Seasonality is a big problem in hospitality real estate investing, especially in sun and beach leisure destinations that struggle to attract visitors all year round.
One way of dealing with it is to try and mitigate it by having other demand drivers besides a hotel. Investor Arrow Global is testing this strategy out in Portugal by developing related assets to create synergies.
Last year we caught up with Francisco Moser, CEO of Hospitality at Arrow Global Portugal.
On picking Portugal
FM: The initial thinking was that there is an opportunity in terms of aggregation in Portugal, because there are a lot of small companies, Mom and Pop hotels.
On focussing on Vilamoura
FM: Vilamoura is not only a beach resort, if you know Vilamoura it's a City [...] it's 1.7 thousand hectares actors of space. So you have an environmental park, so you have huge conditions to live, to invest, to have fun. If you are a remote worker, you can bring your family there because there is an international school. So I think it has all the capacity, to be a 12-month activity resort, and that's what we are betting on.
On synergies between asset types
FM: It's exactly to take the advantage of all the synergies to tackle seasonality, because you know, in [the] Algarve, you have seasonality, at least six months. And with the equestrian centre, the golf course, the new Marina […], new retail area … we're really investing in a lot of amenities and facilities in order to be able to tackle seasonality.
On picking other destinations
FM: We are attentive to the market specially in in consolidated destinations. So we are looking at opportunities in Lisbon, Porto and other areas.