One of my favourite brands in the hotel space are Mr & Mrs Smith, a company I am sure you know. Established in 2003, Mr & Mrs Smith provides an expert booking service for a cherry-picked selection of around 900 boutique hotels and self-catering properties around the globe. Their product is fantastic and if you haven’t discovered them yet, I urge you to start dreaming on their website.
Today, Mr & Mrs Smith announced something new – an investment opportunity – allowing you to invest in one of the success stories of the British travel industry. The ‘Smith Bond’, is described as a new and unique investment opportunity from boutique travel entrepreneurs Mr & Mrs Smith – and the latest launch in the increasingly popular retail bond market.
Over the last 10 years, Mr & Mrs Smith has evolved from being a niche guidebook publisher to become an award-winning booking service, and a worldwide travel club. The boutique hotel specialists have expanded into new territories, developed their own bespoke booking technologies, built entertaining and useful apps, and grown consistently, year-on-year, inspiring legions of loyal fans along the way. Now they are seeking to raise capital to finance their next steps as a global travel provider.
In April 2012, Mr & Mrs Smith will be inviting boutique hotel lovers and retail investors generally, to register applications for the Smith Bond. This innovative funding solution is a four-year retail bond, paying a fixed rate of interest, which will enable members and supporters of Mr & Mrs Smith to share in the benefits of the business growth that the Bond will help fund. Smith Bonds are also open to other private and institutional investors who are looking for a fixed income product generating a fixed rate of return.
And the figures provided look like this could be an attractive proposition for their many fans (and those looking for somewhere to invest their cash). For a minimum investment of £1,000, Smith bondholders will receive either an annual interest rate of 7.5% paid in cash twice a year. Or, there’s a further option to have this paid back as loyalty payments – Attractive!
Mr & Mrs Smith are eager to point out that similar schemes have already proved successfully with companies such as Ecotricity, Hotel Chocolat and John Lewis. However, this will be the first SME retail bond launched by a leading boutique travel brand. Applications are open until Friday 22 June 2012 or until the maximum investment level of £5 million has been reached, whichever is sooner.
Expert investor, Chairman of Risk Capital, FT columnist, and the serial entrepreneur behind superbrands such as Pizza Express and Giraffe, Luke Johnson commented:
“As economic conditions have deteriorated, owners of small businesses feel less confident about raising equity or borrowing money and it also certain that bank credit has got harder to obtain, and is more expensive than it was. It is not surprising therefore that the entrepreneurial minds behind many SMEs are seeking more enterprising methods of raising debt capital without the help of the banks. Crowdfunding may prove a useful addition to the repertoire of places founders can go for money: it’s interesting that America has recently passed the JOBS (Jumpstart Our Business Startups) Act toencourage this form of investment too. In the UK the nascent yet growing SME bond market is enabling some SMEs, particularly those with powerful brands, to leverage their brand loyalty and raise funds for their further growth.”
What makes this particular bond even more unusual and enterprising is the decision to offer investors the option of having the interest paid in loyalty money at a higher rate of interest than the cash return – marking an even greater confidence in the power of the product and the brand as the hook for the investor.
Interesting move from Mr & Mrs Smith and judging by the ever-growing success of their business, I am sure this could signal even brighter things for the brand.
For more information, please see: www.mrandmrssmith.com/bond