the ultra high-end villa management provides them with the ability to deliver additional services that would not be possible if the individual resorts were managed on a stand-alone basis. Expertise, scale and professionalism benefit the organization and all of its counterparties.
The Royal West Indies is not just a resort, but also a real estate project. Freedom Group Management owns one acre of land where you plan to develop between 20 and 30 units that will eventually be sold under management agreements. When will this project start?What is the impact will it have on the resort?
At this stage, we do not have any formal plans to develop the front parcel of land. Should this be done, I believe it will be done in close cooperation with the existing property and condo owners. Our group may ultimately simply divest the property.
Turks and Caicos’ economy depends on the United States; 90% of imports come from the US, the US dollar is the official currency of the country, there are 15 daily flights between TCI and North-American cities, and around 80% of visitors come from there. In addition, Turks and Caicos is focused on high-end tourism. What is the profile of your clients?
Actually, there are 17 gateway cities in North America and upwards of 30 flights on Saturdays. The guest profile is shifting. The age demographic has moved from the 45-55 year old to the 35-45 year old for the first time in the jurisdictions history in 2016. The typical guest is from the Northeast United States.
Freedom Group Management has an expansionist strategy; its goal is to manage five hotels in five years. What the sort of properties does the company want to add to its portfolio?
The businesses most recent expansion is a new ultra-luxury villa collection. This will no doubt be the focus for the next few years. Our group will always evaluate opportunities to acquire additional management companies as they become available. The group is also pursuing some Greenfield projects that are exciting.
Harvard Business Review readers include the most influential business leaders and top decision makers around the world. As a conclusion to the interview, what is the final message that you would you like to transmit to them?
The Turks & Caicos is an exciting destination and is well positioned for continued growth. The successes enjoyed by all thus far are only the beginning. I am confident that growth and prosperity will continue to be realized and I am even more confident that the Freedom Group team will be at the forefront of that growth and development.