The second life of Kike Sarasola

Kike Sarasola (Madrid, 1963) has just arrived from Rome, his new place of residence for half the year in order to analyze business opportunities in the fastest growing country for the hotel chain he presides over. She sports an enviable tan and an indestructible smile. She changes her shirt to pose for the photographer. She does it with ease and admits that she loves it. The former Olympic rider is quite a character within the sector. Perhaps the only businessman who, after having been involved in bankruptcy proceedings and losing his company, continues to lead the brand he founded: Room Mate Hotels. And perhaps also the only one who claims to keep intact his dream of building an emporium of one hundred establishments, like when he created it in 2005.

The chain, acquired in mid-2022 by the American investment fund Angelo Gordon and the Canadian manager Westmont Hospitality for 57 million euros, faces a new phase of expansion after closing a “record” 2023. With a turnover of 106.5 million euros, 37% above the previous year, and with profits for the first time in its history: 15.7 million. The stability that the new owners provide is one of the keys to these good results, highlights the president of Room Mate, derived from the fact that the company is starting from scratch and has no debt “because the house has been cleaned,” he admits. Expensive rents and excess staff have been eliminated, and expenses have been controlled, he explains, but not before highlighting the great virtues that the new shareholders saw in the brand: quality standards similar to those of large hotel companies and marketing that achieves 35% of direct sales for which they do not pay commission, he continues.

And this is how the new expansion plan is approached, which plans to incorporate 13 hotels (from the current 22 establishments they will jump to 35) in the next 18 months, going from 1,700 to 3,600 rooms. At the moment, with an investment of 16 million destined for renovations to adapt the buildings to the design requirements that distinguish the company. And this growth will be not only based on rentals, as the Sarasola hotel operated until now “because it had no money,” but “with purchases, rentals or management, since the investors believe in the project,” indicates the executive.

“40% of the growth will come from Italy, where they forgot to fix their two to four star hotels and there are no centrally located, renovated, beautiful and well-priced rooms, so the Room Mate formula is going to work very well” . They are looking for opportunities in Rome, Milan, Naples and Sicily, where they hope to add 3 to 5 hotels this year. They also want to continue expanding in London (they have already bought one); in Paris, Hamburg, Berlin and Munich, locations where they are not present, as well as in Spain. The local market concentrates 12 of its establishments, while in Italy there are six (the last one opened in Venice, which is a tourist apartment building, a product on which the company is going to bet), and the remaining four are distributed throughout Netherlands, the United Kingdom and Turkey.

In addition, the chain is going to launch a second brand: Room Mate Collection, a four-star plus they call it, which responds to its clients' demand for a "silent luxury, which avoids ostentation", according to Sarasola, aimed at users of a average age a little higher than the rest and with more personalized attention (the 2.4 million customers the company had in 2023 were between 25 and 54 years old, and 91% were international, mostly Americans). For now, they will put the Collection brand on their Giulia hotel in Milan and the Gerard in Barcelona, ​​and then two or three more of those who are currently part of Room Mate will join and also two or three new entrants, says the president, who will present the banner next week at the Berlin sector fair. These hotels will be around 12% more expensive than Room Mate, which are also being renovated.

Skyrocketing prices

The company wants to take advantage of the good moment in the tourism market, of a customer who prefers to travel at all costs instead of changing house or car, in love with carpe diem, according to Sarasola, and which has led to a 12.3% increase in prices. average rates for their rooms last year (although in Florence the increase in average prices has been close to 40%, in Rome 28% and in Milan 21%; in these last two cities the increases in ADR are similar to those of Malaga and Madrid). With these efforts, Sarasola hopes to reach 150 million in turnover in 2024 and achieve an EBITDA of 24.1 million euros, 8.5 million above last year.

And this year is going to be good for the tourism sector, but not as good as 2023, progress. The president foresees a growth of the industry of 4% or 5% “because tourist prices cannot be raised any more. Everything comes to a stop. If we don't want to go overboard and break the goose that lays the golden eggs, we all have to stabilize ourselves a little. The market is going to correct itself because there is no family economy that can withstand it.”

The former Olympic rider, whose office displays photographs from his sporting days, is not too fond of mea culpa. “I have been on the crest of the wave, I have gone down and I have gone up again,” he says and then answers that the learning he has learned from the bankruptcy of his company is to “continue fighting”, the same as after the pandemic, “ that took us all ahead.” He blames the bankruptcy on covid-19, on the lack of public aid (“we asked for help and they didn't give us, although we were about to get it and, at the last moment, we don't know why, it didn't arrive” ) since “my partner had problems in her office that affected us” [Sandra Ortega, the daughter of the founders of Inditex owned 30% of the capital of the hotel company, accused her manager José Leyva of using endorsements with her name so that Sarasola could ask for loans]. “It was the perfect storm,” he concludes.