Depending on the source, the definition of a ‘Chairman’s Statement’ can be briefly defined as a review undertaken normally once a year, informing and updating stakeholders of the company about its overall performance throughout the prior 12 months and its broad objectives over the next year, not the easiest or most rewarding task given that for most businesses, including ours, 2020 has been a truly ‘anno horribilis’.
By the end of January Teamstar our holiday rentals business was trading at 50% above the same period 2019 and whilst sales in January were traditionally quiet, we had (albeit from a very low base), outperformed the market east of Màlaga. Nevertheless, like most things in life out of adversity comes opportunity and 2020 has by default given us an ideal opportunity to significantly overhaul the business and assuming the global vaccination initiative is successful we expect demand to return with a vengeance from April / May onwards.
In short, our financial performance even before the end of Quarter 1 was underwhelming. As a result of Covid 19, we experienced an unprecedented level of holiday cancellations, thankfully we were able to re-book the vast majority to 2021. Sales, astonishingly, finished the year a few percentage points off 2019.
On a wider front, across Spain estimates of between 30-40% of privately owned businesses have permanently closed between March and October 2020, many locals and ex-pats have been left in dire straits. Fire-sales and liquidations have been commonplace for individuals and businesses alike trying to create liquidity to help get through the lockdown periods.
I am proud to say that as a result of 20 years of profitable trading and financial prudence the management team has not only retained and managed liquidity throughout this challenging trading period but has also managed to significantly overhaul both the rentals and sales businesses.
Given the complexities, fast-moving, and competitive nature of the holiday rental sector combined with ever more discerning holidaymakers, through the introduction of a multitude of software enhancements we are confident that we have significantly improved the customer experience from initial booking to post-holiday feedback and reviews. We have also increased reach and access to our property portfolio which now extends from Almuñecar on the Costa Tropical to Sabanillas west of Estepona. It is also interesting to note that Airbnb, one of our largest global rental providers ended up being valued at $47 billion, in one of the most anticipated initial public offerings of the year. Very positive news in the most challenging of years. Holiday rentals are here to stay!
I am also delighted to confirm our franchise relationship with Chestertons, one of the oldest estate agents in the world and a significant global player. Their network covers 21 countries and five continents through over 100 offices, a further sign of optimism and opportunity coming out of this crisis. While the luxury end of the property market has, for the most part, continued as normal, the lower to mid-market is beginning to see large price drops creating an opportunity for holiday home buyers and ex-pats looking to relocate to the Costa del Sol. Chestertons brand will provide an extra boost to our customer base with strong feeder markets driving buyers into areas such as Marbella, Estepona, and the up-and-coming city of Málaga. Not to mention the added benefit of their network effect given the existing Chestertons partners located in Gibraltar and Sotogrande.
This move from Team España comes at a time when most businesses are tightening their purse strings and company capital expenditure is at an all-time low. As I write this statement, I am delighted to report that our Málaga city centre office has already been rebranded to Chestertons and Covid permitting we expect to open in Marbella in quarter 2.
The Spanish government has recently launched a new campaign targeting the British public to encourage tourists back into the country without restrictions by the end of March. The ‘Travel Safe’ campaign has cost the Spanish government around €2million already and is underpinned by a sizeable marketing campaign aimed at increasing tourism for 2021. In November Málaga was voted in the top 20 European cities by Forbes magazine for American ex-pats to live.
To conclude there is no doubt that our young and energetic management team of Kyla Kenton, Rhea Sayer, and Jamie Buss under the guidance of Managing Director Jack Cheshire have positioned the business to significantly capitalise from the strong demand in both sales and rentals that we hope and predict will return in 2021.
Best wishes and stay safe,
Chairman, Team Property Group
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