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Interview
Darrell Metzger

To encourage more tourists to Malaysia, Destination Resorts is developing world-class luxury resorts and hotels, complemented by spas, theme parks and leisure attractions. We talk to the man in charge of pulling it all together

By Jennifer Harbottle | Published in Spa Business 2012 issue 2


Darrell Metzger has a twinkle in his eye. Mild-mannered and mischievous, his calm demeanour belies the task ahead of him. As chairman of the Executive Committee Board of Directors for Destination Resorts, Metzger is in charge of making sure his team delivers on its promise – to invest in and create world-class, leisure and residential developments for the Malaysian market. And to make them profitable too.

Destination Resorts is a subsidiary of Khazanah Nasional Berhad, the investment arm of the Malaysian government, tasked with developing industries that will benefit the nation’s long-term economic interests.

Alongside its sister company, Themed Attractions, Destination Resorts is responsible for enticing more international travellers to Malaysia through the development of the country’s leisure and tourism industry.

While Themed Attractions is in charge of creating entertainment facilities and attractions, Destination Resorts is providing the investment, development and management expertise for destination resort and hotel-related projects – all with spas – in the region. Although they’re both run as separate companies with their own CEO, Metzger has a role in each of them, ensuring they leverage the opportunities between the two. He reports to Nadziruddin Basri, the managing director of Destination Resorts.

Spa tourism
Destination Resorts has three integrated leisure developments underway, all of which include resorts and hotels with spas. There are two in the southern region of Malaysia in the state of Johor, and one on the island of Langkawi (see opposite). And they’ve already attracted some of the top branded resort owners and operators around the world such as Amanresorts, Shangri-La and Sheraton.

Although the government’s Economic Transformation Programme for tourism doesn’t specifically include a focus on spas, Metzger knows Destination Resorts can’t afford to ignore the importance of this market.

“Part of having great destinations is to have very well known, impressive spas,” he says. “We know we need to build off Malaysia’s natural assets to get people to come here rather than Phuket or Bali, so we’ll make sure we have as good or better spa and recreation facilities as they have in those places.” This could prove a wise move, considering that according to Metzger, over 50 per cent of the target market for its resorts will be from Europe and the Middle East, where people expect no less than a luxury spa as part of a five-star hotel.

This sentiment is echoed by Basri, who says: “Destination Resorts, as a developer of premier, integrated developments, will position Malaysia as an appealing and complete holiday destination of choice for all travellers. We will bring out the best of our country’s natural wonders and complement them with world-class leisure and tourism products.”

To ensure it delivers, Destination Resorts is exploring joint venture opportunities with hotel partners which have a proven track record and which have a philosophy that’s in line with the concept and positioning of its projects. As its goal is to become the lead investor in resorts and hotel brands in the country, Destination Resorts owns a “not insignificant” shareholding in each of the branded hotels being built.

In 2012, Destination Resorts also became the majority (51 per cent) shareholder in an existing hotel group called Archipelago Hotels & Resorts. The Asia-based company was established in 2010 and has four, five-star hotels with spas, which it owns and manages in Malaysia. They include The Datai Langkawi, The Carcosa Seri Negara, The Club Saujana Resort and The Saujana Hotel Kuala Lumpur. Under the partnership, Archipelago will run hotels and spas for Destination Resorts where branded partners aren’t involved. On top of this, Archipelago will retain its own identity and operate as its own company outside of Destination Resorts. Longer term, says Metzger, the plan is for Archipelago to grow its newly launched Datai Hotels & Resorts brand in other regions – something that will fit well with the government’s objective of building quality Malaysian brands.

Looking for investors
Although the resort developments are primarily being funded by Khazanah, Destination Resort’s aim is to get private investors involved to operate them. Khazanah’s total investment in Destination Resort’s current portfolio is almost myr7bn (us$2.3bn, €1.8bn, £1.4bn) – one of the largest in the region for a leisure-based development. According to Metzger, the government doesn’t need to run the developments as the principle shareholder, but isn’t looking for an exit strategy just yet.

“When most developers sign a deal, they don’t want to get involved with operations –they just want to buy, build and leave,” he explains. “We’re not doing that. We’re building communities and we’re committed to it.” Having said that, a large component of the three current projects are residential properties and these will be developed and managed by the UEM Land Group, which also part of Khazanah.

A land of opportunity
Metzger isn’t fazed by what needs to be achieved. Although he regularly jokes about “getting too old for this” and pretends to be unsure about his position – “I forget what my role is here!” – you get the impression this is his way of taking the shine off himself and giving the limelight to others. He’s already proven himself a master of leisure development with the runaway success of Sentosa island in Singapore, which together with his team at Sentosa Leisure Group, he transformed from a tired looking island resort into Resorts World Sentosa – one of south-east Asia’s top tourist destinations.

But his role at Destination Resorts is slightly different. It comes with the added challenge of bringing a new product to a market that isn’t well-versed in high-end leisure offerings. On top of that, in creating a success of Sentosa, he’s made his current job harder as he now has to compete with the well-visited tourist offering of Singapore as well as with the nearby and popular tourism destinations of Thailand and Bali.

While Malaysia is well known for its shopping and beaches, tourism is mainly focused around the city and city-based hotels, plus a few island resorts known mainly to backpackers who enjoy diving.

“People’s perception of Malaysia is that it’s underdeveloped and underutilised, but that is the great opportunity,” explains Metzger. “We have all this land, friendly people and all the natural resources you need, as well as the infrastructure. The government has already put in the hospitals, shopping centres, schools, universities and some housing. So now it’s time for the fun stuff – the entertainment and the places to stay.”

Metzger thinks the government’s plans for the tourism industry will only benefit Malaysia. He says that creating resorts for people to come and stay will create jobs, stimulate tourism overall and do good things for this developing country.

Managing director Basri, is also keen to point out that Destination Resort is dedicated to delivering a long-term tourism plan. “We are committed to developing integrated destinations and introducing new, innovative attractions that offer a unique holiday experience for the whole family,” he says. “Our portfolio is diverse and will continue to grow as each project unfolds.”

Place managers
Metzger says the key to ensuring the success of each development and the brands within it, is maintaining the personality and standard of each one. While Desaru Coast and Iskandar Malaysia are high-energy destinations aimed at families, Teluk Datai is about relaxation and privacy, and this is reflected in the hotel brands in each location. Whereas the Sheraton Resort and the Plantation Hotel face directly out onto the entertainment offerings at Desaru Coast, in Teluk Datai, the private villas and resort hotels are nestled in the rainforest to offer guests reflection and peacefulness.

Metzger sees Destination Resort’s ongoing role as ‘place managers’. By that, he means they’ll make sure that “no Seven Eleven stores will open in the resorts… it may look less attractive before and after you exit the resort, but while you’re inside it, it will be perfect.”

He explains: “If you’re the landowner and you earn a percentage of rent from each hotel, retail area, restaurant, convention centre and golf course, you have the motivation to keep the resort looking and working right because that’s what’s bringing the money in. If a developer starts farming things off to third parties and gives them a free reign to operate it how they want – which is common – you lose control over standards.”

Metzger says, until they find a management company that can take over Destination Resorts’ role to the right standards, they will remain in charge.
Ever the optimist, Metzger talks about when (not if) Destination Resort’s developments will be a success. He concludes: “Malaysia’s got such a lot going for it. It’s the right time, the right place and we’re the right company so this is an exciting time for tourism in the country.”

In the pipeline

Desaru Coast
The largest project to be managed by Destination Resorts is Desaru Coast in Johor, a 17km (11mile) beachfront integrated. The MYR3bn (US$982m, ¤754m, £608m) development will include four luxury hotel and spa resorts, private houses for sale or lease, plus a retail mall, convention centre, two golf courses and three theme parks. The development of Desaru Coast is being carried out in three phases, with the first phase expected to open by the end of 2014.

The hotel and spa resorts will be a combination of one six-star branded property managed by Amanresorts International (the first Amanresort in Malaysia), one five-star branded Sheraton Hotel & Resort, and two five-star properties managed by Malaysia’s Archipelago Hotels & Resorts.

Archipelago will own and manage the Datai Desaru Resort, which will feature 64 suites and 35 pool villas – plus one presidential villa – set on a hilltop away from the main attractions. It will also own and operate the 384-bedroom Plantation Hotel, which is a new hotel concept being created by Destination Resorts and Archipelago that will sit in the centre and cater to the family and theme park market.

Iskandar malaysia
Also in Johor, Destination Resorts is involved in a luxurious waterfront development being built by Themed Attractions called Iskandar Malaysia. As part of this, Destination resorts is partnering with Shangri-La to open a Traders Hotel. The 283-room four-star business hotel with spa is being built on top of a quay-side lifestyle and retail complex adjacent to a family theme park. The site will also include the first LEGOLAND® Hotel in Asia.

Teluk Datai
As a counter offer to the high-energy developments in Johor, Destination Resorts is also working on an integrated lifestyle resort at Teluk Datai, on the island of Langkawi. Destination Resorts plans to turn Teluk Datai into a high-end eco-tourism destination aimed at the couples’ market and golfers, set in the rainforest, bordering the beaches. Here, Archipelago is refurbishing its existing 110-room five-star Datai Langkawi hotel, including its spa. It’s also partnering with Shangri-La to open a 350-room beachside resort and spa, as well as looking for partners for two more six-star resort properties and private residences, all in time for a 2014 opening.

The nearby Golf Club Datai Bay is also undergoing an extensive upgrade.

 


Destination Resorts and Hotels Sdn Bhd

A unique feature of Datai Desaru will be bedrooms looking out onto dolphins and fish in the marine park attraction
 


Destination Resorts and Hotels Sdn Bhd
The US$982m Desaru Coast will be the largest resort for Destination Resorts. The first phase is due for completion by 2015
 
Metzger reports to Basri (right) managing director of Destination Resorts which is part of the investment arm of the Malaysian government
Archipelago already runs spas, such as at The Carcosa Seri Negara in Kuala Lumpur Credit: © 2011 Destination Resorts and Hotels Sdn Bhd.
The goal is to turn the existing Datai Langkawi into a high-end, eco-tourism destination Credit: © 2011 Destination Resorts and Hotels Sdn Bhd.
A Teluk Datai development will be more peaceful and is surrounded by the rainforest Credit: © 2011 Destination Resorts and Hotels Sdn Bhd.
The current spa at Datai Langkawi will be refurbished and will sit alongside a new Shangri-La resort and spa Credit: © 2011 Destination Resorts and Hotels Sdn Bhd.
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Interview
Darrell Metzger

To encourage more tourists to Malaysia, Destination Resorts is developing world-class luxury resorts and hotels, complemented by spas, theme parks and leisure attractions. We talk to the man in charge of pulling it all together

By Jennifer Harbottle | Published in Spa Business 2012 issue 2


Darrell Metzger has a twinkle in his eye. Mild-mannered and mischievous, his calm demeanour belies the task ahead of him. As chairman of the Executive Committee Board of Directors for Destination Resorts, Metzger is in charge of making sure his team delivers on its promise – to invest in and create world-class, leisure and residential developments for the Malaysian market. And to make them profitable too.

Destination Resorts is a subsidiary of Khazanah Nasional Berhad, the investment arm of the Malaysian government, tasked with developing industries that will benefit the nation’s long-term economic interests.

Alongside its sister company, Themed Attractions, Destination Resorts is responsible for enticing more international travellers to Malaysia through the development of the country’s leisure and tourism industry.

While Themed Attractions is in charge of creating entertainment facilities and attractions, Destination Resorts is providing the investment, development and management expertise for destination resort and hotel-related projects – all with spas – in the region. Although they’re both run as separate companies with their own CEO, Metzger has a role in each of them, ensuring they leverage the opportunities between the two. He reports to Nadziruddin Basri, the managing director of Destination Resorts.

Spa tourism
Destination Resorts has three integrated leisure developments underway, all of which include resorts and hotels with spas. There are two in the southern region of Malaysia in the state of Johor, and one on the island of Langkawi (see opposite). And they’ve already attracted some of the top branded resort owners and operators around the world such as Amanresorts, Shangri-La and Sheraton.

Although the government’s Economic Transformation Programme for tourism doesn’t specifically include a focus on spas, Metzger knows Destination Resorts can’t afford to ignore the importance of this market.

“Part of having great destinations is to have very well known, impressive spas,” he says. “We know we need to build off Malaysia’s natural assets to get people to come here rather than Phuket or Bali, so we’ll make sure we have as good or better spa and recreation facilities as they have in those places.” This could prove a wise move, considering that according to Metzger, over 50 per cent of the target market for its resorts will be from Europe and the Middle East, where people expect no less than a luxury spa as part of a five-star hotel.

This sentiment is echoed by Basri, who says: “Destination Resorts, as a developer of premier, integrated developments, will position Malaysia as an appealing and complete holiday destination of choice for all travellers. We will bring out the best of our country’s natural wonders and complement them with world-class leisure and tourism products.”

To ensure it delivers, Destination Resorts is exploring joint venture opportunities with hotel partners which have a proven track record and which have a philosophy that’s in line with the concept and positioning of its projects. As its goal is to become the lead investor in resorts and hotel brands in the country, Destination Resorts owns a “not insignificant” shareholding in each of the branded hotels being built.

In 2012, Destination Resorts also became the majority (51 per cent) shareholder in an existing hotel group called Archipelago Hotels & Resorts. The Asia-based company was established in 2010 and has four, five-star hotels with spas, which it owns and manages in Malaysia. They include The Datai Langkawi, The Carcosa Seri Negara, The Club Saujana Resort and The Saujana Hotel Kuala Lumpur. Under the partnership, Archipelago will run hotels and spas for Destination Resorts where branded partners aren’t involved. On top of this, Archipelago will retain its own identity and operate as its own company outside of Destination Resorts. Longer term, says Metzger, the plan is for Archipelago to grow its newly launched Datai Hotels & Resorts brand in other regions – something that will fit well with the government’s objective of building quality Malaysian brands.

Looking for investors
Although the resort developments are primarily being funded by Khazanah, Destination Resort’s aim is to get private investors involved to operate them. Khazanah’s total investment in Destination Resort’s current portfolio is almost myr7bn (us$2.3bn, €1.8bn, £1.4bn) – one of the largest in the region for a leisure-based development. According to Metzger, the government doesn’t need to run the developments as the principle shareholder, but isn’t looking for an exit strategy just yet.

“When most developers sign a deal, they don’t want to get involved with operations –they just want to buy, build and leave,” he explains. “We’re not doing that. We’re building communities and we’re committed to it.” Having said that, a large component of the three current projects are residential properties and these will be developed and managed by the UEM Land Group, which also part of Khazanah.

A land of opportunity
Metzger isn’t fazed by what needs to be achieved. Although he regularly jokes about “getting too old for this” and pretends to be unsure about his position – “I forget what my role is here!” – you get the impression this is his way of taking the shine off himself and giving the limelight to others. He’s already proven himself a master of leisure development with the runaway success of Sentosa island in Singapore, which together with his team at Sentosa Leisure Group, he transformed from a tired looking island resort into Resorts World Sentosa – one of south-east Asia’s top tourist destinations.

But his role at Destination Resorts is slightly different. It comes with the added challenge of bringing a new product to a market that isn’t well-versed in high-end leisure offerings. On top of that, in creating a success of Sentosa, he’s made his current job harder as he now has to compete with the well-visited tourist offering of Singapore as well as with the nearby and popular tourism destinations of Thailand and Bali.

While Malaysia is well known for its shopping and beaches, tourism is mainly focused around the city and city-based hotels, plus a few island resorts known mainly to backpackers who enjoy diving.

“People’s perception of Malaysia is that it’s underdeveloped and underutilised, but that is the great opportunity,” explains Metzger. “We have all this land, friendly people and all the natural resources you need, as well as the infrastructure. The government has already put in the hospitals, shopping centres, schools, universities and some housing. So now it’s time for the fun stuff – the entertainment and the places to stay.”

Metzger thinks the government’s plans for the tourism industry will only benefit Malaysia. He says that creating resorts for people to come and stay will create jobs, stimulate tourism overall and do good things for this developing country.

Managing director Basri, is also keen to point out that Destination Resort is dedicated to delivering a long-term tourism plan. “We are committed to developing integrated destinations and introducing new, innovative attractions that offer a unique holiday experience for the whole family,” he says. “Our portfolio is diverse and will continue to grow as each project unfolds.”

Place managers
Metzger says the key to ensuring the success of each development and the brands within it, is maintaining the personality and standard of each one. While Desaru Coast and Iskandar Malaysia are high-energy destinations aimed at families, Teluk Datai is about relaxation and privacy, and this is reflected in the hotel brands in each location. Whereas the Sheraton Resort and the Plantation Hotel face directly out onto the entertainment offerings at Desaru Coast, in Teluk Datai, the private villas and resort hotels are nestled in the rainforest to offer guests reflection and peacefulness.

Metzger sees Destination Resort’s ongoing role as ‘place managers’. By that, he means they’ll make sure that “no Seven Eleven stores will open in the resorts… it may look less attractive before and after you exit the resort, but while you’re inside it, it will be perfect.”

He explains: “If you’re the landowner and you earn a percentage of rent from each hotel, retail area, restaurant, convention centre and golf course, you have the motivation to keep the resort looking and working right because that’s what’s bringing the money in. If a developer starts farming things off to third parties and gives them a free reign to operate it how they want – which is common – you lose control over standards.”

Metzger says, until they find a management company that can take over Destination Resorts’ role to the right standards, they will remain in charge.
Ever the optimist, Metzger talks about when (not if) Destination Resort’s developments will be a success. He concludes: “Malaysia’s got such a lot going for it. It’s the right time, the right place and we’re the right company so this is an exciting time for tourism in the country.”

In the pipeline

Desaru Coast
The largest project to be managed by Destination Resorts is Desaru Coast in Johor, a 17km (11mile) beachfront integrated. The MYR3bn (US$982m, ¤754m, £608m) development will include four luxury hotel and spa resorts, private houses for sale or lease, plus a retail mall, convention centre, two golf courses and three theme parks. The development of Desaru Coast is being carried out in three phases, with the first phase expected to open by the end of 2014.

The hotel and spa resorts will be a combination of one six-star branded property managed by Amanresorts International (the first Amanresort in Malaysia), one five-star branded Sheraton Hotel & Resort, and two five-star properties managed by Malaysia’s Archipelago Hotels & Resorts.

Archipelago will own and manage the Datai Desaru Resort, which will feature 64 suites and 35 pool villas – plus one presidential villa – set on a hilltop away from the main attractions. It will also own and operate the 384-bedroom Plantation Hotel, which is a new hotel concept being created by Destination Resorts and Archipelago that will sit in the centre and cater to the family and theme park market.

Iskandar malaysia
Also in Johor, Destination Resorts is involved in a luxurious waterfront development being built by Themed Attractions called Iskandar Malaysia. As part of this, Destination resorts is partnering with Shangri-La to open a Traders Hotel. The 283-room four-star business hotel with spa is being built on top of a quay-side lifestyle and retail complex adjacent to a family theme park. The site will also include the first LEGOLAND® Hotel in Asia.

Teluk Datai
As a counter offer to the high-energy developments in Johor, Destination Resorts is also working on an integrated lifestyle resort at Teluk Datai, on the island of Langkawi. Destination Resorts plans to turn Teluk Datai into a high-end eco-tourism destination aimed at the couples’ market and golfers, set in the rainforest, bordering the beaches. Here, Archipelago is refurbishing its existing 110-room five-star Datai Langkawi hotel, including its spa. It’s also partnering with Shangri-La to open a 350-room beachside resort and spa, as well as looking for partners for two more six-star resort properties and private residences, all in time for a 2014 opening.

The nearby Golf Club Datai Bay is also undergoing an extensive upgrade.

 


Destination Resorts and Hotels Sdn Bhd

A unique feature of Datai Desaru will be bedrooms looking out onto dolphins and fish in the marine park attraction
 


Destination Resorts and Hotels Sdn Bhd
The US$982m Desaru Coast will be the largest resort for Destination Resorts. The first phase is due for completion by 2015
 
Metzger reports to Basri (right) managing director of Destination Resorts which is part of the investment arm of the Malaysian government
Archipelago already runs spas, such as at The Carcosa Seri Negara in Kuala Lumpur Credit: © 2011 Destination Resorts and Hotels Sdn Bhd.
The goal is to turn the existing Datai Langkawi into a high-end, eco-tourism destination Credit: © 2011 Destination Resorts and Hotels Sdn Bhd.
A Teluk Datai development will be more peaceful and is surrounded by the rainforest Credit: © 2011 Destination Resorts and Hotels Sdn Bhd.
The current spa at Datai Langkawi will be refurbished and will sit alongside a new Shangri-La resort and spa Credit: © 2011 Destination Resorts and Hotels Sdn Bhd.
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Tel: +44 (0)1462 431385

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