In February, Driftwood Capital launched its Driftwood Life-style & Luxurious Division (DLLUX), enhancing administration, funding, and improvement companies and initiatives inside the luxurious, way of life, and branded residences sector. Since 2019, the agency has invested greater than $2 billion in that sector with developments such because the Westin Resort & Spa Cocoa Seashore, Dream Miami, Cover by Hilton West Palm Seashore, and Cover by Hilton Tempe. At launch, DLLUX assumed oversight of 12 belongings that had been managed by Driftwood Hospitality Administration, eight of that are additionally owned by Driftwood-sponsored funds.
In an unique interview with LODGING, Managing Director, Luxurious and Life-style Investments Alinio Azevedo, who leads DLLUX, described Driftwood Capital’s considerate enlargement inside the sector: “Driftwood had established itself primarily in upper-upscale branded motels however strategically expanded into the approach to life sector by way of each improvement and acquisitions since 2015. This evolution led to the profitable administration of 12 way of life and resort belongings. The enlargement into the luxurious and branded residences sector was a part of a broader technique to capitalize on the rising demand for immersive and high-end journey experiences. It’s also a part of our technique to diversify our portfolio into the fastest-growing, and most resilient, phase of the business. Lastly, it’s also a perform of requests from our current investor base to put capital on this phase.”
Azevedo, the previous CEO of Aspen Hospitality—which develops, owns, and manages luxurious motels, golf equipment, and branded residences—defined that the sector has “emerged stronger post-pandemic” resulting from quite a few elements together with demand from high-net-worth people (HNWIs), experiential-driven journey demand, provide constraints, and pricing resilience. “Institutional traders stay bullish on high-end hospitality actual property, citing restricted new provide, excessive boundaries to entry, and pricing energy as key funding drivers,” Azevedo stated. “ESG-focused luxurious developments are additionally gaining traction as sustainability turns into a vital consideration.”
He recognized the next distinct developments in luxurious & way of life and branded residences, respectively:
- Luxurious & Life-style Motels: “RevPAR and ADR within the luxurious phase have outpaced broader market development. ADRs for luxurious motels elevated 29 p.c from 2019 to 2023, with properties continuously exceeding $1,000 per evening. Excessive-end resorts, wellness-focused properties, and experiential journey proceed to see sustained demand from prosperous vacationers.”
- Branded Residences: “The branded residence sector has expanded quickly, with world provide rising 160 p.c over the previous decade. Demand is pushed by UHNWIs (ultra-high-net-worth people) and HNWIs looking for turnkey, serviced residing experiences, with key development markets in North America, the Caribbean, and choose worldwide gateway cities. Main resort teams, together with 4 Seasons, Ritz-Carlton, and Aman, proceed to broaden their branded residential pipelines to fulfill demand.”
Along with the operational consolidation, Driftwood launched a devoted funding fund concentrating on markets throughout america and choose worldwide markets that match the fund’s standards, with deliberate capital deployments of over $3 billion. “The Driftwood Life-style & Luxurious Fund (DLLX) is concentrated on each possession and administration,” stated Azevedo, who oversees the fund. “The fund is devoted to buying, creating, and lending on luxurious and way of life hospitality belongings, together with branded residential properties.”
Crafting the sorts of visitor experiences applicable to the sector, Driftwood’s administration division performs a key position in optimizing the DLLUX portfolio’s efficiency. “Journey is evolving towards extra immersive and bespoke experiences,” famous Azevedo, who defined that Driftwood’s method focuses on:
- Curating high-potential markets that attraction to prosperous vacationers looking for luxurious experiences, whereas benefiting from supply-demand imbalances and favorable working and improvement prices.
- Funding in experiential properties, specializing in high-end design, immersive facilities, and powerful model partnerships that cater to trendy vacationers’ needs for customized companies, significant journey experiences, and skill to hook up with native communities.
- Branded residential elements, which improve returns whereas providing distinctive, service-oriented residing experiences.
- Expertise-driven operations, leveraging Driftwood’s proprietary Domino platform for real-time information and analytics to optimize resort efficiency.
