Rich travellers mean rich returns for investors
town in northern England, $100,000 will buy you a four-bedroom house. In Dubai, it will get you a four-bedroom penthouse—for a night. The Royal Mansion, the nightly rate for which makes it the world’s priciest suite, sits on the 18th and 19th floors of the Atlantis The Royal hotel. It comes with 1,100 square metres of marble floors, a terrace with an infinity pool, a steam room, Hermès shampoo, $500 bathrobes, a not-so-mini bar and, naturally, a butler.
The Royal Mansion’s opulence—and price—are hard to rival. But only a bit less posh properties are popping up from the Okavango Delta in Botswana to Kangaroo Island in southern Australia. Saudi Arabia is building eco-resorts on the Red Sea with a collective 8,000 rooms, which one executive calls the “new Maldives”. London’sIn contrast to mid-range hotels, luxury ones are in the midst of a boom. The precise definition of what counts as luxury varies, but you know it when you see it.
One reason is that there are more big spenders, and they are getting richer. In 2012 the world had 29m dollar millionaires, according to, a bank. By 2022 that figure more than doubled to nearly 60m. The collective fortune of these silver-spooned individuals exceeded $200trn. Many more now hail from what are otherwise middle-income or even poor places. The number of millionaires in Brazil is forecast nearly to double by 2027, to almost 800,000.
All these splendour-seekers are competing for scarce rooms. Although construction of new hotels has resumed after a pandemic-induced pause, it is slow going, especially for fancy digs in select locations such as historic city centres and nature reserves. In many parts of the world just acquiring the necessary approvals and permits can take between five and seven years. And that is before any cement is poured. Atlantis The Royal took 14 years to build from start to finish.
This is turning luxury hotels into a lucrative asset class. The annual rate of return on such properties exceeded 6% in 2022, the highest in at least a decade . And that in turn is attracting investors beyond the usual hotel operators, property developers and buy-out barons. Montage International, a Californian owner of a dozen lavish properties such as Montage Cay in the Bahamas, counts Wall Street stalwarts like BlackRock and Goldman Sachs among its backers.
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