In this week’s interview feature LATTE talks with John Spence, the Chairman and CEO of Karma Group. Karma Group includes luxury travel names Karma Resorts, Karma Retreats, Karma Royal, Karma Estates, Karma Beach, as well as Karma Spa.
LATTE took time earlier this year to hear about Spence’s history and how he was roped into the hotel business, including the unique philosophy behind the brand – which now comprises a stable of 24 properties around the globe – quizzing him on his top three. He tells about Karma’s plan to offer island hopping, which Spence refers to as “Surf & Turf”, in the Caribbean, and we also discover that he’s a Nespresso freak!
Speaking off coffee, you might want to grab a beverage. This is a very detailed and thoroughly interesting read.
John, you’ve admitted to a youth spent playing in punk bands and wearing a plastic bin liner for costume. How did your decision to tackle the travel industry evolve from these scandalous beginnings?
Yes, it’s certainly true that I used to play in the music industry in punk bands. I was at university back in 1980 and I appalled my parents by dropping out after a couple of terms but I thought I was the best guitarist in the world. But I quickly discovered when I went to London that I was the worst guitarist in the world and the reality was that if you couldn’t get a job playing guitar in a punk band in 1980 you must be pretty bad.
But anyway, I drifted on to the business side of the music industry and, more probably through luck than any ability, I managed to have a lot of good bands. I spent four years and I looked after many a group, and some of them became very successful like Culture Club, Eurythmics, Bananarama, and The Cult. I had a fantastic time – thoroughly enjoyed myself.
But, after four years, I took a holiday down to Tenerife to see my mother. And during that time, I’d constantly been travelling; I’d been on the road the whole time, living in hotels, flying on planes. And so I pretty much had ‘the travel bug’. Down in Tenerife I met, totally by accident, a person who had just arrived from the States, and had just started a hotel – a timeshare holiday ownership company called Global. And he suggested to me that I should change career and get involved in the travel industry, to which I initially laughed and said, “No, I’m in the music business,” but I agreed to give it a crack for a while.
I started off as the most junior salesman possible. I was the kid on the beach, hustling people in and doing very much what we call ‘cold land sales’, and amazingly I became very good at it. I actually loved the industry. And I think, I was born at the end of Gatwick Airport, I have the smell of jet fuel in my nostrils. Growing up as a kid, I spent lots of time in a hotel, so I’ve always had a big propensity and a passion for travel.
Might your statement that you’d “rather be a pirate than a naval officer” be construed as the continued influence of these rebellious origins, and do you bring this element of rebellion into the realm of luxury travel? How?
With regards to one of our straplines, it’s more fun to be a pirate than be in the navy, I think, almost certainly, it does get back to my rebellious beginnings and indeed my continuous rebellion. We are as a company a bit like a bunch of pirates. We travel the world, we sit outside main corporate society. I often say that many of us are probably unemployable in the main corporate world.
And I revel in that; I like the fact of having a bunch of mavericks that work for me, I like the creativity and the entrepreneurialism that goes with that. I, as an individual and as a company, would never thrive in the main corporate environment. So I think we’ve always had a passion for being different. We’ve always had a passion for working hard and playing hard. We’ve always had a passion for being able to be incredibly mobile and flexible.
I’m very fortunate that one of the things I’ve had over the years was being given a fellowship to teach at Yale University. And one of the things that I teach my students there is that it’s often better to be a small entrepreneurial company than a big one because it’s a little bit like the difference between a cruise liner and a speed boat. A cruise liner is large, it’s substantial, but it’s very hard to manoeuvre. A speed boat can move in and out of opportunities the whole time. It can move on a sixpence.
And as a company, we’ve always embraced this attitude of being a pirate ship; of being entrepreneurial, buccaneering, quick to make decisions, accepting that we make mistakes, and at the same time, being slightly outside the main corporate area. And I think this comes into the product that we’re offering, very much, because we are perceived by our customers and our clients as being ‘five-star hippy’, which is another one of our straplines – being a bit different, being a bit irreverent.
I think that one of my few business heroes in life has been Richard Branson, who I’ve known over the years. I think we embrace the same sort of spirit of being slightly different and out of the box. I think consumers, particularly in the holiday space – which is a fun, leisure space – kind of like that, and they get bored of the main corporate offerings and embrace the fact that we’re a bit different.
Perhaps the biggest clue is in the name of your endeavour, “Karma”. You have built a strong reputation as a socially conscious entrepreneur. What beliefs have founded your business model, and how might we see their influence today?
I very deliberately called the company ‘Karma’. I can clearly be criticised by someone who is a student and understands the true concept of karma. It’s not quite correct, but I do believe that what you give the universe, the universe will give back to you. I believe you do good things and good things come back, and bad things – bad things come back. It was like George Harrison said in that famous Beatles song, ‘you only get the love that you give’. And I’ve seen all too many people who’ve done good things get good things back and bad things get bad things back. So, I don’t quite understand how it works, but I do believe in karma and creating good karma.
From a point of view of the company, and individually, I think I’ve been blessed over the years with many an award but I have to say the award I’m most proud of is the award of “Philanthropist of the Year”, which I was given some time ago in the United States.
And I do believe both personally, and with my corporate hat on, that we all have a moral, ethical, spiritual responsibility to give back to society. If we are lucky enough to be successful, we do have to give back, we do have to help people that are less successful. And in particular, with our company, we have been successful in parts of the world where we’re not from. We’ve been successful in India, in Indonesia, Thailand, Australia – all sorts of places – and many of us are not from those countries. And so I’m passionate about supporting charities and initiatives which are socially aware in those countries.
In India, our main charity is called Christel House. It was founded by a friend of mine a number of years ago and we’re the major sponsor. It’s a school in Bangalore. We have over 900 children who are orphans or street kids and we give an A-Z education from the age of five up to 17-years-old. And it’s very much based on the philosophy that if you give a man a fish it’ll feed him today, but if you can teach him to fish, you’ll feed him forever. And so we’re very passionate about that.
We have an orphanage in Indonesia, we have a school for children in Vietnam who’ve been damaged or maimed. And so yes, I think that we do take it seriously. I personally get great joy from it. I think my staff do – in fact, I know my staff do. I think they like working for a company that feels it is important to help the local community.
From a purely commercial point of view, I believe that the local communities are extremely pleased and supportive of the fact that we have philanthropic initiatives. And possibly surprised, because I don’t think many multinationals do that. I’m quite appalled by the number of companies that don’t actually contribute to local charities. And so, look, from a Machiavellian point of view, as well as getting benefit on a spiritual and ethical sense, we get a benefit commercially. Because if local villages or local people see that we are not just taking the money away and running away, going ‘Whoopee!’, but contributing quite sizeable amounts back into the local community, then they tend to help and support us.
And I’m often asked the question, why we’ve been successful and a lot of other international companies haven’t been successful in Asia. I think one of the reasons is simply that. If you don’t respect the local community, if you don’t give back, if you don’t offer yourself up as being someone that wants to help them, then communities have a habit of maybe biting you and not being friends when times are hard, or not helping you.
And also, from a commercial point of view, because I believe very much that things work two ways, things work for helping communities, but also from giving you a business advantage. I’ve got to say our customers love the fact that we’re involved in philanthropy. We do an event each year called ‘Camp Royal’ where we bring two or three hundred kids who are disadvantaged to our resort, we shut the resort for a week, we offer the ability for our clients to be volunteers – to actually sort of serve them drinks, or make their beds – and we have a waiting list every year, people just love getting involved.
And again, I think that the more people travel and holiday to exotic places around the world, the more conscious they are that there is a social responsibility to help the people in those places and leave a lasting memory. So, yeah, that’s a long answer to your question, but I believe in philanthropy for many reasons. It’s a passion for me and it’s one I hope I instil both in my managers and also our clients.
What is the most exceptional experience you’ve ever shared with a community or individual as the result of your Karma Community Care outreach programs?
I think I’ve probably answered about the most exceptional experience I’ve had. I mean, I’ve been touched many times. I think again, another experience I had which is very important to me is I went to the school in India, Christel House, with my father and my two daughters a number of years ago, when one of them was about 18 and one was about nine-years-old. And we went to the school which had obviously rolled out the red carpet. We looked around and then they gave an assembly and sang songs. We saw the dining room and the library and we did a tour and it was an immensely moving experience and a very joyous experience to see everything we’ve done, and to be there with my father and my children.
And I think an incredibly important moment for me in my life was when my nine-year-old daughter turned around to me and said, “Daddy, I’m so proud and I understand what you’re doing when you’re travelling. And I’ve sometimes been sad when you’re travelling and not seeing you, but now I see how you’re helping all these children. I want to say how proud and how wonderful it is. And that’s kind of raw, sort of a moment in your heart when you feel pretty chuffed. When your daughter says that. And that she sees the impact that my work and my success is having on these other children, these 900 children who clearly she can understand, all of a sudden, that she lives a very privileged life but they have a much harder life and I hope that that’s been also very beneficial for her.
You’ve explained that Karma seeks to go above and beyond simply producing world-class resorts to create truly memorable experiences for its guests. What does this distinction mean to you, and how does Karma distinguish itself in this way?
I think that we always say at Karma that we’re not in the hotel business, we’re not particularly in the travel business, we’re not in the lodging business. We’re not trying to compete with the Four Seasons or the Holiday Inn, or whatever it is, we’re not in that business. We’re in the entertainment business.
And it probably goes back to my beginnings in the music business, and it goes back to my belief that when people take a holiday, they want to be entertained. And we are Walt Disney. We are actors on a stage. I say to my people that our job is to give people a fantastic experience and it’s not about necessarily the cheapest room or the biggest square metres of the bathroom or proximity to the airport or whatever; it’s when people go on holiday, they want to have a fantastic experience. And so we spend a lot of time looking at how we can do that.
Our clients are attracted to our ‘five-star hippy’ philosophy. And what I mean by that is I sometimes define what we’re doing by, the best time you ever had on holiday is when you’re 20-years-old or 21, travelling the world, not a care in the world, sleeping in a hammock, lying on a beach, maybe smoking a joint or drinking too much or, you know, whatever it was that you did when you were a student, and you had a great holiday. And you loved it and you remembered it and that was what you wanted.
And then you grow up and you got a job and you got a wife, or you got a husband, and children, and you holidayed in five-star resorts and did well in life. And all that’s fantastic but it missed that je ne sais quoi. It missed that excitement, that energy, that sort of sense of unknown-ness or achievement. And what we try to do is provide that same excitement, but now, of course, you’re grown up and you want air conditioning, banging on some stereos, or good spa treatments or whatever. So we try and provide very much a ‘five-star hippy’ experience.
What does that mean? Well, it means we have great beach clubs. We spend time and effort on having good DJs and producing good music. We have great cocktail lists and wine bars. We have great menus. We have celebrity chefs. We have spas that do exotic alternative therapies, like sort of ‘white witch’ treatments and reiki and what-have-you. We have good gyms with top athletes like English rugby stars coming in to do personal training. We have kids clubs where we look after children and don’t plomp them in front of an iPad and a video game, but teach them about the local community and encourage them to interact and experience the destination that we’re in. We have fashion shows. We have a whole assortment of things.
And it’s important to remember that not only are we in the entertainment business, we’re much closer to a private members club – we’re not really a hotel company. The vast majority of people that stay with us are our members. We have 55,000 members, families, which represents almost 200,000 people. We’re growing at a rapid rate. It’s something like 15 new memberships a day. My vision, very much, is that the time will come when the only people that holiday with us or experience our products are members first. So, like Soho House on steroids, really.
And that means that we do lots of work away from the resort, so we don’t really view our relationship with the member as just being the seven nights he stays with us at our resort in Vietnam. We view it as an ongoing relationship and we spend a lot of time and effort, whether it be in apps and communication or doing parties in the cities. We were recently in Singapore for the Rugby Sevens. We’re going to be there soon for the Formula 1 where we have a big corporate box. In London, recently, we did big events. And so we really want to work with people over the year.
So to say that Karma is a lifestyle rather than a holiday may be a bit of a sad cliché but there’s an element of truth in it. That we are different from other hotel companies. And that we want to develop a relationship with people over the full course of the year and to give them all sorts of satisfaction. I’ve just literally come from a tasting of our new wine that we produce down in Bordeaux, which will be available to our members. We’ve just bottled our olive oil from last year which is sourced from our estate in Preverger, which is available. So, I think that we’re very different in the fact that we are much closer to a members club than we are to an actual hotel.
Why do you believe your guests are so passionate about socially conscious travel, and what trends in travel do you think we might be observing as a result?
I do think clients are much more socially aware. I think people are much more adventurous in their travel. What’s interesting is when we started 25 years ago, it was all about buying assets in Asia and developing them primarily for Australians and Europeans. That was partly driven on that it was cheap to buy assets in Asia and to build, and there was a big desire from Asians and Europeans to holiday there. There’s been a certain change to that pattern. A lot of our business now are buying up assets in Europe, which are, I believe, undervalued and certainly well priced, and marketing them to Asians who want to travel to Europe because they’ve grown up desiring to go to those places.
I think when people do travel, a lot of people are very socially aware, and they’re also very aware of the environment. I’m privileged that I teach at Yale and at UCLA in the Architecture schools, not as an architect, but as a developer. And I do teach a lot about, and speak about, that there’s no conflict between being commercial and equally being socially and environmentally aware.
There’s too many people that either believe, or actually act that, you’ve got to be one or the other: you’ve either got to be commercial, in which case, sod the environment, or sod social awareness, just make money; or you’re going to be so socially aware, and so environmentally aware, that you’re not going to make money. And neither of those approaches work because if you’re not socially aware or environmentally aware, then I think you’re going to have a bad karma (to use my company’s name), and a bad experience, and have push-back from consumers who don’t like that. And equally, if you’re so economically aware and socially aware that you don’t have your eye on making money, you’ll go bankrupt, and in which case there’s nothing worse in the world than a resort which is empty and not working. That certainly isn’t socially or economically aware.
So, I think it’s important and I think you can be both, and I like to think that’s what we strive for. We are unashamedly commercial, we make profit, we’re a successful company. But equally, what we do is both environmentally and socially aware, wherever we are able – whether it be helping the local community, or minimising the damage on the environment in the way that we build things, or the way that we can make things as close to carbon neutral as possible, or giving back.
I like to think that consumers like that. We don’t shove it down their throats. I have a pet hatred, to be honest with you, of resorts that almost make me feel guilty, because they like to preach about how they are environmentally or socially aware and that they’re saving the universe. Let’s face it, people that are in my resorts are on holiday. So whether they choose to buy into our values of social and environmental awareness or not is entirely up to them. We’re not asking them to. But we do find more and more, because I think the awareness is becoming more apparent, that people respond to that, and respect and appreciate that, and like the fact that we’re on the same wave length.
What other changes have you seen in the travel industry, and how do you stay ahead of these changes?
As I’ve said, I think one of the big changes we’ve seen in the last few years has been this migration of Asians to Europe. It clearly was predictable. When I started in Asia 25 years ago, it was because I believed that Asia was going to become a powerhouse, but I would be lying, and I think anyone would, if they claimed to have foreseen just how much that has manifested itself so swiftly.
And particularly in the last five years, we’ve just bought a new resort in Tuscany and I was down there last week finalising the transaction. I went out in Florence, which is one of my favourite cities in the world; it’s a magnificent, magnificent place. And it would be fair to say that probably at least 50%, if not more, of the tourists were Asian, whether it be Chinese, or South Korean or Indian. And we see a rapid growth on that.
And I believe very much that God is not making what I call ‘brand tourist destinations’ anymore, which is like the Greek Islands, and the Alps, or the highlands of Scotland or France and Italy, so we are busily acquiring properties. I mean, literally over the last couple of weeks, I’ve bought two resorts in Normandy, just outside Paris, near Rouen, on the Seine. I purchased this beautiful medieval hamlet called Borgo Di Colleoli in Tuscany, which is equidistant between Pisa and Florence.
And we recently bought a resort in Greece. I’m going down to Crete to open our newest resort there. We’re looking at a portfolio of assets to buy elsewhere in Greece, in Rhodes and some of the other islands. We’re redeveloping our property in Mykonos. We’re looking at new property over in Spain. So, I think one of the big travel trends that is going to occur is that more and more and more, and more and more, Asians are going to be travelling to Europe. And elsewhere of course, to the States and elsewhere in the world.
But Europe represents what I call the ‘student moment’. When I was a kid, I had on my wall a picture, a beautiful beach with a palm tree and my dream was to go to Asia and to see that hypothetical beach and that palm tree and drink cheap beer and see exotic girls or whatever it was. And that’s what I, and many other people, did as soon as I could; and we see the same dream of all sorts of people, in India and China. They had on their wall when they were a kid growing up, or in their mind, a picture of the Greek Islands or the castle in Scotland or the chateau in France or the Tuscan vineyard.
And they now have the money, they have currencies which are convertible, they have airlines which are cost-effective, they have the ability to travel there and they are going to, more and more, go there. So one of our main priorities is to buy up as many assets as we can that fit into the Karma model in destinations that we believe that Southeast Asians and Asians are going to want to go, and provide the products for them.
What are your top three Karma destinations you think our readers might love?
Asking me to choose one or several top resorts is a little bit like asking someone to pick their favourite children because it’s very hard to do, and also, I’ll be criticised whatever I say. But look, if I had to choose three resorts, I would say number one is Karma Kandara in Bali, and it’s a magnificent property. It’s located near Uluwatu, right on the side of a cliff.
There’s a story behind it. A number of years ago, I was considering retiring and I employed a Feng Shui expert to go all over Bali to try and find me the most powerful piece of land that I could build a villa on and this was the piece of land they found. It’s the most far-southerly part of the island, it looks out on the Indian Ocean. And the next bit of land, if you could see it, would be Australia. Huge breakers come in, there’s a gorge there, there’s a cave temple at the bottom and a temple at the top. The energy is just magnificent. And it’s full of butterflies and monkeys and all sorts of stuff.
So I bought it, quickly decided I wasn’t going to retire, that was a really stupid idea, and then decided to build a hotel. And over the course of a number of years, I bought land all around it and the local villages and hey presto, we ended up with this magnificent resort. There’s now 70 units, and we’re building another 40. It’s got a cable car down to its own private beach. It really is one of those sites that is very difficult to actually replicate. And to me it’s very personally special and we obviously win lots of awards for best resort in Asia, best spa and best beach club and so on. But I do love it, and if I had to say of any of my resorts – and I have 33 now – where would I say is the number one, it would be Kandara.
Elsewhere, Preverger in the south of France is magnificent. I was very fortunate to buy this. It’s an 18-bedroom chateau just outside St Tropez, and it has a very storied history. It used to belong to Laura Ashley, the famous fashion designer; and before her, to Jeanne Moreau, the French film actress.
In its day, it hosted many a wild party. We have a man that looks after the grounds for me, and he’s been there 30 years, and his uncle managed it before. I had a drink with him in the village not so long ago and he says, “you young people, you think you invent drinking and parties, but compared with the Jeanne Moreau and Brigitte Bardot, you are amateur”. So it kind of put me in my box, but it had an amazing history and many famous people have been there over the years.
It’s 80 hectares of land, it’s got olive trees, it’s got a vineyard. I employed Nicky Haslam, the famous interior designer, to do it up recently, so it’s looking pristine. It’s got a helipad there, you can fly down to St Tropez for lunch or to the airport. Magnificent woods all around it. So that is a beautiful, beautiful, beautiful piece of France.
And for my third property… what would I say? It’s difficult because there are so many, so many that I’d point to. I think I’d probably point to Tuscany, at the moment, because I’ve just been there. It’s one of my newest acquisitions but it is, as I said previously, in a little hill village between Pisa and Florence. It goes back 500 years. We have a palazzo there, we have a beautiful chapel there, we have a little square there. I think Florence is one of those magnificent places in the world that resonates with everyone. It’s the vineyards and the olive oil and the pasta and the culture and the history.
So it’s probably because it’s lodging in my mind, because it’s the most recent. I could point to Vietnam as being magnificent. I could point to some of my Indian ones. I have a new resort in Dharamshala in the north of India, which is where the Dalai Lama lives, which is surrounded by the Himalayas and is a magnificent place. A palace in Jaipur, Ratan Haveli, which is very special to me. Goa, which is where I began. I was recently there for our 25th anniversary party, which was particularly special. So they all are, in their own way, extremely special, and unlike most hotel groups, we don’t try and homogenise or make them all the same. They’re all different in different ways. But those are probably my top three at the moment.
What exciting new Karma destinations can we expect to see coming soon?
I’ve got several new Karma ones coming up. We’re literally about to put the ink on the contract of our newest one in Thailand, in Chiang Mai. Thailand’s been very good for us over the years. We’ve got two resorts at the moment; one in Chiang Mai and one down in Phuket. We had a great property in Samui that I sold a number of years ago. And I like Thailand a lot. We are about to develop more in Indochina. We have one in Vietnam, which is immensely popular, and we’re looking at acquiring one in Siem Reap in Cambodia by the Angkor Wat ruins. And also in Laos.
Elsewhere, the other part of the world that I’m very keen to get involved in is the Caribbean, I see great opportunity there. And we’re currently looking at the island of Anguilla, which I personally love a lot and I do think it’s got great potential. It was unfortunately quite devastated by the hurricane, but as a result, there are some assets there which we’re talking to the owners about acquiring. So expect to see us there.
And the other thing we’re looking at doing in the Caribbean is what we call our sort of “Surf and Turf” program, which is going to be a combination of providing catamarans with land-based accommodation. I think there’s a huge opportunity for people to spend a few nights out on the water on a catamaran, doing a bit of island-hopping and going around all the beach bars and a few nights on the land. So, expect to see us more there.
Elsewhere, in Europe, we’re very keen on acquiring more and we’ve got negotiations going on in various parts of Europe. Over in Asia, we’ve got a piece of land in Hakuba – which I bought a number of years ago – which is a ski resort about two hours outside Tokyo, and we plan on developing that next year. And we also have a piece of land in the Philippines in Palawan, which again I bought a number of years ago and we have that slated for development again over the next year.
And finally, what’s the best coffee experience you’ve ever had?
I appreciate your your signature question, but I’ve got to confess to being a bit of a heathen. I’ve got friends who are coffee addicts; who have the most expensive machines, barista techniques and source beans from various fair trade plantations up the side of a mountain. But I’m not. I absolutely am addicted to a Nespresso machine and I confess that’s probably the wrong thing to say to the coffee aficionado people.
But I, absolutely wherever I go in the world, have Nespresso machines. I insist on having them in all my homes, in all my resorts. When I do meetings, I insist on Nespresso. I have a daily ritual of getting up at about five o’clock and doing my first cap (sounds like a drug addiction). And then doing my second cap and doing my work from five to seven. Making my wife her tea and doing my third cap at seven o’clock. And if I’m at home, it’s then the school run and then getting on with the day.
I was never particularly a huge coffee fan, to be candid, in life. More of a wine fan. The Nespresso machine either converted me or polluted me, or corrupted me. It should probably be illegal having a Nespresso machine, for the number of people that have got addicted to it. But I appreciate that maybe I’m a heathen, need to be educated in the more remote iconic single-brew pours.
But for me, a mixed bag of various brightly-covered caps. Which, by the way, I think is absolute genius. In the coffee world, if someone had predicted that some of the top sort of real estate in the world – in places like the Champs Elysees and Oxford Street – would be occupied by a maker of a coffee machine and capsules, they would’ve said they were smoking too much pot a few years ago. But it does appeal to my sense of humour, the whole sort of marketing that goes around it.
But anyway, my best coffee moment is getting up at five in the morning, no one else is up, putting my little cap in the machine, pouring myself an espresso, doubling it up an hour later, getting two hours’ work done that I wouldn’t have done without the benefit of that gain, and repeating that wherever I am in the world with the ease of a hundred-pound machine, which can be plugged into the wall. And to me, as a heathen at least, it gives me the most amazing taste of coffee.