Calm Is a Commodity, and Business Is Booming

Aman Resorts 

In 1988, Adrian Zecha an Indonesian hotelier founded Aman Resorts, by launching ‘Amanpuri’ in Phuket Thailand. Aman has carved out a new niche of ultra-luxury resorts within the hospitality industry. Its name comes from the Sanskrit word ‘peace’ which reflects its focus on privacy, bespoke and serenity experiences. Since its founding Aman has built a beautiful portfolio of 35 resorts and residences across 20 countries within the world's most pristine locations. 

Aman current owner Vladislav Doronin, a Russian real estate mogul acquired a majority share of Aman in 2014.  The company is currently headquartered in Switzerland and has been operating as a private organization with strategic investors like the Public Investment Fund, Cain International, Alpha Wave Ventures, and Mubadala Capital who together have invested over $1.3 Billion into Aman in 2022 and 2023, valuing them at $3-4 Billion.

Aman targets ultra-high-net-worth individuals and travelers who are seeking unparalleled experiences. With its locations being in remote breathtaking locations this creates a strong moat around them and sets them apart from conventional five-star / luxury resorts. Aman’s mission is to provide luxury experiences without compromise. 

The global luxury travel market is valued at over $1 trillion and is expected to grow at a 7% CAGR through 2030. This demand is driven by customers seeking bespoke, experiential, and high-end experiences. Aman’s unique global presence in the ultra-luxury markets makes them an ideal target for a potential IPO or strategic acquisitions by LVMH, who acquired Belmond in 2019. Aman’s premium position with an affluent client base makes them an attractive target for potential investors who are looking to tap into the luxury travel boom. 

Aman’s properties have consistently ranked among the highest daily rates within the hospitality industry, ranging from $1,500 to $10,000 per night depending on the location, seasonality, and exclusivity. Aman has been able to distinguish themselves with bespoke services that include wellness retreats, cultural experiences, and wedding or corporate retreats.  Branded residences have been a major revenue/growth driver for Aman with its New York residences being priced between $5-$100 million which sold out quickly after launch. 

While Aman Resorts has remained a privately held company, it is estimated that annual revenues are between $800 million and $1 billion in recent years. Revenue growth has been fueled by the expansion of its branded residences and entry into new luxury markets, it is estimated that revenue will grow at 13% CAGR through 2025. Aman’s ultra-luxury focus and low room count compared to competitors like Belmond, Six Senses, and Four Seasons allow it to drive higher revenue per room than its competition. Its premium pricing strategy has allowed Aman to operate with an estimated 30-40% which is significantly higher than the industry averages.

Aman Resorts has been able to attract significant investments from strategic investors and sovereign wealth funds, which has enabled its expansion. In 2022 Cain International and the Saudi Arabia Public Investment Fund, invested $900 million valuing the resorts at $3 billion.  Then in 2023 Aman Resorts was able to raise an additional $360 million from Mubadala Capital and Alpha Wave Venture, this capital has been used to support expansion and signaled investor confidence in Aman's growth trajectory. 

Aman’s estimated cash flow comes from several diversified streams including its branded residences, operational cash flow, and expansion capital. Its branded residences allow it to collect large upfront payments that contribute to its significant cash flow. Also with its premium pricing strategy and consistent occupancy rates, Aman’s flagship resorts like Amangiri and Amanpuri can sustain a robust operational cash flow. 

Catering to individuals with ultra-high net worth, Aman has been able to carve out a niche for themselves, unlike any other conventional luxury resort. By maintaining its focus on Private and exclusivity, experiential travel, and unrivaled settings, Aman has been able to prioritize private and authenticity over traditional experiences. Each Aman property is known for its low room count, ensuring privacy and a personalized experience. The location of each Aman resort has been strategically located in some of the world's most iconic and pristine locations. 

Aman's competitive advantages lie in its brand equity and cult following, location strategy, bespoke services, and branded residences. In areas like New York City, Aman has its branded residences that cater to UHNWIs who are looking for a permanent luxury living space. Aman has created a cult-like following, often referred to as ‘Amanjunkies’ that has provided them with strong recurring revenue streams and has positioned Aman as the gold standard in hospitality. Aman has been able to create a high barrier of entry from its hard-to-replicate locations, from its high entry costs and strict zoning restrictions.

The luxury travel market is valued at $1.3 trillion as of 2022 and is expected to grow at 8% CAGR through 2030, driven by the rising demand for experiential and wellness tourism, the growing number of UHNWIs, and a post-pandemic surge in secluded travel options. Aman has also expanded into cities like New York, Bangkok, and Beverly Hills to capture the growing luxury market where clients seek sanctuaries within metropolises.

Aman has several growth drivers in its current pipeline that include the expansion of its branded residences, future resort launches, and wellness and experiential services. Branded residences have become a cornerstone in Aman’s growth strategy after the success of its New York launch, future residences include Bangkok, Beverly Hills, Saudi Arabia, and more. These projects provide large cash flows and high margins that will further enhance its revenue. With the expanding wellness tourism markets, Aman has been able to take advantage of it through its Amangiri and Amanpuri resorts which have been pivotal players in the company's wellness-driven revenue. 

Aman’s pipeline of new properties across key markets has enabled them to scale without over-concentration in any region. Aman has focused on having operational efficiency through low room counts and centralized management systems enabling them to operate with high Average Daily Rates (ADRs) and occupancy rates. The company focused on streamlined operations which enabled it to reduce overhead costs without compromising its luxury standards. 

The resort's expansion is extremely capital intensive with the recent funding from strategic investors, these funds are planned to finance New Aman and Janu properties globally and the expansion of its branded residences across key markets. Given Aman’s strong brand equity and high-margin model they can attract additional funding without needing to dilute its current shareholders. Strategic partners with the Public Investment Fund out of Saudi Arabia have enabled them to unlock regional opportunities without taking all the development risks. 

Aman Resort faces several operational risks that include its high fixed costs, resourced intensive expansion, workforce retention, and supply chain vulnerabilities. With the company's focus on its bespoke services, Aman may have challenges maintaining and training staff in remote areas. Aman’s global operation depends on premium quality supplies, any supply chain disruptions could increase fixed costs and impact guest satisfaction. Aman’s ability to develop new properties could lead to challenges from zoning restrictions to construction delays that could lead to cost overruns.

The ultra-luxury hospitality industry has seen an increase in competition from well-established players like Six Senses, Belmond, and the Four Seasons expanding their product offerings. A significant portion of Aman’s target market consists of global high-net-worth individuals, any potential global recession or travel restrictions could directly impact bookings. This also makes Aman’s reliance on international travelers a risk due to currency exchange rates and oil price volatility. 

A potential IPO for Aman Resorts could face risks related to market perception, economic downturns, and transparency in its financial reporting. Public markets often favor high-growth scalable businesses, while Aman’s focus limits its perceived scalability. Potential acquisitions from firms like Accor or Marriot could dilute Aman’s brand equity and reduce its long-term value. Failure to achieve target revenues and profit growth could result in potential delays in exit strategies

Aman Resort has been able to carve out a niche segment within the ultra-luxury hospitality market. Its strengths lie in its ability to create diverse revenue streams from its expansion plans to the increased demand for wellness and experiential travel. Aman’s branded residences have become 30% of the company's total revenue. Investments from strategic backers like the Saudi PIF, Cain International, and Alpha Wave Ventures have enabled them to secure financial stability and capital to further their expansion plans. 

Rivals like Six Sense, Four Seasons, and LVMH’s Cheval Blanc have begun to heavily invest and target similar customer segments as Aman. Operating as a global organization, Aman has to manage multiple expansion projects that strain resources from delays or overruns. Aman's current valuation is currently in the range of $3-4 billion and given its unique brand positioning, Aman risks challenges from investor alignment that could complicate a future exit. 

The bad boys over at Azar Capital Group like Aman Resorts and think their future is very bright. Its unmatched high-margin model, brand equity, and robust funding offer strong long-term potential for investors. Although it is unlikely they will go public in the future we believe that private investors like the Saudi PIF will continue to fund Aman’s operations in the long term if capital is needed. 

Disclosure

This analysis is for informational purposes only and should not be considered financial advice. Investors are encouraged to perform their own due diligence or consult with a financial advisor before making investment decisions.