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Executive summary – Hugarró Nature Retreats

Our mission:
Building & operating  small environmentally sustainable 4-star hotsprings & wellness retreats in Iceland at stunning locations that maximize their natural surroundings to give guests the luxury to unwind.

Business objectives:

  • Build a 7-pool, 350 m2 (pool m2) geothermally heated hotsprings facility including restaurant & meeting spaces.  Hotsprings capacity:  350-400 daily visitors.
  • Build a 31 room hotel and up to 23 freestanding hotel cabins to the property.  Maximum guest capacity: 207 (with future possible expansion to 30 cabins).
  • Reach an annual occupancy of at least 52% in 1st year of operation.
  • Get certified in highest rating by relevant quality and environmental certification bodies in Iceland in first 2 years.
  • Build the hotel and hot spring facilities according to BREEAM standard (“in-use”)  and Nordic Swan and Greenkey and obtain certification within 18-24 months.
  • Build Hugarró Wellness Retreats into a solid brand with goal to open 2 more retreats in Iceland in next 5 years to serve our clients at multiple locations.
  • Protect and restore (birch) forest coverage on our properties to at least 100% of the current coverage.

USP (unique selling proposition)  – what makes our project so unique?

  • A Stunning location with amazing views all around in a natural birch forest.
  • A variety of pools that are designed to be operated to the highest  health, energy-efficiency, environmental and safety standards.
  • Circular cabins that can turn around (electrically) to enjoyed preferred view! 
  • Within an hour driving from Reykjavik.
  • Visionary hotel design that applies principles of landscape hotel, meets the highest environmental and operational standards and has a smart modular design that allows fast (prefab) building and minimal maintenance.
  • Highly accessible for disabled travelers (well above legal standards) – 10% of travel market…..
  • Possibility to create hot springs facility (geothermal power) and offering a year-round destination in itself, not just a lodging facility.
  • Less than 5 kms. from Glymur waterfall, with 198 m. the highest (accessible) waterfall in Iceland.
  • Solid experience in management team with hospitality, customer service and restaurant business.
  • 62% of our property is covered by trees, creating lots of privacy and protection for future cabins. This is very rare in Iceland
  • Lots of forested land around our location, excellent for hiking and making it beautiful surroundings.
  • Topography of land – 40 m. slope – allows lots of privacy and great views for future cabins.
  • A very-supportive, pro-tourism municipality that wants to see our project become reality.
  • Possible option to create a reforestation/hiking area project on a nearby location with spectacular views of the fjord to off-set carbon emissions of guests (and others) flying to Iceland.
  • No permanent neighbors (except vacation homes) living within 2 km and no permanent neighbors within 15 km.
  • At a safe distance (1.5 hr. driving) from volcanically active areas. 

Industry analysis
Tourism has been a growing force behind Iceland’s economy in more than a decade, with opportunities for investors in high-end tourism, including luxury resorts and hotels. The number of tourists in Iceland reached more than 2.3 million in 2018. Tourism in Iceland contracted in 2019 and 2020 due to COVID-19, and the total number of tourists went down to 2 million in 2019 and then down to 486,000 in 2020. As of 2022, the tourism sector had recovered, with 698,000 tourists in 2021, 1.8 million tourists in 2022  and 2.2 million tourists arriving in 2023. The sector has been moving away from mass tourism to high-end tourism amid increasing demand for exclusive and luxury experiences.
For a more detailed report on the tourism industry, check this report on tourism numbers from Islandsbanki of February 2024 and this macroeconomic forecast of January 2024.

 

Upscale hotels in Iceland have very high booking rates (several sources mention high season to be sold out for 2 years). As one bank director put it: if you build it, you’ll fill it (see also Icelandic Tourist Board dashboard).  And Iceland 2nd biggest airline Play is trying to double its fleet of aircarft.

  • Tourism in Iceland has grown back to pre-COVID levels.
  • The labor market in Iceland is tight.  Finding Icelandic staff is a challenge when jobs are seasonal. Luckily being part of the European Free Trade Association  and Schengen area,  hiring European frontline staff at hotels is easy and very common.  A solid in-house training program and attractive on-site housing will help us build and keep a strong team.
  • Iceland is world-renowned for its economic advancement, social stability, and technological innovation and continually ranks as one of the leading societies in international comparative analyses of the quality of life, safety, and equality. The nation is young, educated, multilingual, and enjoys high living standards and a thriving cultural scene. Government services are digitally accessible to a large degree.  To learn more about doing business in Iceland and economic numbers, see here.
  • Iceland is ideally located midway between Europe and North America. Flight duration is 2.5-5 hours to Europe and 5-6 hours to the United States (East Coast) and Canada.

 

Our customers
There are clear developments in tourism where guests don’t define luxury by the availability of golden faucets or deep-rugged carpets. Our clients are looking for an authentic experience in contact with and respect for nature.  Few countries are as suitable for this kind of tourism than Iceland.  

But tourists don’t’ come to Iceland for the weather.  They come for a unique immersion in majestic nature, unique anything they have seen before. They come to reload their battery enjoying stunning landscape, an untouched wilderness

What makes Hugarró different is that we will put all the dots on the ‘i’: making excellent use of an amazing location with a striking hotel design;  top-class service by well-trained, motivated staff that truly understands the concept of personalized service; excellent food; a top-class hot springs facility and all that for a reasonable price.   Exceeding expections every day is our goal.

24 years in the service industry has taught founder Thorwald Westmaas 2 things:  your staff is your most important asset and if you continuously exceed your clients expectations, they will become your ambassadors.

Another great advantage of Iceland is its location halfway between continental Europe and the USA.  This, together with the excellent and growing networks of several air carriers makes Iceland ideally positioned for both markets.

Strategic plan
Our marketing strategy rest on a combination of:

Operations plan
At this moment we work with 2 leading and very experienced hospitality consultants (in DE and in the NL) to cover this topic in more detail.   Given our goal to meet the highest standards on sustainable hotel management and design, our operations will be based on the standards of several certification bodies such as the Nordic Swan, Vakinn, Greenkey, Earthcheck and The long run / Preferred by Nature  and we aim to eventually get certified at highest levels.

Management team
Thorwald Westmaas (founder) has over 24 years of experience in service industries including education, hospitality and tourism.  While trained as an engineer, customer service is in his DNA.  He takes a practical, no-nonsense approach to operational challenges and sees each of them as an opportunity to learn and improve.

Mario Hellemons
Generalist in de bouw- en vastgoedsector, als ondernemer,
(project)manager en vastgoedadviseur. Met 23 jaar ervaring in
vastgoedontwikkeling heeft Mario verschillende projectteams en
organisaties geleid in de bouw van utiliteit, hotels, scholen en
woningen. Belangrijkste persoonlijke kenmerken zijn energiek,
sportief, daadkrachtig en pragmatisch. Doelen realiseren op een
duurzame creatieve manier, teamwork bevorderen en mensen
motiveren zijn zijn drijfveren.

Thor Björnsson
Thor Björnsson plays a central role in shaping Hugarró Nature Retreat’s strategic vision and guiding its investment initiatives. With extensive expertise in luxury real estate, market analytics, and sustainable development, Thor oversees critical aspects of business planning, operational strategy, and project execution. As the project’s only Icelandic partner, Thor provides invaluable local insights and a deep understanding of Iceland’s cultural and environmental context.

His Ph.D. research on luxury real estate development in environmentally sensitive markets further positions him uniquely to guide Hugarró in harmonising environmental sustainability with exceptional luxury experiences, solidifying the retreat’s market position and long-term success.

Financials
Ask for our investor prospectus.  Estimated return 8-15%.  In 2nd phase cabins and rooms will be sold to individual investors and leased back exclusively to management company.  Estimated yearly return 7-11%.

The 2nd stage – selling of cabins and rooms – can start when all architectural drawings are approved.  The sales income will cover expenses such as drilling for geothermal water, building and shipping the hotel, the hot springs facilities, a small hydropower plant (if feasible). 

Details on the building cost of the hotel  on request.   It covers the cost to build  the buildings + the associated cost of transport to Iceland, placement and other common costs.  We plan to charter our own vessel to ship all units in one time. 

Our per-room development costs are well within the average for our category as this from report from HVS shows.  It’s actually low when taking into account that the average hotel in the US has at least 2-3x as many rooms as we have planned.

The cost of the hotsprings development are also available on request.

A revenue 2-year projection is also available.  Based on what we hear hotel owners with a similar property we feel that our occupancy rates are realistic if not somewhat conservative at 52% average during the first year.  Needless to say the sales & marketing to make this occupancy rate reality has to start a year in advance.  Check out some of our competitors and their pricing at this page.

Using an industry rule of thumb to calculate the value of the hotel we come to an amount of € update… million, based on the ADR.  Of course this formula only  takes room revenue into account (room rates + breakfasts per room).  We also have income from the cabins, hot springs and food & beverage sale.  

A breakdown of revenue and expenses, several important hotel and financial KPI’s and proves the capacity to pay investors an attractive return.

Finally, here are documents with location images and the most recent draft the drawing showing the hotel floor.

Other milestones:

The municipality has accepted our proposal for review and published (March 20, 2024) it on their website (see item 6; use Google translate  😉).  Several government institutions and individuals have given their opinion during 8-week publication period.   There was nothing that could substantially change our plans and the municipality building committee has unanimously requested us to elaborate the required change of master zoning plan and a detailed ‘local zoning plan’. 
This new masterplan has been presented to the municipality on October 10 and the planning ministery  We have received comments for review that have been addressed and the updated plan has now been published on the municipal website and planning ministry for public consult (use Google Translate). The public and relevant institutions had until March 13 to comment.  Of the 8 comments, 6 where institutional and posiitive.  Two  comments by neighbouring landowners (we don’t have permanent neighbours in the valley and nearest vacation home is 2 km. away) were less positive but had no legal substance.

We are confident none will bring up issues that can effectively challenge the planned development.  It helps of course that municipality is very pro-development and we are doing it in a very sustainable way.

While we don’t want call it a formality, the fact that our coverage of the land with buildings will be only 4.1%. (currently 3% is allowed); the already mentioned lack of nearby neighbors  and the fact we are dealing with a municipality that is very eager to see more tax revenue and employment, we expect it to  be a smooth sailing. 

This is aided by the fact that we have hired Icelands most prominent engineering/consulting company what actually wrote the original zoning plan for the municipality.  Our local architect is also very familiar with the staff in the municipality.  These are factors of real importance in Iceland; more so than in NL or DE.

The expectation is that the total process will we wrapped up by end of April early May.  In the meantime we can of course work finish the construction drawings, engineering of cabins and foundations and many other tasks.

Actual construction can begin after approval of construction drawings by Icelandic authorities. Depending on our funding we expect this to be by the Q4 of  2025. According to consulted builders, there is capacity to build in 1st half of next year. This will take several months making the opening planned for fall of 2026.

Final remarks:
Questions can be directed to thorwald@naturallyiceland.com or mario@naturallyiceland.com or you may contact us at +31-6-2717-6969 (T) or +31-6-4319-9848 (M).