The year 2015 may go down in the lodging history book as the year buyers were prepared to pay $1 million per key for U.S. resort properties. In fact, five of the top transactions through the third quarter of the year were resorts. Led by the sale of California’s Malibu Beach Inn for $1.7 million per key, California had four of the top five. The Montage Laguna Beach fetched $1.4 million per key, Bardessono Hotel & Spa in Yountville traded for $1.37 million and Ventana Inn & Spa in Big Sur for $1.35 million.
The sole non-California property in this elite bunch was in Florida, another popular resort destination: the Marker Waterfront Resort in Key West, which traded for $1 million per key.
While the resort segment was one of the last to rebound following the 2008-2010 industry downturn, the recovery has now made significant strides. Lodging Econometrics’ U.S. construction pipeline data for the third quarter bears out just how far resort development has come.
The total resort pipeline amounts to a healthy 894 projects, consisting of 120,753 rooms. Lodging Econometrics then breaks that number into three subsets. Of the nearly 900 projects, 243 are currently under construction, 366 intend to start construction within the next 12 months and 285 are in the early planning stage.
For purposes of comparison, the third-quarter pipelines of other specialized industry tiers are not nearly as robust. The boutique segment pipeline, for example, lists 210 projects and 31,755 rooms, while the pipeline for the lifestyle segment comprises 203 projects with 36,000 rooms.
Certainly, resorts vary widely in terms of profile, target audience and amenities. A secluded, 80-room, oceanfront destination resort on the Pacific Coast of Mexico will attract a different clientele than a family-friendly, convention-friendly 500-room resort in Fort Lauderdale.
Wyndham Hotel Group operates two resorts in the Orlando market, the 400-room Wyndham Grand Orlando Resort Bonnet Creek and the 613-room Wyndham Orlando Resort International Drive. While the differences between the two are hardly as pronounced as the profiles of the Mexico and Fort Lauderdale properties just mentioned, there are subtle (and some not so subtle) points of differentiation.
Foremost among the similarities is that this being Orlando—the realm of Disney World, Universal Studios and Sea World—both resorts target families with young kids. Included in the room product at the Bonnet Creek property, for example, are 42 king bunk family rooms and another 42 double bunk family rooms. There’s also a lagoon-style swimming pool.
For its part, the International Drive resort offers 33 family fun suites that feature either one king or two double beds, bunk beds, plus beanbag chairs and a mini-fridge for snacks.
Both resorts also make a strong claim on the group market. Bonnet Creek’s 25,000 square feet of meeting and event space features an 8,000-square-foot Grand Ponce de Leon Ballroom. International Drive’s 60,000 square feet of space includes a 25,000-square-foot Grand Ballroom. Both resorts also have multiple outdoor spaces suitable for receptions and social events like weddings as well as multiple food-and-beverage venues on-site.
Bonnet Creek’s ace in the hole is its location; it is surrounded on each side by Walt Disney World, making visits to the theme park convenient. International Drive completed a major renovation in 2014. Directly south of the resort, Merlin Entertainments is putting the finishing touches on a $200-million entertainment complex, the focal point of which is a 400-foot high, cantilevered observation Ferris wheel called the Orlando Eye. Consisting of 30 passenger capsules, each of which can carry up to 15 people, the Eye debuted in late-April and has become a popular tourist drawer, attracting people to the International Drive submarket.