Octant Hotels, a story of ‘regeneration’ 

Octant Hotels, a new luxury lifestyle hotel brand in Portugal, is a collection of eight hotels scattered throughout the country, mostly in places that normally don’t see a lot of tourists. One thing that ties these hotels together is that each was a bankrupt property given a new lease on life.

“Our story is a very authentic story. It is a regeneration story,” said Luís Mexia Alves, CEO of Octant’s parent company Discovery Hotel Management. “We didn’t build most of our properties, we rebuilt. We are revitalizing places and communities. Our portfolio is not located in the most obvious touristy places. They are very specific locations. So, this is a story of regeneration and trying to add value to assets that for lots of reasons didn’t work before.”

The architecture and design of the Octant Praia Verde blends into the tree-covered landscape of the Algarve region

The hotels are in the Algarve, Alentejo, Azores, Lousã and Castelo de Paiva regions of Portugal. Each hotel is distinctive in its architecture, design and location, which is largely rural. These properties appear nestled within the surroundings of the terrain, ranging in size from 32 to 123 keys.

The Octant brand is part of Discovery Hotel Management, created by Explorer Investments, one of the largest private equity companies in Portugal. The fund was developed to manage a range of assets acquired during the economic crisis in Portugal, including hotel properties that either never opened or were under financial distress.

The timing of the Octant Hotels brand coincides with Portugal’s resurgence as an international tourist destination following the lockdown measures from the coronavirus pandemic.

“We are not located in the most obvious touristic places, so the team is local, the food we source is local, and the experiences we develop are local.” – Luís Mexia Alves

Freedom, localism

Once redeveloped and rebranded, these hotel properties are bound by what Alves describes as two main pillars: freedom and “localism.” Freedom means that guests are not restricted by many of the rules that are part of a normal hotel stay. The most well-known part of this policy is the 24-hour service. For example, anytime of the day or night a guest will be able to receive at the very least a continental breakfast whenever it is requested. Guests also have 24-hour access to many of the hotel’s facilities, including pools and weight rooms. In addition, the check in-and check-out policy is quite liberal. Guests can arrive and leave pretty much anytime they’d like as long as rooms are available.

The second pillar, localism, means guests receive an authentic experience of the communities they are visiting.

“We are not located in the most obvious touristic places, so the team is local, the food we source is local, and the experiences we develop are local,” Alves said.

These experiences vary by location. Wellness treatments, local pottery classes, wine tastings and garden tours are among the offerings depending on the regional specialty. This localization may extend to furnishings and art in the hotel if there is a strong art and craftsmanship culture in the community.

Alves said Octant now has more than 200 local suppliers for their hotels with a goal of reaching more than 400 by next year. This includes the food and beverage programs, which are unique to the region, featuring local delicacies and specialities as well as regional wine varieties with local chefs developing and executing the menus.

‘Perfectly different’

Alves views the diverse nature of the hotels as a positive.

“The diversity of our hotels is like the diversity of humanity. It’s a very good thing. We like to say our diverse hotels are perfectly different,” he said. “The common trait is service. Our hotels are very informal, very laid back. But we give a very tactical, very customized service that is based on localism. And it’s also based on the freedom that guests enjoy.”

Sustainability is a term often tossed about for marketing purposes as opposed to actual benefits to the community and planet, but Alves said it is a vital part of the Octant brand identity. In addition to supporting artists and artisans, and the local environment, this policy extends to how they treat their employees, who are from the community.

The pool at the Octant Lousa and at all Octant Hotels are open 24 hours to guests.

“We’re reviewing our HR policies so that we are focused on retention, and developing and training people,” Alves said. “When they bring revenue to the hotel, we up their salaries, making sure they’re getting a piece of the pie.”

Alves noted that having a strong employee-retention program is an important part of Octant’s focus on 24-hour service, which could create extra costs if not handled properly.

“We have to be lean, and we have to be very strong,” he said. “Being a management company run by private equity, of course, we all have our standard budgeting, we have our approvals and reporting procedures. We have ratios and standards that are defined. And we are looking at results each and every month. So, we’re running very tight controls. We’re also asking how we can get more value for our guests to make them happier.”

The good news, Alves said, is that the guests they attract, largely from the U.K., U.S. and Brazil, are willing to pay a premium for the services and experiences they offer and are equally willing to support the type of sustainability practices the brand promotes. He sees the positioning of the brand with affluent travelers will continue to attract well-heeled travelers as the company looks to find more distressed properties with potential – even in a market in which interest rates continue to rise and the economy slows.

“I’m pretty optimistic to be honest with this upscale positioning,” he said. “Everything is running very strong. Of course, we’re not blind to what’s happening, and we’ve already made some contingency scenarios. We’re hoping for the best but getting ready for a slowdown of the economy. This is not something that will impact us like COVID.”

Alves added that Octant is having a record year with especially strong business from April through July. “We’re driving ADR with a very high percentage, and we have a lot of foreign guests coming in from the United States, Brazil and UK. We’re very, very happy”.