Hotel Vs Residential

For over a decade, the big players in the hotel industry have started building residential components for their hotels. Without even noticing, many big cities and secluded resorts around the world built large buildings in which just a small fraction of it is dedicated to a true hotel inventory, giving way to a large residential component that offers an opportunity for a few to enjoy the beauty of a custommade home together with the detailed service of top hotel brands.

One may think that this trend is the natural reaction of hotel companies to Airbnb’s fearless competition, which diverted business and revenue from hotels in the last decade, but it is not. Since the 90s, hotel companies have strived to increase the management contracts and reduce their assets, only acquiring trophy assets that would provide a double return (operating and real estate). With more and more luxury brands coming into the market, expanding the brand across the globe has become more challenging for hotel companies. Furthermore, Real Estate owners now see in these top brands a great way to increase the residential price when marketing their products by adding a seal of quality, sophistication, and high service standards to their residential sales. The Mandarin Oriental, Four Seasons, Ritz Carlton, and so on are attaching residences to their hotels and, in certain cases, already developing branded residences without a hotel. Of course, this has turned into a win-win situation for both parties, one being able to hang their brand on more buildings around the world, and the other one increasing the price per square foot on the residential real estate capitalizing on the name of the hotel brand.

But when it comes to residential ownership, HNWI´s top tier is shifting its investment preference towards luxury clubs and secluded communities, where access is only granted to its members and memberships are only available with the purchase of real estate.

"When it comes to residential ownership, HNWI´s top tier is shifting its investment preference towards luxury clubs and secluded communities, where access is only granted to its members and memberships are only available with the purchase of real estate"

Private clubs are now a trend, and prices per square foot are much higher than a hotel-branded residence. These clubs are a paradise on earth, a self-sustainable city without leaving the community, a place where generations gather to celebrate life. These clubs offer unbelievable complimentary amenities to their members; they offer a unique lifestyle surrounded by actual or soon-to-be friends. A great example of luxury community development is Discovery Land Company (https://discoverylandco. com), founded in 1994 with the opening of The Madison Club in Scottsdale, Arizona. Discovery has, to date, developed 35 luxurious clubs and keeps growing at a rapid pace. But why are these clubs so successful? Well, first of all, they are known by a few, and access to this will only be through another member and not by a social media advertisement. Second, members’ investments grow and stay pretty safe as a limited number of real estate are available at each location, and there tends to be more demand than offers. And last, being a community where everyone is looking forward to engaging with everyone, members make new acquaintances that could potentially turn into great business outcomes.

In a nutshell, the ultra-luxury service industry will continue to shift to the residential side, where HNWI’s leisure needs will be satisfied by enjoying the top-notch service high-caliber luxury brands provide, together with owning a piece of real estate as a great investment opportunity but also heaven on earth where the elite surrounds these individuals