HIP Signs With Room Mate Hotels to Open Pax Barracuda in Palma de Mallorca Following EUR23 Million Renovation

Spain, Madrid. August 29, 2019

Hotel Investment Partners (HIP), the largest owner of hotel resorts in Spain, has signed an agreement with Room Mate Hotels, the chain owned by Kike Sarasola, to manage the new Pax Barracuda hotel in Palma de Mallorca. The agreement involves two hotels (Calviá Dreams and Barracuda), which HIP will convert into one by investing EUR23 million in a full-scale refurbishment and repositioning project. The opening of this new hotel will mark the renowned Spanish chain, Room Mate Hotels' debut in the world of hotel resort management.

HIP's strategy for assets such as these - large-scale properties with prized locations - is to create value via an investment and management plan designed to reposition the hotel on the market. "After investing EUR23 million in completely transforming the hotels, it was paramount to select the right management firm to operate them. We are in no doubt that Room Mate Hotels will bring the hotel management expertise needed to fully complete the repositioning process", said Alejandro Hernández Puértolas, Founder and CEO of HIP.

Kike Sarasola, CEO and Founder of the Room Mate Group, said that "entering the resort sector with HIP in a place like Mallorca is a surefire recipe for success for our first beach hotel. With this investment we are making a bold commitment to the Magaluf area, as so many other great chains have done, including the Escarrer de Meliá family. Our guests wanted Room Mate to open a beach hotel, so we're going to take them by surprise once again."

The brand new Pax Barracuda will open in April 2020 following 18 months of renovation works. It will boast a new and updated look and feel, and offer a range of guest experiences that will make it one of the most unique and appealing hotels in the area. The new hotel will have a 4-star rating (the former Calviá Dreams had three stars and the Barracuda four) and 391 rooms. This is slightly fewer than before given the number of junior suites and suites has been considerably increased - a new premium 22-room building will be added, while the main building will also offer an additional 18 premium rooms. The new Room Mate Hotels beach complex - with a built area of 39,481 sqm and situated on a plot comprising over 19,665 sqm - is set to create more than 240 direct jobs.

The rooms and communal areas have been designed by the highly-esteemed Barcelona interior designer Jaime Beriestain. The new design will also feature complementary services including beauty treatments, a gym, children's club and activities in the swimming pool areas. To further enhance the experience, guests will be able to choose from a range of new dining options, from an all-you-can-eat buffet to à la carte restaurants, and will also be able to enjoy show-cooking that will be held in open spaces and feature a wide variety of culinary options.

This is a unique project designed to completely transform both the hotel's concept and range of services, and target guests with a medium-high purchasing power, including families. It also aims to upgrade the service to bring it into line with the Room Mate's exacting standards and create additional value as part of the hotel's repositioning process - a process that also affects the marketing strategy, which aims to reduce the number of guests who come via tour operators.

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Revenue Management: Focus On Profit

Revenue Management is still a relatively new profession within hotel operations and as such, it continues to evolve. One significant trend in this area is a shift away from using revenue as the foundation to generate key performance indicators (KPIs) and to instead place the emphasis on profit. Traditionally, revenue managers have relied on total revenue per available room (TrevPAR) and revenue per available room (RevPAR) as the basis of their KPIs. Now, some revenue managers are using gross operating profit per available room (GOPPAR) as their primary KPI. This puts profit at the center of revenue management strategy, and managers are increasingly searching for new ways to increase the profitability of their hotels. Return on Investment is the objective of any hotel investment, so it is only logical that profitability and ROI will be emphasized going forward. Another trend is an expanded focus on direct hotel bookings. Revenue managers know that one way to increase profitability is to steer guests away from online travel agencies (OTAs) and book directly with the hotel. This tactic also reinforces brand identity and loyalty, and encourages repeat business. In addition, it provides a valuable platform to market the hotel directly to the customer, and to upsell room upgrades or other services to them. Another trend for revenue managers involves automation in their software programs. Revenue management systems with automation are far more desirable than those without it. Automating data entry and logistics increases efficiency, allowing managers to spend more time on formulating strategy. As a bonus, an automated system helps with aggregating and interpreting data. The October issue of the Hotel Business Review will address these developments and document how some leading hotels are executing their revenue management strategies.