The projects under development are located in São Paulo (SP), Campos do Jordão (SP), Fortaleza (CE), Jericoacoara (CE), Recife (PE), Natal (RN), Ilha do Sol (PR) and Foz do Iguaçu (PR). The investments, which total R$7 billion (US$ 1.35bln), will be carried out until 2028, but the first hotels, in São Paulo, Fortaleza and Ilha do Sol, should be inaugurated as early as 2023. The initial forecast was for 2022, but the coronavirus pandemic delayed the original plans.
In an interview with Exame, the CEO of VCI, Samuel Sicchierolli, spoke of the plans for the Hard Rock brand in Brazil. In addition to the eight hotels, the executive says that the flag may also have casinos on Brazilian soil, if the regulation of gaming is approved by Congress. The bill will be voted on in the House this month.
"We are what the company calls an area developer, we have a contract to develop 10 projects in Brazil. The first eight were focused on hotels, but the other two may have different profiles. They are studying, for example, the possibility of having casinos in Brazil, if the regulation of gaming is approved in Congress," explains Sicchierolli.
Exame - What are Hard Rock flag's plans for Brazil?
Samuel Sicchierolli - We have eight projects under development, some at the construction stage, others at an early stage. The PSV (General Sales Value) of the planned projects is close to R$7 billion (US$ 1.35bln). In our two most advanced projects alone, Fortaleza and Ilha do Sol, there have already been R$1.2 billion (US$ 230m).
Hard Rock is present in 77 countries and 200 cities in four business divisions: restaurants and cafes, hotels, casinos and concerts and events. In Brazil, we are involved with hotel and events projects.
We are what the company calls an area developer, we have a contract to develop 10 projects in Brazil. The first eight were focused on hospitality, but the other two may have different profiles. They are studying, for example, the possibility of having casinos in Brazil, if the regulation of gaming is approved in Congress.
Why was Brazil chosen to receive this investment?
The Hard Rock brand underwent a transformation after 2008, in the United States, and from then on it began to make greater investments in the hospitality segment. Although it is a well-known brand, it is an expressive player that has recently prioritized projects in this segment.
The logic of bringing Hard Rock hotels to Brazil has to do with the dynamics of the timeshare segment itself. Historically, these projects have focused on C class clients, they are hotels with simpler services, in destinations that were not necessarily the most sought after. Another important point is that until 2018, timeshares also did not offer legal certainty. It was only with the approval of a law that Brazilians had more security to acquire a quota. In projects prior to 2018, we saw a high volume of judicialization, because of the lack of individual registrations, which prevented the owner from selling, renting or transferring these assets.
The approval of the law and the arrival of brands such as Hard Rock made the market go from R$2 billion (US$ 380m) in PSV to more than R$20 billion (US$ 3.8bln) in a short time.
Why is timeshares so strategic for the brand's plans in Brazil?
We were the first company to have timeshares with an international brand in Brazil. In addition, only 2% of the Brazilian population has access to a second home, on vacation. Having a vacation home requires investing in a property, furnishing it, paying employees... it's a very high acquisition and maintenance cost. Our timeshare projects have an average quota value of R$120 thousand (US$ 23k) - an amount that can be paid in 60 installments. It's a pretty affordable plan.
Global research shows that people travel, on average, 17 days a year. Anyone who buys a share from us has the possibility to exchange at all Hard Rock units. That means he can spend his time at any of our 4,300+ hotels. If you don't want to travel, you can also rent your unit.
What is the profile of this customer?
They are people who have already traveled abroad, they know about the quality of our hotels, and about all the safety features. It is an audience mainly from the B+ and A+ classes, which did not feel served by the timeshare projects that existed. The average family income of those who buy a share is R$15 thousand (US$ 2,850), with 10% of our customers earning more than R$45 thousand (US$ 8,500).
We have clients from 19 years old to 80 years old, but on average, we are talking about someone 38 years old, married, 2 children, and a family income of more than R$15 thousand (US$ 2,850). In relation to the use of the quota, it is much more varied: we have from the client who really likes to travel and want a space for himself and his family, we have the client who does not like to travel so much, but wants to make income...are different goals.
Another important aspect is that we don't force the sale, we don't do the so-called "emotion sale". The client who buys a quota, in general, does it spontaneously – that is, he came here and wanted to know the project. This makes our post-sales cancellation level only 15%, compared to cases that reach up to 50% in the market.
What channels does the customer find to buy a quota?
In addition to our concept stores, such as the one we have on Avenida Brasil, in Sao Paulo, and the stores we have in malls, we also sell online. Today, I have clients in more than 1,400 Brazilian municipalities, although the projects are in only eight cities. Many people search, search the internet and end up buying online, asking questions by video call, for example. We receive more than 2,000 calls a day at the call center, from people who want to know about the projects.
What is the quota model for Hard Rock projects?
We have 26 owners for each property, which means that each is entitled to two weeks of use. The property deed determines exactly that: which space the shareholder is entitled to (which apartment, unit size and enterprise), and in which period he can enjoy it. The weeks are determined at the time of purchase of the quota, as families usually already have a travel routine, to take advantage of their children's vacations and organize vacation days from work.
All shareholders pay a condominium fee, which covers the expenses of IPTU, water, energy, cable TV, internet, in addition to breakfast, hotel maintenance and everything a traditional guest would have. The management of the enterprise is even carried out by the Hard Rock brand itself.
Source: Exame
