Multimillionaire luxury hotel tycoon John Spence began his career cleaning toilets and managing rock bands.
Either the bog scrubbing or managing Culture Club would technically make him an untouchable in India, but karma has a way of working out for Spence, who chatted with Lunch Magazine recently.
“I’ve been very fortunate in that I’ve never done a job I didn’t like doing,’’ he says.
“I was in the music business before and then I got into this. I love it. I do it as a hobby. I call it a job-sport.
‘’The only time I’ve ever been paid a salary in my life was when I was a toilet cleaner earning 50 pounds a week to get a bit of money to go backpacking.
“Otherwise I’ve always been earning a commission or running my own business doing what I Iike; I think that’s one of the keys to success really. Do something you like and if you enjoy and relish it then it’s easy to be successful. If it’s an uphill battle it tends to be tougher.’’
Spence is the 100 per cent equity owner of his two brands Karma Resorts and Royal Resorts.
“Karma Resorts are very much our five-star upmarket all-singing-all-dancing best-in-the-world resorts and Royal are our four star slightly larger offerings.
“With Karma we are putting in some more inventory at the back and we are building another Karma on the eastern end of Bali to complement our resort at Kandara.
“And we are also building in the Bahamas on a private Island. We’re putting in a combination of hotels and private villas and a Nammos Beach Club and health spa.’’
Spence has also just signed a joint venture with Cuba to build a Karma resort.
“We hope to start that next year. It’s quite near Havana and we are looking at various other sites.’’
Spence says he has relocated to Europe for the next six months to drive Karma’s developments in Europe and the Caribbean.
‘We have picked up a resort in Germany outside Munich in the Bavarian Alps (it is actually an old Sheraton Hotel) which we are currently renovating and we are looking at various other acquisitions in England and Europe.
“So from a development point of view we have a lot happening.’’
Spence says he has acquired equity in the original Nammos Beach Club in Mykonos.
“Our plan is to roll out beach clubs in that style around the world. In places like Ibiza, St Tropez and the Philippines and the Bahamas.
“That’s quite exciting for us.’’
Asked for a dollar figure on all this development, Spence said it was “fairly substantial’’.
“One of the unique traits of the company is we have no debt. We don’t borrow money. We don’t go to the banks. I own 100 per cent equity. I don’t have any partners or joint ventures or private equity coming on board.’’
He said his firm buys and develops solely through cash flow.
“So to a certain extent sometimes the speed of our development depends on our current sales and cash flow. And that’s pretty good. This year we are 40 per cent over budget. The world is in recession. I’m in England and it pretty much looks like the end of the world, the markets are crashing.’’
And there are a lot of fantastic assets out there, he said.
“Because we are relatively liquid, we have money in the bank and we can make a decision in 30 seconds so to speak, it’s relatively easy for us to pick up some great assets at the moment and do some interesting developments.
“We are very acquisitive at the moment. I’m a bit like a chipmunk feeding myself and shoving things in my mouth.
“We know the world changes and the world turns and things we pick up now we can roll out later. We are in a very similar position to where we were in the late ‘90s when the company grew exponentially. When the Asian currency crash happened we went from being a relatively small company to becoming a large or medium size company because again we were cash rich.’’
He said at that time all his competitors were going bankrupt because they had large bank debts.
“That really leapfrogged us. And we are in a similar situation at the moment so we are quite keen to buy.’’
Lunch: So why are you so cash rich?
“We have two businesses. So we are fundamentally different from most of our competitors who concentrate on one angle.
“We are a real estate developer. We sell the product and we are a hotelier and resort operator.
“We buy a piece of land. We masterplan it and subdivide it. We then go to market and sell it essentially. We sell it as either whole ownership villas (which is what Karma Kandara is) or it might be fractional ownership, it might be time share.
He said this strategy enables him to “create our own cash’’.
"It’s a combination we have found very useful for us.’’
Lunch: What is the secret of your amazing success?
“Hard work. Carpe diem, seize the day. We have been very effective at making quick decisions.
“I’m a great believer in the old Malcolm Gladwell principle that you make a decision in the blink of an eye and you spend forever afterwards trying to justify it.
“We are quick on our feet and we are able to be. We also buy ahead of the game.’’
Spence says his company can’t compete with the big boys on a prime piece of land.
“If it’s in a strong market and there’s a beautiful piece of land to be bought on a prime beach in Hawaii for example we are never going to get it because always Four Seasons or some other big company are going to get it because they have tons of money they can draw down.
“Where we succeed is in two things: either buying in the downturn which is right now or the Warren Buffett principle.
“You buy when people are leaping out of windows and sell when they are celebrating.’’
Spence says he bought the land Karma Kandara is on 12 years ago.
“People said I was insane because there was no development there. All the action was down at Kuta and Seminyak.
“If we see good potential we buy it at a very cheap price. So I sat on Karma Kandara for seven years.
“On our balance sheet we have land on the Gili Islands off Lombok, in Palaui off the Philippines and off Thailand. We buy and hibernate for seven or eight years.
“I passionately believe that if I find prime beach land, then either I, my son or grandson will make money out of it because the world is running out of great beach front land to develop on.
“If you are able to take a bit of a punt and pay cash and wait until the market catches up, suddenly people say look, there’s a Bulgari, a Banyan Tree there. And it’s land I would not be able to afford now.
Lunch: Are you a genius?
He laughs. “No I dropped out of university. I have very bad educational qualifications actually.’’
Spence is completely on board with the luncheon culture favoured by Lunch Magazine and to that end is keen about rolling out more Nammos Beach Clubs.
“Nammos is a great formula, with great food, great cocktails, DJs and the beach all making a great combination.
“We think funky laid back is the way to go. Drinking your champagne rather than spraying it everywhere. At the same time, it’s a place with a good family vibe where kids can go, as can people of all ages.
“One of my favourite things in the world is a long lunch at a beach club and the fact that I can now personally experience that and set them up myself.
“We had a quick look around the company at who was the most suitable to do the research on beach clubs and I decided to take that job myself.’’