Bloomberg News

Madeira’s Blandy Group Looks to Invest Abroad as Tax Rise Looms

December 12, 2011

Dec. 9 (Bloomberg) -- The Blandy Group, the Madeira hotel owner that once counted Winston Churchill among its guests, plans to focus on investment away from the Portuguese island as the government faces pressure to raise taxes.

“All our major hotel investments are now set to take place outside Madeira,” said Michael Blandy, chairman of the 200- year-old family group. “This has already started with three hotels operating in Brazil.’

Portugal has asked Madeira’s semi-autonomous government to come up with a plan to repay part of its 6.3 billion euros ($8.5 billion) of debt, which is may lead to a tax increase and weigh on tourism -- the island’s main source of revenue. The Blandy Group operates five hotels in Madeira and one in mainland Portugal through its Porto Bay SGPS SA joint venture.

“The plan now is to open one hotel in Brazil every two years,” said Blandy, adding that the soccer World Cup in 2014 and Summer Olympics in 2016 will bolster tourism.

Blandy Group owns 45 percent of Porto Bay, while Madeira- based Ocean Islands SGPS owns the other 45 percent. The remaining 10 percent is held by small shareholders.

The company may eventually sell shares in Porto Bay, though that’s not likely to happen in the next five years and the shareholders haven’t made any commitment to a public sale, Blandy said.

The Blandy Group was founded in 1811 by Michael’s forebear John Blandy, who arrived in Madeira three years earlier looking for work and set up a business with the island’s namesake wine.

Revenue from Madeira wine sales enabled the family to expand into areas including shipping, coal storage and banking. It also allowed the Blandys to acquire the Reids Hotel in 1937, which later hosted guests including Churchill, Sigmund Freud and George Bernard Shaw. The group sold the seafront property in 1996 to meet demands for dividends and avoid renovation costs.

“We just couldn’t afford to keep trophy hotels,” Blandy said.

--Editors: Ross Larsen, Joao Lima.

To contact the reporter on this story: Henrique Almeida in Lisbon at halmeida5@bloomberg.net

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net


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