With a diverse portfolio of unique properties, AX Group has a long-term vision for its investments. CEO Michael Warrington reflects on the economic potential of the country, as well as the group’s unique qualities.
To what do you attribute the exponential growth of the Maltese economy in recent years?
Malta’s economy is closely tied to property development. When authorities are willing to make building permits available, then the economy grows rapidly. The change in government in 2013, which coincided with the end of the world recession, brought a change in the approach to granting certain permits, and that generates a lot of economic activity in the island. Malta’s success is the result of a combination of factors. We have a government that is very pro business, in terms of its policies, in terms of its approachability, and in terms of its willingness to engage. The very strong economic growth we are experiencing is mainly triggered by the two big industries in Malta, construction and tourism, which have a strong multiplier effect on the rest of the economy.
How would you best describe AX Group?
Established in 1975, today the AX Group of companies is a household name in Malta. We manage nearly 40 companies in four primary sectors: hospitality, construction, development and care. AX Hotels chain consists of seven hotels with 4 and 5 stars in Valletta, Sliema, and Qawra, including Rosselli – AX Privilege, the first 5 star hotel in Valletta. As a group, we focus on development of unique concepts of construction, such as the first retirement village in Malta with Hilltop Gardens and Simblija Care Home. We don’t develop to sell; we develop to create long term business models. Furthermore, we have also been involved in the construction and restoration work of a number of landmark projects.
What are your main competitive advantages?
Each of our properties is unique, but our competitiveness stems from the fact that one team manages several properties, which gives us very strong economies of scale. Our return at what is called the GOPAR, the gross operating profit per available room, is the highest in the industry. Our turnover this year will be close to €60 million and we have equity of nearly €250 million, and we plan to double in the next five years.
I would say that our main competitive advantage is our management structure. We are innovative, dynamic, and lean in terms of our organizational structures. We are very quick to take decisions as we don’t have long bureaucratic processes. We are very close to our customers and we listen carefully and respond swiftly to their requirement. We are capable to identify emerging trends and to follow those trends. For example, our group embraced Internet business very early on, so today nearly 55 percent of our revenues come through traffic generated directly through this channel. Having access to the right information, knowing your client, knowing your market and being able to respond to change is key for success.
As a group, we are aiming to grow at a fast, but stable pace in the next five years, and we are already considering projects which have long been in the pipeline, but are now mature to be executed. Our group is open to new business ventures with partners from the Gulf region and other international partners; we want to work with people who bring value to the table.
Why should investors from the Gulf region choose Malta?
Malta has always been a gateway to Europe. We are strategically placed and we have a long tradition of being very commercially minded, as well as cultural similarity with the Middle East. Malta also has a very strong educational system, which is the backbone of the current wave of development. Furthermore, the government is focused on pioneering initiatives for economic diversification, nurturing a political and economic climate that enables businesses to grow.