The fourth annual Mediterranean Resort & Hotel Real Estate Forum (MR&H) last month brought together top hospitality experts in Athens, Greece, to “Experience the Opportunities” in the Mediterranean resort market.
Produced by Questex, Hotel Management's parent company, the event drew a record-breaking 357 delegates, a 51-percent increase from 2017’s conference. Attendees included hotel owners, institutional investors, lenders, developers, architects, professional service providers and government officials from 29 countries. More than 80 speakers discussed the industry and its issues for more than 20 hours, not including an additional 12 hours of networking time.
During the sessions and throughout the networking, several themes emerged regarding Mediterranean hotel investment and development. Highlighted were:
1. Geopolitics is the driving force in the world, creating a lot of noise in both politics and the media, yet its impact on economies remains muted. The U.S. economy is expected to remain strong; the EU is coalescing around its 27 members while Greece has stabilized and now Italy teeters. All in all, it looks like tourism and hospitality will continue to grow at a rate higher than global GDP as more consumers spend their money on experiences and an emerging middle class continues to grow.
2. RevPAR in the Mediterranean is outperforming the rest of the Europe with an 8-percent increase in the region versus a 5.2-percent increase for the whole of Europe. Last year was an outstanding year across the Mediterranean with 2018 seeing some signs of displacement in Southern Europe with a shift toward increasing demand in Northern Africa.
3. Investors strongly agreed that a local partner and a strong operator with experience in the region as well as seasonality are key to any successful investment strategy in the region.
4. Branded residences are a critical part of the capital stack for a developer but developers and brands aren’t always seeing eye to eye regarding the value of a brand or the mandates associated with it.
At the conference, Geoff Ballotti, CEO of Wyndham Hotels & Resorts, said he was “incredibly optimistic” about the region’s future, and Wyndham’s ability to open more of its brands in Greece, Turkey, Israel and Cyprus. He also expects to see more mixed-use developments like the Wyndham Residence in Athens that opened in July.
Andreas Andreadis, CEO of Sani and Ikos Group, also was bullish on the region’s appeal for developers, but as both an owner and an operator, he wants locations with clear and comprehensive rules for development. “We need communities and municipalities that are eager to grant the necessary licensing on beachfront locations,” he said, noting that need is not always easy to meet, especially in in-demand destinations like France and Italy, where appropriate development sites are hard to find. Sani and Ikos Group is limited, he added, by availability of locations and the availability of a labor force.
In terms of what makes a Mediterranean resort successful, Roger Allen, founder and group CEO of Resources for Leisure Assets, said, “The whole of the resort must be more than the sum of its parts,” noting a number of factors—location; access to the beach, sea and mountains; good weather and good airlift—all make a difference. “But in this day and age, resorts are looking for something that will add to the experiential element of how the resort will differentiate,” he said. “That’s the secret sauce of each individual property. It’s very important that each resort finds its own unique experiential element that can define itself as a leader in its own category. A resort has to build a moat around itself so it becomes more about the property rather than the location. That’s when you get a unique property that is more than living off the location; that’s where you build brand value.”
The resort business in the Mediterranean was developed mainly by landowners, said Andreadis, and was not taken terribly seriously due to the lack of professional operators. However, in the wake of the global financial crisis, investors noticed resorts with strong operators offered a better return on investment than urban hotels. “Now it’s becoming understood in the industry that resorts can make better returns of money but still, we are in the very, very early stages,” he said. “I would say that every beachfront location with proper operations in the Mediterranean within the European Union is a gold mine for the future because of the scarcity of the product and the need of families to travel close by.”
Allen echoed his sentiments, especially in terms of attracting the newer generations of travelers. “Today, everybody is searching for experiences and the experiential element,” he said. “Everything has to be Instagrammable. We have Generation Z coming through right now, we have got millennials, and this is making the development of a resort more complicated. Resorts have to think outside of the box, but it’s relevant to identify how an experience translates to a product that can be sold to a market that is hungry for new experiences.”
A successful Mediterranean resort should know its audience and emphasize what makes it distinct, said Allen. “It’s very, very difficult to be a potpourri and actually appeal to everyone because then you become a jack-of-all-trades and master of none.”
The Value of a MR&H
“MR&H is a prestigious event and its critical in terms of hospitality especially within the Mediterranean region,” said Thanos Papasavvas, founder and CIO, ABP Invest, Ltd., a keynote speaker for the event. “What I like most is not only the quality of the panelists and the organization but also all of the attendees that come along and create a very lively discussion and debate.”
“MR&H is a very good place to meet professionals, to meet competitors, to exchange ideas, to hear about new trends, to see how other people think," said Andreadis. “It’s a great forum to exchange ideas about investment in the hotel and leisure sectors and to check if what you think is valid. It's interesting to see their reactions.”
“It’s vital,” said Allen, “because it appeals to resort investors, developers, operators—they’re all in attendance at this event."