Urban-focused Room Mate moves into resort segment
 
Urban-focused Room Mate moves into resort segment
03 DECEMBER 2019 9:16 AM

After successes with its design-centric urban properties and serviced apartments, Spain’s Room Mate Group is branching out into the well-developed resort segment at home and abroad.

MADRID—If all goes according to plan, the Room Mate group will open its first resort property next April on the Spanish Mediterranean island of Majorca in what founder and President Kike Sarasola described as a natural progression for the Madrid-based firm.

“We’re going through a company’s normal process of growing, and we’re moving into other segments of the business,” Sarasola told Hotel News Now.

“We started in hotels, then went into apartments, and so I thought it was time to go into resorts as well,” he said.

Kike Sarasola, Room Mate

Room Mate’s hotels, most of which are named after a person or “roommate,” launched in Spain in 2005 with a chic look, downtown locations, late check-out and breakfast until noon appealing especially to young guests seeking a hip hotel experience at a reasonable price.

Today, there are 26 Room Mates across 15 cities in seven countries in Europe and the Americas, and 10 more are scheduled to open over the next 18 months. Last year, the group posted a turnover of €83 million ($91.5 million).

Five years ago, as his fellow hotel CEOs raged against Airbnb and its ilk, Sarasola started his own version of serviced apartments called Be Mate that feature 24-hour reception and other hotel amenities. There are now seven in Spain, Italy and Mexico, with more planned.

Next move
Room Mate’s latest expansion could be seen as a risky move as rival resort markets in Eastern Mediterranean countries such as Turkey, Tunisia and Egypt are once again attracting European guests who had opted for Spanish holidays in recent years because of security fears.

This situation “concerns us, but we always knew this would happen and factored it into the equation,” Sarasola said.

“We had a lot of tourists who came here because they didn’t want to go to those other places where they felt they were in danger. But I think that many (Spanish) companies have done their homework; they saw this coming and improved the product through redecoration and refurbishment” of their properties, he added.

“I’m not scared of competition because in Spain we have things like quality, gastronomy and heritage, so we have to fight for a different kind of tourist, ones who are not necessarily focused on beaches on the islands or along the coasts,” he said.

Sarasola admitted the resort segment is very well developed in Spain across all levels, but said there is always room for improvement.

He said Room Mate’s resort properties will target a broad range of guests and have the same design-centric look as its urban hotels.

“When we came into the hotel market, everyone said the same thing: That everything had been already been invented in the industry. I said ‘Okay, maybe it’s developed, but I haven’t found a hotel that I want to use with a good location, affordable price and good service’,” Sarasola said.

“There is still room to improve, and … we can do that in many ways, such as taking better care of tourists who come with families. Families are a segment that we really want to develop, but at the same time we want to cater to older people and young party people. In a 400-room resort, I think we can cater to everyone,” he said.

For its resort debut, Room Mate is refurbishing an existing property in the Magaluf district of Majorca, which had gained a reputation as a shabby destination for young British partiers.

But new, upscale hotels operated by chains such as Meliá Hotels & Resorts have begun to attract more discerning (and better behaved) guests to Magaluf, and that could happen in other mature destinations, Sarasola said.

The group’s second resort hotel will most likely open in Torremolinos, a town on southern Spain’s Costa del Sol, which also has seen better days.

“These mature destinations could have a turnaround and stage a real comeback,” Sarasola said.

“We’ve seen that happen in places like Playa d’en Bossa in Ibiza or Playa del Ingles in the Canary Islands, where hoteliers have refurbished their hotels and the area benefits. I find this a fun challenge to help a mature destination become hot again, and in Magaluf, Meliá is doing an incredible job putting up good hotels in good destinations. I want to do this,” Sarasola added.

Room Mate is seeking opportunities in other Mediterranean countries, and further afield.

“We’re looking around the Mediterranean and, of course, in the Caribbean like the Dominican Republic. We were looking at Playa del Carmen in Mexico, but with the sargassum seaweed problem, we’re a bit scared,” he said.

Build as we can
Room Mate’s first two resorts will be conversions of existing properties, but the president said he is open to new builds as the chain expands.

“Right now we’re looking at everything. For me, it’s better if I take an existing property because basically the work will be eight to 12 months. But if we have to build a new one, that’s 24 to 36 months depending on the country. It’s the same thing as in the urban market. If I find a piece of land or a building we can tear down and build again, we will. It just depends on what we find at that moment,” Sarasola said.

Inmaculada Ranera, managing director for Spain and Portugal at business advisory Christie & Co, said Room Mate’s leap into the resort market was a smart move on several levels.

“It is a good time for them to do this,” Ranera said. “It’s true that those other countries are coming back, but I still have some safety concerns for places like Turkey. Spain is considered a safe and resilient destination, and we still have everything to compete with the eastern Mediterranean countries,” she added.

“Room Mate thinks they can replicate the success they’ve had in the urban market. Clients already are familiar with the brand and it makes sense to start in Spain as they know the market,” Ranera said.

Ranera also sees Room Mate’s property conversion strategy as wise.

“There are not too many good opportunities in resort areas in terms of number of rooms and beachfront locations, but the existing ones, despite not having all the preferred conditions, are good in terms of price and allow Room Mate to start having presence in that segment,” she said.

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