In February, Driftwood Capital launched its Driftwood Life-style & Luxurious Division (DLLUX), enhancing administration, funding, and improvement companies and initiatives inside the luxurious, life-style, 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 property 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 growth inside the sector: “Driftwood had established itself primarily in upper-upscale branded accommodations however strategically expanded into the life-style sector via each improvement and acquisitions since 2015. This evolution led to the profitable administration of 12 life-style and resort property. The growth 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, section of the business. Lastly, it is usually a operate of requests from our current investor base to position capital on this section.”
Azevedo, the previous CEO of Aspen Hospitality—which develops, owns, and manages luxurious accommodations, golf equipment, and branded residences—defined that the sector has “emerged stronger post-pandemic” attributable to quite a few elements together with demand from high-net-worth people (HNWIs), experiential-driven journey demand, provide constraints, and pricing resilience. “Institutional buyers stay bullish on high-end hospitality actual property, citing restricted new provide, excessive limitations to entry, and pricing energy as key funding drivers,” Azevedo stated. “ESG-focused luxurious developments are additionally gaining traction as sustainability turns into a crucial consideration.”
He recognized the next distinct tendencies in luxurious & life-style and branded residences, respectively:
- Luxurious & Life-style Lodges: “RevPAR and ADR within the luxurious section have outpaced broader market development. ADRs for luxurious accommodations elevated 29 % from 2019 to 2023, with properties steadily exceeding $1,000 per night time. 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 international provide rising 160 % over the previous decade. Demand is pushed by UHNWIs (ultra-high-net-worth people) and HNWIs looking for turnkey, serviced dwelling experiences, with key development markets in North America, the Caribbean, and choose worldwide gateway cities. Main lodge teams, together with 4 Seasons, Ritz-Carlton, and Aman, proceed to develop their branded residential pipelines to satisfy demand.”
Along with the operational consolidation, Driftwood launched a devoted funding fund focusing on markets throughout the US 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, growing, and lending on luxurious and life-style hospitality property, 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 strategy 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 personalised companies, significant journey experiences, and skill to connect with native communities.
- Branded residential parts, which improve returns whereas providing distinctive, service-oriented dwelling experiences.
- Expertise-driven operations, leveraging Driftwood’s proprietary Domino platform for real-time information and analytics to optimize lodge efficiency.