While local operators can provide advantages for resort investors, partnering with an international brand can save a resort years’ in building its revenues, according to a session at the Resort & Residential Hospitality Forum in Lisbon.
Discussing Operating Leisure: Finding the Right Management Partners for your Needs, Ruben Paula, Partner and COO, KPI Hotel Management Services, said that for greenfield sites it is much faster to have a brand to activate a resort.
“That’s by a matter of years. Even if it’s a destination in itself, it will still help it. So we look at what the right partner is for that location,” he said.
However, Paula stressed that choosing a partnership model was very much dictated by the specifics of the location, with each resort destination having its own variables.
“In resorts, sometimes we are looking at micro locations. It also requires different investment levels for different brands and the return,” he pointed out. “The important thing is the total spend. With different brands you get different vibes, what type of client does it bring? They can bring more spa users, or more golfers or more F&B spenders. We look at the brand and what type of building we have.”
It was a view echoed by Hylko Versteeg, Head of Development Southern Europe, IHG Hotels & Resorts, who stressed: “There are projects and projects, partners and partners.”
His view as that international and regional brands can co-exist well and said that he thought it was a positive for the market that there were more white label operators to choose form, adding that “sometimes it makes more sense to come in with an international brand or sometimes the franchise model where you work with the local specialist.”
International brands move in
Versteeg said that although IHG had been later to the resorts market than some of its peers, it was a sector that it is “now moving heavily into”.
He also warned against over-complicating the sector by introducing too many brands and sub-brands.
“Brands within a brand can be a contentious point. We have 13 in Europe where some companies have 30 or 40. It’s not just adding brand, on brand on brand and then you have put the euro budget behind it to promote. We tend to really go with one option and generally we sit with the investor and then talk to them about what they need to do to bring to a certain standard and the returns,” he said.
Giving the regional operator perspective, George Spanos, CEO, Domes Resorts, said that he believed regional brands could be more effective than international brands, and that importantly they can attract local talent to staff the resorts.
“For resorts, at least 50% of the income comes through travel agencies, which local companies can use their channels to work with. They can also co-exist with an international brand,” he said. “As an investor, firstly you need the brand support, for example if you are switching from four-star to five-star. And you need to check the feeder markets [of visitors] for a particular project. International brands are in a transitional stage with resorts, which they did not know much about. They have interest now in European resorts and I think they will invest and grow.”
Felipe Klein, Managing Director Investments & Real Estate, HIP, added that the attraction differential between local and international brands was less critical when the resort was not a greenfield site and said it was not a “straightforward issue”.
“We usually invest in hotels from the 1970s and 1980s, so we tend to select from Collection brands,” he said, in terms of their positioning. “We are looking at distribution channels. My personal feeling is that there are not that many brands that have strong recognition [with consumers] but what is clear is that the brand should bring distribution.”
Branded residences an opportunity
However, the brand can be powerful when it comes to branded residences as part of a resort, insisted Jose Cardoso Botelho, CEO, Vanguard Properties, who said that this was an increasingly important part of the company’s business and chimed in particular with US customers.“Americans are by far the most important, which is one of the reasons we select brands that Americans like. That can also bolster the value of the residential part,” he said of the current resort market and where guests come from.
“Branded residences feels as though it could be a huge business because of the infrastructure [that is in place in a resort], and we see that the Americans are very eager to buy such types of properties, which is quite new to Portugal. Brazil is also a strong market but at our latest schemes we have buyers from 14 different countries.”