THE ROYAL SAVOY, MADEIRA

THE PROJECT:

The archipelago of Madeira is situated in the North Atlantic Ocean, some 500 kilometres from the African Coast and 1,000 kilometres from the Portuguese mainland. The group comprises the main island of Madeira, the smaller island of Porto Santo and three uninhabited islets of Ilheu Chao, Desserta Grande and Ilheu de Bugio. The island of Madeira covers an area of 741 square kilometres – 57 kilometres long and 22 kilometres wide.

Madeira is one of the oldest tourist destinations in Europe.  Tourism forms the most important economic sector and is the biggest industry on the island. Madeira is, in terms of tourist arrivals, Portugal’s third most important tourist region, ranked after the Algarve and Lisbon. A predominantly British market has dominated Madeira until recent years when German visitors took top place for a time.  Madeira is also popular among the French, Swedish, Dutch and Belgians, although the main markets of demand are still the Germans, mainland Portuguese and British.

Madeira is traditionally perceived as a winter holiday destination, although visitor arrival figures show a fairly even year-round spread, with March, April, May, August, September and October being among the strongest months.  The comparison of seasonality by tourist nationality demonstrates the fact that the main German market tends to visit the island between February and June.  Conversely, Portuguese holidaymakers tended to concentrate their stays in the summer season.

The Royal Savoy, which is part of the Savoy Group of hotels, which includes the Hotel Savoy, Santa Isabel, Vila Ramos and the Royal Apartments, opened in April 2002, a century after its first inauguration and was a significant enhancement to the facilities offered by the Savoy Group. Built at a cost of some €40 million, the complex consists of 162 Apartments of which there are 101 Studio’s, 41 One-bedroom units and 20 Two-bedroom suites.

THE CLIENT:

The Savoy Group is owned by SIET-SAVOI, S.A, a Portuguese established company previously quoted on the Lisbon stock exchange, but is now privately owned. The Savoy Group of companies are especially important to the local economy, employing over 1,000 personnel with the main activities being tobacco planting and manufacturing, animal feed processing, as well as poultry and pork production and real estate. Apart from these investments on the islands, the two principal shareholders own other diversified investments such as banking, insurance, real estate, news media, printing, wineries, telecommunications and art

THE BRIEF:

Prior to the decision to move forward with the development of the Royal Savoy Complex which was to be constructed on the former Lido deck and built up against a cliff face below the famous Savoy hotel, Dean & Associates worked alongside BDO Hospitality Consulting in London [now THR Hospitality Consulting] to prepare an independent assessment of the market and financial feasibility of a proposed luxury vacation ownership resort, to assist the Savoy Group in its appraisal of the project

The Report prepared for this assignment provided a clear and concise overview of the European timeshare industry including its size and structure; its main players and its regulatory parameters and trends.  It also included background materials relating to marketing and selling practices and operating costs as well as product structures and their evolution.

THE APPROACH:

As well as a detailed analysis of the hotel market in Madeira itself, the Report would include insights into the likely competitors within Portugal and within Madeira specifically, so as to assist in determining the best market entry options and product positioning.  The analysis of the project was to focus on:

• the proposed product or unit configurations and related facilities;
• the specific market assessment related to Madeira;
• a comprehensive financial analysis of the proposed timeshare facility which would be linked to an existing hotel operation.

• obtaining current market and operational data on timeshare resorts in Portugal;
• determining the existing and projected characteristics of markets considered to be of relevance to the project;
• determining the then current supply of timeshare accommodation serving those markets and obtaining all available data from sources considered authoritative on other relevant planned timeshare resort/vacation club developments in Portugal in general and in  Madeira specifically;
• procuring an understanding of the Savoy Hotel’s operations, key guest markets by nationality, average party size and length of stay, levels of repeat visitation and so forth

A detailed site analysis was also undertaken to assess its accessibility and its relationship to other timeshare projects as well as to hotels, resorts, golf clubs, airports, commercial areas and facilities, tourist attractions and other main facilities in the relevant market catchment area, as well as its suitability for the use proposed and identified the site’s strengths and weaknesses in that regard. This analysis was then used to determine the proposed timeshare resort’s competitive position relative to existing and planned future timeshare resorts/vacation clubs in Madeira.

THE DELIVERABLES:

The assignment necessitated the making of recommendations regarding the configuration of the proposed inventory and its pricing. In addition very specific recommendations were provided regarding the proposed legal structure for the resort and the timeshare product to be offered, including the provision of specimen documentation.

The project was subsequently developed, affiliated to Interval International and with a highly professional sales team in place, became one of the most successful luxury timeshare resorts within Western Europe. In particular, exemplary landscaping and interior design ensured that this Resort mirrored the high quality for which the Savoy Madeira had long been famous.

Key success factors for this project were:

• Madeira’s established position as a high quality, year round tourism destination;
• The spectacular sea front location and uninterrupted sea views enjoyed by all the Apartments;
• The tie in to the famous Savoy Hotel Madeira and the ability to leverage the brand;
• The exemplary design and fit-out of the Apartments and the quality of the interior finishes and F.F. & E.
• The overall quality of the entire Resort and its exquisitely designed common areas and amenities;
• A very significant hotel guest database and high levels of repeat visitation by loyal and affluent guests;
• A highly professional marketing and sales team who took the project forward