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Leisure Real Estate Summit, London (Feb 2015)


Leisure Real Estate Summit, London (Feb 2015)

I was invited to moderate a panel session on 'Distribution & OTAs' in the integrated resort and holiday home sectors. I also attended many of the other sessions and my selected take-away nuggets include:

  • Demand growth in the hotel sector was higher than growth in supply, driving occupancy growth and starting to have a positive effect on ADR across many markets.
  • Holiday home sales in Croatia were weaker in 2014 compared to 2013, whilst Malta had its best year since the crisis began. Hotel brands can add value to real estate in the right location, but only where the brand matches the destination's values and vision.
  • In the transaction space, the Mediterranean region tends to be less transparent than Northern Europe and many Med markets are very localised (often by city, where the mayors possess significant power and influence). Demand drivers in the Med are very different to cities and Northern Europe. Debt availability in Med markets is limited and most success likely with local banks.
  • Golden Visa programs (aka Citizenship by Investment Programs, CIP) can help in the launch phase of a development, but demand often fades away as other destinations launch competing programs and issues arise with the existing programs. CIP is a narrow and very specialist market and should not be relied upon as the single driver for a resort's business plan. Key risks include: government interference, corruption, influential immigration agents, and real estate price fluctuations over the longer term. Key source markets include: China, Russia, Middle East, Taiwan and Brazil.
  • CIP in Portugal is increasingly popular because of its advantageous tax regime for CIP buyers. It has attracted significant demand from France (circa 20% of total sales in 2014 on the Algarve) where taxes are high (particularly among retirees).
  • The customer experience begins with the internet and the search process for a hotel, thus creating an exciting an easy to use website is key to converting visits into bookings. Listening on social media can be rewarding. Hotels should create 'trending' and 'present minded' content to attract clients.
  • 88% of HomeAway's first time bookers will book again.
  • Within investor sectors, Germany is seen as cheap, where LTVs of 65% achievable and debt at 1.5% interest available. Within Med, IRR expectations should be in the mid-teens.

Resorts of the future will need to address new expectations where people: (i) are seeking experiences, (ii) give high regard to health and sustainability, and (iii) seeking multigenerational travel is growing. Golf is dead - less than 4% of over 55-year olds in the USA want to live on golf. Any integrated resort needs to offer 'formal social nodes'. 

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