MADRID — Open-air hospitality — call it camping, glamping or hybrid leisure — is attracting attention due to the increased demand for it and its ability to generate higher average daily rate.
At last month's Atlantic Ocean Hotel Investors’ Summit in Madrid, a panel of hospitality experts with glamping exposure discussed how more hotel companies are adding separate outdoor accommodations divisions. Both private equity investors and travelers looking for unique stay experiences are interested in the segment.
But the challenge in the segment is centered on creating value, said Philippe Rossini, portfolio manager, hospitality, at institutional real estate management firm Swiss Life Asset Managers. His company has two funds dedicated to outdoor accommodations and for now is focused on growing in France. In 2023, Swiss Life launched its Plein Air Invest private equity fund, the target of which is to upgrade campsites into glamping site.
Rossini added lenders and investors like the segment due to its environmental, social and governance components.
Luis Amézola, associate director of real estate investment, hospitality and glamping at Meridia, said his concentration is growing outdoor accommodations in Portugal and Spain.
“Andalucia can have demand all year, but 80% of our [gross operating profit] is July and August. It is a super-seasonal business,” he said.
Meridia entered the open-air market five years ago because it appreciated the segment’s modernity, sustainability and lifestyle elements, Amézola said. Today, it has 16 outdoor accommodation assets in Iberia, including in Val d’Aran and Asturias in Spain and the Alentejo and Odeceixe in Portugal.
Elie Armaly, senior director of business development at Sharjah Investment & Development Authority — referred to as Shurooq — said his firm has been involved in glamping since 2018, although any product remains in its hotel portfolio.
“It is about heritage, adventure and destination,” he said.
One of Shurooq’s latest glamping endeavors is a 20-site destination named Nomad, located in the Kalba Mountain Reserve on the east coast of the United Arab Emirates’ emirate of Sharjah. It opened in late December and is part of Shurooq’s Sharjah Collection.
Opportunities and restrictions
Glamping does take advantage of greenfield sites, but the usual route requires adapting acquired sites. Rossini said campsites are declining in France, where legislation for the segment is stringent.
“There are fewer campsites in general, or they are in areas where you will not find the demand. In addition, the barriers of entry are super strong,” she said.
Regulations vary across Spain’s regions, Amézola said. For example, some glamping units must include water closets.
“In Spain, some potential entrants wanted nothing smaller than 10 hectares. We managed to secure plots during COVID-19, but now there are more barriers,” he said.
Amézola added there is a concentration on boosting glamping demand in shoulder seasons and with business travelers and large corporate groups. He said 55% to 60% occupancy across a year is the norm, but ADR — not occupancy — is the segment's principal metric.
Occupancy at glamping sites can be boosted by providing local food-and-beverage pop-ups, spas and even Michelin-starred chefs, panelists said.
But weather is always an issue. Armaly said in the summer it is simply too hot for most forms of glamping in the Middle East.
And major weather events are a risk in any climate, Rossini said.
Last year, we had “floods in May, but we reopened in June. There also are water issues. In France, you need to replace pool water every nine days, so that has resulted in us needing to develop new attractions.”
One advantage of moveable outdoor accommodations is that it can be moved to other campsites to take advantage of higher ADRs, Rossini said. He added refurbishment planning is not an issue in the segment, as there is plenty of time. There also is flexibility around staffing.