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Dionísio Pestana. From Madeira to the world

In fewer than five decades, Dionísio Pestana has gone from one to 100 hotels, while the group he founded continues to grow at a rapid pace. This is his story, told in the first person.

After almost 50 years in the hotel business, what was the greatest challenge you’ve faced?

That’s an easy one: when I arrived in Madeira, in 1976, to save the hotel my father had opened in 1972. It’s now the Pestana Carlton Madeira. I was young and inexperienced. But I was keen. Saying that, what I really wanted to do was work on the stock exchange.

Why was the hotel in trouble?

The hotel was being financed with revenue from the Prédio Funchal (now Pestana Rovuma), in Maputo. After 25th April 1974 [the date of the revolution that restored democracy in Portugal and ended colonial rule], that source of income disappeared, and my father didn’t want to put more money into the Madeira operation. He was ready to cut his losses.

Foto a preto e branco de Dionísio Pestana com colegas do Colégio Maristas em Joanesburgo, África do Sul.
Dionísio Pestana was born in Johannesburg, where he spent his childhood and youth. He attended Marist College in a multicultural environment, with classmates from 50 different nationalities.

Your father, Manuel Pestana, was born in Madeira and emigrated early.

His childhood was one of poverty and hunger. He finished the fourth year of schooling and started working in subsistence farming. One day, someone told him about the “land of gold”, which was South Africa.

You were born in Johannesburg. What was your family life like?

My parents worked a lot. My father used all the free human capital he could find, which was my mother and me. I would get out of school on Friday and go to work in the shop.

Did you help with the accounts?

As if! I served behind the counter; I filled the fridges.

What contact did you have with Madeira before moving there?

I had been here twice. Once when I was six, another time when I was 12. We came by boat. It took three weeks – and that was the best part, because South Africa was much more advanced. Everything in Madeira was sad and negative.

When you arrived in 1976, you lived in the hotel.

Which was lucky for me, because that meant living in an international world, with lots of foreigners and a good social life. I lived in a suite on the 18th floor until I married Margarida, when I was 37. That was when I started driving to work. Before, I used the lift.

Foto de casamento entre Dionísio e Margarida Pestana, no Funchal.
At the age of 37, Dionísio marries Margarida Pestana in Funchal.

How did you solve the hotel’s financial difficulties?

There was a time-sharing boom and I managed to sell rooms to families who are still clients today. After two or three years we had enough cash flow.

You were also able to buy the iconic Casino Park Hotel in 1986.

That hotel also saw the first business diversification: the casino, which was rented to a Lebanese group for a million dollars a year. That’s why I didn’t need a bank loan because I had that cash flow – but it didn’t work out.

Why?

Because they never paid us.

What did you do then?

Well, we had to learn the casino business. I spoke to my manager, Luigi Valle, and we went to Las Vegas, and took notes.

The following year, the company was listed on the Lisbon stock exchange.

It was the time of stock market madness in Portugal. Every big company was going public. We sold 25% of the company in 1987 for about the same price we paid for the Casino Park Hotel.

Was it that money that helped you expand to the mainland?

Yes. We bought 25% of Torralta, which had a finger in every tourist pie: from casinos in Tróia to hotels in the Algarve.

Foto de Dionísio Pestana no então Sheraton Madeira, atual Carlton Madeira Hotel
The entrance of the Madeira Sheraton in the 1970s, before being called Pestana Carlton Madeira.

You moved to Lisbon but didn’t stay long.

I spent three months in the offices, but every day was a different problem with investors, suppliers, taxes… So, I exchanged my 25% for Salvor, a Group company that had five hotels in the Algarve: the Alvor Praia, the Blue Alvor Beach, the Levante, the D. João, and the Golfinho. As hotels in the Algarve are seasonal, I bought a golf course to boost business in the winter, but I realised that it would only fill 10% to 15% of the rooms. Also, with golf came real estate…

In the ‘80s and ‘90s, it seems that expanding business occurred more as a reaction to circumstances than part of a strategic plan.

Yes, the dream started with a hotel. We ended up with four large hotels in Madeira and none on mainland Portugal. Then a piece of land became available in Cascais with a building permit and we created Atlantic Gardens. In 1991, we bought a palace in Lisbon that would become our turning point.

The future Pestana Palace Lisboa.

That was when I felt that Lisbon hoteliers began to see us in a different light. The building had a lot of history and some thought we would just knock it down and build something big. There was even a petition against our hotel! Later, they realised they were wrong and apologised.

So, when did global ambition take shape?

When we went to Africa. While on a state visit to Portugal, the President of Mozambique stopped off in Alvor, where I talked to him. I wanted him to return the building that my father had lost because of the revolution, so he felt some sense of compensation. He agreed to cede the building for 60 years, but not the land, and on condition that we turned it into a four-star hotel. The person who set it all up was José Roquette. It was a great learning experience. When Pestana Rovuma was finished, we opened the Pestana Bazaruto, also in Mozambique.

And after Africa came Brazil?

Yes. We saw it was becoming popular and we went to Rio de Janeiro, São Paulo, Curitiba… We had nine hotels there.

Which was the first hotel in a non-Portuguese speaking country?

London. A piece of land became available opposite Battersea Park that was considered unappealing. I thought it was great!. They told me it was on the wrong side of the river Thames… As we were 12 minutes’ walk from Buckingham Palace, I decided to go for it and we ended up building a 220-room hotel.

In a 2016 interview you mentioned having your eye on Paris, where you now plan to open a hotel in 2026.

When you want a hotel in a new city, how long are you prepared to wait for the right deal? It’s not easy getting into big cities like Paris or London. Sometimes you have to know how to wait for the right place. When we find it, any time is good.

And what’s the right time to sell?

There isn’t one. We’ve just sold a hotel in the Algarve because we had three or four in the same area, and we prefer to diversify the geographic risk and have stronger cash holdings.

What European capital are you missing?

Rome, Paris, Dublin and, although not a capital, Manchester is also part of our plans, in partnership with Cristiano Ronaldo.

Dionísio Pestana e Cristiano Ronaldo.
Dionísio with Cristiano Ronaldo at the official inauguration of the first Pestana CR7 hotel in Funchal on July 22, 2016. Four more would be inaugurated by 2022.

How did the partnership Pestana CR7 come about?

We already had different types of hotels, but we didn’t have a lifestyle category. We went to see if Cristiano Ronaldo would put his name to the project, but he liked the idea so much he wanted to invest. We also have a real estate company together called Ponta de Lança [Portuguese word for striker].

Now you’re 70, what’s your average day like?

Easy going, although worried about the future. I’ve always diversified risk to protect the Pestana Hotel Group.

Are you still involved with the hotel building?

Yes. I really enjoy it. As for the rest, I focus on strategy and I’ve always got my eye on the bottom line and cash flow. I take part in the big decisions, but not in the day-to-day management of things.

Do you have a favourite Pestana hotel?

For the last 30-plus years I’ve spent my holidays at the Alvor Praia with my wife and children, always in July. And in August, we go to Porto Santo. In Africa, I really like Bazaruto, in Mozambique.

Are your children interested in the family business?

Carlota is a psychologist. Lourenço is entrepreneurial and doing his thing in the restaurant business. Manuel studied hotel management but is more interested in real estate. Vasco has just finished law school and will start an internship in all the Group departments in September. He’s the keenest and believes he’ll lead the Group one day. But this is a very big beast and the business has to be managed professionally, through an executive committee.

Foto a preto e branco de Manuel e Dionísio Pestana na década de 80 no Pestana Carlton Madeira.
Manuel e Dionísio Pestana no Carlton Madeira na década de 1980.

Any regrets?

I took too long getting out of Madeira. I should have expanded to the Canary Islands, which have more sun, are very big and have cheap land.

Has Asia ever been in your plans?

Macau nearly happened. We had plans for a hotel with a casino, but I preferred to focus on the Europe, Africa and America triangle.

How do you see the future of hotels?

With fewer rooms, more common areas and business mixed with pleasure. The experience will be increasingly important. And there’s no going back: lifestyle is the new luxury.