Background
In early 2008, the Minister with responsibility for the Urban Development Corporation (UDC) mandated the agency to return to its core functions as established under the Urban Development Corporation Act (that is, to carry on the business of planning and development of designated areas in various parts of Jamaica). In compliance with this mandate, the agency was required to, among other things; divest itself of its non-core assets.

pegasus

The Development Bank of Jamaica Limited (DBJ), as Secretariat to the UDC Divestment Enterprise Team administered the sale of the 71,865,384 ordinary shares in Pegasus Hotels of Jamaica Limited (PHJL) and retained Scotia DBG Investments Ltd (Scotia DBG) by way of competitive tender in December 2008 to act as its lead broker and advisor.

In September 2010, an agreement was signed between the National Hotels and Properties Limited (NHP) and hotelier Mr. Kevin Hendrickson for the sale of 71,865,384 ordinary stock units or 59.81% of the shares held by the NHP in PHJL for the amount of US$11 million (approximately J$947,639,000). The sale was concluded on 8 December 2010.

Since Privatisation
Since the Jamaica Pegasus Hotel came under the new management of the Hendrickson Group, the initial priority was improving customer service through re-training and development of the team members.

There has been the implementation of a major refurbishment and upgrading programme slated in two phases, these are:
Phase One: This incorporated extensive work in the public areas and restaurants, which commenced in the first quarter of 2012. These include but are not limited to:

  • The closure, relocation, re-modeling and opening of a brand new 24/7 Café featuring a total re-design and new menu;
  • Refurbishing of the main Lobby and Bedroom Sub-Lobby areas;
  • Expansion of the Lobby Level square footage to include an outdoor terrace
  • Closure of the Polo Lounge and opening of a brand new bar & lounge – Blend. The Blend Bar & Lounge is a modern, contemporary space much larger than the old Polo Lounge featuring a crisp design;
  • Renovation and upgrades to the Pool Deck, including new pool furniture;
  • Re-modeled and in some cases expanded public area restrooms: lobby level, poolside, main ballroom and the upper meeting rooms;
  • Upgrading of the general landscaping throughout the property;
  • Brand new gym with additional new equipment and yoga area, now located on the 1st Floor;
  • Renovation and re-design of all the hotel’s luxury suites, one-bedroom suite and complete remodeling of approximately 48 standard bedrooms to date.

Phase Two: This will include further upgrades to the bedrooms with full completion estimated for end of 2014, upgrades to the main ballroom and expansion to create a large pre-function area at the lobby level.

The ownership of the Pegasus Hotel has created synergies for the Hendrickson Group, already owning Courtleigh and Knutsford Court hotels. Synergies have been created mainly in the back-of-the-house operations in terms of group purchasing, information technology, accounting and logistics. This has helped to garner greater cost efficiencies for the individual properties due to economies of scale.

The Jamaica Pegasus was also able to provide its guests with an incredible variety of products. It is this dynamic that allows the business to be more flexible and customize our guest experience.

Current Market Share
The Jamaica Pegasus maintains its fair market share and is seeing a return of customers who are happy with the new direction and the quality of its products and services.

Based on the long standing relationship with travel partners and the refurbishing, the Jamaica Pegasus has been able to generate renewed excitement for the Hotel and Kingston. It was noted that the location of the hotel, in particular being located beside The Courtleigh gives tremendous leverage with some clients.

In early 2011 the Jamaica Pegasus announced that its initial plan was to spend approximately US$10 million on expansion, refurbishing etc. The company is on target for this expenditure and may even see a further commitment based on the need to truly transform the product.

Conclusion
The divestment of the Jamaica Pegasus Hotel, implemented by the DBJ was an excellent move and has been beneficial to the Jamaican economy as the Government is no longer the owner. As such the risk involved in the running of the hotel is no longer the prerogative of the Government of Jamaica to manage. With the hotel now in the hands of the private sector it is in a position to obtain investment that the GOJ would have been unable to provide due to fiscal constraints and can now be ran more efficiently. More investment and less debt on the part of the government can only be good for the economy. Also, it should not be underestimated what a well-oiled Pegasus can add to the tourism product. This move eases the burden off the GOJ and by extension the Jamaican taxpayers. The new majority owners have already invested considerably in the upgrading of facilities and customer service and continued investment is expected in the year to come.