Madrid-based European private equity real estate manager Azora has high hopes for the European leisure market and has been busy acquiring assets in anticipation of a big rebound in demand.
In July 2021, it acquired the 383-room Tivoli Marina Vilamoura resort and the 248-room Tivoli Carvoeiro resort in Portugal’s Algarve region through a sale and manage back transaction for €148 million (US$174 million), including a variable price, with Bangkok’s Minor International.
Then, in December, Azora acquired Bluserena SPA, the second largest resort operator in Italy, from the Maresca family. The acquisition was completed on behalf of Azora’s latest €1.8 billion (US$2.1 billion) pan-European hospitality fund, Azora European Hotel & Lodging, F.C.R., which becomes more than 55% deployed with the closing of this deal.
Bluserena operates 13 all-inclusive hotels with a total of 4,200 keys across Italy, including eight owned hotels representing 3,000 keys. The hotels, 11 in the 4-star category and two 5-stars, are spread across the main Italian tourist coastal destinations including Sardinia, Sicily, Apulia, Abruzzo, Piedmont and Calabria.
The transaction also includes the acquisition of the Bluserena operating platform, which will continue to be located in Pescara (Abruzzo), Italy. The transaction was the largest executed in the Italian hotel market in 2021, consolidating the Azora European Hotel & Lodging, F.C.R. as a market leader in Italy.
Azora is planning to spend €30 million (US$34 million) on the Bluserena properties as well as grow the company in Italy through new hotel acquisitions, leases and management contracts.
In total, Azora has raised capital in excess of €5 billion (US$5.7 billion) since its inception in 2003 and currently manages an asset portfolio of €4 billion with investments in Spain, Belgium, Portugal, Italy, Germany, the United Kingdom and Switzerland, among other countries. It has also entered the United States market.
As it becomes a force across Europe and after announcing the Bluserena deal, HOTELS reached out to Azora leadership to learn more about why it acquired the Italian resort operator. We talked to Javier Arus, partner and head of the hotels division at Azora, to get insights about the latest deal and more.
HOTELS: Where does potential lie in Italy? What further attracted Azora to the market?
Javier Arus: Italy is the third largest touristic market in Europe, and on top of its high international demand it also has a very large and resilient domestic leisure market. From an ownership and operator perspective, the Italian market is one of the most highly fragmented markets in Europe – there are not many hotel operators and many resorts are in the hands of families. These factors represent a clear opportunity to build a platform and help develop the presence of institutional investors in such an attractive market.
Azora had already gained presence in Italy though the 529-room Grand Palladium Sicilia Resort & Spa in Sicily, which it acquired when it took majority ownership in Grand Palladium Hotels & Resorts in 2019. We realized that on top of the strong and resilient domestic market there were opportunities to build on Italy’s international demand, too. As it is very labor intensive to gain a relevant presence in the Italian tourism market, due to its fragmentation, being exposed to this market via the significant Bluserena deal gives us a privileged position from which to continue building out our activities in Italy.
H: Will Bluserena grow via strict management in addition to acquisitions made by Azora?
JA: Today, Bluserena manages five hotels, which are owned by third parties. Our objective is to set management and lease contracts as the main growth driver of the company. This growth strategy will be reinforced by further acquisitions made by Azora which fit within Bluserena brand.
H: What are the growth expectations for Bluserena in the next three to five years? Is it strictly leisure or could it expand into urban and business properties?
JA: The objective is to double the size of the company in the next five years with focus on the Italian leisure market (sun and beach; mountain resorts).
H: Where does Bluserena need to improve its operations and what is the plan to address it? What are the biggest challenges for Bluserena?
JA: Bluserena is a successful company with a very long track record and a highly professional team. The company understands the Italian resort market very well and it has been consistently profitable even in very difficult seasons across 2020 and 2021. The biggest challenge for the company will be to develop a significant international demand and extend the season in some of its resorts, which have traditionally focused solely on attracting domestic tourists. In the past, Bluserena has not been present in the international distribution channels, focusing all its commercial efforts in the domestic market, but Azora will now be able to leverage its international expertise to the benefit of growing this brand.
H: What will be done to improve its distribution competitiveness versus more widely known properties and operators?
JA: In its segment (4 stars), Bluserena competes mostly against other Italian operators and family run properties. As of today, the presence of international brands is very limited in this segment of the market. Bluserena enjoys a very loyal customer base with more than 50% of the room nights generated by repeat/returning customers. As such, there are opportunities to increase the direct distribution of the company as well as to develop brand awareness in some regions in Italy and in other key countries in Europe.