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Wednesday, September 15, 2021

The Biggest Hotel Brand You Never Heard Of: Israel's Brown Hotels Expands into Europe

Brown Hotels sometimes calls itself the biggest hotel brand you’ve never heard of. The Israel-based hospitality company, founded in 2010, is a power player in its home country, and is now making moves in southern Europe. 

The company’s expansion strategy is based on brand growth through opportunity. In the micro sense, that means looking around for deals in terms of individual properties for sale. But on the macro scale, it’s a matter of considering destinations that may be suffering from hospitality real estate hits due to Covid-19 or other economic and political factors.

Brown Hotels is undergoing a major expansion 
in Greece

Brown Hotels evolved out of the desire to create dwellings that not only showed visitors the real culture and creativity of the city's youthful population, but also to expand the nightlife and neighborhood hangouts for locals. During its decade in existence, the Tel Aviv-based company has opened more than 16 hotels around Israel. The properties operate under five different brands, each encapsulated by a female icon. For example, Brown Beach Houses, sporting a 1950s vibe, according to founder Leon Avigad, pays homage to Brigitte Bardot while Lighthouse, the modern “Work Hard, Play Hard” brand, uses Paris Hilton as inspiration.  

In 2016, the company opened its first property outside of Israel, the Brown Beach House in Trogir, Croatia. Avigad said the destination made sense, given its proximity to headquarters and its Mediterranean climate. The success of that resort spurred further investigation of expansion in southern Europe.

Brown Beach House, Croatia

“For us, it was very clear that when expanding into Europe, it was more natural to start in places that look and feel like Tel Aviv,” according to Avigad. 

After Croatia, he started looking into Greece, deciding to earmark the country as its next destination for heavy investment. Brown purchased its first two hotels there in 2018. 

“Greece seems even more dynamic than Croatia, and I think Athens is poised to be the next Berlin,” said Avigad. “Plus, Greece has much more to offer than just islands. The mainland is so rich with culture and experiences.” 

Seeing an underdeveloped market on the mainland, and an economy ripe for investment, Brown decided to go all in.

“When we started looking, the real estate market was not very strong, but at the same time, the destination was strong and demand steady,” noted Avigad. At the same time, he said “the Greek government was becoming very receptive to new businesses and new investment.” 

While the government was not offering financial incentives per se, “they were more open to foreigners and trying to make it easier for everyone to invest.” 

Brown Acropol Athens

All of the legwork in Greece started paying dividends in July, when Brown Hotels announced the opening of its first three properties in Athens. The Brown Acropol, DAVE Red Athens and Villa Brown Ermou all represent individual design concepts, and are the first of seven new properties by Brown Hotels set to open in Greece by the end of 2021. Brown Hotels will subsequently expand to Thessaloniki, Cyprus and Corfu, and then by 2023, will have a total of 50 properties in Greece. 

Villa Brown Ermou, Athens

Next up is Hungary. The company has identified a quartet of hotels in Budapest for redevelopment. The first of them is slated to open in 2023. The company is also scouting  “happening cities” like Berlin, that fit with the company’s hip urban brands, and looking in Italy for both resort and city hotel opportunities. However, Avigad says the brand will not enter any new market unless it can develop at least four properties concurrently, with a minimum total of 400 rooms. 

In the meantime, Brown Hotels continues to expand in its home country. Six hotels, two in Jerusalem and four in Tel Aviv, are opening in Israel this year, and another three are slated to open in Tel Aviv by the end of 2022.

The original version of this article appeared in Hospitality Insights.

Friday, September 3, 2021

During 2020, glamping went from trendy to mainstream. I have spoken about the topic at several travel industry conferences, and recently wrote this trends piece for the 2021 Wellness Hospitality Real Estate Report.

Glamping is defined as an elevated form of camping that allows travelers to stay in unique accommodations (tents, treehouses, tiny houses) with services and amenities more often experienced at four or five-star resorts. Certainly, the pandemic helped glamping leap from niche to more mainstream. Glamping-style resorts have witnessed explosive demand due to their ability to provide socially distant, stress-free and secluded sojourns with immersion in nature.

Glamping in the bush in Australia

During the past year, numerous scientific studies have highlighted the inherent mental and physical benefits of being outside. At the same time, the use of outdoor wellbeing experiences to improve the quality of life has been increasing exponentially. In a forecast released prior to the Covid-19 pandemic, the global glamping market size, valued at $1.8 billion, was predicted to expand to $5.41 billion by 2028. Grandview Research’s Glamping: Market Size & Trends also forecasts an annual growth rate of 14.1 percent from 2021 through 2028. 

Glamping in Istra, Croatia

Given the boost the sector has received during the Covid era (one of the few hospitality sectors that actually benefited from the pandemic), those forecasts may now be on the low side. In fact, glamping, a high-end form of camping that appeals to a broad range of travelers looking to spend more time outdoors, appears to be the right product for the right time. While the type of safari tents often used by glamping developments were once solely associated with trips into the wilds of Africa, today, we see glamping resorts popping up throughout Europe and North America.

Some U.S. resorts, like Eastwinds in New York's
Catskills, are adding glamping units to their offerings.

Europe has the biggest current revenue share (34.9 percent) of the global glamping market, but the North American glamping market is predicted to expand at a faster annual growth rate (16.7 percent) through 2028. Non-Covid factors fueling the growth of the sector included easier access to exotic, unconventional landscapes; the ability of social media to promote small, remote glamping sites at a low cost; and greater interest in outdoor adventure among luxury travelers. 

The glamping proposition is gaining traction among the investment community thanks to high EBITDA margins and low upfront development costs. Hospitality operators who invest in tented projects can expect to generate a quicker return than their bricks and mortar counterparts. As a result of such attractive numbers, and the growth of interest in glamping among travelers writ large, industry players have been able to secure multi-million dollar deals from the investment community.