- Resort developers and operators have learned that “the one percent” is just that, not five percent.
- Luxury hotel brands can bring value to the club and residential component of resorts.
- Good access via air or land transportation is critical to resorts’ success.
- Trends include resorts within master-planned communities and urban resorts.
Resort developers and operators took a hit during the recession, but are making a cautious comeback, according to a panel at ULI’s Fall Meeting. They have learned, said Kim Richards of The Athens Group, that “the one percent is not five percent. We have returned to focus on the traditional luxury market.”
Moderator Toni Alexander of InterCommunications, Inc. asked the panelists about the influence of Gen Y and Millennials, mentioning a study that identified six different types of “new” travelers: retro, connoisseurs, multi-generational family groups, Gen X families with kids, those seeking simple and authentic experiences, and those seeking outdoor adventures.
Mark Kehke of DMB Pacific Ventures said that they are seeing a younger demographic than expected, with different approaches to resort experiences. “We believe we have to focus on the multigenerational family model; you can no longer offer, for example, a pure golf resort.” Richards had a different opinion: “Every generation thinks they are special, but I have not seen a dramatic shift in demand; families have always been our market.”
Many successful resorts refused to cut prices during the recession, either for hotel rooms or residential lots. They did, however, adjust some of their club fees. Alexander suggested that Gen Y have been called “brand sluts” for selecting special offers over brand loyalty. Panelists observed that carefully selected brands can help drive the success of resorts with multiple components; in some cases, a hotel’s brand can deliver qualified potential purchasers for the resort’s for-purchase residences.
Access is more important than ever for resort success, but is changing. For Hawaiian locations, said Patrick Fitzgerald of Hualalai Resort, flight availability is critical, but so is foreign government travel policy. He is hopeful, he said, that China will loosen its visa requirements for Chinese citizens traveling to the US. A nearby private airport can provide convenient access for those with the means to charter private jets. Even train stations – which drove development of the great Western mountain resorts in the last century – are making a comeback. Potomac Shores, a master-planned community under development in Virginia, will feature a resort hotel with its own commuter train station, to be developed by Richard’ Athens Group.
Other trends in resort development to watch include:
- Sustainable development focusing on quality rather than showiness
- Programmed health and wellness activities beyond the requisite gym and spa
- Furnishing resort residences like hotel rooms, making it easier for owners to rent their units
- Redeveloping older resorts in great locations
- A continued or increased focus on water-based amenities in coastal areas
- Resorts serving as “town centers” for surrounding residential neighborhoods
- More “urban resorts” that provide luxury and amenities for those who want to explore cities instead of – or in addition to – enjoying beaches, spas, and outdoor activities. One resort in Malibu, noted Richards, offers the best of both worlds: an ocean beach as well as the culture, sightseeing, dining, and shopping opportunities available in greater Los Angeles.