MADRID — Setting up meetings with government officials might not seem to be the most fun way of filling up a calendar, but for hotel industry leaders such face-to-face interaction can prove invaluable.
Collaboration with government officials on large-scale resort development is especially critical in sensitive, remote destinations.
Gonçalo Carrington, co-founder and managing partner of Portuguese investor Investaureum, said his firm partners with government to promote his hotel and resort destinations and developments, which are in the countryside some distance from the country’s principal cities, Lisbon and Porto.
“They provide incentives, and our properties need better airports, as well as schools and housing, as we employ 1,000 people. We need alignment,” he said during a panel at the Atlantic Ocean Hotel Investors’ Summit.
Carrington added it is not just national governments that hotel firms must converse with, but also local government.
“It is a learning process” often for local government officials, he said. “If you involve them, it will turn out better — that will bring them on board, not just the authorities, but also the small shops, artisans. ... We want to create something interesting for them, and for us.”
Since the start of the COVID-19 pandemic, sometimes the government will come to you, said José Ariza, senior partner at Dominican Republic-based Investa Capital Partners.
Ariza said the Dominican government has been very proactive.
“The country has had 11.2% growth [in tourist] arrivals against 2019, and there is free health insurance for visitors. Our president has been visiting hotels and owners, not sending an email. He is saying [the country] needs you to stay open, and we will help you,” he said.
The government, he added, is relaying the message that the financial sector will settle debt, "so let’s see how we can work it out, as we want to make sure when operations are good, you’ll be able to pay us,” Ariza said.
Tatiana Veller, managing director of Stirling Hospitality Advisors, a subsidiary of RAK Hospitality Holding, said it is only through government initiative that Ras Al Khaimah, the United Arab Emirates’ youngest emirate, has been able to move into second position behind Dubai in terms of hotel room count.
“The plan is for 10,000 keys, a doubling of what we have now. We are opening the Wynn Casino, the only [casino] in the [Gulf Cooperation Council],” she said, referring to a project announced in December that also will see 1,000 guest rooms.
“There is newly created government legislation on gaming that the RAK government has written,” Veller said.
Future-Proof
Working with the government also provides alignment in terms of environmental, social and governance legislation already in place or likely to be mandated.
Ariza said there are approximately 85,000 rooms in the Dominican Republic, 5,504 of which have been added in the past two years.
“We’re doing 10,000 new keys, and that is just us, and the government is trying to create a new destination, Cabo Rojo, on land it owns,” he said.
Ariza said that resort will start with 4,700 rooms with brands already in place — and will take pressure off the country’s principal destination, Punta Cana. Leading brands in the region include AMResorts with 1,500 rooms, Hilton with 750 and Marriott International with 700.
Investaureum’s Carrington said outside of the main Portuguese cities, developers and operators must be creative and sustainable.
“The government is looking for investors to help develop the country,” he said, citing the country’s golden-visa regulations for non-European Union citizens that is now more than 10 years old.
Veller said Ras al Khaimah will not succeed if all the hotels and resorts are in defined areas and do not raise the living standards of residents.
“Development changes the life of the Emiratis there, certainly as the population makeup will change, in terms of roads, schools, hospitals and other infrastructure,” she said.
Such matters are always on the discussion agenda, she added.
Ariza said governments can be known to be creative, too, reiterating that alignment is key.
“The government contributes the land and infrastructure, and once the developer comes in, ownership will pass to the public sector,” he said. “Profitability will be boosted for the operator and owner for the first 10, 15 years, as an incentive, with the challenge being how to work that out to the benefit of all and to the community and taxpayer.”
Veller said that alignment process begins with developers and operators fully understanding the government’s bigger picture.
“Start small, be financially stable and future-proof your interests,” Veller said.
“Create value, be resilient and promote the culture,” Carrington added.