Connecting tourism and real estate investment

A hotel, an apartment building intended for short-term rental, a mixed-use development near an attraction: each is a real estate investment whose value depends on a tourism business performing well. Yet the two are often analysed in isolation. A property adviser assesses the location and construction. A tourism consultant assesses demand and operations. The investor is left to connect the two, usually with optimistic assumptions filling the gap.

Value follows the operating model

In tourism-related property, the operating model drives the asset value more than in most other real estate categories. The same building can be a well-run boutique hotel, an under-managed aparthotel or a collection of individually let units, with very different revenue profiles, cost bases and exit options. Deciding on the operating model early, and designing the asset around it, avoids expensive corrections later.

Demand needs to be examined, not assumed

• Who actually visits the location, for how long, in which seasons, and what they spend on accommodation and experiences.
• Which segments are growing and which depend on a single market or channel.
• How accessible the location is, and what infrastructure or product gaps limit the length of stay.
• What the competitive supply looks like now and what is already in the pipeline.

These questions determine the achievable rate and occupancy, and therefore the price it is sensible to pay for the asset or the budget it is sensible to spend on its development.

Feasibility is a joint exercise

A useful feasibility study for a tourism property brings together the market analysis, the operating concept, the capital and operating costs, the financing structure and the exit assumptions in one model. Changing one input, such as the number of keys or the target segment, should visibly change the others. Studies prepared in separate silos tend to agree with each other only by accident.

Operations protect the investment

After completion, the value of the asset is protected or eroded by daily operations: service quality, pricing discipline, distribution, maintenance and cost control. Investors who plan for the operating phase, whether by building an operating team, selecting an operator or structuring a management agreement, are better positioned than those who consider the project finished at opening.

The best tourism real estate decisions are made by people who can see the building, the guest and the balance sheet at the same time.

This is why we organise real estate and tourism as connected capabilities rather than separate departments. Market analysis, feasibility, transaction support, product design and operational coordination are more valuable when they inform each other from the first conversation.