BERLIN — Beach resorts may be the most prized type of hotel asset among investors across Europe, but supply constraints will limit the number of those properties that are available.
During a leisure travel panel at the 2023 International Hospitality Investment Forum, Willemijn Geels, vice president of development in Europe for IHG Hotels & Resorts, said a desire to get into that space is a big reason why her company signed a strategic partnership with Iberostar in late 2022.
"In our portfolio, it was lacking," she said. "We wanted to move into that space of the beachfront, all-inclusive resorts, and we're happy to have signed that partnership toward the end of last year, which adds 70 of those to the portfolio and really gives us access to a particular segment of that leisure market that we don't really have in house."
Sergio Carrascosa, co-founder and managing director of asset management at Hotel Investment Partners, said it's increasingly a space where major international hotel brands want to play, especially in southern Europe.
"Ten to 15 years ago, [the segment] was vastly controlled by tour operators," he said. "There were some local families owning some hotels, but apart from some Spanish brands and Club Med, there were very few brands," he said.
Now it's like night and day, Carrascosa said, with Marriott International, Hilton, IHG and Hyatt Hotels Corp. all carving out spaces in the segment. He said that makes these types of properties more attractive for investors.
"From an investor point of view, what we want is to have much more control over our distribution," he said. "Our cost of distribution has to be reduced."
Grégory Lanter, chief development and construction officer for Club Med, said his company has been and seeks to remain a leader in European beach and ski resorts and has long been a pioneer in the now burgeoning all-inclusive segment. He said consumer sentiment continues to shift in favor of all-inclusives because they give travelers fewer things to worry about.
"At the end of the day, it's the best way to have a hassle-free experience," he said. "For a very long period of time, all-inclusive was considered a cheap offering, a way to not spend money. ... What we are seeing now is that it's not a value situation, and that's why we're seeing luxury all-inclusive coming in to the market. It's a state of mind."
Lanter said one thing brands, operators and investors will have to adapt to in beach and leisure markets in Europe as the segment grows is there's a higher level of seasonality to the business than in warmer destinations such as the Caribbean, and that obviously means making important operational decisions to protect the bottom line.
"Having an all-inclusive open in January in Europe doesn't make sense," he said. "You'll lose whatever you have."
Lanter added being closed four or five months a year adds layers of complexity to issues such as staffing.
"Do people really want to work six months a year, or would they prefer to work a full year?" he asked.
He said there are some places in Europe where it makes sense operate year-round, particularly if there are multiple drivers of demand, but those destinations are rare and expensive for investors.
"In Europe, we have a limited number of assets, and if you have a limited number of assets, the prices will go up," Lanter said.