In an opportunity that came sooner than it thought, American management firm Apple Leisure Group sees its majority stake in Spain’s Alua Hotels as the perfect springboard to gaining traction in Europe and growing its brands and customer base.
GLOBAL REPORT—American management and travel-operations firm Apple Leisure Group has agreed to purchase a majority stake in Spain’s Alua Hotels & Resorts and intends to roll out the brand across Europe, then perhaps globally, according to sources.
Alua, based in Spain’s Balaeric Islands, was founded in 2015 and has 12 resorts and 4,000 rooms. It now becomes part of Apple’s European division, with Alua’s CEO Javier Águila assuming the role of president, Europe, for Apple.
In addition to Alua’s 12 properties, Apple also agreed in November to manage four hotels in Spain via a partnership with Hesperia Hotels. Those hotels, also all on Spain’s Balearic and Canary islands, will be operated by Hesperia under the AMResorts umbrella.
“We’ll open 16 hotels next year, four with Hesperia and 12 with Alua. Additionally, we are acquiring a management platform that will allow us to provide full services in Europe the same way we do it in America,” said Javier Coll, Apple’s EVP and chief strategy officer.
“We were planning to start providing brand management and commercialization services to Hesperia, but this transaction accelerates our plans, opening a new avenue for growth,” Coll said.
Apple stated “Alua will become the American group’s hotel brand of reference for the mid-market sector, both in Europe and globally.”
Águila will report to Coll.
Apple, the parent company of resort firm AMResorts and tour operators Apple Vacations and Travel Impressions, is owned by two funds, KKR and KSL Capital Partners, after the pair bought it from Bain Capital Private Equity in December 2016.
Apple’s European pie
Bruno Hallé, founding partner of Spanish advisory firm Magma Hospitality Consultancy, said in May Apple negotiated an alliance with Spain’s NH Hotels to bring AMResorts’ existing brands, Dream Resorts & Spas and Secrets Resorts & Spas, and new brand Amigo Hotels & Resorts to Europe.
NH will operate hotels stemming from the alliance, while AMResorts will be in charge of management and sales, Hallé said.
Hallé said the Apple-Alua deal is consistent with consolidation seen recently in Spain and Portugal, but with one important difference.
“The leisure market is the new discovery in Iberia. The sector is seeing a lot of interest,” he said.
Apple’s Coll said the company is “focused on leisure, not urban.”
“We’ve been growing our group at a good and healthy pace in the Americas, and now we’ve seen an opportunity for what we believe is our next market in terms of volume. That could have been Asia or Europe, and we are closer to Europe,” he said.
Coll said that thinking also led to the partnership with Hesperia.
“We’re in our second phase, already thinking of growing a management team, but we just did not think that would happen in the first year, in 2019, although one of our owners, KSL, had been in conversation with (Hesperia) for a long time,” he said.
He added Apple remains asset-light and is focused on management.
“Alua properties range between 4 star-plus and 3 star-plus, (and) this fits perfectly with our strategy. … We have different brands in equivalent segments, (but) we only had Sunscape in 4-star so Alua and Amigo will give us more options in that level,” Coll said.
“Our goal is to get between 25 and 40 hotels in the next three to four years, and we’re focused on any leisure market with decent volume in Europe, so therefore Spain, Canary Islands, Balearic Islands, Croatia, Portugal, Greece, Turkey.”
Apple works with the major tour operators in Europe, which in turn help fill Apple’s Caribbean resorts, Coll said.
He said Apple also will begin marketing the Spanish and future European hotels in the U.S.
“We will start doing something. It will not be huge volumes in the short term, but as we carry on, that will increase,” he said.
“Europe is a mature market. The Americas still are in diapers, but in Europe we’re hoping to grow by offering a little bit of an alternative, operating hotels a little differently and with a little flavor from the Americas.”
Coll said the company “is an innovator in what we add to the product in Europe,” but that comes with challenges.
“We might not be able to do 100% of what we’d like due to limits on the assets, payroll being much higher, the existence of more regulations, but we shall adapt to all of that,” he said.
The deal makes Apple’s partnership with Hesperia even stronger, Coll said.
“In Europe, we will have more options than all-inclusive, at least in most of the properties, since our destinations are well-known in Europe and (our) customers rent cars and like to visit the cities, other beaches. … So, all-inclusive will be an option but also (European plan, modified American plan), et cetera,” he said.
“Now we have boots on the ground, and there will only be good things happening. We will investigate different business avenues too, such as (destination management companies), but we are not planning to compete with the big boys,” he said, referring to Thomas Cook and TUI AG.
Coll said he is not worried about Brexit, which potentially could result in an economic dip in the U.K. and less international travel, with the U.K. being the largest feeder market for Spain.
“Common sense will prevail. I do not see as yet any restrictions, any need for visas. There always is some turmoil in the short run, but I am optimistic,” he said.
He said the travel industry has weathered challenging times before, particularly during the 2008 recession. The difference is “vacations now are a basic right,” he said.
“At that time (2008-09), we were worried, but travel is not a luxury, it is something you have to do, to disconnect. Yes, maybe the spend might not be as much as the previous year,” Coll said.
He added that the company “will definitely explore any possibility” to grow in Europe, and “acquiring management companies is one more avenue.”
Additional reporting for this article provided by HNN editorial director Jeff Higley.