Resort development helps meet demands of loyalty program members

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Full-service resorts are an essential component of the portfolios of many of the major hotel companies. Like transient business hotels or extended-stay properties, they’re as dependent on high occupancy, rising average daily rates and positive revenue per available room growth as any other type of lodging asset.

But resorts, whether beachfront in Cancun, mountaintop in Whistler, British Columbia, or desert in Palm Springs, play another important role for hotel companies that goes beyond simply attracting leisure and group business based on the appeal of their location and amenities.

Hotel companies need them in order to satisfy members of their frequent guest programs who are in search of new and exciting redemption possibilities. Whether the program is Starwood Preferred Guest, Wyndham Rewards, Marriott Rewards, Hilton HHonors or Hyatt Gold Passport, by their very nature these and other points-based programs are aspirational.

Redeeming for a Resort Stay

In other words, corporate road warriors and other frequent travelers will spend numerous midweek nights at a limited- or select-service Four Points by Sheraton, Ramada, Fairfield, Hampton or Hyatt Place, earning enough points to be able to take their families to stay at a full-service property, often a resort, essentially free of charge.

Dave Marr, global brand leader, Sheraton and Tribute Portfolio for Starwood Hotels & Resorts Worldwide, alluded to this when the company last month announced that the 398-room Riviera Palm Springs (Calif.) Resort would join Tribute Portfolio, Starwood’s newest soft brand for independent hotels in November. Tribute Portfolio guests can earn—and redeem—SPG points for stays at participating properties. In addition to leisure travelers, the resort, which has 52,000 square feet of meeting and event space, targets the group market as well.

“We’re excited to give SPG members access to this magnificent resort,” Marr said. The iconic 1960s-era Riviera is the first property on the West Coast to join Tribune Portfolio. Tribute debuted in April with the 393-room Royal Palm Resort in South Beach, Miami (pictured).

The same redemption advantage applies to another recently announced Starwood development, this one in the popular resort destination of Daytona Beach, Fla. Like the Riviera Palm Springs Resort, it involves an existing property, the former Desert Inn. But unlike the Riviera, which will retain its independent status while affiliating with a soft brand, the soon-to-be 200-room Westin Daytona Beach Resort & Spa will carry the Westin name, one of Starwood’s established upper-upscale brands. The resort will be Daytona Beach’s first Westin.

Starwood unveiled plans for the Daytona Beach project in August, though the conversion isn’t expected to happen until the third quarter of next year. Starwood and the property’s owner, locally based Humphrey Realty, a privately held real estate owner and developer, will take this year to undertake a gut renovation of the property estimated to cost $20 million.

Resorts in the Pipeline

With the overall rebound in the lodging industry in the years post-recession, interest in resort development has jumped at the same time there’s a growing scarcity of suitable sites for new construction in the traditional beach and mountain destinations. Zoning in many communities has also gotten more restrictive. This has led to a marked increase of interest in conversions.

A shortage of appropriate sites for new construction notwithstanding, however, Lodging Econometrics still reports a fair number of projects under way in its U.S. resorts construction pipeline. While modest compared to the pipeline numbers, for example, in the broad midscale industry segment, there are still 242 resorts currently being built across the country, accounting for 31,776 rooms. Meanwhile, another 320 resort projects (with 39,327 rooms) expect to start construction in the next 12 months.

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