“the appearance of green shoots” by Andrew Coutts

19 11 2009

Andrew Coutts

“the appearance of green shoots” is the perfect expression to translate the current situation of the Portuguese holiday property market. ILM 2nd quarter 10-10-10 (ten questions targeted at ten leading resort developers and agents) market confidence survey concluded that after a period of very low confidence, the market could be stabilized. In fact the companies that predicted a rise in confidence in the previous edition of 10-10-10 for the 4th quarter of 2009 (signs of which are already visible in the 2nd quarter) maintain their view with 50% classifying the level of market confidence as “medium”, and showed that there is less interest in the more established tourist destinations where there is a greater supply.

In order to continue business, the local players are adapting to this new reality by rethinking the product strategy, the financial risks associated, the marketing and sales strategies and the overall model. The standard overseas leisure property model i.e. whole ownership, has reached maturity. Thus, new business models, new distribution channels and above all differentiation and innovation are required to continue the development of the holiday property ownership market. New concepts based upon niche markets are flourishing and the web is playing a crucial role in the market development leading to   greater interface between players. In the holiday property market real estate is now drawing closer to the hospitality business and the experiences and lifestyle that the hospitality business DNA comprises. To sell a property that is managed by a hotel company in a system that allows the owner to buy-to-use (wholly or partially) according to his real needs, and then let back, and earn income from it; represents a win-win-win-win situation. The promoter wins because he is adding value to his asset and he is giving a new life to his stock, the hotel management company wins because these units represent extra capacity in a complementary lodging offer, the tour operator wins because he can now reach a new demand profile and the property buyer wins because he can buy with security and has a guaranteed offer of services, he still owns the asset or part of it, uses it with as a hospitality experience and can profit from it. These new business models explain the success of companies like for example, The Registry Collection (TRC) which is growing steadily, now having over 35,000 members and 160 different resorts in the world’s leading high-end, luxury exchange programme.   The affluent market areas are still spending but they are also looking for more value in their spend and affiliation to TRC membership which enables developers to offer buyers 24/7 concierge services, an elite travel partner programme as well as off-plan sales support. Crucially, TRC affiliation offers expanded choice and variety of destinations, all at a guaranteed luxury standard.

In conclusion, what we consider to be the new critical success factors for the next generation resorts are:

  • DIFFERENTIATION  by creating a Blue Ocean Model
  • A STRONG LIFESTYLE CONCEPT – that reflects a particular way of life.
  • TARGETING – the 4 most important trends in demand are Experiences, Authenticity, Family-friendly Holidays, Hassle-free and seamless travel
  • THE RESORT MANAGEMENT AGENCY – ensures seamlessness in the experience by serving as an umbrella for control
  • FOCUS ON COMMUNITY CREATION – to foster a strong emotional sense of belonging and increase in loyalty