KSL Resorts’ sweet spot is in larger properties

 

The La Costa Resort and Spa in Carlsbad
The La Costa Resort and Spa in Carlsbad, Calif., received a $10-million upgrade to its golf course.

 

New YorkKSL Resorts began in 1992 as KSL Recreation Corporation, but five years ago, with the formation of KSL Capital Partners, KSL Recreation was rebranded as KSL Resorts, with KSL Capital Partners acting as a private-equity fund specializing in the hospitality sector.

“We are a free-standing management company, and we often manage assets on behalf of KSL Capital Partners,” said Arthur Berg, VP of marketing, during a recent visit with Hotel Management. “We are always their first choice.”

Currently, eight of KSL Resorts’ nine properties are owned by KSL Capital Partners, with the exception of the Hotel del Coronado in San Diego, which is now owned by Blackstone Real Estate Advisors. “We used to have a stake in Hotel del Coronado, but our DNA is as owner operators,” Berg said. Blackstone Real Estate Advisors, a division of the Blackstone Group, now possesses a 60-percent stake in the property while the previous majority owner, Strategic Hotels & Resorts, retains a 34.3-percent share. 

Choosing their targets

KSL Resorts historically has targeted older properties that are capital-intensive, and uses its position as a free agent to choose them carefully. “The beauty of being a private company is that there aren’t any artificial targets for us to hit,” Berg said. “We don’t develop for the sake of it, and it gives us room to be selective.”

One of KSL Resorts’ recent ventures involves major renovations to The Homestead in Hot Springs, Va. Beginning in February 2012, in excess of $35 million has been spent on a project dubbed “Allegheny Springs,” a water feature comprising a lazy river. 

The juxtaposition of an outdoor area such as Allegheny Springs alongside the historic property, built in 1766, outlines KSL Resorts’ approach to hotel refurbishment. “We look at what needs improvement and upgrades, and we do it in a way to retain the hotel’s historical nature while bringing it up to par with the expectations of the luxury traveler,” Berg said.

Allegheny Springs
Allegheny Springs is a new outdoor water feature designed to lend a family atmosphere to the historic Homestead property in Hot Springs, Va.

 

Berg noted that it is important to lose the negative aspects of a property’s “age” while retaining the hotel’s historic roots to appeal to younger travelers. According to Berg, travelers want to see a blend between the classic and the contemporary. KSL Resorts is also partnering with spa operator Canyon Ranch to open a 40,000-square-foot spa in The Homestead by May this year.

Another hotel renovated at the hands of KSL Resorts is the La Costa Resort and Spa in Carlsbad, Calif., which received a $50-million upgrade to the hotel that included a $10-million boost to the property’s golf course.

Moving parts

Despite their interest in unique hotels, KSL Resorts has not traditionally looked into boutique properties. “We favor slightly larger, complex properties with a lot of moving parts and vertical revenue,” Berg said, though adding they would entertain the addition of a boutique property. 

When asked if KSL Resorts is more comfortable dealing with physically larger hotels, Berg refused. “Size really isn’t the issue, because we also operate the 300-room Barton Creek Resort & Spa,” he said. 

According to Berg, KSL likes finding architecturally significant properties, or those with unique regional positions. In that way, he feels like they are on the right track.

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