Apple Leisure Group (ALG), one of the main travel and hotel groups in North America, is redoubling its commitment to the European market in the midst of the coronavirus crisis. In 2019 he made his entry into the Old Continent through Spain, both in the Canary Islands and the Balearic Islands. And now a further step in its strategy is confirmed with the arrival of the firm in Greece, where it will manage three hotels owned by Hotel Investment Partners (HIP) from 2021. “Despite the coronavirus, this year has been to continue growing and take the leap out of Spain. We are very excited, ”explains Javier Águila, ALG’s president for Europe and in charge of the group’s global strategy. At a time when the tourism industry is shivering in the face of the pandemic, Apple Leisure Group is trying to seize the opportunity to expand its expansion with four and five-star establishments.
After its arrival in Spain almost two years ago, it has added 28 hotels in the country and the list will continue to grow, since it has a dozen new additions very close to closing on the islands and the Costa del Sol. for tourism in Spain and Europe ”, adds Águila. ALG’s forecast is to end 2020 with more than 9,000 rooms in Europe. The firm’s plans are clear and go through further growth and entering new countries. Specifically, Portugal, Italy, Turkey and Croatia are in the spotlight. “The intention is to consolidate in Spain, grow more in Greece and in 2021 reach at least one more country. In addition to entering an urban destination such as Madrid, Seville, Barcelona, Valencia or a European capital ”, confirms the president of ALG’s global strategy.
In fact, the group estimates that the investment to reposition its hotels in the next two years on the Old Continent amounts to 100 million euros. This roadmap is backed by a tourist group that had a turnover of more than 3,000 million euros in 2018 and manages the vacations of 3.2 million people each year, especially from the United States, a niche in which it can make a difference.
“One of the goals is to help bring the American customer to Europe. Until now they mainly come to cities and we will try to combine urban destinations with days in places of sun and beach ”, explains Javier Águila. In 2019 3.3 million tourists from the US visited Spain and there is room for growth. In addition, these are travelers with a higher level of spending: 264 euros per day per tourist, while the average number of visitors to Spain was 155 euros. A huge difference for the industry. Of course, Águila recognizes that, despite the commitment to attract North American travelers, the majority of customers in ALG’s European hotels will be European.
Public institutions and the main employers’ associations in the sector always stand out as one of the main objectives of attracting more and more long-haul tourists. Although the shock of the pandemic has been so brutal that now they only think about surviving. According to the latest Exceltur calculations, this 2020 the sector will stop earning 106,000 million euros. And all are pending the performance of the Canary Islands this winter, something they hope will mark a turning point by opening up the possibility that they can travel without restrictions to the islands from Germany and the United Kingdom.
At the operational level, the coronavirus has also turned a sector that has been the engine of the Spanish economy for many years. And that has caused unthinkable situations: “Until now, a good hotel in a good location had never lost money, something that will happen in 2020”, acknowledges Águila. And for the future they paint clubs, at least until the health crisis is resolved. For this reason, many assets are starting to hit the market and some hotel companies like ALG will try to take advantage of this opportunity to accelerate their expansion.
Carlos Jáuregui, EY partner responsible for mergers and acquisitions, believes that the key will be the evolution of the pandemic over time. “The next Easter can be fundamental. If it goes bad until then, the movements in small and medium hotels will increase ”. To which he adds: “There is a lot of investment interest, especially in specific vacation tourism locations.” Along the same lines, Luis Buzzi, partner responsible for tourism at KPMG Spain, maintains: “The big question is how long the pandemic will last. If this situation continues, the sale or transfer of assets for their management will come, especially during 2021 and 2022 ”.
Javier Águila confirms these estimates and has the financial muscle of a group that does not doubt its commitment to Europe. “The crisis situation will accelerate what is a natural process that reduces the fragmentation of the sector. We must invest and reposition assets, something that small and medium-sized hoteliers will not be able or will not want to assume in the face of so much uncertainty. That is why it is possible that more opportunities may emerge ”, he argues. Africa Palau and Marc Molas, Deloitte’s directors of financial advisory, agree on this: “Concentration is a process that has always been on the horizon for the sector and is now going to accelerate.”
In addition, large hotel groups around the world are partly taking advantage of the moment of hiatus due to the coronavirus. None of them want it, because it represents a colossal sinkhole on income. But at least it helps them to carry out the planned replacement or the slope of part of their hotels more quickly. In the case of ALG, he has work ahead of him: “Between 2020 and 2021 we are going to reposition 13 or 14 hotels in Europe to allow us to access another customer profile when the situation improves. We have to take advantage of this time to be prepared, ”says Águila.