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European Hoteliers Place Stock in Urban Resorts Amid Shifts in Work-Life Balance

Large Talent Pools Within Cities Ease Burden of Staffing at Resort Levels
Panelists at the Atlantic Ocean Hotel Investor’s Summit in Spain spoke about urban resorts. From left: moderator Roger Allen, of RLA Global; Dillip Rajakarier, of Minor Hotels; Adrian Bridge, of The Fladgate Partnership; John Alarcon, of Accor; and Alexander Schneider, of Sani/Ikos Group. (Terence Baker)
Panelists at the Atlantic Ocean Hotel Investor’s Summit in Spain spoke about urban resorts. From left: moderator Roger Allen, of RLA Global; Dillip Rajakarier, of Minor Hotels; Adrian Bridge, of The Fladgate Partnership; John Alarcon, of Accor; and Alexander Schneider, of Sani/Ikos Group. (Terence Baker)
Hotel News Now
January 25, 2024 | 1:54 P.M.

MADRID — Most often associated with beach or mountain getaways, leisure and resort hotels are increasingly being developed in urban locations as travelers' notions of work and rest shift in the aftermath of a pandemic.

In the past, the high performance of resort hotels in traditional leisure destinations left nothing to be desired, said Dillip Rajakarier, CEO of Minor Hotels.

“Post COVID-19, the maths are upside down, and that comes from what one’s interpretation of experience and luxury are,” he said on a panel at the Atlantic Ocean Hotel Investor’s Summit. “Urban is more tuned to luxury today as it is more tuned to the new lifestyle. I’ve been blown away by places such as Rome for this idea, but we will [not invest] if we cannot bring in local influences.”

Alexander Schneider, chief operations officer of Greek hotel owner Sani/Ikos Group, said he regards the situation in the same way a hedge-fund manager would weigh whether to buy stocks or bonds.

“Your broker would say both, so I wonder if this conversation is really a topic. We all know the pendulum swings,” he said. “Not too long ago guests wanted low density, and now we are into culture. Maybe concepts try and address too many target groups.”

Schneider added there is new, robust wealth looking to be spent on leisure.

“Most billionaires are inherited billionaires, not self-made ones. I think the two concepts, resort and urban, can coexist. Our model requires space, so if you found me 2,000 square meters in London, I’d take it if the price was right,” he said.

Adrian Bridge, chairman and CEO of The Fladgate Partnership — a 300-year-old company that owns The Yeatman in Porto, Portugal — agreed that the one requirement of luxury is space.

“The other is about storytelling and authenticity, and [our hotel] will continue to work well with the new visitor that comes for both work and leisure. U.S. travelers are notorious for short holidays, but COVID-19 has extended [vacations],” he said.

John Alarcon, vice president of luxury and lifestyle for Spain and Portugal at Accor, said of the seven luxury hotel flags that are more than 100 years old, the French firm has four. Accor's portfolio includes brands such as Raffles, Orient Express and Fairmont.

“We have a clear picture of where we want these brands to go. Only 20% of the pipeline in in Europe and North Africa, and only 5% in the Americas,” he said.

Rajakarier said getting the most out of every square foot of urban resort and leisure hotel helps the sums add up.

“We’ve introduced wellness, timeshare, residential, beach clubs, rooftop bars to boost experiences. On the other side, we have schemes to protect coral and elephants, in two examples. That is another experience, but the guest expects us to do that even if it was not an experience,” Rajakarier said.

Schneider said his firm prioritizes keeping its Greek roots as a genuine part of its hotels.

“We are expanding, with a 65% return rate and 95% occupancy. Not being so uber-professional, that allows us that organic touch,” he said.

Roam Widely

Resorts require staffing levels higher than most hotels, and finding employees remains a real challenge, panelists said.

Schneider said Sani/Ikos Group employs 6,000 employees.

“We are struggling with this. Seniority for us is at an average of 16 to 17 years with the company, but we need to become an exciting place to work again,” he said. “It is remarkable that the hotel schools have convinced students it is better to sit in a windowless room looking at Excel sheets than to travel the world.”

Delivering authenticity comes from hiring a wide pool of staff, which you might have more chance to do in an urban location, Bridge said. He added his firm is in the process of opening a sibling hotel to The Yeatman.

Being affiliated with a hotel brand can help, panelists said.

“We want to be the best hotel company in the world with the biggest profits, not the biggest hotel company in the world, and you do this by aligning your thinking to be that of an owner’s and then delivering relevant management,” Rajakarier said. “You need credibility to provide [investors], as capital wishing to be competitive needs a certain return.”

Alarcon said that is certainly vital in the luxury sector, with some per-key costs being more than €1 million ($1.1 million).

For hotel owner-operators the biggest challenge is finding the right plots, Schneider said.

Panelists pointed to some positives, such as the return of Chinese travelers and Americans to Europe.

“We will have a record year,” Rajakarier said.

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