Mega resorts march on Europe
 
Mega resorts march on Europe
22 JULY 2013 6:15 AM

Europe’s first mega resort, the $6-billion BCN World, is one of several massive projects sprouting up around the world.

REPORT FROM SPAIN—If all goes according to plan, ground will break before the end of this year for Europe’s first gaming mega resort, with investors envisaging a $6-billion project covering almost 1,500 acres with six casino-hotels totaling 18,000 rooms.

Dubbed BCN World, the project, which is an hour’s drive south of Barcelona on the Mediterranean Sea, is expected to open in 2016.

It is just the latest of a number of mega resorts planned around the world over the next few years, including one in Madrid.

“Mega resorts are nothing new except in Europe,” said Ivar Yuste, partner at Madrid-based consulting firm PHG Hotels & Resorts. “The idea is to create a destination where there is nothing and where land is cheap.”

Singapore, Macau and South Africa already boast mammoth gambling or leisure meccas of this type, and others in planning stages or under construction include Resort Paracurú Beach in Brazil, Baha Mar in the Bahamas, the Asian-themed Resorts World Las Vegas and Oryx Island in Qatar.

Now it’s Europe’s turn.

“BCN World is in a great location. Disney was considering that same area in the region of Catalonia for its European theme park before deciding on Paris. Not choosing Catalonia was a big mistake on its part,” Yuste said.

“Spain is the perfect choice for this as it is already a major tourist destination and consistently ranks as the second in world in tourism revenue after the United States.
“It is still the ‘Florida of Europe’ with great weather, excellent tourism infrastructure and political stability,” he said.

In May 2013 year-to-date hotel performance metrics, Spain showed modest growth, increasing 1.3% to 60.5% in occupancy; rising 1.4% in average daily rate to €81.79 (107.23); and rising 2.7% to €49.52 ($64.92) in revenue per available room.

Meliá’s role
Partners in the project include the Spanish investment group Veremonte, upscale shopping developer Value Retail, Macau-based gaming and entertainment company Melco Crown and Spain’s Meliá Hotels International. 

“Meliá has a management agreement  for the first hotel, managing 1,100 of what will eventually be a total of 3,000 rooms in the first phase of the project that also includes a casino, conference center, theater and restaurants,” said José María Dalmau, Meliá’s senior VP of business development.

“We’ll manage 850 rooms for which we are considering some kind of a 5-star and 4-star combination, plus a fantastic 5-star, 250-room hotel under our ME Meliá brand.”

Meliá executives expect the mega resort to attract travelers from around the world. They see the company’s participation as key to enhancing its brand awareness in emerging markets.

“BCN World is primarily aimed at the Chinese, Russian and Latin American markets, followed by Europe, which of course includes Spain,” Dalmau said.

“We are very focused on the potential in the Chinese market, given the fact that the Chinese have shown great enthusiasm for similar casino-hotel projects in other parts of the world.”

Sheldon Adelson’s Las Vegas Sands Corporation, the U.S. casino group with extensive experience in the United States and Asia, is planning another massive, casino-hotel project just outside the Spanish capital, which the local press has christened “EuroVegas” although the resort’s official name has yet to be decided.

Ticketed at $29.5 billion, the complex will eventually feature 12 integrated resorts with 4- and 5-star hotels, casinos, a convention center, golf courses, shopping malls and theaters, along with restaurants and bars, according to press reports.

Completion of the first phase is scheduled for 2017 with the entire project to be finished by 2020, a Las Vegas Sands representative told Hotel News Now. Company officials declined to provide a cost projection for the mega resort, nor would they comment on BCN World’s possible impact on the Madrid project.

Chances of success
One has to question whether putting in thousands of hotel beds in Madrid and Barcelona, which are only an hour’s flight apart, makes sense, Yuste said.

“I think that down the line it will prove there just isn’t enough business for two gaming mega resorts so close together, and we could see both of them downscaling their plans,” he predicted.

“However, Adelson has spent millions on due diligence and planning for ‘EuroVegas,’ and he is a man who knows what he is doing,” Yuste said.

Another veteran hotel industry consultant, Russell Kett, chairman of HVS in London, agreed about the mega resorts’ chances of success.

“It remains to be seen whether the two of them will prosper, but both sites have good weather, a pleasant environment, good (transport) connectivity and government support,” he said.

“The first one to open will have to educate the Europeans about what the concept of a U.S.-style gambling resort is like (and) it is wise they are taking a phased approach. It’s like when you build a theme park, you don’t open all the rides at once but rather a new one every year or so, which makes people want to return,” Kett said.

“But I don’t think we’re going to see these types of resorts popping up everywhere as they take an enormous amount of capital, and so they will retain their scarcity value,” he added.

A local welcome
Hoteliers in Tarragona have welcomed plans for BCN World, arguing it will boost the existing hotel business despite the addition of thousands of new rooms to the area.

“It is a very positive opportunity for the industry here and complements the destination, which already has a major theme park, extensive beaches, history and wine tourism,” said Francesc Vives, the secretary general of the Tarragona Federation of Hotel and Tourism Operators, which represents 340 hotels with a total of 65,000 beds.

“At the very least it will mean an extension of the tourist season, probably throughout the year. Sure, some obsolete hotels will suffer, but everyone else will benefit as not all casino clientele will stay in the resort’s hotels,” he said.

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