Spanish Revolution - Polaris World
Jonathan Richards
28-Jun-07
José Luis Hernández is President of Polaris World – the Spanish-based leisure and entertainment conglomerate that identified golf as the key ingredient to galvanise its business. Jonathan Richards spoke to him.
The UK has been good to Polaris World – a global property juggernaut with close to 6,000 employees worldwide and offices in most key European capitals. It’s the Brits who make up some 55% plus of its property-owning demographic. The company’s President, José Louis Hernández, was one of the original founders and now oversees an empire billing £400m plus a year. It is now six years since he invested two million euros as part of a syndicate of four businessmen each electrified by the commercial possibilities of the emerging second home market in Spain.
He’s in London to announce his arrival as the new and very public face of the company and a new TV ad campaign which seeks – in part – to quell fears that the Spanish property market has imploded.
At 32, he helms one of the most significant businesses in Spain. Significant enough, for example, to have precipitated the wholesale transformation of Murcia, a previously neglected region of South-East Spain; a region now scheduled to receive its own airport in 2009.
He turned his back on a successful law career in 2001 transfixed by the possibility of being able to create something he could ‘see and touch’. Quietly spoken and very much a gentle man, the company mission statement to create a ‘revolution in the development of leisure and entertainment resorts’ has – to some extent – been achieved. A network of companies are now inextricably bound to the Polaris World mothership, including the recently added PW Golf Academy, each servicing a sprawling business empire.
Though our conversation traversed the rocky terrain of the state of the Spanish property market, at no time did his demeanour change. José Louis Hernández ‘lives above the shop’ at Polaris World. He actually has his home there and conveys a keenly-felt sense of obligation to those who buy into the Polaris World lifestyle, peppering his conversation with words such as ‘fulfilment’, ‘dreams’ and ‘commitment’. Fittingly, he proudly showed off a Scottish five pound note signed by Jack Nicklaus during our interview. Highly apt given the success the company has enjoyed since fusing the Polaris World and Jack Nicklaus brands.
POLARIS WORLD IN FIGURES:
Employees worldwide: 5,600 in 63 countries
Turnover: £400m in 2005
Properties sold to date: Over 7,000
Companies’ portfolio: Polaris World Garden, Polaris World Telecom, Polaris World Home Style, Polaris World Travel, Polaris World Golf Academy (April 2007)
Key commercial relationships: Jack Nicklaus, InterContinental Hotels, ESPA
Construction: Two resorts completed and five under construction
How did the Polaris World concept come together?
We were a team of four. The concept started from an analysis of what was happening with the second home market in Spain, the rest of Europe and the US and from that analysis we tried to figure what the future was going to be.
What was your initial investment collectively in the company?
It was about 8 million Euros. That was between four of us.
How long were you considering the idea of Polaris World before you had to commit your own money?
It was really quick. It was probably a couple of months. We started with one resort. When we saw we had the capacity to develop the next stage was to think of a chain of resorts. We began to think of creating different resorts for different market segments. Initially, we thought the customer was going to be semi-retired or retired; soon we realised clients didn’t need to be 55/60 and that we could go for younger clients. We’re going to open our first school this September as we have clients with little kids; it will have a British school curriculum.
Was there a point when you thought Polaris World would work?
I think it came within the first three months. We thought the potential was great. Once the product was on the street it was amazing how quickly it sold and how much people liked the concept; so we thought if we continued to develop the concept and invested more in communication to raise awareness of the product that our sales were going to grow. We were so motivated. We were working every weekend and never thought it was going to go wrong. Every day we got signals from the market that things were going in the right direction and it made us feel comfortable. I remember feeling really emotional when I saw the first completed show home. It was so full of clients we didn’t have enough sales people to look after them.
Looking back do you feel there was a high level of risk in what you were doing?
The risks were not as big as they may seem. If you look at the growth we have enjoyed in the past six years, anyone would assume we took great risks because people always associate big risks with big growth. That is not the case. Our growth came from sustained sales. We only moved to the next project once the first ones were sold. We looked for 60-80% sales, which in real estate terms is more than enough to cover the costs of a project. The key element that permitted us to develop and grow so quickly is that we sold really fast. The first development sold in the first year, the following year we sold 2,500 properties and this gave us the capacity to grow. To date, we have sold to more than 10,000 clients.
Given that golf is a crucial part of the Polaris World offering involving Jack Nicklaus in your ad campaigns was inspired. Did it give you the leverage you expected?
In the early stages when there’s modest brand awareness it’s always important to have a celebrity just to attract peoples’ attention and to project credibility. You know, ‘this company must be serious to have involved someone with the reputation of Jack Nicklaus’. When people see that and don’t know the company it shows we are serious. It was our way of signifying the quality we wanted to offer. It has been a great experience for both sides. The golf courses are managed by his sons. It’s a family matter for him. We believe that Nicklaus Design has elevated the standards of golf course design worldwide, which is why we were determined to secure to company as our partner.
It wasn’t hard to get him on board. We already had a relationship with him. His company and he himself had been a supplier of services. After some time we thought he could be a good hook.
What he is doing with us is probably the biggest golf project in the world.
The perception of the Spanish property market right now is very negative. How do you react to that and what are the implications for Polaris World?
The conclusion around in the market is that buying a house in Spain may not seem to be such good business. At Polaris World we consider we have been able to differentiate ourselves from what’s going on elsewhere. We offer properties at a good price that will continue to make investment interesting. We are major spenders on advertising in the UK. It really work for us and even more so in times like now where there is a general negative opinion being formed about property market in Spain. The purpose of our campaign is to make the statement – ‘I’m in Spain, but I’m different’.
You would still anticipate buyers making money on their investments with you?
Yes, absolutely. We offer two-bed apartments with landscaping all from £80k. This proposition has value and will be more valuable in a couple of years
Let’s expand on that. Why should Polaris World be immune to market forces when there is acknowledged to be a glut of property?
Price is the problem here. We offer lower prices and are very competitive. And we are succeeding and our proposition is different. We are selling volume and have plenty of clients, so we don’t envisage problems. Other companies have been buying land at too high a price and have to sell at a high price accordingly; they can’t sell below that and are, in effect, trapped by their own acquisition.
What is the shareholding configuration of the company now?
There were two main shareholders. One member has left the company, allowing other groups to take up shareholding. One is an investment arm managed by Credit-Suisse and local investors. That happened at the end of December 2006. Only one group of shareholders from the original partners remain – one of them has the majority of the company and I’m together with him as the President of the company.
Where did the name Polaris World come from?
It’s a mixture of coincidence and brainstorming. We had the name within the company and it wasn’t being used. We later added ‘World’ to describe the brand. It had attributes a brand should have in terms of being pronounceable in every language and implying something global. And it suggests a range of services and a concept – beyond that of just property.
What is your proudest achievement?
Creating something that had no precedent in a market and making it work. Seeing customers happy is our greatest satisfaction and sharing with every employee makes it even more so.
What are the future plans for Polaris World?
We feel the trend for British and people from Northern Europe acquiring property in Spain is going to last and we’re going to try to anticipate their wishes and keep the business growing. The next 10 years will see more than 25,000 houses delivered with the Nicklaus trail being recognised as the best golf offering in Europe. It is our intention to see our hotels recognised as best in Europe in the vacation segment. It could be called consolidation but I see it as another step in our concept. That concept is much bigger than the reality shown so far.
Is there a crucial business lesson you have learnt in your experiences with Polaris World?
The most important lesson I have learnt is the importance of honesty and fulfilment of commitments to clients; anyone who gives you his hand and looks in your eyes (pauses) if you fulfil that expectation, you will succeed. If not, nothing works.
In property, people are investing hopes, dreams as well as money. Do you feel a personal responsibility for people who buy from the company?
Absolutely. We take care of people not just during the process of selling but after that. We want every client satisfied. We are, you’re right, dealing with peoples’ dreams – these things are too delicate to be mismanaged. We are not developers who just sell one project and leave. We invest in that project. We spend millions of Euros on amenities – on restaurants and pubs for example. Those investments during the first years generate losses for us but we stay there till they work. We sometimes have to adapt what kinds of cuisine we offering, the kinds of pubs we’re opening and that takes even more investment. We believe that our concept will work in the future if we take care of the present. That is not just a business principle; it’s a moral principle, too.
Are you able to disconnect from work when the working day ends?
I live in Polaris World as do other Polaris World directors. I go to the supermarket every Saturday morning. I go to our restaurants. We experience every service we create. I have neighbours who are also clients. Some people might think it’s something that wouldn’t let you disconnect from work, but it’s also a way to be even more involved in your commitments to your clients and to really love what you do.
What made you ditch law as a profession for property?
I think law is a great profession. But my desire was to make something more material that I could see and touch that would bring me more satisfaction. I was lucky enough to know people who shared the same ambitions. When we talk about work and business we’re talking about money; but we’re also talking about a sense of satisfaction. Up until fairly recently I’d probably have made more money if I’d kept to the legal profession.
Did you envisage the level of success that Polaris World has enjoyed to date?
I foresaw success. We all really believed. The more we concentrated on the idea the more we believed in it and the more real it became. One of the most interesting things about Polaris World was that none of us came from this sector; none of us had any know-how about what we were about to create. This made the concept even more pure because we had no pre-conceived ideas. Most of the people we talked to in the sector said ‘don’t do this, it won’t work’. We thought it would.
So belief is a key commodity for you in business.
Unless you believe in what you do, you’re not going to achieve.
