BlueShift Makes Jump to Owning Hotels

9 June 2018

The company wants to create a new group of hotels and is targeting 20 assets in Portugal valued at €500 million.

This is a new step in the life of BlueShift, the hotel management company that is now preparing to build a new hotel group in Portugal. It is currently analysing 20 assets throughout the country, in potential investments worth €400-€500 million.

BlueShift already has another asset to use in this initial phase of expansion: the Italian Mario Chessa became a partner of the company, joining Francisco Nogueira de Sousa, a former Starwood board member, and Filipe Santiago, the former CEO of Tivoli.

The First Hotel Group to Use the Blue Ocean Model

The hotels that are in BlueShift’s sights can be found throughout the country in the Azores, Madeira, Lisbon, Porto, Alentejo, Algarve and the Centre region, in particular in the zone of Coimbra in the latter case.

“Instead of just taking care of the management, we could also own the business, buy the hotel with partners, and there is even the possibility of leasing. The opportunities in this country are immense,” says Francisco Nogueira de Sousa, who created BlueShift in 2012 with the objective of ensuring the management of independent hotels from the perspective of professionals with experience in chains or hotel multinationals. Filipe Santiago joined the firm in late 2016, followed recently by Mario Chessa.

“We are going to create the first Blue Ocean hotel group, applying all of the management model’s strategic principles,” says Filipe Santiago, referring to the bestseller “Blue Ocean Strategy” which is the basis for BlueShift’s management strategy. The book recommends that companies find their own space or ‘blue ocean’, rather than digging in a ‘red ocean’, which is defined by a bloody fight for territory.

“We have been approached by a large number of national and international investors,” Mr Santiago said, adding that “we will work together with Marriott for several of these projects, because of the trust that we have built with them due to all the previous work we have done together.”

“New and independent units” are the primary focus of BlueShift’s investment. “There is a lot of willingness on the part of our partners to invest and, regarding possible amounts, the sky is the limit. The great challenge that exists, for example, in Lisbon or Porto is the difficulty in ‘grabbing’ the assets,” Filipe Santiago reasoned, reiterating their goal of “becoming a group that is not only a service manager but also renting or buying hotels, always applying the Blue Ocean strategy.”

Hotels’ Profitability Increased by between 30 and 800%

As Francisco Nogueira de Sousa points out, the essential goal of the Blue Ocean principles is “to make businesses profitable; we are not talking about dreams or utopias that do not come true.” It is visible in BlueShift’s results, which manages a number of hotels (Convento do Espinheiro in Évora, and Quinta das Lágrimas in Coimbra are some examples) and “none of our hotels had increases in profitability below 30%, and in some cases, growth reached 800%.”

BlueShift’s most significant results were achieved at the Praia d’El Rey resort in Óbidos, which was in the process of insolvency. “In the three and a half years it has been under our management, hotel revenues have practically doubled (increased 80%), and we have increased EBITDA by seven and a half times. The results that had been targeted to achieve for Praia d’El Rey in 2035, we reached in 2017” the executive emphasised, noting that BlueShift had been called in by the insolvency administrator. Despite its results, Oxy Capital, which owns Praia d’El Rey’s outstanding loans, decided to terminate the management contract in January of this year. Francisco Nogueira de Sousa kept the glory of having won the “best manager of the year” award at Praia d’El Rey, “among the 650 hotels that Marriott has in Europe.”

Mario Chessa, BlueShift’s new partner, comes with the goal “of making hotels a platform for connecting with other luxury brands.” After a long spell at Starwood, Chessa helped launch Prince Aga Khan’s Tiga hotels in Italy and created the Riva lounge (luxury yacht brand) inside the Gritti hotel in Venice. “In Portugal, there are lots of opportunities in the luxury segment, not only in Lisbon, Porto and Algarve but in lesser known places,” says the Italian executive, who married and had children in the Algarve. “It is a very authentic country, which should be recognised with new concepts. At this point in the economic cycle, you must be innovative and anticipate the future in hotels.”

Original Story: Expresso – Conceição Antunes

Photo: José Fernandes

Translation: Richard Turner