Branded Residences: The New Trend in the Greek Hospitality Sector

During the past few years, a trend from other touristic destinations worldwide has also emerged in Greece. Branded residences, a form of real-estate exploitation, were late to appear in the Greek market – even though the country has traditionally been a popular destination for tourists. This delay is most probably down to cultural restraints and, in particular, the hesitance of high net worth individuals – for whom this product is by definition designed – to own private homes within hotel complexes and offer them for exploitation.

To put it simply, the branded residences regime broadly comprises the following set-up. A number of apartments or villas (whose features sometimes include private pools and exclusive use of outdoor areas) located within a hotel complex are offered either for sale or for long-lease, depending on the type of classification of the hotel complex – ie, whether it is classified as a classic-style hotel, a condo hotel, or a tourist accommodation complex. In certain instances, time-sharing legislation will apply.

Branded residences, while occupied for certain periods of time by their owners, remain in the hotel inventory in the sense that – when not occupied by their owners –  they are offered for rent by the hotel in a manner equivalent to the rent of hotel rooms. In return, the owners get part of the income deriving from such rent. This amount will depend on various factors, including:

This type of exploitation has recently become a trend in Greece following the interest shown by major hotel operators in entering the Greek market to make use of their experience in other touristic destinations around the world. Given that the product offered is an expensive one, such apartments/villas will be constructed within ultra-luxury hotels and resorts in Greece. This has already been set in motion for the Costa Navarino hotel in the Messinia region of the south-west Peloponnese, under the Mandarin Oriental brand, and for the Amanzoe resort in Porto Heli. And there are more to come in the near future.

From the owner’s perspective, this type of arrangement seems to make sense for a variety of reasons. They make an investment by acquiring or long-leasing an apartment or villa that they may then use for specific periods of time, depending on the agreement with the hotel operator. The owner is offered services pertaining to the operation and maintenance of their villa while, at the same time, gaining access to the facilities of the resort where the apartment/villa is located. Given that branded residences are part of ultra-luxury resorts, their restaurants, spas, gyms, etc, are of equivalent quality.

Finally, the owner receives part of the income generated by renting their residence. Depending on the time during which said residence remains in the rental pool of the hotel, at some point the owner will make full recovery of their investment.

On the other hand, it is a hot product from the hotel operator’s perspective as well. This is because, by selling or long-leasing residences within a hotel complex, the hotelier/hotel operator generates cash when such cash may be needed for the completion of construction or, in general, for the opening of the hotel. From the moment the hotel starts operating, branded residences are the jewel in the crown of such resorts – attracting high net worth guests and thus enhancing their prestige and strengthening their presence in the market.

All in all, with Greece holding on to its historically strong presence in the touristic market and becoming even more of a draw for luxury holidaymakers, the exploitation of branded residences is expected to expand significantly in the near future. From a legal perspective, however, it seems that their operation is not governed in a uniform way but rather fragmentally – depending on the type of hotel complex within which they are developed.

Bearing this in mind, it may be time to introduce specific legislation to govern the construction and operation of branded residences. Whether based within hotel complexes or not, branded residences need a specific and uniform legal framework in place that is particularly oriented to their use and exploitation in accordance with international practice.