ESG ‘key to attracting the best investors’

To attract the best investor to your leisure development, it needs the best environmental certification, according to speakers at the Resort & Residential (R&R) Hospitality Forum in Lisbon today (11 October).

Discussing how to make leisure developments attractive to travellers and investors, as well as keeping them attractive, Bernardo Lazcano, managing director at ASG Iberia, said that sellers need to be “on top of ESG and best in class”, for example the top BREEAM property ratings. “When you market that property, you can see the kind of investors that are attracted by that kind of component,” he said.

ASG sold the Hard Rock Hotel Madrid to Arlaes Management for €65M last year, owns the Nobu Barcelona and is developing the first SLS hotel in Europe in Barcelona.

Jordi Vilanova, president of Mercan Properties, said the business is also focused on ESG, describing it as a “win-win” due to both environmental benefits and savings and a premium “definitely not less than 10%”.

“There’s a clear impact on the ADR [and] especially the North American market and some European markets, they’re become more and more sensitive in terms of having ESG or similar labels,” he added.

Mercan Properties has eight hotels in Portugal open and operational and a further 21 under construction, including its partnership with Hard Rock Hotels, which is anticipated to bring the brand to Portugal for 2026 in the form of the 275-key Hard Rock Hotel Algarve in Portimão.

However, location is also key to developing an attractive leisure destination. Ashley Scott, global practice principal - planning + landscape at architectural firm WATG, highlighted the importance of accessibility: “If you can’t get your guest there, you have no project,” he explained, “and that journey from the airport to the resort is very important”.

Lazcano emphasised that ASG was “very returns-driven” with one of the key factors when selecting a location being the liquidity of the market. “It is important to make sure that the product is going to be attractive to investors when we exit,” he said.

Although, there are also nuances to consider – for example, Vilanova highlighted that international visitors to Portugal, for example from Asia and North America, may be in Portugal for an extended period and looking to visit multiple destinations.

“We have properties in Alentejo, the north, in Lisbon and in the south. What we’re really pushing is how we cross-feed from one to the other,” he said.

Francisco Moser, hospitality CEO at asset manager Arrow Global Portugal, spoke of the company’s Vilamoura project in Portugal’s Algarve. The group has been on an acquisition spree for the last year and is “upscaling the whole destination” including the marina, local equestrian centre and sports facilities to transform it into a 12-month destination.

As for finding assets once you’ve identified a location, Moser said there were a lot of distressed ‘mom & pop’-run assets to be found amidst the “fragmented” southern European market.

“As long as you say that you are in the market interested in acquiring assets, things come to you, you don’t have to look much,” he said.

The local touch is also key to draw guests to destinations. Vilanova offered the example of the way North American airlines have positioned Portugal as a destination – the Caribbean may have better beaches, and Florida better golf resorts, he said, “but there’s a third component combined with these two which is the history – the Portuguese experience makes that unique”.

Moser added that the destination should be differentiated and bring new concepts to market to attract guests in: “The whole spectrum of hospitality activity should be differentiated because we’re not commodities. We can’t compete on price, we have to compete on differentiation,” he said.

And while attracting guests to a destination is one thing, keeping them there and spending and coming back is another. “Hotels and resorts have got to work a lot harder to keep the guest there and occupied,” said Scott, highlighting emerging trends such as monetising the landscape through amenities, and luxury resorts increasingly catering to families.

“We’re being asked now by operators to bring in more family-friendly amenities,” added Scott. “[And] it is the pester power from the children that gets the families back there the next year.”