With competition for beach resorts at an all-time high, some investors are looking further afield to properties catering to other types of leisure demand, such as golf and mountain resorts.
Vertell Asset Management is betting on the latter with its new lifestyle brand, a segment which hasn’t yet penetrated the mountain resort space on a large scale. The group acquired four Arenas resorts in Switzerland last year, which it is refurbishing and relaunching under its new brand Faern, which has been created in response to a shift in consumer behaviour towards health and wellbeing, accelerated by the pandemic.
“This is top of their priority and agenda when they select destinations to travel, and mountains are, generally speaking, received as the perfect destination for these type of activities,” explains co-founder and chief executive Romain Semmel.
“There have been a lot of misconceptions about the mountains, but from an investment point of view, from different types of investors – private equity or institutional – there is a lot of potential in the mountains,” says Semmel.
Misconceptions of seasonality
One of those misconceptions, he suggests, is that mountain resorts are inherently seasonal. They may once have been, but operators are noticing decreasing seasonality in the leisure resort market and Vertell’s Swiss mountain resorts have been no different, with “almost the same level of demand” across both the summer and winter seasons, says Semmel. This also brings operational efficiencies, allowing the resorts to retain staff with year-round employment contracts.
“We’re seeing the fastest growth in the summer in terms of ADR, that has been accelerated by the pandemic. We’ve had properties that have grown by 40% just for the summer in ADR – this is where we see most of the growth happening in the coming years,” he says.
Vertell has leaned into this by focusing on properties of 100 bedrooms or more, with enough of a footprint to create large common areas for facilities such as kids’ clubs, spas, meeting spaces, bars and restaurants.
“This is really important in fighting the supposed ‘seasonality’,” says Semmel.
Similarly, architecture and design practice Broadway Malyan, which asset manages the 194-key Penha Longa golf resort near Sintra in Portugal, has nine different food and beverage outlets as well as a large catering and event business. Broadway Malyan’s head of hospitality Margarida Caldeira says F&B contributes 60% of the resort’s revenue. The remaining 35% comes from accommodation, which could grow further with plans for a 150-key expansion of the resort, while only 5% comes from golf, despite it being the resort’s main attraction.
“The golf acts as an anchor,” says Caldeira. “The anchors are not there to give you the money, they are there to help you to get the money in other things.”
Penha Longa guests stay an average of 2.1 nights across the year, although occupancy varies between 38% to 67%, with the property recording an ADR of €212 so far this year.
For Faern, Semmel says the average stay can be anything up to seven days in the peak months of January/February and July/August, although it does decrease slightly in the shoulder season, meaning over the year the average length of stay is four to five days.
Expanding the season with greater accessibility
Cable car and ski lifts operating into the summer have helped expand the season, as well as smaller innovations like mountain e-bikes, however, he adds that it’s difficult to yield on cable car and ski lift passes, which Vertell’s resorts include in all package deals.
“A lot of ski lifts are owned by different companies or entities [in Switzerland], so across the market they all have a very different approach. So, some of them we have a discount for our guests, some of them we have to subsidise,” explains Semmel.
“Sometimes we will lose a bit of money, but if we don’t do it, people won’t come, so it’s a trade-off. It’s not a big issue at the end of the day, it’s not like we’re losing a lot of money, because we’re making a lot of money on other things. But it’s something we need to navigate.”
Semmel also notes that the “captive” supply in mountain resorts makes it interesting from a real estate investment perspective.
“Mountain resorts are relatively small, there’s difficulty to build new properties in ski resorts, so from an investment point of view, when you buy an asset or a hotel, you have a limited risk of new competitors coming into the market and diluting your demand or ADR. So, from an investment point of view, very attractive,” he says.
And while generational ownership may have once proved a challenge to investors, also noted in a panel focused on Italy at the recent Resort & Residential Hospitality Forum, Semmel sees potential to improve operations, revenue management, and digitalisation performance and increase ADR through renovation. He is also having “more and more discussions” with family owners where the next generation do not want to take on the family hotel.
To brand or not to brand?
Semmel also suggests this captive supply is why there are fewer branded operators in mountain resorts: “The distribution of a brand is not as significant as it would be if you were in Paris or London where you have much more competition around you. If you drive innovation, renovate your property, you will stand out. So, the pull of the brand is less evident and potentially what you will gain in additional revenue, you will lose in franchise fees.”
Although, he adds that some luxury properties have done “fantastically well” in the right destination, such as the W Verbier, while Ritz-Carlton is set to debut in Zermatt in 2026. “That makes a lot of sense because those consumers will identify with the brand,” he says.
“We’re very excited about the mountain, we think it has huge potential in the coming years and we’re looking at buying more properties in that field for the next 12-18 months.”
All those quoted in the article appeared on stage at the Resort & Residential Hospitality Forum held in Portugal between October 17 and 19, in a session called: Beyond the Beach: Three Resort & Residential Concepts that Expand the Possibilities of Leisure Hospitality.