With growing demand for summer accommodation in the Alps and a historically family-owned model for hotels in the mountains, opportunities exist to grow clusters of hotels suitable for institutional investment, according to Alexander Rae, Head of Mergers & Acquisitions, Beaumier.
The company specialises in luxury hotels in leisure markets and has been building a portfolio of hotel properties in the Alpine region, with a desire to finance and refurbish more hotels in what has been to date a niche market.
Speaking at a session dedicated to Alpine Markets: Extending Opportunities for Summer and Winter Tourism at the Resort and Residential Hospitality Forum in Lisbon, Rae said that Beaumier had evolved to a positioning as a brand that is about “soulful luxury, authenticity and embracing the local community and heritage”.
The typical hotel property is in the 40-80-bedroom range, with a strong connection with nature, the sea, mountains, countryside and lakes, he explained, with the company increasingly focused on opportunities in the Alps.
“Since 2019, on the M&A side we have more than doubled from five to 12 hotels in key strategic locations across Europe and that will continue in 100% seasonal leisure markets,” he said.
The Alps as a summer destination
“We saw the opportunity in 2019 when we acquired an existing business in the French Alps. We like the Alps because of the high barriers to entry, the fact that there is not much new development and it is very compressed in terms of demand in the high season,” he added.
In terms of securing deals, Rae described property sales as being “very under the radar”, and said that to complete deals required connections with local authorities and influential families.
“However, Rae conceded that it is not easy to operate in a seasonal market, and said that the company’s experience in such environments has been crucial in terms of how to operate and also for investors in terms of how to unlock value.
“Depending on the market, some of the hotel inventory is under-invested so, coming in, the knowhow and financial power gives us an edge compared with some [legacy] families and gives us more opportunities to invest in the Alps,” he explained.
Diversification of markets
David Moscato, founder and managing partner, Quarantia Capital Advisory, added that one of the key reasons that the Alpine market had become more attractive was because it had diversified its offer from skiing and now was focused on the snow during the summer and activities such as walking and cycling during the summer. The Alps already attracts customers from all around the world, meaning it has strong recognition.
“What the summer offers is diversification, such as retreats, conferences and spas,” he pointed out. “They are also different markets, with typically families in the winter and in the summer more adventurous travellers. There is also the potential for long term rentals.”
Rae agreed and said that summers are becoming increasingly stronger. However, currently winter is still the key season and although the summer is picking up, ADR is not as strong.
“That does offer diversification in terms of services you can offer for your guests and also it helps [the hotel operation] with staff in terms of P&L, staff training and retention. It means we retain the staff across the year and it is more cost effective in terms of finding staff accommodation,” he said.
Still not a whole year market
“Having two seasons doesn’t necessarily make a whole year, so trying to find the fine balance of when you open and for how long you open remains challenging. Inevitably, as [traditional] summer destinations get hotter, people are looking for cooler destinations and the Alps is serving that well,” Rae explained.
Many of the existing hotels within the Alps are family owned and are passed from generation to generation, remaining within the original families. There are signs of this changing, and the acquisition of multiple assets in close proximity is key to creating a business that attracts a wider range of investors.
“What we’re trying to do is demonstrate the attractiveness of these markets for institutional investors, so we are developing in clusters. We have four assets in the French Alps, four in southern France [for the summer leisure market], and we’re looking to do the same in the Balearics,” he added. “Creating economies of scale then allows us to have a more attractive bottom line.”
That is also aided by more sophisticated management tools and standardised operations, all of which help to demonstrate to the wider institutional world that the Alps can be attractive to a variety of income sources.
“First and foremost we’re investors, so we scrutinise every deal we look at and are very selective,” said Rae. “The market has to have the right demand assets, the connection with nature, the property has to have character. In terms of clusters we are looking for France, Mirabel, Val-d’Isere, the Cote d’Azur, and the same for Switzerland where we have three assets and are looking at other locations with international demand.”
For the summer market, Rae said that in Spain Beaumier is looking at Ibiza, the other Balearics islands, the Italian coast and the islands.
“But all with value-add, which means repositioning from three star to five star, reducing keys, renovating or refurbishing good properties, or adding a spa,” said Rae.