Resort Development [2 ed.] 9780874203387, 9780874200997

Citation preview

Resort Development

SECOND EDITION

ULI Development Handbook Series

Resort Development

Copyright 2008 by ULI–the Urban Land Institute All rights reserved. No part of this book may be reproduced in any form or by any means, electronic or mechanical, including photocopying and recording, or by any information storage and retrieval system, without written permission of the publisher. ULI–the Urban Land Institute 1025 Thomas Jefferson Street, N.W. Suite 500 West Washington, D.C. 20007-5201

Library of Congress Cataloging-in-Publication Data Schmitz, Adrienne. Resort development / [principal author, Adrienne Schmitz ; primary contributing authors, Robert Chickering . . . et al.]. — 2nd ed. p. cm. — (ULI development handbook series) Includes bibliographical references and index. ISBN 978-0-87420-099-7 (alk. paper) 1. Resort development—United States. 2. Resorts—United States—Planning. 3. Recreation areas—United States—Planning. I. Chickering, Robert. II. Urban Land Institute. III. Title. TX911.3.P46S377 2008 917.306’2--dc22 2008036739

10 9 8 7 6 5 4 3 2 1 Printed in the United States of America.

ii

About ULI–the Urban Land Institute The mission of the Urban Land Institute is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. ULI is committed to ; Bringing together leaders from across the fields of real estate and land use policy to exchange best practices and serve community needs; ; Fostering collaboration within and beyond ULI’s membership through mentoring, dialogue, and problem solving; ; Exploring issues of urbanization, conservation, regeneration, land use, capital formation, and sustainable development; ; Advancing land use policies and design practices that respect the uniqueness of both built and natural environments; ; Sharing knowledge through education, applied research, publishing, and electronic media; and ; Sustaining a diverse global network of local practice and advisory efforts that address current and future challenges. Established in 1936, the Institute today has more than 40,000 members worldwide, representing the entire spectrum of the land use and development disciplines. ULI relies heavily on the experience of its members. It is through member involvement and information resources that ULI has been able to set standards of excellence in development practice. The Institute has long been recognized as one of the world’s most respected and widely quoted sources of objective information on urban planning, growth, and development.

Project Staff RACHELLE L. LEVITT

Executive Vice President, Global Information Group Publisher DEAN SCHWANKE

Senior Vice President, Publications and Awards ADRIENNE SCHMITZ

Senior Director, Residential and Community Development Project Director NANCY H. STEWART

Director, Book Program Managing Editor DUKE JOHNS

Manuscript Editor BETSY VANBUSKIRK

Creative Director BYRON HOLLY

Senior Designer Book and Cover Design CRAIG CHAPMAN

Director, Publishing Operations

Books in the ULI Development Handbook Series (formerly Community Builders Handbook Series) ; Retail Development: ULI Development Handbook, 2008 ; Residential Development Handbook, Second Edition, 2004 ; Mixed-Use Development Handbook, Second Edition, 2003 ; Business Park and Industrial Development Handbook, 2001 ; Multifamily Housing Development Handbook, 2000 ; Office Development Handbook, Second Edition, 1998 ; Resort Development Handbook, 1997

Cover photo courtesy of Twin Palms, Phuket, Thailand.

iii

Authors Principal Author

Contributing Authors

ADRIENNE SCHMITZ

ANDREA CARPENTER

Senior Director, Residential Community Development ULI–the Urban Land Institute Washington D.C.

Writer Amsterdam, The Netherlands MELINA DUGGAL

ROBERT CHICKERING

RCLCo Real Estate Advisors Orlando, Florida

Economics Research Associates San Francisco, California

LAUREN GOOD

ANNE FREJ

ULI–the Urban Land Institute Washington D.C.

Primary Contributing Authors

Director, Office and Industrial Development ULI–the Urban Land Institute Washington D.C.

ROBERT GOODSPEED

ULI–the Urban Land Institute Washington D.C.

RON NYREN

Writer El Cerrito , California

JOHN LANCET

HVS International Miami, Florida

DEAN SCHWANKE

Senior Vice President, Publications and Awards ULI–the Urban Land Institute Washington D.C.

JENNIFER LEFURGY

FRANK SPINK

PATRICIA MONTESON

Spink Consultancy Annandale, Virginia

Health Fitness Dynamics, Inc. Pompano Beach, Florida

JULIE STERN

SAM NEWBERG

Writer Falls Church, Virginia

Joe Urban, Inc. Minneapolis, Minnesota

Writer Pasadena, California

STEVEN D. PETERSON

Ballard Spahr Andrews & Ingersoll, LLP Salt Lake City, Utah LINDA SECHRIST

Writer Naples, Florida

iv

Reviewers TONY ALEXANDER

InterCommunications, Inc. Newport Beach, California GREG CORY

Economics Research Associates San Francisco, California TOBY DAVIS

Kemper Sports Management Northbrook, Illinois JAMES DEFRANCIA

Lowe Enterprises, Inc. Aspen, Colorado HENRY DELOZIER

Pulte Homes, Inc. Scottsdale, Arizona DAVID HOWERTON

Hart Howerton San Francisco, California MITCH HUTCHCRAFT

King Ranch Fort Myers, Florida MICK MATHEUSIK

NAI Commercial Vancouver, British Columbia NELSON MIGDAL

Greenburg Traurig, LLP Washington, D.C. GARY SANDOR

Reed Development Hilton Head Island, South Carolina RICHARD SONNTAG

Pivotal Group Park City, Utah RICHARD WARNICK

Warnick & Company, LLC Scottsdale, Arizona HOWARD WOLFF

Wimberly, Allison, Tong & Goo (WATG) Honolulu, Hawaii BECKY ZIMMERMANN

Design Workshop, Inc. Denver, Colorado

v

Acknowledgments

This second edition of Resort Development is the result of the expertise and hard work of many dedicated professionals. First, much credit goes to those who created the first edition of the Resort Development Handbook, which provided the template and considerable material for this one. Thanks to Dean Schwanke, the principal author and project director, and the numerous ULI members, staff, and others, who researched, wrote, and reviewed the first edition. While the first edition was the foundation for this new one, significant changes in the resort industry required that we revisit all the topics covered and substantially rewrite each chapter. We thank all the writers who made major contributions to this new edition. Anne Frej helped to frame the issues, reorganize the material, and identify appropriate experts to help with research and writing. Robert Chickering updated his earlier work on chapter 3. Ron Nyren, Frank Spink, and Julie Stern each wrote new chapters. Additional material was provided by Lauren Good, Robert Goodspeed, John Lancet, Patricia Monteson, Steven Peterson, and Richard Warnick. A team of reviewers also performed an important function, providing extensive comments that helped to ensure that the text would be accurate and up to date. The authors of the case studies deserve recognition for their thorough research. We also thank the resort managers, developers, architects, designers, and photographers who cooperated with the case study authors, met with them, and provided written materials, data, drawings, and photographs for each case study. Many of the feature boxes throughout the text are adapted from articles previously published in Urban Land; others were written expressly for the book. These articles and authors are cited in the text.

vi

Words are only part of a book, and this edition is filled with wonderful photography generously provided by hundreds of resort owners, developers, and designers, and catalogued by Lauren Good. Finally, we thank the numerous ULI staff and consultants who contributed to the production of the book. We thank manuscript editor Duke Johns for ensuring that the information was clearly written and useful to our audience; and Byron Holly, who produced the cover and layout for the book. We also thank Rachelle Levitt and Dean Schwanke for their ongoing support. And to all others who had a hand in the creation of this book, we offer our thanks. ADRIENNE SCHMITZ

Project Director and Principal Author

Contents

1 Introduction

3

Definitions and Resort Types Resort Types by Market 6 Resort Types by Setting/Amenity Mixes 8 Resort Types by Residential/Lodging Types 9

4

Historical Background The 19th Century 23 Early 20th Century 25 Mid-20th Century 28 Late 20th and Early 21st Centuries 30

22

Overview of the Development Process The Development Team 32 Stages of the Development Process 34

32

Commercial Real Estate Markets Type of Resort 66 Market Size and Characteristics 67 Competitive Context 67

65

3 Feasibility Analysis and Financing 71 Development Program The Amenity Program and Strategy 73 Residential and Lodging Program and Strategy 76 Programming Commercial Uses 77 Phasing and Timing 81

72

Site Selection and Analysis The Setting 84 Location 85 Physical Analysis 87 Regulatory Analysis 88

84

Understanding Demographics and Psychographics 40 Household Structure 41 Psychographics and Recreational/Leisure Preferences 42

Financial Analysis The Financial Model 90 Hypothetical Example 91

89

Conducting Overall Resort Market Studies Market Study Components 43 Residential Market Segments 45

43

Residential Market Analysis Identify the Market 50 Supply Factors 51 Timeshare/Vacation Ownership Markets 53 Today’s Vacation Ownership Buyer 55 Fractional Ownership Market 55 International Market 56

50

Financing Special Resort Financing Problems 109 General Resort Financing Guidelines 110 Land Acquisition Financing 112 Construction Financing 112 Workouts 113

Hotel and Guest Market Analysis Market Segments 59 Analysis of Supply and Demand 61

59

2 Market Analysis

39

4 Planning and Design Site Planning Issues Creating a Sense of Place 115 Establishing a Sense of Authenticity 119 Sustainability and Environmental Preservation 122 Positioning Uses 126

108

115 115

vii

Special Considerations for Mountain Sites 127 Special Considerations for Coastal Sites 129 Special Considerations for Desert Sites 134

Marina Operations and Management 239 Managing Spas 241 Tennis Facility Management 245

Regulatory Issues Public Policy Issues 136 Managing the Approval Process 137 Flexibility Concerns 137 Community Needs and Local Benefit 137

136

Site Planning Process Concept Planning 139 Preliminary Planning 141 Final Planning 144

138

Project Design Transportation and Utilities 144 Water Amenities and Boating Facilities 150 Mountain Amenities and Ski Facilities 156 Golf as an Amenity 165 Other Recreational Amenities 175 Retail, Cultural, and Entertainment Amenities 190 Residential Products and Design 195 Hotel Products and Design 202 Timeshare and Vacation Ownership Products 207

144

5 Operations and Management

211

General Issues

211

Resort Hotel Operations and Management Selecting the Brand and Management 213 Resort Hotel Operations Characteristics 215 Managing Resort Hotel Services 215

212

Community Operations and Management Governmental Bodies 216 Nonprofit Tax-Exempt Organizations 218 Community Associations 220

216

Organizational Options for Recreational Amenities Special Districts 223 Property Owners Associations 224 Independent Operations 224

223

Managing Multiuse Resorts

246

Activity Programming

249

Conclusions

253

6 Marketing and Repositioning

255

Resort Marketing Tools Preparing a Strategy 256 Promotion 256 Advertising 259

255

Resort Hotel Marketing

259

Residential Marketing and Sales Management Sales Management 261 Sales Organization 262 Launch Marketing 264 Measuring Market Acceptance 265

261

Timeshare/Vacation Ownership Marketing Effective Sales Techniques 268 Marketing Volume Requirements 269 Traditional Marketing Techniques 269 Newer Marketing Techniques 269 Resale Programs 273 Rental Programs 275

268

Promotion of Golf and Tennis Facilities

275

Renovation, Repositioning, and Redevelopment 276 Resort Development Cycles 276 Cosmetic Improvements and Minor Renovations 280 More Significant Renovations 282 Major Redevelopment and Repositioning 282 Master Plan Redevelopments 284 Emerging Trends 285 Conclusions

285

Vacation Ownership Operations and Property Management

226

7 Case Studies

Managing Rental Programs

228

Managing Major Amenities General Operations Issues 230 Shared Amenities 231 Managing Golf Amenities 232 Ski Area Management 236

229

Banyan Tree Lijiang, Lijiang, China 288 A 7.34-hectare (14-ac) boutique resort with 55 guest villas, two restaurants, a spa, and a main pool.

viii

287

The Carneros Inn, Napa, California 296 A 27-acre (11-ha) resort of 24 for-sale homes and 17 fractional ownership units, along with 86 guest cottages, ten suites, a spa, two pools, a small town center, and three restaurants.

Doonbeg Golf Club, Doonbeg, Ireland 306 A private club ownership golf resort of 388 acres (157 ha) on the coast of southwest Ireland, with 56 suites and 80 cottages in full ownership.

Taj Green Cove, Trivandrum, India 400 A 57-room beach and spa resort featuring 57 luxury guest cottages, two restaurants, a spa, a fitness center, and a pool, on a four-hectare (ten-ac) site.

Hampton Lake, Bluffton, South Carolina 316 A 906-acre (367-ha) second-home and retirement community of approximately 900 homes ranging from custom lots to fourplex units, developed around a 165-acre (67-ha) manmade lake and surrounded by a wetlands nature preserve.

WaterColor Inn and Resort, Santa Rosa Beach, Florida 408 A master-planned, 499-acre (202-ha) coastal resort community that includes 1,020 single-family and multifamily homes, 100,000 square feet (9,300 sq m) of commercial space, a 60-room hotel, a beach club, tennis club, boathouse, abundant open space, and a lakefront park.

Jackson Gore at Okemo Mountain Resort, Ludlow, Vermont 326 A new 505-acre (204-ha) addition to Okemo Mountain Resort, including 156 fractional ownership condo units, 169 fee-simple condos, 14 new ski trails, and a hotel with indoor/outdoor pool and other amenities. Jardins Victoria, Vilamoura, Portugal 334 A recent 7.7-hectare (19-ac) development adding a 280room hotel and 145 whole-owner luxury flats within Vilamoura, a master-planned, second-home golf resort. JW Marriott Starr Pass Resort and Spa, Tucson, Arizona 342 Part of a larger master-planned community, this 575-room resort hotel includes a 20,000-square-foot (1,900-sq-m) spa, five restaurants, and 90,000 square feet (8,400 sq m) of conference and meeting space. Lake Las Vegas Resort, Henderson, Nevada 352 A master-planned resort community encompassing 3,592 acres (1,454 ha), built around a privately owned manmade lake and featuring an array of housing types, hotels, golf courses, open space, and a town center. Montage Laguna Beach, Laguna Beach, California 362 A beachfront 262-room luxury resort hotel and spa that includes 28 privately owned residences on a 30-acre (12ha) site that was previously a trailer park. The Reserve, Indian Wells, California 370 A luxury private-equity membership golf course community with club facilities and 241 residential lots and homes occupying 730 acres (295 ha). Roaring Fork Club, Basalt, Colorado 380 A private, invitational golf and fishing club on 282 acres (114 ha) with an 18-hole signature golf course and cabins available for sale to members as whole or fractional ownership. Sunrise Ridge Phase II, Yellowstone Club, Big Sky, Montana 392 A luxury vacation condominium development within the Yellowstone Club, including 43 duplex and triplex units.

8 Trends and Outlook

419

Social Trends and Lifestyle Factors Demographics and Psychographics 420 Communications and Technology 423 Education 242 Work and Leisure 425 Travel and Tourism 426 Safety and Security 430

420

Trends in Related Industries The Airline Industry 431 The Cruise Industry 432 The Entertainment Industry 434 Health, Wellness, and Well-Being 436

431

Resort Real Estate Hotels 439 Housing and Second Homes 443 Other Types of Ownership 445 Green Development 447

439

Recreational and Sports Participation Trends 448 Golf 449 Skiing and Winter Sports 450 Boating and Water Sports 452 Ecotourism, Soft Adventures, and “Voluntourism” 454 Gaming 458 The Outlook for Resorts 459 The Prospects for New Resorts in the United States 460 The Prospects for New Resorts Worldwide 462 The Prospects for Repositioning Existing Resorts in the United States 464

Appendix

466

Index

468

ix

Foreword

This second edition of Resort Development is part of the ULI Development Handbook Series, a set of volumes on real estate development that traces its roots to 1947, when ULI published the first edition of the Community Builders Handbook. That edition was revised several times, and in 1975, ULI initiated the Community Builders Handbook Series with the publication of the Industrial Development Handbook. Titles in the series have covered all the various types of real estate development: industrial, office, residential, retail, and mixed use. Resort development is a complex field spanning a wide range of real estate products, settings, and recreational amenities. It is closely tied to one of the world’s largest industries: travel and tourism. Understanding the complexities and nuances of such a vast and diverse business is a daunting undertaking. As with all the handbooks in the series, the objective of this one is to provide a broad overview of the land use and real estate sector under discussion, as well as a guide to the development process. It aims to promote best practices in resort development, and it addresses four general groups of readers, each of which has an important role in making land use decisions: developers and investors; development consultants; public officials; and citizens’ groups and individuals concerned about growth and development and the effects of growth on the environment. This book presents a comprehensive discourse on resort development, including the history of resorts, discussions of the different resort types, resort market analysis, feasibility analysis and financing, land use planning and product design, operations and management, marketing, and trends and outlook. Among the strengths of the book is its reliance on a variety of

x

examples and real-world situations. The case study chapter documents the development of 14 resort projects in five nations, including second-home communities, hotel resorts, and resorts that contain a mix of hospitality and residential product types. Numerous other examples are cited throughout the text or appear in feature boxes. Success in resort development requires depth of expertise in the development and management of the various components that make up a given resort. Risks run high, and fortunes have been won and lost in these endeavors. The risks are particularly high for large-scale projects that require many years to complete and for pioneering projects in remote locations. Because resorts cater to people’s dreams rather than their needs, developers must keep abreast of evolving notions of what constitutes luxury, excitement, and diversion from the everyday. Creating places that address those wishes requires imagination, and succeeding can be rewarding both financially and emotionally. We hope this book will help the reader better understand the business and achieve such rewards. ADRIENNE SCHMITZ

Project Director and Principal Author

2 Resort Development

1. Introduction

Resort development is a complex undertaking that encompasses a wide range of property types, recreational amenities, locations, and natural settings, and thus often involves a broad spectrum of development strategies and approaches. Many of the issues involved in developing a ski resort in Colorado, for example, differ markedly from those involved in planning a second-home golf course community in South Carolina or an oceanfront resort hotel in Bali. Because resort development increasingly takes place in exotic places all around the world, further variations arise from geographic diversity and the variability of political and economic systems. Resorts and second-home communities serve a common market demand created by three fundamental human desires: the desire to take a vacation or holiday and to get away from a familiar environment; the desire to pursue recreational interests and to be stimulated and entertained in the process; and the desire to travel to interesting or attractive places and unusual settings. Different resorts offer different appeals as related to these desires, and the priority that individuals and fami-

Acqualina Resort and Spa, Sunny Isles Beach, Florida

DAVID GRIFFITH

lies attach to these desires is the primary determinant in their choice of a resort experience. Thus, while the various projects discussed in this book encompass widely differing resort concepts and products, they are all similar in that they are direct competitors for vacation and leisure time and expenditures. People can choose to ski one week, play golf the next, and visit the ocean on another occasion, and their choice of accommodations might range from a hotel to a condominium rental to a timeshare to a full-ownership second home. Upper-income households may have multiple timeshares or leisure homes in a variety of locations; timeshares are frequently exchanged as well, affording the owners a wide choice of resort and vacation experiences in locations all around the world. Successful resort development requires an understanding of supply and demand: both the variety of recreational and resort options available to the consumer, and the depth, breadth, and characteristics of the resort consumer markets. Only by understanding the big picture can a resort be effectively positioned to tap the market for specific products and experiences. Planning, building, marketing, programming, and managing the various real estate products, amenities, and services that make a particular resort attractive within an increasingly competitive

Introduction 3

TWINPALMS, PHUKET

Phuket is a popular island destination in Thailand that is home to many resort developments, such as Twinpalms, a boutique resort offering 76 rooms and suites in a lush setting.

marketplace must begin with an understanding of the dynamics of the leisure market and how a given resort site can position itself to serve that market. This book provides an overview of the resort market and a guide for developing and managing successful resorts. It focuses on resort and second-home community development in locations around the world and includes case studies from North America, Europe, and Asia. It deals primarily with resort hotels, second-home developments, the various fractional ownership products, and multiuse resorts that combine more than one type of product. It does not deal with purely recreational projects such as theme parks, amusement parks, and miniature golf courses; campgrounds and recreational vehicle parks; or nonprofit projects. The book is intended to function as a general introduction and reference source for resort and second-home development. This chapter provides basic definitions, historical background, and an overview of the resort development process. Chapter 2 presents a methodology for resort market analysis and a review of resort real estate market segments. Chapter 3 examines resort programming, feasibility analysis, and financing. Chapter 4 discusses land use planning and resort product design, chapter 5 reviews operations and management issues, and chapter 6 discusses marketing. Chapter 7 presents detailed profiles of 14 illustrative resort and second-home development projects, while chapter 8 concludes the book with a summary of the issues and trends that are

4 Resort Development

likely to affect the development of resort and secondhome developments in the near future.

Definitions and Resort Types The word “resort” means different things to different people. For some, an entire city—such as Aspen, Colorado; Phuket, Thailand; Cancún, Mexico; or Marseille, France—is a resort. For others, a resort is a secondhome golf course community in South Carolina, a hotel on the beach in Hawaii, or a ski village in Switzerland or Utah. The resorts discussed in this book encompass many of these meanings, but a more precise definition is required. Resorts as discussed in this book reflect three primary characteristics, as follows: ; They are real estate projects that have been developed and planned by a master developer. ; They offer proximity and easy access to significant natural, scenic, and recreational amenities that make them attractive places to visit. ; They include lodging accommodations, timeshare ownerships, and/or residences used largely by tourists, vacationers, weekend travelers, seasonal residents, and/or owners or users of second homes. Resorts can be categorized according to three major criteria: by their proximity to their primary markets, by their setting and primary amenities, and by their mix

Are Historic Hotels Worth It? In a market with increasingly fickle consumers and the risk of industrywide downturns, historic hotels can stand out from the pack, offering a distinguished, one-of-a-kind experience and a connection to the past. It is important, however, to consider the economic and physical complexities of owning and maintaining historic buildings. Because historic hotels require a significant investment of time and money, they require a long-term commitment. Acquiring and renovating historic hotels can be worth it—if the investor takes a long-range view. There are several ownership scenarios. Some historic hotels are owned by a single entity such as a family or a trust. Four generations of Monteleones have operated the Hotel Monteleone in New Orleans since 1886. The building has been in the family long enough that they probably have little debt service and enough cash reserves to cover expenses. Other properties, however, are owned and operated by a chain or brand. Acquiring historic properties in an inflated real estate market can be risky. It may be difficult to generate profits if the project has a high debt service and requires expensive renovation. Many properties, however, are owned by individuals, while being managed and operated by brands that understand the nature of historic hotels. This scenario works when the property owner has a modest debt service due to long-term ownership or other beneficial transactions. In this case, there can be adequate reserves for thorough repairs and enough revenue potential for a chain to make the hotel profitable. Given the unusual needs of historic hotels, adequate reserves can be critical to their success. Increasingly, historic hotels are owned by large, branded hotel companies. Aging buildings are expensive to restore and maintain, and large companies can benefit from economies of scale and can spread the expenses across their holdings. Branded historic hotels offer a distinctive building combined with the advantages of a brand, such as loyalty programs for frequent travelers, companywide booking systems, and broad quality control. Some the world’s largest hotel companies include historic properties in their portfolios. Approximately 35 percent of InterContinental’s hotels are historic in nature and location. About half of the hotels in both Starwood’s St. Regis brand and Fairmont’s brand have historic roots. The Marriott chain has converted numerous historic buildings to hotels. Adaptive use of historic buildings can be a suitable option when erecting new hotels is not possible, or when the only land available is occupied by a structure that cannot be torn down because of historic status. Location is a crucial element in identifying historic

hotels to add to a portfolio. “We pursue heritage-style hotels that enjoy the premier location in the city they serve,” explains Jeff Senior, vice president for brand management at InterContinental. “Our guests expect to stay at a hotel centrally located to anything important taking place in that destination.” The historic hotels in gateway cities—cities that serve as the social, political, and economic hubs for a region—have an advantage, because these cities attract a higher number of travelers who appreciate historic hotels. Much depends on the nature of a property and how well it matches a company’s philosophy and portfolio. It is important to define the desired client demographics and look for historic properties that fit the criteria. After potential investors decide whether a historic property fits their brand, they need to determine whether it can be restored economically. There are two fundamental considerations. The first involves the restoration of visible elements: lobbies, public spaces, and interior finishes. These are often less expensive to address than infrastructure, and they are the improvements most likely to attract visitors. The second is the renovation of the infrastructure: structural, mechanical, electrical, plumbing, waterproofing, and exterior improvements. It can be tempting to skimp on these aspects, since they are not as obvious to travelers. However, systems renovations are essential for the long-term viability of a property, and they support the visual improvements. Depending on its condition, a building may need to close during renovation. If renovations are phased to minimize disruption (for example, by wings or floors), a hotel can stay open and continue to generate revenue. To manage this successfully, it is important for the hotel to communicate openly about its work to the neighborhood, civic leaders, and the customers. Restoring a landmark property can engender goodwill from all these parties. Conversely, attempting to hide a renovation effort from guests usually results in ill will. Loyal brand clients are often willing to endure minor inconveniences because they believe in the importance of maintaining historic landmarks. Closing for restoration can greatly shorten the length of the construction period and may reduce project costs, since contractors then have complete control of the facilities and will not be delayed by hotel operations. A well-organized and well-publicized reopening of a historic hotel can heighten patrons’ interest and may compensate for lost revenue. Historic properties may experience building assembly failure and material failure. Water intrusion can be a problem. Roof membranes, flashings, mortar, and grout all have a defined service life—they wear out and

Introduction 5

Are Historic Hotels Worth It?

continued

require replacing. Damaged or missing ornamentation can require remedial work. An existing-conditions survey provides the road map for a restoration, so it is important not to skimp on this stage. Exploratory investigations should include probes and materials analysis to determine whether damages may have been caused by unexpected factors. While modern mechanical systems are highly desirable for a hotel, balancing guests’ comfort with respect for the building can be tricky. It is difficult to insert modern mechanical systems into a historic building that was not designed for them, and without careful planning from the start, a structure can be compromised by the attempt. Most regulation of historic restoration occurs at the local level. It is important to understand and comply with city landmark ordinances, as well as state and federal regulations. In certain cases, tax credits may tip the scales in favor of acquiring and restoring a historic property. The Federal Historic Preservation Tax Incentives Program provides a tax credit for the certified, substantial rehabilitation of certified historic structures. A certified building either is listed in the National Register of Historic Places or is located in a registered historic district and certified as contributing to the district’s historic significance. To qualify for federal credits, projects must follow the U.S. Secretary of the Interior’s standards

for rehabilitation, which comprise ten basic principles. Because of these restrictions, not all owners choose to take advantage of the tax credit. The New Markets Credit is another federal program that grants tax incentives for commercial projects in lowincome census tracts. Municipal government bonds also provide funds, and can be easier to obtain than bank loans. Cities and historic preservation societies can also help with qualifying a structure for tax credits, low mortgage interest rates, donations of property, or grants. In return, restored historic hotels can improve a city’s tax revenues, enhance civic reputation, and increase tourism. Historic buildings often have high-quality finishes and ornamentation that cannot be easily duplicated, given modern construction costs and the decline of craftsmanship. With tax credits and other financial incentives, however, these elements can be cost effectively preserved in existing buildings. As a result, historic hotels can offer travelers luxury finishes and amenities at rates that are competitive with or even lower than those offered by modern luxury hotels. The connection to the legacy of a particular place and time can be an invaluable asset, since historic hotels can provide travelers with a compelling cultural experience.

of residential and lodging products. In general, resorts often do not fall discretely into any one category but, for discussion purposes, this book treats them as relatively discrete. Resorts also can be classified by their quality, pricing structure, and overall appeal to different income groups; according to this system, there are budget resorts, midpriced resorts, and luxury resorts, as well as a host of products in between. These quality and pricing distinctions are not treated separately here but rather are discussed within the schema outlined below.

user patronizes the resort; the typical length of stay; and the quality of the resort setting. In short, destination resorts tend to draw users from a broad area, usually either national or international in scope. Moreover, users tend to travel to destination resorts by air rather than by car and tend to visit infrequently, usually not more than once a year or less and often only once in a lifetime. Users tend to book stays of one or two weeks. Destinations tend to be located in dramatic or particularly attractive world-class destinations—places that can lure the resort users to make an extra effort to get there. Many resorts in Hawaii, Mexico, the Caribbean, the mountains and coasts of Europe, and Asia are typically referred to as destination resorts. Nondestination or regional resorts, on the other hand, are often located within a two- to three-hour drive of their primary market and are not generally positioned or marketed to attract visitors from farther away. Users generally travel to these resorts by car, although some

Resort Types by Market Some resorts are described as “destination resorts.” While nearly all resorts are located at a destination some distance from the primary residence of the resort user, five significant characteristics distinguish destination from nondestination resorts: the proximity of the resort to its primary market; the means by which the user reaches the resort; the frequency with which a

6 Resort Development

Source: Campbell W. Black and David P. Wessel, “Are Historic Hotels Worth It?” Urban Land, August 2003.

may rely on trains (especially in Europe) or planes. Users often visit the same resort frequently, as many as 15 to 20 times per year. Nondestination resorts frequently book short stays for weekend users and the four-day vacation market. Regional resorts can be found near major metropolitan areas around the globe, notably in the Northeast and Midwest of the United States, near Hong Kong in Asia, and near London, Paris, Milan, and many other cities in Europe. The byproduct of these distinctions is that destination resorts generally tend to have a higher ratio of hotel rooms to second homes, whereas the reverse is true for regional resorts. Destination resorts also tend to be more upscale and expensive than regional resorts. Despite these distinctions, numerous resorts cater somewhat equally to both destination and regional markets. Ski resorts in the Alps or near Denver and Salt Lake City in the United States, for example, draw heavily on drive-in visitors from nearby metropolitan areas, as well as on visitors who travel greater distances to use the resorts. The better golf resorts in northern California also cater to both local markets and destination resort markets. Moreover, many destination resort areas, such as southeast Florida, Palm Springs, California, or the south of France, also claim a substantial in-place retirement population that distinguishes them from other more purely destination resorts, such as those in the Caribbean or in Indonesia’s Bali. Resort Types by Setting/Amenity Mixes Patrons tend to think of resorts in terms of their setting and the primary recreational amenities they provide. In the setting and amenity mix, there are four primary resort categories—ocean resorts, lake/river resorts, mountain/ski resorts, and golf resorts—and several secondary categories, all of which are outlined below. Since vacationers and second-home buyers are typically motivated by a desire for rest, relaxation, recreation, and social interaction, the character and quality of the natural environment and the recreational amenities offered by the facility are among the key factors for a resort’s success in the marketplace. Ocean Resorts. The nature of an ocean resort can vary considerably depending on the nature of the oceanfront location and the variety of other amenities provided. To varying degrees, ocean resorts rely on the quality and extent of their beaches, the quality of the views, the climate, and the available water sports activities. These are all affected by the nature of the

ocean/land interface, which can be characterized as a bay, barrier island, gulf, isolated ocean island, inland waterway fed by the ocean, and so on. Ocean resorts in areas such as Florida and Hawaii, the Caribbean, the Mexican coasts, and Asian locales like Bali and Phuket are frequently positioned as destination resorts that are reached by air; they appeal to seasonal visitors who may be located some distance from the ocean, often in colder climates. Ocean resorts in the northeastern United States cater more to weekend users and the second-home market. Lake and River Resorts. Lake and river resorts often rely more on the recreational activities associated with water, especially boating and fishing, and less on beaches and views. They are frequently positioned as secondhome communities, often within a three-hour drive of a major city, rather than as destination resorts that draw from national or international markets. They are usually more modest in scale and quality than ocean resorts. Mountain/Ski Resorts. While skiing is the primary draw, mountain resorts have increasingly been capitalizing on their settings and are now at the forefront in pioneering the four-season resort concept, diversifying their amenity packages to attract visitors throughout the year. Historically, many mountain resorts were founded as spas, drawing on their healthful air and natural springs to establish themselves as places to foster good health or help cure illness. St. Moritz, Switzerland, for example, has been known since the Middle Ages for its mineral springs and healthy climate and today remains a world-class ski resort. Mountain resorts in the western United States and Canada and parts of Europe tend to be destination resorts, while those in the northeastern and Midwestern United States are generally more regional in orientation. Golf Resorts. While golf is an important component of many resort types, including those already mentioned, some resorts rely on golf as the primary attraction. Golffocused resorts and second-home golf communities have become a major force in states such as Florida, North Carolina, and South Carolina, which have largely exhausted their supply of suitable oceanfront property for new resort development and therefore have moved on to inland areas for continued growth. Golf resorts are also popular in desert settings in Arizona, Las Vegas, and the Palm Springs area of California, which all rely on scenery, climate, and golf to draw resort users. Some resorts are primarily golf resorts even though they occupy waterfront locations. In California, Pebble

Introduction 7

DALE A. HORCHNER/DESIGN WORKSHOP

Kananaskis Village includes four hotels, a conference center, commercial space, and many recreational amenities that showcase the resort’s location in the foothills of the Canadian Rockies near Calgary.

Beach and the adjacent Spanish Bay Resort are both top international destinations for golfers, yet they are ocean resorts as well. In these examples, beaches are not the primary draw because of rocky coastlines and frigid waters. Instead, golf courses have been sited along the coastline to create dramatic settings for the golf experience. Other Setting/Amenity Mixes. Other popular mixes of settings/amenities and themes are numerous, including those with active recreation and health orientations and those with entertainment, cultural, and amusement orientations. Spas have gained considerable prominence in recent years as the public has focused increased attention on health and well-being. Spa components offering health-related services and programs to help visitors lose weight, build strength, relieve ailments, develop healthful habits, or simply pamper themselves have become major segments of many resorts and even the primary draws for some. Spa-focused resorts have been successful in a wide range of settings, including beaches, mountains, deserts, and even urban areas.

8 Resort Development

Tennis resorts typically offer extensive instruction programs and may host tournaments. Most tennis facilities in resorts are combined with other amenities, but some cater primarily to tennis players. They tend to be located in climates where year-round play is possible. Equestrian communities attract primary- and second-home owners who wish to board horses or enjoy horseback riding. Ranch resorts provide vacation experiences with an “Old West” flavor as a backdrop for horseback riding. Natural-attraction resorts capitalize on attractions such as national parks, waterfalls, appealing landscapes, and so on. Sporting expedition lodges—specializing in activities such as fishing, hunting, diving, and climbing—provide accommodations and outfitter/guide services for a variety of specialized, nature-based recreational activities. Fishing in particular is gaining in popularity. Fly-fishing draws vacationers to such destination resorts as Roaring Fork Club in Colorado (see case study, chapter 7) and Bighorn River Resort in Montana, where guided fishing expeditions are a primary draw,

THE GROVE ISLE HOTEL & SPA

Resort hotels provide a relaxed setting, usually removed from commercial activities. The Grove Isle Hotel & Spa occupies its own island near Miami Beach.

but guests also enjoy comfortable surroundings and fine cuisine based on local ingredients. Water parks have matured into large and sophisticated attractions, and now they may include various dining and entertainment options as well as expansive networks of water slides, pools, and other water-based amusements. Entertainment, cultural, and amusement-oriented resorts come in several varieties. Cultural and musicoriented resorts include the resort products around Branson, Missouri’s country music venues, where demand has spurred tremendous growth in resort development. Historic attraction and heritage resorts focus on sites or towns with a distinctive heritage; examples include resorts surrounding the Williamsburg and Jamestown areas of Virginia, where colonial history and culture are the attractions; around Santa Fe, New Mexico, where Spanish, western, and Native American history and culture lure visitors; and in the Napa Valley of California, where wineries and agriculture hold the spotlight. Theme park resorts include the various resort products around Disney World and similar resorts at other major theme parks. Casino resorts provide not only gambling for enthusiasts but also live music and other amusement

opportunities. Urban resorts provide vacation accommodations for those pursuing the cultural, entertainment, and shopping experiences found in cities. Resort Types by Residential/Lodging Types Resorts are often categorized in terms of the type, extent, and mix of the residential and lodging facilities they offer. From a developer’s perspective, the extent and mix of the housing and lodging on a property are critical for three reasons. First, housing and lodging accommodations are the major sources of revenue for the property. Second, planning for the development of accommodations consumes most of the developer’s time. Third, housing and lodging are essential to defining the nature and positioning of the resort. Based on this approach, three major real estate product types are marketed in resort properties. Generally, the products can be distinguished by the level of financial commitment required from the guest or user. Hotels require only a relatively modest financial commitment, usually a nightly rate of a few hundred dollars. Timeshares and other partial ownership products require a moderate, usually one-time cash investment, plus annual

Introduction 9

Golf Traditions and New Amenities Draw Guests to St. Andrews An ancient city on the east coast of Scotland, St. Andrews was long known for its university and as the ecclesiastical capital of Scotland. In modern times, however, both reputations have been eclipsed by its fame for golf. Visitors from all over the world flock to St. Andrews to witness the game’s greats compete on one of the city’s renowned courses. The most famous, the Old Course, occupies the same ruggedly beautiful site where golf was first played some six centuries ago. Overlooking the Old Course’s famed 17th hole, the Old Course Hotel offers spectacular views, four restaurants, and deluxe, five-star service to St. Andrews visitors. Opened in 1969, the hotel has evolved into its present form through a series of owners. The hotel was constructed by British Transport. In 1982, it was sold to European Ferries as part of the British government’s privatization program. The resort was upgraded and opened by HRH The Princess Royal to accommodate the 1984 British Open. It was then purchased by an international consortium called the Old Course Limited and was again refurbished. Kosaido Company, Ltd., became the majority shareholder and owned the property until 2004, adding the £5 million Millennium Wing in 2000. When the Kohler Company bought the hotel in 2004, it had been nearly 15 years since a major overhaul. A family-owned, diversified business based in Kohler, Wisconsin, the company also owns Destination Kohler, a luxury resort based around the AAA five-diamond resort hotel the American Club. In preparation for the 2005 British Open, the company refurbished rooms, expanded the spa, and recruited French designer Jacques Garcia to orchestrate the updating of the hotel’s interiors. Today the hotel offers 146 rooms, including 37 suites, a state-of-the-art Kohler Waters Spa, and fully

Old Course Hotel at St Andrews in Scotland.

maintenance fees. The initial fee for a timeshare averages about $15,000 for a week per year. The cost for a fractional ownership averages about $150,000 for a midrange property but can run much higher, depending on the value of the property and the use rights assigned to the share. Full-ownership second homes require a major financial investment similar to a primary home, anywhere from $50,000 for a modest cottage or cabin to several million dollars for a luxury home. Each of these three resort product types can be combined in some fashion to create a fourth type of resort: a multiuse resort community. Much of this book focuses on the development of multiuse resort commu-

nities, as they encompass all the issues involved in the development of the various resort components, as well as a variety of larger issues that make multiuse resorts an exceedingly complex development type. Resort Hotels. Resort hotels are by far the most common type of resort property. The accommodations in these facilities range from rustic basics such as tent cabins to luxury suites with every amenity imaginable. The differences between a resort hotel and a traditional commercial hotel can be described in terms of the guests’ purpose in staying at the facility. The guest at a resort hotel typically visits for relaxation or recreation, whereas the guest at the commercial hotel typically is

10 Resort Development

wired conference facilities for meetings and other events. The newly expanded spa offers a hydrotherapy pool, a Japanese salt steam room, a light therapy sauna, exercise facilities, and a range of treatments. St. Andrews remains the most extensive golf destination in Europe, with ten championship golf courses in the immediate vicinity. The resort’s own Duke’s Course is the only inland golf course in St. Andrews. Designed by five-time British Open champion Peter Thomson, the 7,271-yard (6,650-m), par-72 course was opened in 1995. It enjoys impressive views, an extensive pro shop, and newly upgraded clubhouse facilities and cart paths to ensure year-round convenience and comfort. Robert Goodspeed, Urban Land Institute

driven by convenience. Increasingly, however, resort hotels are catering to commercial guests, (especially conference attendees) during low seasons, while traditional hotels are catering to leisure travelers, particularly during weekends and holiday periods. Resort hotels and lodging facilities generally differ dramatically from most commercial hotels in terms of their setting and level of amenities. Whereas a typical commercial hotel occupies a compact site in a downtown or along a highway, a resort hotel or lodge is usually located on a large site oriented toward its natural surroundings and recreational facilities but removed from unrelated commercial activity and highways. Guest room accommodations in resort hotels are often carefully positioned within attractive settings, frequently offering exceptional views of and access to the natural surroundings. Traditional hotel amenities are typically limited to an exercise room, possibly a small swimming pool, and the concierge’s ability to arrange off-site activities. Resort hotels often feature extensive on-site amenities, including large swimming pool complexes, tennis courts, golf courses, equestrian facilities, gardens and landscaped courtyards, and a wide range of other amenities such as the hotel’s own beaches, marinas, or ski slopes. Golf, in particular, accounts for the success of resort hotels in attracting business meetings, an increasingly important source of revenue. Resort hotels are often set within larger resort communities, enabling them to offer a further range of amenities included in the community, such as beaches, parks, amusement facilities, retail services, and so on. Like commercial hotels, resort hotel facilities can be classified as economy, midpriced, or luxury properties and by their overall quality—which is assessed by travel services such as Michelin, the Mobil Travel Guides, and the American Automobile Association (AAA) that assign star or diamond ratings. Many travel Web sites such as Expedia and Orbitz also rate hotels by quality. In addition, facilities can be classified as conference- and nonconference-oriented hotels. Numerous niche products exist within the broad category of resort hotels, such as resort motels, guesthouses, bed-and-breakfasts (B&Bs), lodges, boutique resort hotels, and megaresort hotels. One way to classify and think about lodging facilities is by their size, which can range from a handful of rooms to over 5,000 rooms. The small end of the spectrum—hospitality facilities under 25 rooms—accounts for lodging types such as guesthouses, B&Bs, country inns, guest ranches, fishing and hunting cabin rentals, and small motels.

Resort motels are usually small, low-amenity facilities that cater to low-budget automobile travelers. Guesthouses, B&Bs, and country inns are usually located in rural or historic areas and cater to weekend travelers and short-stay guests. They are often older facilities, sometimes converted mansions or farmhouses. These small lodging facilities are usually independently owned and operated, often by families, and are not a major concern of large resort developers and operators. In some cases, however, these types of facilities can be a part of a larger resort property. For example, the Wintergreen Resort in Virginia includes a bed-and-breakfast lodging facility for those who prefer this type of accommodation. Some second-home communities also provide a small, sometimes temporary lodging facility on site to accommodate prospective buyers. Hospitality facilities in the 25- to 125-room range can include some of the previously mentioned types, but may also include small specialty hotels. Resort lodges, for example, often fall into this size range; lodges are typically located in mountain or rural settings, are often rustic in design, and usually include restaurant services as well as an extensive lobby with comfortable sitting areas where guests can congregate. Lodges often cater to skiers, hunters, and hikers. While the term “lodge” is often used loosely to name hotels that do not necessarily fit this description, the concept remains useful. The emergence of boutique resort hotels is a relatively recent phenomenon. This is a special category of small resort hotel that focuses on service, quality, and privacy for highly discriminating guests, typically individual travelers and attendees of small business meetings. Spa resorts may also be in this size range. Examples discussed in the case study section of this book (see chapter 7) include Banyan Tree Lijiang in the Yunnan Province of China; the Carneros Inn in Napa, California; Taj Green Cove in Kerala, India; and the WaterColor Inn, which is part of the WaterColor resort community in Santa Rosa Beach, Florida. This type of resort hotel usually has between 50 and 100 rooms, provides limited dining and other facilities, does not usually provide access to a golf course, and is generally not part of a multiuse resort community, although it certainly can be accommodated within such a community, like the WaterColor Inn. Boutique resort hotels do not try to provide “something for everyone” but rather target travelers seeking a distinctive ambience and character. The facilities are often located in extraordinary but sensitive settings that are not suitable for larger hotels.

Introduction 11

COURTESY OF LIJIANG BANYAN TREE HOTEL & CO., LTD.

Entrance to the Banyan Tree Lijiang in China. This boutique resort takes advantage of its natural setting and cultural attractions.

Resort hotels in the 125- to 400-room range are usually chain-affiliated hotels located in major resort areas. They can follow low-, mid-, or high-rise configurations, with restaurant services, conference facilities, and their own recreational amenities. While these facilities are sometimes similar in construction to commercial hotels, their design is usually markedly different. For example, most guest rooms feature outdoor balconies, and rooms are often larger and incorporate more amenities, reflecting the facts that guests in these hotels represent a higher percentage of couples and families, that their stays are longer, and that guests spend more time in their rooms than guests in commercial hotels. Resort hotels, even when they use concrete or steel-frame construction, are often designed to be more horizontal than vertical because they aim to fit within their natural surroundings. They might be made up of several buildings, including low-rise structures with walkout units. This allows the hotel to offer a variety of room options appealing to a range of guests seeking different experiences. A honeymooning couple, a conference attendee, and a family each require different room types and settings, which a large resort hotel tries to provide.

12 Resort Development

Montage Laguna Beach, with 262 rooms, is an example of a luxury hotel that fits within this category (see case study, chapter 7). Resort hotels with more than 400 rooms are generally found in the most popular resort locations that offer major attractions such as prime beach frontage (as in Florida, the Caribbean, and Hawaii), prime ski facilities (as in Colorado, Western Canada, or Utah), a notable theme park or parks (such as those around Orlando, Florida), major gaming facilities (such as those in Las Vegas or Macau, China), or a prime golf course (as in Arizona or Palm Springs). Early examples of large resort hotels include the Fontainebleau in Miami Beach, built in 1954, with over 1,600 rooms, and the Hilton Hawaiian Village, which began as thatched guest cottages in 1955 and today encompasses 3,386 rooms in a series of high-rise towers. Today, many of the largest hotels are being constructed in Las Vegas, Macau, and Dubai, United Arab Emirates—all resort destinations appealing to worldwide markets. The MGM Grand Hotel in Las Vegas is currently the world’s largest hotel, with nearly 5,700 rooms. It will soon be surpassed by Asia Asia

Hotel in Dubai, which is expected to be completed by 2010 and will have 6,500 rooms. Among the case studies in this book, the JW Marriott Starr Pass Resort and Spa in Tucson, with 575 rooms, provides a useful example of a large resort hotel (see case study, chapter 7). Megaresorts or “fantasy hotels,” which became popular in the mid-1980s, generally include more than 1,000 guest rooms combined with meeting facilities and an extensive array of amenities and activities, many with fantasy themes. Examples include the Hyatt Regency Waikoloa in Hawaii, a luxury version of a Polynesian village with waterfalls, lagoons, and dolphin pools where guests can interact with wildlife; the Walt Disney Grand Cypress Hotel in Orlando, Florida, which imitates a Victorian beach resort; Atlantis Paradise Island, featuring a 63-acre (25-ha) themed water park and underwater “ruins” of the mythical Atlantis; and the numerous Las Vegas megahotels whose themes are carried out in scaled-down replicas of icons such as the Eiffel Tower, the Statue of Liberty, and the Roman Forum. Vacation Ownership Products. To understand the multitude of ownership products in resort development today, some background is useful. The early emergence of the condominium form of ownership in the 1960s was first associated with resort locations. These early condominiums often were developed by entrepreneurs independent from the developers of the recreational areas. Eventually, resort developers jumped on the bandwagon, and condominium clusters soon

were growing in the midst of these destination resort properties. The second movement was associated with the advent of the master-planned community, whose principal products were lots and homes. The enactment by Congress of the Interstate Land Sales Full Disclosure Act of 1969 brought respectability to the efforts of legitimate developers of resort communities. By the 1970s, with rising mortgage interest rates and the Arab oil embargo in full swing, developers first adopted the timesharing ownership concept, often as an exit strategy for already built condominiums whose sales were lagging. Unfortunately, timesharing also became a way to dump unattractive motel properties, a practice that ended when “purpose-built” timeshare properties came on line later in the decade. Because timeshare ownership, like condominiums, required enabling legislation from states, many of the early timeshares used a variety of legal techniques to be able to deed real estate interests that had time limitations on ownership. Among the products coming out of this developmental stage of timesharing were partnership interests, undivided interests in whole units, and leases. Most timeshares were originally “fixed week, fixed unit,” but later on more flexibility was offered by “floating use” and “floating unit” concepts, as well as by the emergence of exchange companies. As the dust began settling on the industry in the 1980s, a variety of products emerged. During this period, most timeshares and similar ownership con-

COURTESY OF EDSA

Megaresorts like Atlantis Paradise Island, in the Caribbean, generally include more than 1,000 guest rooms and an extensive range of amenities.

Introduction 13

With a history stretching back more than four centuries and a tradition as a luxury hotel for over 130 years, Villa d’Este, which overlooks Lake Como in northern Italy’s lake district, stands unique in the world of resorts. Approximately 28 miles (45 km) long and never more than two miles (3 km) wide, the lake is traveled by boats and ferries that provide views of historic villas and access to the towns and villages along its shores. The villa was built in 1568 as a princely summer residence for Cardinal Tolomeo Gallio. Its history as a hotel began in 1873, when it was purchased by a small group of investors from nearby Milan. The villa’s 154 rooms are each unique in size and decor, and a staff outnumbering the guests provides world-class service. Villa Malakoff and Villa Cima, two 19th-century villas located within the gates of the 25-acre (10-ha) complex, offer visitors both the privacy of a home and the luxuries of a five-star hotel. In the past decade, Villa d’Este has undergone a substantial transformation in order to provide modern comforts and facilities, including an indoor swimming pool, sauna, beauty center and spa, and modern conference facilities. Seven miles (11 km) from the hotel, the Peter Gannon–designed Villa d’Este golf course winds over slopes and valleys along the Lake of Montorfano, and seven more courses can be found in the surrounding area. The historic design and rich collection of plants, sculpture, and fountains in the villa’s gardens draw visitors from around the world. In a 2004 addition, executive chef

cepts were located in projects specifically designed to serve the buyers’ needs. Many units featured a “lockoff” room or rooms that could be rented, exchanged, or otherwise used by the owner. The two-bedroom, twobath unit with lock-off became a popular vacation unit type, usually featuring expanded kitchen facilities and upscale furnishing packages. This period also saw the entry into the timeshare industry of major hotel companies seeking to use this product to fill seasonal gaps in use at destination resorts. Meanwhile, state regulators had caught up with the industry, and most timesharing sales were regulated under statutory variations based on preexisting land sales acts. Federal legislation did not follow, because under the Reagan administration the federal government was less inclined to regulate local real estate activity. But most state laws reached any property marketed in a state, regardless of whether it was physically located in that state. Additional legislation made developers toe the

14 Resort Development

COURTESY OF THE LEADING HOTELS OF THE WORLD, LTD.

Staying with the Past at Villa d’Este

Villa d’Este, on the shore of Italy’s Lake Como, is a historic luxury resort that has kept up with the times.

Luciano Parolari created a chef’s garden to produce a variety of fresh vegetables, berries, and herbs to enhance his dishes. Food is prepared for a diversity of settings ranging from the formal dining room to the grill, which operates in the garden under a 500-year-old plane tree. Lauren Good, Urban Land Institute

line, including “sellers of travel” laws, telemarketing and direct mail statutes, and state licensing of salespersons not already covered under existing real estate broker regulations. Most states now dictate a rescission right or cooling-off period of varying lengths—usually between 72 hours and one week—during which a buyer may cancel without cause and receive a full refund of all monies paid to a developer or sales agent. The resort development industry has substantially expanded its vacation ownership product lines in recent years. What was once a simple field of lots, condominiums, and timesharing now includes a diverse and varied product mix, with more new products likely to come in the future. All such products require an annual maintenance fee to discharge the costs of operation. These can range as high as $600 a year for a one-week interest to many thousands for fractional and destination club products. These products undoubtedly will further evolve in the future, but what follows includes definitions of key

terms currently in use and descriptions of the range of resort ownership products in today’s marketplace. A continuing issue is that of the ability of the initial purchaser to resell a vacation ownership interest. The larger developers often offer resale programs to their owners, and many resale companies have emerged in response to this need. Nevertheless, resale prices often reflect a deep discount owing to the original seller’s marketing and financing costs. If the purchaser is not aware of this issue at time of purchase, they may be disappointed upon resale. Unfortunately, some companies have preyed on unsuspecting consumers, and both state regulators and ARDA (American Resort Development Association) have attempted to identify and curtail the activities of the field’s bad actors. Special attention has been directed to those who require an upfront fee for reselling interests because of the frequent misuse of this concept by unscrupulous companies. Timeshare or Vacation Ownership. In its simplest form, timesharing involves selling deeded real estate or a nondeeded equivalent interest that entitles its owner to use one week in a resort accommodation together with its amenities (while in residence). This product is often referred to as “vacation ownership,” an industry response to early negative public perceptions of timesharing. In deeded projects, purchasers usually acquire either title to

a specific time period or a 1/52nd undivided interest in a condominium unit, with occupancy and use provisions in their project documents. This product is not typically an asset that will appreciate significantly. Buyers pay an initial purchase price, typically financed by the developer, and then annual maintenance fees. Some timeshares are fixed in time (e.g., the owner has the 34th week of each year in perpetuity), but many are “floating time” programs that require the owner to make an annual reservation. Purchasers can buy into their preferred season, with prime season weeks selling for more than off-season weeks. Some vacation ownership interests have priority rights based on purchase price or on a rotating high- to low-demand selection process. In many cases, purchasers can opt for a timeshare that skips every other year of ownership—known as “biennial ownership”—for a lower price. These are also referred to as “even-odd” ownerships, based on whether ownership or use rights occur in even- or odd-numbered years. Timeshare programs often feature an internal trading program that enables owners to trade their week for another within the same project. Virtually all vacation ownership properties are affiliated with a major exchange company that offers trading ability. Initial membership in the exchange company is offered at point of sale, and the first year’s dues and membership

ART GRAY

Many forms of ownership have evolved. The Carneros Inn cottages are fractional ownership, at intervals of one-tenth year.

Introduction 15

COURTESY ROARING FORK CLUB.

Roaring Fork Club cabins can be purchased by club members as whole or one-quarter year ownership.

fees are usually paid by the developer. Purchasers have to elect to continue participation in the exchange after the one-year trial membership. With the international exchange companies, a week of use in the buyer’s “home resort” is deposited with the exchange company (a procedure often referred to as “space banking”) prior to its date of use, and the member can then select from other resorts in the system for a comparable week on a single-use basis. This arrangement permits more flexibility as to time and location for one’s yearly vacation, addressing an aspect of early timesharing that garnered resistance as prospective purchasers worried about having to return annually to the same property. One’s trading power is based on a number of criteria, including size of the unit, home resort quality, demand for the resort area among other exchange members, availability of suitable accommodations at the area where one wants to go (in turn reflecting the willingness of other members of the exchange to deposit their weeks of use), and so on. Fractional Ownership. Fractional developers sell an alternative second-home product that provides

16 Resort Development

expanded use rights together with more extensive amenities and services than traditional timeshares. A key difference is that fractional ownership conveys a proportionate fee interest in the property, whereas timeshares convey only a right to use the property. Fractions range typically between one-eighth and onequarter ownership, giving the fractional owner between six and 13 weeks of use per year. As contrasted with timesharing, this product has a real estate feel and is not simply a bundle of weeks aggregated for sales purposes. Fractional owners anticipate appreciation, like other second-home owners. The fractional product appeals to those who can vacation more frequently and intend to return to a single location season after season. Many fractional projects use a rotating calendar or priority system to allocate use rights. Acquisition costs and annual fees are significantly higher than with timeshares. The exchange component of the fractional product has become crucial for high-end exchange companies, providing an attractive service for this category of user. Established timeshare exchange companies have rushed into the market with their own versions of a

high-end fractional exchange program. In his 2006 Fractional Interest: Leisure Real Estate Market Report (hereinafter cited as the Ragatz report), well-known industry analyst Richard Ragatz divided fractionals into traditional and high-end segments. He defined “traditional fractional interests” as those whose accommodations and amenities are of “three star” quality in their units, furnishings and amenities, and selling for less than $500 per square foot. “High-end fractional interests” were defined as “four star” in quality and selling from $500 to $999 per square foot. Although developers of fractional ownership projects have tried to separate themselves from other forms of timesharing, state regulators have taken the position that fractional ownership is timesharing for regulatory and licensing purposes. Private Residence Clubs. The private residence club (PRC) is the highest-end fractional product, catering to those accustomed to a superior level of service and luxury. Intervals are usually shorter for private residence clubs than for traditional and high-end fractionals, ranging between one-seventh and one-seventeenth of the undivided interests in the units. Subject to availability, PRC owners have unlimited use of facilities and lodging, a privilege they usually pay for through higher annual maintenance fees or dues and, in some cases, a daily use fee. The Ragatz report identified PRC products as selling for $1,000 or more per square foot, representing the pinnacle of “five star” quality in both accommodations and amenities. These programs are treated as timesharing by state regulators as well. Destination Clubs. Destination clubs are membership-based clubs structured similar to golf country clubs and featuring a deposit refund mechanism. Purchasers pay a membership fee or deposit in return for access to the club’s amenities and lodging. A destination club developer typically owns or has use rights in a collection of five-star PRC-level accommodations (singlefamily homes, condominiums, or other luxury housing types) in beach, mountain, urban, or other highly desirable locations worldwide. Members have the right to vacation in the various accommodations owned by the club, subject to its reservation procedures. Members typically do not own any real estate and can resign at any time to receive a partial refund of the membership cost, a refund that typically equals 80 percent of the original fee or deposit. Annual maintenance fees are higher than for timeshare, traditional and high-end fractionals, or PRCs. This product tends to be more

expensive than any other timeshare product. Like the private residence club, it differentiates itself in terms of service, amenities, and luxury. Initial acquisition costs are often in the high six figures, and annual dues run in the thousands of dollars. Most of these products are nonequity: one is really buying a contractual right to occupy, and buyers trust the developer to run the facilities at a break-even level to ensure continued use. A small number of destination clubs have an equity structure, which varies from club to club but gives members an ownership interest in the real estate held by the club. Memberships typically cannot be resold, and the club controls resales. Destination clubs retain the flexibility—at the developer’s discretion—to add or subtract residences in the club inventory based on member demand and opportunities to acquire suitable residences. The regulatory treatment of these clubs is still very much up in the air, although some states have attempted to regulate the sale of memberships in destination clubs like timeshares. The developers of destination clubs have vigorously opposed such efforts, and they persuasively argue that they should not be regulated any more than golf membership clubs are regulated. Points and Points Conversion Programs. In recent years, new programs calculated to offer owners more flexibility in their use of vacation ownership interests have emerged. Some timeshare projects have been structured from the outset as “points programs,” assigning to the interest sold a number of points that reflects the developer’s best estimate of the value of the timeshare, taking into account the unit size and decor, season of ownership, available amenities, and general demand. In some cases, purchasers are sold points rather than a specific week. This has been especially common for those resort companies that have multiple locations to offer purchasers. These owners must plan ahead and schedule their use within the developer’s system of resorts, with each use period having a points value. Owners hope that their acquired points will permit them to schedule vacations when they want them. An owner of limited points still has a chance to schedule a vacation, but perhaps not a full week in high-demand resorts. Points programs have proved so popular that both the exchange companies as well as developers have offered a points conversion program allowing timeshare owners to trade their interests for points, and even to upgrade their ownership through purchase of additional points.

Introduction 17

Hotel del Coronado’s founders, Elisha Babcock and H.L. Story, dreamed of building a seaside resort that would be the “talk of the western world.” “The Del” was built on Coronado Island in San Diego, after the two Midwestern businessmen bought the undeveloped peninsula in 1885. The hotel opened its doors in 1888. One of the leading luxurious railroad resorts in the West, the “Grand Lady by the Sea” became a watering hole for the rich and famous. There was even a spur track on the property to accommodate private rail cars. Although originally promoted as a fishing and hunting resort, the hotel offered many more refined amenities, including billiards, bowling, croquet, swimming, boating, bicycling, archery, golf, and fine dining. A “tent city” with modest tent and bungalow accommodations at reasonable rates was added in the early 1900s for the emerging middle class. The times continued changing, and the Hotel del Coronado faced many changes as well. During World War II, the U.S. Navy used part of the facility for housing. The part that was still a hotel became an attraction for military men and their sweethearts. During the 1950s and 1960s, many older hotels throughout the nation failed. Thanks to a series of owners who wanted to keep the hotel alive, however, the Del prevailed. The hotel even became home to resident guests, people who lived on the property full-time. In the 1970s, Americans once again became interested in history, and the Del was brought back to its former glory. In 1977, the Hotel del Coronado was named a National Historic Landmark. In August 2001, the hotel completed an extensive restoration project that included design and decor enhancements as well as structural reinforcement. These efforts included refurbishing the original Victorian Building’s foundations, preserving a historic smokestack and the rib-vaulted pine ceiling of the Crown Room, and restoring the oceanfront Windsor Lawn. The Victorian Build-

Condominium Hotels or Hotel Condominiums.

Beginning in the late 1960s, condominium hotels have enjoyed market acceptance as a product enabling resort developers to add lodging facilities at little or no capital cost. The condominium buyers pay for the lodging and accept limitations on their occupancy in return for a share in the rental income stream from their units. The earliest such offerings were for small lodging facilities in the Pacific Northwest. One of the first major

18 Resort Development

HORNBERGER+WORSTELL

A Victorian Classic Sees New Life in California

Hotel del Coronado has added fractional ownership cottages and villas to the historic property.

ing’s 381 rooms were restored with traditional architectural details and furnishings. The original Otis #61 lobby elevator, one of the first fully functioning electric elevators manufactured in the United States, was also rehabilitated as the final element in the restoration. In the fall of 2005, implementation of the Hotel del Coronado’s 15-year new master plan began. The first phase includes a new restaurant, oceanfront walkway, world-class spa, garden park entrance, fitness center, and luxury for-sale beachfront cottages and villas. The 11 beachfront cottages and villas at Beach Village are expected to include 78 condo hotel units, a private enclave with pools and hot tubs, front desk and concierge service, and access to all the resort’s amenities. Prices for these units will range from $780,000 for a onebedroom studio to $2.5 million for an 1,800-square-foot (167-sq-m) suite. When not owner-occupied, units will rent on a nightly basis. Lauren Good, Urban Land Institute

condominium hotels registered with the Securities and Exchange Commission in 1972 is still in operation today as a condominium in Arizona. In the early days, purchasers of condominium hotels received a prospectus for the offering that was filed with the SEC, which described the risks of purchasing. Buyers were required to contract for management with the developer for a multiyear term. The offering of the real estate along with the mandatory rental management

KAPALUA LAND COMPANY, LTD.

Kapalua Resort on Hawaii’s Maui includes a range of ownership products: condominium villas, luxury estate homes, and fractionals.

agreement resulted in the SEC’s position that these sales constituted the sale of an investment contract under their rules. Owners could only stay in their units for a limited time each year, often as little as fifteen days, a limitation that stemmed from certain IRS rules on hobby losses. The fifteen-day occupancy limit was adopted as a “safe harbor” for owners under the tax rules. Condominium hotels have received renewed interest following an SEC no-action letter in 2003 that permitted the signing of a rental management agreement prior to closing and without having to register the product as a security under federal law. (A developer must also comply with state securities laws, which may not be as liberal as the SEC’s 2003 position.) Today’s condominium hotels usually involve the sale of luxury condominiums as real estate coupled with the right to participate in a purely voluntary rental management program with the developer or its affiliated management company. These projects resemble high-end condominium projects more than hotels and give owners the opportunity to acquire the entire unit or residence and reduce carrying costs by participating in the rental program. Owners have personal use rights but are often encouraged to limit the use of their condominiums so that the rental program manager may book advance overnight rentals and group meetings. The condominium hotel product may be differentiated from hotel condominiums, which look and operate more like a traditional hotel, with all the regular hotel guest services and amenities. Here the unit sold is not

a spacious condominium unit but a typically sized hotel room. Hotel condominiums are often a financing tool for developer/operators who cannot obtain conventional financing yet who prefer a more standard hotel product. Recreational Vehicle (RV) Club Membership Plans.

An increasingly important component of resort development today is the RV membership club. Although the concept has been around almost as long as secondhome lot sales, the industry experienced an extended period of decline that seems to have ended. Like its timeshare cousins, it often features flexible use but with guaranteed annual space (with limitations on the number of consecutive nights one can use a particular site) for a trailer or other RV—sometimes even a tent— and common amenities for use while in residence. There are organizations offering trading of RV spaces much like the timeshare exchange companies. Acquisition costs are relatively low, depending on amenities and amount of time purchased, and annual dues for maintenance are usually much lower than timeshares, since the property maintenance responsibilities don’t include a lodging component. Second-Home Developments. A second-home development is a community substantially composed of second homes, which are defined as a home that is owned fee simple by a household that also owns or rents another home as its primary residence. A second home may in fact be a third or fourth home, one of many homes that a household may own. Second homes are sometimes also referred to as seasonal homes, week-

Introduction 19

ida, the Phoenix region in Arizona, and the Palm Springs region in California. Second-home communities may also shift their mix and status over time. For example, a community might start out as a second-home community and later evolve into a retirement community; some second-home communities near major urban areas have evolved into primary-home communities. Second-home developments thus can take on a number of forms. The resort condominium, such as the high-rise residential buildings typically found in oceanfront areas such as Miami Beach or Ocean City, Maryland, is one type. Another is the small, lowerdensity residential community that relies on a beach, lake, or other natural amenity to draw its market. Seabrook, Washington, is a new urbanist community of about 400 beach cottages that fits that model; Dewees Island in South Carolina is another example. A further model is the low-density development that incorporates a golf course or country club. The 700acre Reserve at Indian Wells in southern California is an example, with only 240 homes surrounding a golf course (see case study, chapter 7). One other model is the large planned community that incorporates a variety of housing types with several major amenities, usually including a golf course; case studies in chapter 7 that describe this model include Lake Las Vegas,

COURTESY OF TRANSCONTINENTAL PROPERTIES, INC.

end homes, or vacation homes, depending on how they are used by the owner. Some people—especially retirees, independent executives, and those with independent means—often use two or more homes equally; they may reside in several homes, none of which is necessarily primary. Thus, another way to define a second home more broadly is a home in which the owner also resides for substantial parts of the year, but not as the primary residence. Second-home developments may consist of detached single-family houses, attached units, multifamily properties, or a combination. Attached and multifamily resort units are more likely to be marketed and sold as second homes with income potential, and thus they tend to be placed in a rental pool or program operation. Single-family detached homes are more likely to be sold to users who do not expect to rent them extensively, although many detached-home communities include homes available for rent through real estate agents or rental agencies. Primary and retirement homes may be incorporated into second-home developments as well, and some projects are hybrids that include primary homes, second homes, and retirement homes. A large number of hybrid communities are located near major metropolitan areas in areas that are well-established retirementhome and second-home locations, such as South Flor-

Lake Las Vegas is a multiuse resort community with a variety of residential types, hotels, and amenities.

20 Resort Development

Jackson Gore at Okemo Mountain Resort, and Jardins Victoria. Of course, other models exist that are further hybrids or variations of these. The site for second-home developments may range in size from a few acres to several thousand acres and from a handful of units to many thousand. Densities also vary greatly, accommodating anything from high-rise condominiums to hotel residences to single-family homes on large lots. Moreover, projects may involve either a land developer who also builds homes or a master developer who sells lots to homebuilders or homebuyers. Housing units developed in second-home communities exhibit significant differences from those in primary-home communities. Generally, they place greater emphasis on outdoor living areas, they are often developed at lower densities, and their architecture tends to be less formal. Housing styles vary greatly, however, depending on the region, target market, and developer and designer preferences. Revenues in second-home projects can be derived from the sale or operation of a wide variety of residential products, recreational amenities, and club memberships. While the residential products are the most important source of revenue for a second-home community, the right to use a community’s recreational amenities, such as a golf course, is often sold separately either through equity or nonequity club memberships or fees. The amenity may also be sold to an independent operator. Second-home communities can also be distinguished from resort hotels, timeshare resorts, and multiuse resort communities through their long-term management arrangements. A community association rather than a developer or resort operator invariably assumes management responsibility for a second-home community. Either the developer or a resort operator may remain involved in the management of certain elements of the community, such as a golf course or marina, but in many cases the developer’s interest in the property ceases entirely once the project is built and sold out. In such cases, community associations can undertake the management of the amenity program, although a club structure may also be put in place to do so. These issues are discussed in greater detail in chapter 5, which deals with the management of resorts. Multiuse Resort Communities. A multiuse resort community combines several of the resort property types already discussed, all benefiting from the synergies of mixed use in a resort setting. Such a community is positioned to offer a mix and range of both owner-

ship and transient housing facilities. Shared amenities should reduce the product and use cost per participant, and economies of scale should help keep maintenance fees under control. A developer can benefit from having a wide range of products to appeal to all consumers, thus reducing sales and marketing costs. Multiuse resort communities can vary widely in both size and mix of residential and lodging facilities, but the classic examples are large-scale projects on sites of 500 acres (200 ha) or more that include a full range of housing types and hotel accommodations. Lake Las Vegas Resort (see case study, chapter 7) is a 3,592-acre (1,454-ha) community that offers a full range of housing types from custom single-family homes through condominiums. It also includes hotels, a town center, and a host of amenities and soft programming. Another classic example is Beaver Creek in Colorado, a large-scale, 2,777-acre (1,124-ha) mountain resort community that is planned to include 204 detached homes, 1,187 condominiums/townhouses, 221 timeshare units, and 471 hotel rooms. On a much smaller scale, the Carneros Inn in Napa, California (see case study, chapter 7), occupies only 27 acres (11 ha), but it still provides hotel accommodations, fractional ownership units, and fee-simple ownership homes, as well as a range of amenities. Multiuse resort communities also vary greatly in terms of the nature and density of their residential and lodging facilities. Some may incorporate predominantly mid- and high-rise housing and lodging facilities, as does Beaver Creek; others largely feature low-rise facilities, as does WaterColor (see case study, chapter 7). Frequently, multiuse resorts offer a variety of product types to suit various market segments and settings. The variety of products in a multiuse resort can be used strategically to maximize the resort’s appeal to a range of users, enabling the resort to provide a broader and higher-quality selection of amenities. In general, multiuse resorts tend to be larger than the single-use resorts described earlier and often include a more extensive amenity package. Multiuse resorts are more likely to offer two major amenities such as beaches and golf courses or ski slopes and golf courses, and they generally function as four-season resorts. The variety of products and amenities permits the multiuse resort to cater to the needs of resort users over time as their interests and discretionary incomes change. From the developer’s perspective, each hotel guest is a potential timeshare, condominium, or single-family-home purchaser; each timeshare owner

Introduction 21

A Singapore Classic

COURTESY OF RAFFLES HOTEL SINGAPORE

Playing host to writers, actors, dignitaries, and travelers from around the world for over 120 years, Singapore’s Raffles Hotel is one of the world’s most celebrated grand hotels. Opened in 1887 by the four Armenian Sarkies brothers, the hotel was named after Sir Stamford Raffles, founder of the city of Singapore. It quickly grew in popularity, and its history is intertwined with the history of Singapore. The country’s sole surviving wild tiger reputedly was shot underneath its Bar & Billiard Room in 1902. Around that time, bartender Ngiam Tong Boon invented the Million Dollar Cocktail and the Singapore Sling. Famous literary guests in the early years

Raffles Hotel in Singapore.

is a potential condominium or single-family-home purchaser; and so on. Similarly, a downhill skier or a windsurfing buff may develop an interest in another recreational pursuit such as golf. The ability to provide the resort user with a wide variety of experiences enables the resort to become a dominant player in the market. The greater diversity inherent in multiuse resorts means that such properties require more sophisticated development and management operations than other resort types. The developer of a multiuse resort must consider not only all the issues involved in the development of the various product types already discussed, but also how to program, develop, and operate them so that they work together to create an integrated and well-balanced resort environment.

22 Resort Development

included Joseph Conrad, Rudyard Kipling, Somerset Maugham, and Noël Coward. The hotel survived World War II, first as a Japaneserun inn, and then as a temporary transit camp for war prisoners after Japan’s surrender in 1945. In the following decades, the hotel gradually was remodeled and expanded. The Singapore government designated it as a national monument in 1987. In 1989, the hotel closed for a S$160 million restoration by Raffles International Limited, reopening to guests in September 1991. During the restoration, a wing was added in a complementary style, and the restored hotel features 103 guest suites, 19 restaurants, 60 shops, and ten meeting spaces. The hotel has continued to open new stores and restaurants, hosting international celebrities, and even issuing its own varieties of wine and chocolate. The full-service Amrita Spa opened in June 2000. The hotel has won dozens of awards and achieved a fame that inspired Austrian architect Wolfgang Bauer to quip, “While at Raffles, why not visit Singapore?” In 2006, Colony Capital, the owner of Raffles Hotel, merged with Canada-based Fairmont to create Fairmont Raffles Hotels International. The company owns and manages over 120 hotels in 25 countries under four brands, Fairmont Hotels & Resorts, Raffles Hotels & Resorts, Swissôtel Hotels & Resorts, and Delta Hotels, as well as vacation ownership properties managed by Fairmont Heritage Place. The company has opened or is planning additional hotels under the Raffles brand in Cambodia, China, United Arab Emirates, Vietnam, the Philippines, and several Caribbean islands, among other locations.

Historical Background Throughout history, people have traveled to mountaintops, coastlines, hot springs, sacred sites, and other special places in search of physical relaxation and spiritual renewal. Over the centuries, the establishment and growth of resorts have been linked largely with the availability of convenient modes and routes of travel; advances in transportation have even helped popularize resorts in once remote locations. Throughout much of history, however, resorts generally have been the province of the wealthy. For the most part, the resort industry is a modern phenomenon whose growth has paralleled the emergence of the affluent society in industrialized nations. Sacred places were important elements in early travel, and still play a role today. Some of the oldest

holy destinations can be found in the mountain areas of China, where sacred sites play an important role in the Buddhist and Taoist religions. Similarly, in the Middle East, Jerusalem, Bethlehem, and Nazareth became destinations for Christians, and Mecca and Medina continue to draw Muslim pilgrims. In Europe, the history of resorts can be traced to the Greeks and Romans, and the earliest examples are again frequently associated with sacred sites such as Delphi that were often visited by ancient travelers. Early resorts also were associated with medicinal and health needs, including the ancient baths in Rome as well as the town of Bath, England, founded by the Celts more than 2,000 years ago and subsequently expanded by the Romans. The history of golf can be traced back to the 1400s, when it was first established at St. Andrews in Scotland. In 1754, the Society of St. Andrews Golfers was formed, the predecessor group to the Royal and Ancient Golf Club that we know today. In North America, the earliest second homes and resorts were associated with the colonial aristocracy, which continued the European tradition of maintaining both country homes and townhouses. Modest resorts grew up around hot springs in the Appalachian Mountains. The Homestead in Hot Springs, Virginia, dates to 1766, when a bathing pavilion and an inn were built around some mountain hot springs. The Greenbrier near White Sulphur Springs, West Virginia, dates to 1779, when a lodge was built to house tourists. As in Europe, resort development in North America began to proliferate with the advent of pleasure travel by coach, steamship, and rail. New opportunities later emerged with the introduction of automobile and airplane travel and the rapid expansion of the middle and upper-middle classes. The 19th Century The modern concept of resorts began to emerge in the mid-19th century. In Europe, mineral springs in mountain areas had become popular summer destinations, including the area now known as St. Moritz in Switzerland. Heralded as early as the 16th century as one of Europe’s finest mineral springs, it became a more formal resort in 1831, when the spring was leased from the town of St. Moritz by a local corporation. In 1864, local hotel operator Johannes Badrutt convinced several English tourists, visiting for the summer, to return in winter; their delight with the experience eventually led to the establishment of St. Moritz as a winter destination featuring skiing and ice skating.

The Sagamore Hotel on Lake George in upstate New York was among many grand resort hotels built in the 1880s.

The Mediterranean resort town of Cannes, France, also emerged in the mid-19th century with the establishment of major villa residences, the opening of luxury hotels, and the establishment of railway connections to Paris. By that time, many popularly priced resort communities flourished at the seashore and in the mountains. In the United States, Cape May, New Jersey, was the foremost resort of the mid-1800s, with tourists flocking there at first by steamboat and later by rail. Many of the seasonal resorts for the growing American middle classes had a religious or cultural orientation. Accommodations were modest, often densely built around lakes or at the shore. The Wesleyan Grove retreat at Oak Bluffs on Martha’s Vineyard off Cape Cod, Massachusetts, started in 1835 and survives as an early example. The 1870s saw the founding of Chautauqua, a summer community started by a Methodist minister as a two-week retreat for Sunday school teachers at Chautauqua Lake in upstate New York. This first Chautauqua started a movement that spawned as many as 200 similar summer communities throughout North America.1 Now interdenominational, the original Chautauqua Institution attracts an average of 7,500 people each week during its nine-week summer season of educational and cultural events for all ages. The 1870s saw Newport, Rhode Island, transformed by the construction of grand summer homes built primarily for New York industrialists. The 1880s brought a surge of recreational development that catered to both the rich and the not-so-rich. For the general public, rail transportation opened up new areas close to home,

Introduction 23

North Carolina’s Pinehurst Resort and Country Club ranks among the best-known and most famous golf resorts in the United States. Its eight championship golf courses are complemented by a wide variety of recreational amenities and hotel facilities, as well as by the small village of Pinehurst. Pinehurst’s resort and recreational resources were the vision of its founder, James Walker Tufts, a Boston businessman and philanthropist who purchased 5,500 acres (2,226 ha) of North Carolina timberland in 1895 for approximately $1 per acre. Tufts believed that Pinehurst’s mild climate would provide the ideal setting for a winter health retreat. With this vision, he secured the services of the renowned landscape designer Frederick Law Olmsted to complete the resort’s site planning and design. Tufts actively solicited referrals to his health resort/retreat through brochures mailed directly to doctors. Initially, Pinehurst offered tennis as its primary recreational activity, along with riding, hunting, lawn bowling, and archery. In 1898, the first rudimentary nine-hole golf course was laid out and quickly became the resort’s central attraction. Scotland-born golf course designer Donald Ross came to Pinehurst in 1900 and, over a 48-year period, created four legendary courses. Pinehurst’s Victorian-style Carolina Hotel, often referred to as the “White House of golf,” opened its doors on New Year’s Day 1901 and today remains the center of the Pinehurst Resort and Country Club. Ownership of the resort eventually passed from family hands when the Diamondhead Corporation purchased the property in 1970. ClubCorp, the resort’s current owner, acquired the property in 1984. The resort recently completed a new phase of expansion and renewal. Pinehurst’s oldest property, the Holly Inn, which opened in 1895, was completely

while city trolley companies often developed picnic groves and amusement parks at the ends of their lines to encourage weekend trips. Coney Island was the prototype of American amusement parks. Its development between 1860 and 1890 included huge resort hotels, ballrooms, beer gardens, bathing piers, and rides and games that attracted thousands and, later, millions of New Yorkers. Like many recreational ventures, the exotic Margate Hotel on Coney Island, built in 1881 in the shape of an elephant, was designed as an attraction for a land sales promotion. For the wealthy, railroads provided access to new regions and sparked the development of large resort

24 Resort Development

COURTESY OF PINEHURST, LLC.

An American Golf Legend

Pinehurst is one of the best-known golf resorts in the United States.

renovated in 1999 in a $31 million project that overhauled its 79 guest rooms. In 2002, the resort opened the Spa at Pinehurst, a 31,000-square-foot (2,900-sq-m) facility offering over 40 treatments. In 2005, the resort launched a $10 million renovation phased over three years. The renovation included updating guest rooms and constructing a golf advantage school complex with instruction areas, classrooms, and a state-of-the-art golf fitness lab. The resort has also developed nearly 100 condominiums on the property, which are rented to guests when not in use by their owners. The Pinehurst resort and village has been declared a National Historic Landmark. Given its strategic development and rich golf heritage, it remains highly competitive as a destination resort.

hotels, often built by or with the financial support of railroad companies. The Ponce de Leon in St. Augustine, Florida, the most lavish and expensive resort hotel of its kind, opened in 1888 and contributed to Florida’s growing reputation as a tourist destination. Other grand resort hotels that opened in the 1880s included the Sagamore Hotel on Lake George, New York (1883); the Grand Hotel on Mackinac Island, Michigan (1887); the Banff Springs Hotel in Alberta, Canada (1888); Hotel Del Monte on the Monterey Peninsula in California (1880); and the Hotel del Coronado in San Diego (1888). And in 1889, R. H. Macy & Company co-owner Jerome B. Wheeler opened the Hotel Jerome in Aspen, Colorado.

Society from around the globe attended the hotel’s grand opening. Most of these hotels were closely associated with land sales operations for resort and recreational real estate development. Railroads also facilitated the creation of early planned recreational communities. Tuxedo Park, New York, a prototypical private residential recreational community, was launched in 1885, when Pierre Lorillard, heir to a vast tobacco fortune, purchased 7,000 acres (2,800 ha) of land about an hour’s train journey from New York City in the Ramapo Mountains of southern New York State. Lorillard envisioned an exclusive but informal summer community whose plan and architecture would respect both the land and the character of the site. He disdained the excessively scaled houses of Newport and intentionally specified a more modest style for the original clubhouse and the first homes, although a 140-foot (43-m) -high barbed-wire fence completely enclosed the compound. Membership in the 400-member Tuxedo Club was required for property ownership. Outside the gates, Lorillard constructed a village to house the 200 artisans and merchants required to maintain the preserve and its activities.2 In the 1890s, the Jekyll Island Club was established on Jekyll Island, Georgia, as a private winter community for the Morgans, Rockefellers, Vanderbilts, and other wealthy families that summered in Newport. They built giant “cottages” and a fabulous clubhouse where they convened for ten-course evening meals. Today the club is operated as a luxury resort hotel. Another winter resort, the Pinehurst Resort and Country Club, was established in 1898 in North Carolina; the first U.S. golf course significantly linked to a real estate project was designed for Pinehurst. Palm Beach began its life in 1894 as a winter resort spurred by Henry Morrison Flagler’s development of the East Coast Railway and the subsequent opening of the Royal Poinciana Hotel and the Breakers, which, twice destroyed by fire but completely rebuilt after the second fire in 1925, remains a luxury destination today.3 Early 20th Century The Pocono region of northeastern Pennsylvania experienced a boom in popularity during the early part of the 20th century, together with the Catskills and Berkshires of New York and Massachusetts; resorts in these areas initially were open only during summer months and catered to guests from nearby metropolitan areas. Other summer resort areas that gained popularity during this period

included Lake Geneva, Wisconsin, the Great Lakes coastal areas of Michigan, and Hot Springs, Arkansas. Most of the “great camps” of the Adirondacks in upstate New York had their heyday between the early 1900s and the 1930s. During this time, wilderness settings became popular retreats from the congestion of industrialized cities. Sagamore Lodge, the Vanderbilts’ compound near Raquette Lake, is considered by many to be the prototypical great camp. It was one of the first to use a rustic architectural style that incorporated indigenous materials and handcrafted details. This style eventually became a model for the public buildings in many national parks. In 1917, Paris E. Singer, heir to the sewing machine fortune, visited Palm Beach and decided to develop a holiday community that would become the winter counterpart to Newport. When World War I effectively put an end to transatlantic travel, Singer’s architect, Addison Mizner, responded by synthesizing Mediterranean motifs, creating a design style that evoked a strong sense of place and came to symbolize Florida architecture.4 As the automobile became more prevalent in the United States, the patterns of recreational activity underwent a dramatic change as Americans looked farther from home for a diversity of vacation experiences. The naturalist movement and a growing awareness of the physical wonders of the country stimulated increased interest in the outdoors. The National Park Service, established in 1916 to manage and protect the nation’s scenic wonders, built large, rustic hotels such as the Ahwahnee Hotel at Yosemite National Park (1927) and the Old Faithful Inn at Yellowstone National Park (built in three phases between 1903 and 1927). The 1920s saw the first recreational land booms in America, particularly in Florida and California. As development moved down Florida’s east coast, several new grand resort hotels opened, including the Cloister Inn (now the Boca Raton Hotel) in Boca Raton (1926) and the Biltmore in Coral Gables (1926). Coral Gables, founded in 1921 by George Merrick, was planned from the start as a recreational real estate venture. A system of canals enabled Merrick to advertise more than 40 miles of waterfront.5 Grand winter resort hotels opening in California in the 1920s included La Valencia in La Jolla (1926), La Quinta near Palm Springs (1926), and the Biltmore in Santa Barbara (1927). The Arizona Biltmore in Phoenix (1929), designed in part by Frank Lloyd Wright, helped establish the Arizona desert as a winter resort. Over time, these

Introduction 25

There’s plenty to make the Arizona Biltmore an unusual resort. For starters, it’s the only surviving hotel with a design directly influenced by Frank Lloyd Wright (Wright was a consulting architect). Its gold-leaf ceiling is the world’s second largest, after the Taj Mahal’s. Marilyn Monroe called the resort’s Catalina Pool her favorite swimming pool. Every U.S. president since Herbert Hoover has visited the resort, as well as a host of dignitaries and celebrities. Nestled on 39 acres (16 ha) adjacent to the Phoenix Mountain Preserve, the Arizona Biltmore was exceptional from the start. No expense was spared in its original construction, and Wright and his student Albert Chase McArthur were retained to design the hotel. The structure was built from “Biltmore block”— precast blocks made on site and stamped with patterns designed by artist Emry Kopta. When the original cost estimate of $1 million doubled, the resort’s investors were forced to sell to William Wrigley, Jr., the only original investor with deep enough pockets to fund the unusual project. For the next 43 years, the Wrigley family owned and operated the resort as it developed into a preferred oasis for a host of famous travelers. In 1973, the Wrigley family sold the property to Talley Industries, which undertook a renovation using the resort’s original materials and design patterns. During the 1970s and 1980s the Paradise Wing, Valley Wing, and Terrace Court opened, and the main building and cottages were refurbished, adding over 300 rooms and a 39,000-square-foot (3,600-sq-m) conference facility. By the 1990s, the resort had lost much of its luster. Physically dated and lacking new services and amenities, it was losing money. The Grossman Company Properties acquired the property in 1992 for $61.5 million and pursued a plan to renovate and reposition the hotel. The interior was updated with Arts and Crafts style fixtures and furnishings. Guest room bathrooms were upgraded, and central kitchen and laundry facilities were extensively renovated. A new pool complex and a 16,000-square-foot (1,500-sq-m) ballroom/conference facility were constructed. Surrounding the famed Catalina Pool, 78 resort condominium villas were con-

hotels and others like them helped attract both seasonal and permanent residents to their surrounding areas. In Europe during this period, the ski industry was emerging with the establishment or expansion of such classic winter resorts as St. Moritz, Kitzbühel, and St. Anton. In warmer climates, with the advent of the steamship, the Greek isles and other Mediterranean

26 Resort Development

COURTESY OF ARIZONA BILTMORE RESORT & SPA

An Arizona Classic Changes with the Times

The Arizona Biltmore Resort & Spa, known for its luxurious accommodations, is now part of the Waldorf-Astoria Collection.

structed using decorative brickwork consistent with other buildings on the property. These properties were intended to be rented to vacationers, with owners receiving an equal share of the room revenue until a predetermined level or return is reached. Throughout the 30-month renovation process from May 1993 to November 1995, no more than half of the hotel’s guest rooms were removed from the rental pool, thus ensuring sufficient cash flow throughout the construction. The repositioning of the property also involved innovative sales and marketing tools, and the decision to change from a national hotel management company to an independent management and operation structure. Since this major renovation, the resort has added a 22,000-square-foot (2,050-sq-m) spa (1998) and a 120-room New Arizona Wing (1999), and significantly enhanced and expanded the meeting spaces. Once again considered among the world’s most spectacular resorts, today the Biltmore features 738 guest accommodations, including 78 one- and twobedroom villas, over 100,000 square feet (9,300 sq m) of indoor meeting space, eight swimming pools, seven tennis courts, an 18-hole putting course, and a full-service European spa, salon, and fitness center. The adjacent Arizona Biltmore Country Club offers two 18-hole PGA golf courses: the Links and the Adobe.

islands became destinations, spurring the development of hotels and tourism infrastructure in these places. The growth in both Europe and the United States of resort and leisure developments halted abruptly in 1929 with the Great Depression. Not until after World War II did the resort and second-home markets begin to revive. The 1930s did, however, witness the establishment of two

The Evolution of Colorado’s Grand Dame imported from Italy and other European countries to create ornate moldings and paintings, as well as elaborate exterior detailing. In June 1918, the Italian Renaissance–style resort was completed, and the Broadmoor opened its doors on June 29, 1918, with three buildings, 111 guest rooms, and a golf course designed by Donald Ross. The resort’s growing fame led to further expansion of its facilities. Two golf courses designed by Robert Trent Jones, Ed Seay, and Arnold Palmer were added to the original. The International Center was added in 1961 as a dedicated meeting space, followed by a new building to house additional guest rooms, and the Penrose Room, a fine dining establishment. The West Complex, containing an additional 154 guest rooms and meeting facilities, was

COURTESY OF THE BROADMOOR

Known as the “Grand Dame of the West,” the Broadmoor, in Colorado Springs, is a five-star, five-diamond resort boasting over 700 guest rooms, 15 restaurants, 3 golf courses, and a world-class spa, attracting visitors from around the world. In recent years the oldest parts of the 117-year-old resort have been fully restored, and new residences and stores have been added. The Broadmoor began as a farm and the failed dream of a Prussian nobleman. Willie Wilcox bought the land in 1880 and established the Broadmoor Dairy Farm in an attempt to relieve his tuberculosis. In 1885, Prussian count James Pourtales came to Colorado and partnered with Wilcox, bringing his farming knowledge with him. After deciding that the only way to make a decent profit would be to create an upper-class suburb, Count Pourtales formed the Broadmoor Land and Investment Company and purchased the original tract. To entice people to purchase lots, Pourtales built the Broadmoor Casino and constructed a small hotel a few years later. The property was eventually forced into receivership owing to the count’s financial problems, and in 1897 the property was purchased by the Winfield Scott Stratton Estate to use for local events and later as a boardinghouse and day school for girls. In 1916, Spencer Penrose, a Philadelphia entrepreneur, purchased the Broadmoor Casino and Hotel and an adjoining 400 acres (160 ha) of land. Penrose, along with his wife, Julie, had the idea to turn the Pikes Peak region into a multifaceted resort area. Construction of the main complex began in May 1917. Artisans were

COURTESY OF THE BROADMOOR

The Broadmoor in Colorado Springs is adding a residential component to the luxury resort hotel.

Introduction 27

The Evolution of Colorado’s Grand Dame

continued

added in 1976. Another conference facility, Colorado Hall, was built in 1982. In 1994, the 12,000-square-foot (1,115sq-m) Rocky Mountain Ballroom opened, along with the Broadmoor Spa, Golf, and Tennis Club, featuring a full-service spa, state-of-the-art fitness center, indoor and outdoor pools, a golf clubhouse, restaurants and lounges, and golf and tennis pro shops. An additional 150 guest rooms were added in 1995, bringing the total number of guest rooms to 700. In October 2001, Broadmoor Main closed to undergo major renovations: each of the original 142 rooms, the lobby, lounges, restaurants, retail outlets, and public spaces was redone. Original artwork was restored, and high-speed Internet access and large five-fixture baths were added to the guest rooms. Recent expansions include Broadmoor Hall, which has added 60,000 square feet (5,574 sq m) of meeting space, bringing the total up to 185,000 square feet (17,200 sq m). Summit, a new restaurant designed by Adam D. Tihany, opened in December 2005, along with seven new retail shops. In July 2006, the 18-hole Mountain Course, designed by

Nicklaus Design, opened, bringing the resort up to 54 holes of championship golf. The Broadmoor Development Company now is creating the Residences at the Broadmoor, a new residential resort community on the resort’s grounds. The Broadmoor Brownstones are 4,582-square-foot (426-sq-m), four-level attached residences featuring fireplaces, a private elevator, and rooftop balconies. The Broadmoor West Residence is composed of single-level homes in a six-story building overlooking the Broadmoor West Golf Course. Homeowners at both locations will enjoy resort services and amenities, as well as have access to memberships at the Broadmoor Golf Club, Spa, and Fitness Center. With this impressive range of amenities and a long history of excellence, the Broadmoor is the longestrunning consecutive recipient of both the AAA fivediamond and the Mobil Travel Guide five-star awards. The Broadmoor is currently owned by the Oklahoma Publishing Company, headquartered in Oklahoma City.

high-profile winter resorts: Lake Placid, New York, which hosted the 1932 Winter Olympics, and Sun Valley in Idaho (1936). Sun Valley was the vision of Averell Harriman, who at the time ran the Union Pacific Railroad and saw the ski resort as a means of encouraging people to ride trains to the site. The Depression ultimately had a positive effect on America’s national parks, as the Civilian Conservation Corps and other federal work projects brought in crews to develop recreational areas within the parks.

opened near metropolitan areas along the coasts and the Great Lakes. The 1950s also saw the opening of the Desert Inn in Las Vegas, planting the seed for the renowned “strip” of large, self-contained, casino-based resort hotels that quickly became a popular vacation destination, particularly as air travel became more available and affordable. Skiing became popular as well. The old mining town of Aspen, Colorado, became a major ski destination during this period. Aspen had fallen on hard times with the collapse of the silver market, but Chicago industrialist Walter Paepcke revitalized the community with his vision of a ski resort that could be a retreat for thinkers and outdoor lovers alike. He started both the Aspen Institute for the Humanities and the Music Associates of Aspen, institutions that today retain international reputations.6 In Europe, Spain’s Costa del Sol emerged as a new destination. The Marbella Club was established by Prince Alfonso of Hohenlohe-Langenburg and others in 1954, and Puerto Banús was later established by José Banús as a major yacht and marina center, attracting large yachts and their wealthy owners to the Costa del Sol. By the 1960s, the Caribbean, Mexico, Indonesia, Hawaii, and many other areas became increasingly accessible, gradually transforming the resort business into a globally competitive industry.

Mid-20th Century The 1950s marked an unprecedented boom in family travel by automobile, especially in America. The touring trip became the most popular type of family vacation, giving rise to the widespread growth of highway-oriented lodging, including auto courts and motels. The burgeoning “upper middle” professional class was growing more affluent, mobile, and—with the post–World War II baby boom—more family-oriented. Walt Disney captured the imagination of this new market, and in 1955 he opened Disneyland in southern California, aiming to re-create the fantasies that were pictured on television and in films. Country clubs also found their way into new suburban areas in the 1950s, cultivating and capitalizing on an increasing interest in tennis and golf. Many new marinas and yacht clubs

28 Resort Development

Lauren Good, Urban Land Institute

Redevelopment Reinvents Georgia’s Sea Island Sea Island was the brainchild of visionary and engineering whiz Howard Coffin, whose pioneering automobile designs launched his career as the head of the Hudson Motor Company, one of the leading automakers of the early 20th century. While traveling to Georgia to visit an auto racing course, Coffin toured Sapelo Island near Savannah. Having fallen in love with the seaside landscape, Coffin purchased thousands of acres in the area between 1911 and 1922, including the land that would become the Sea Island resort. When a motor causeway opened in 1925 linking the island with the mainland, Coffin and his cousin and partner Alfred “Bill” Jones moved quickly to realize their vision of a resort colony. They sold lots for cottages, constructed a bathhouse and dance pavilion, and in 1927 opened a small hotel called the Cloister. Also that year, the resort’s first golf course, Plantation Course, opened to widespread acclaim. The island’s beautiful setting and the Cloister’s reputation for hospitality quickly drew visitors, many of whom returned year after year. In the following decades, the resort underwent careful, controlled

expansion under the leadership of Bill Jones and then Bill Jones, Jr. New conference facilities, new guesthouses, and other facilities opened. In the late 1990s, the resort launched a redevelopment project that would reinvent the island. Under the leadership of Bill Jones III, in 1999 the Sea Island Company transformed four nine-hole golf courses into two new 18-hole courses—Plantation and Seaside— and in 2001 reopened the former St. Simons Island Club course as the Retreat. In 2001, the company opened the Lodge at Sea Island, an intimate 40-room hotel and clubhouse. After over 70 years, the original Cloister was reborn. A new hotel incorporating architectural elements from the old building opened in 2006 with 156 luxury guest rooms. The complex also includes new ocean cottages, a new beach club, and a 60,000-square-foot (5,574-sq-m) spa. The resort also offers private homes, homesites, and condominiums in various neighborhoods on the island. The resort’s reputation for service and privacy brings continued popularity and led to its selection as the site for the 2004 G8 world leaders’ summit.

Sea Island is an exclusive and isolated resort island in the Atlantic Ocean off the coast of southern Georgia.

The 1960s in the United States saw a boom in secondhome development and land speculation, plus a lack of regulation in rural areas that allowed developments to grow unchecked. Large corporations participated in the boom, subdividing and marketing huge tracts of land. High-pressure salespeople sold thousands of acres to eager but naive investors. As complaints about mis-

representation and fraud began to surface, consumer and environmental groups took issue with irresponsible development practices. Environmentalists were especially influential in changing development practices. Soil erosion, inadequate sanitary disposal, and insensitive intrusions into scenic areas helped focus public attention on the environmental hazards associated with irrespon-

Introduction 29

sible development. Nonetheless, local regulators often had little control or simply maintained a low profile. Many local governments lacked zoning or other regulations during this time, particularly in rural areas where land use controls have traditionally been weakest. Eventually, the response to both consumer fraud and environmental abuses was increased regulation. In 1969, the U.S. Department of Housing and Urban Development established the Office of Interstate Land Sales Registration (OILSR). The OILSR requires all developments of 50 lots or more to register a prospectus with the department if they intend to use interstate commerce to market their properties. From 1971 to 1977, the OILSR received an average of 3,000 consumer complaints a year. Over this time, the office initiated indictments against a number of companies and suspended sales at hundreds of developments, mostly in Florida, Arizona, Colorado, and California. A number of resort developments launched in the 1960s demonstrated the merits of environmentally sensitive land use planning and design and thus had a major educational impact on consumers and the development industry. These included Sea Ranch in northern California (1964), Salishan in Oregon (1965), and a series of deluxe resort hotels built by Rockresorts (headed by Laurance Rockefeller): Caneel Bay on St. John; Carambola Beach Resort on St. Croix; Little Dix Bay on Virgin Gorda; Dorado Beach in Puerto Rico; and Mauna Kea in Hawaii. In Europe, the trend was epitomized by Vilamoura on Portugal’s southern coast (see the Jardins Victoria case study, chapter 7). Late 20th and Early 21st Centuries By the 1970s, demand for recreational real estate was clearly moving away from lot sales toward high-amenity, second-home communities, including a significant increase in the sales of resort condominiums. New projects initiated during this period included Northstar at Tahoe in Truckee, California (1970); Waikoloa, Hawaii (1974); Amelia Island Plantation near Jacksonville, Florida (1974); and Palmas del Mar in Puerto Rico (1975). The OPEC oil embargo from 1973 to 1974 and the recession of 1974–75, however, proved disastrous for many resorts. Consumers cut back on luxury purchases, and some developers were left holding large inventories. Interest and carrying costs ate up profits, forcing many developers into default. Some of the nation’s most prestigious financial institutions were also caught in the recession’s real estate debacle when homeowners and developers alike defaulted on their loans.

30 Resort Development

The late 1970s saw the return of the industry’s strength and the initiation of many large-scale resort communities, including Kiawah Island in South Carolina (1976); Kapalua on Maui in Hawaii (1978); Carmel Valley Ranch near Carmel, California (1977); Pelican Bay in Naples, Florida (1978); and Palm Beach Polo and Country Club in Florida (1978). The 1980s were a period of major growth and change, with real estate being significantly affected by shifting demographics and lifestyles, as well as advances in communication and information technology. Resort communities initiated during this period included Beaver Creek, Colorado (1980); Grand Traverse Resort, Michigan (1980); Deer Valley, Utah (1981); Seaside, Florida (1982); Harbour Ridge, Florida (1984); Gainey Ranch, Arizona (1984); and Semiahmoo, Washington (1985). These and other projects started in the 1980s generally required longer startup periods for planning and permitting than earlier projects, in part because of the broader scope of regulations coupled with increased concerns about environmental impacts. The tax law changes of 1986, the stock market crash of 1987, and the subsequent 1990 recession marked the beginning of a slow period for resort development. Exacerbating the slowdown was the limited availability of financing, which resulted from the failure of many financial institutions. Congress created the Resolution Trust Corporation (RTC) in August 1989 to deal with the savings and loan crisis. In the following four years, 740 institutions with assets of about $442 billion were assigned to the RTC. Since a significant number of these institutions held assets associated with resorts, subsequent disposal of the assets at “cents on the dollar” substantially influenced the course of development for many projects. In the late 1980s and early 1990s, Japanese investors played a significant role in the startup and refinancing of many projects worldwide, until the Japanese financial market’s crash in the early 1990s effectively halted Japanese global investment activities. Resort communities started in the late 1980s and early 1990s include Fisher Island, Florida; Spring Island, South Carolina; and Indian Ridge Country Club, California. These and many other high-profile communities initiated during this period were targeted to a rarefied market: those in the top 1 percent of the income range. The differences between these communities reflect the growing diversity of values and lifestyles even within this narrow market segment. Megaresorts of this era included Kauai Lagoons and the Hyatt Regency Wai-

From Worker Housing to Five-Diamond Luxury The American Club, the AAA five-diamond hotel at the heart of the Destination Kohler resort in Kohler, Wisconsin, began life as a dormitory for immigrant workers. Walter J. Kohler, Sr., son of the founder of the manufacturing company bearing his name, envisioned the building as a means to provide an improved standard of living for his workers. For a fee equivalent to roughly one-quarter of an average salary, a worker could rent a room and receive three meals a day. Kohler also offered residents free concerts, reading rooms, a bowling alley, and other amusements. Immigrants could take English language classes at the nearby Kohler public school, and newly naturalized American citizens were celebrated with special banquets. In 1942, after two decades of service, the American Club was transformed into an inn, hosting a variety of actors, singers, and authors who traveled to speak or perform for the Kohler Village Women’s Club. The Kohler Foundation continues this tradition to this day through its Distinguished Guest Series, which annually brings world-renowned artists to the village for concerts. The building’s distinctive history was recognized by its listing on the National Register of Historic Places, but by the 1970s, it was beginning to show its age. Under the leadership of Herbert V. Kohler, Jr., the American Club was reborn as a hotel and conference center of national renown. Local crafters recreated

Destination Kohler in Wisconsin began as worker housing. Today it is a full-service luxury resort.

detailed wood moldings, original chandeliers were duplicated, and antiques were specially selected to represent the heritages of the building’s original residents. Additional recent amenities have transformed Destination Kohler into a full-service, year-round resort. New wings to the American Club were completed in 1981 and 1993, bringing the total number of guest rooms to 237 and the conference space to more than 21,000 square feet (1,950 sq m). The 121-room Inn on Woodlake opened in 1994 and was expanded in June 1999 to offer tranquility and convenience at the mid-priced lodging category. The inn boasts an innovative, V-shaped design that takes full advantage of the natural surroundings. Bathrooms are outfitted with deluxe Kohler fixtures. In 2001, the Riverbend private club opened after a 14-month renovation of this historic house. Housed in the estate of former Wisconsin Governor Walter J. Kohler, the club features 31 luxurious guest rooms, access to various other parts of the house, a full-service spa, and other facilities. Riverbend is open to club members only, and membership requires a $125,000 deposit and an annual fee of roughly $3,300. These lodging accommodations are accompanied by world-class recreational facilities. The resort added the award-winning golf courses Blackwolf Run in 1988 and Whistling Straits in 1998, both designed by renowned course designer Pete Dye. The courses have hosted numerous golf luminaries and national championships. The luxurious Kohler Waters Spa debuted in 2000, offering more than 50 treatments. The resort now includes ten restaurants, ranging from Italian cuisine to creative healthful fare. The resort’s 85,000-square-foot (7,900sq-m) Sports Core offers year-round tennis, swimming, jogging, and a wide variety of fitness classes. The private 500-acre (200-ha) River Wildlife wilderness preserve offers outdoor activities such as hiking, hunting, fishing, horseback rides, and canoeing. The surrounding area boasts a host of natural and cultural attractions. The planned community of Kohler is home to 1,900 residents, as well as the resort and the Kohler Company. Home sales are handled through the full-service brokerage company Village Realty & Development. The community offers single-family homes, duplexes, and condominiums just miles from the Lake Michigan coast.

koloa in Hawaii and the Las Vegas casino hotels such as the Mirage, Treasure Island, and the Luxor, which exemplified the increasing role of entertainment in resort lodging facilities. This period also saw the sensitive restoration of a number of vintage resort hotels,

including La Quinta in southern California (1980–1984) and the Sagamore on Lake George, New York. The timeshare industry was also substantially reborn during the late 1980s and early 1990s as major corporations such as Marriott, Hilton, and Disney entered the

Introduction 31

market. Between 1980 and 1990, the number of timeshare resorts quadrupled to nearly 2,400 worldwide, of which 1,200 were in the United States. By the mid-1990s, the real estate market had regained its strength. Hallmarks of the 1990s included the tremendous expansion of golf course communities; the substantial growth of themed resort hotels (especially in Orlando and Las Vegas); the emergence of new urbanism and a return to traditional design themes; the inclusion of town centers within resorts; the proliferation and escalation of luxury hotels and residential products; an increasing diversification of resort amenities; and a growing emphasis on environmental preservation as a strategic ethic and positioning strategy for projects of all types. In the early 21st century, the resort industry became more focused on microniches, with no single model of amenity serving as the driver.7 Amenities were redefined to include not only facilities but also soft programming. One overriding trend was the demand for places where multigenerational families could gather. Also important was the increasing desire for interaction with nature and a broader community, exemplified in volunteer vacations, ecotourism, and other experiences rooted in a sense of social responsibility. Some resorts have added botanists, naturalists, preservation experts, and even historians to their staffs in an effort to provide sought-after educational programs. Americans have become more adventurous and willing to travel to exotic destinations. In addition to Latin America and the Caribbean, tourism has bloomed in North Africa and Asia. Globalization of wealth has expanded the tourist base to include travelers from China, Russia, and the Middle East. Europeans have vacationed and purchased second homes in South Africa, Mauritius, and the Seychelles. Prices soared for second homes in the first five years of the 2000s, followed by soaring hotel room prices in mid-2000s. The upper end of the resort market was taken to new levels, with prices for homes in the most exclusive areas often starting in the seven figures. Rooms frequently commanded $400 a night and up for deluxe hotels. Resort developers increasingly saw the value in brands during this period and launched collaborations with luxury hotels such as Four Seasons and Ritz-Carlton as well as celebrated golf course architects such as Jack Nicklaus, Arnold Palmer, and others. Finally, fractional ownership blossomed, recording 15 percent annual growth rates throughout much of the period. Large hotel chains continued to enter

32 Resort Development

the timeshare industry, creating a plethora of product types, particularly at the luxury end of the spectrum. Fractional ownership products such as quarter shares and private residence clubs (PRCs) have been offered at top price points, and several luxury hotel brands have become active in this market, including Four Seasons and Ritz-Carlton. The case studies in this book depict many of the most recent trends. Family-focused resorts include Roaring Fork Club, Hampton Lake, and WaterColor. The desire for authentic local experiences and environmental concerns have driven the concepts for Lijiang Banyan Tree, the Carneros Inn, and Doonbeg Golf Club. Many of the case studies illustrate how resorts are catering to upper-income vacationers and filling niche markets for small boutique properties (Montage, Taj Green Cove, the Carneros Inn), while Lake Las Vegas Resort provides an example of a large resort that still does it all. A major challenge for developers and operators is designing resorts that will continue to be relevant and vital in the decades after they are built, so that they continue to attract new, younger visitors and buyers throughout the life of the property. This goal requires constant reinvention and reinvestment not only in the physical plant but also in programming.8 Chapter 8 discusses many other trends that are expected to characterize the continuing evolution of resorts in the 21st century.

Overview of the Development Process As with other types of real estate, resorts depend on a complex, iterative, and multidisciplinary development process that involves many interrelated activities requiring simultaneous review and constant adjustment. These activities involve many areas of expertise. The process demands increasing levels of refinement in which all elements must be weighed and pass the test of economic feasibility. This section provides an overview of the major activities involved in the development process. Chapters 2 through 6 cover specific aspects of the process. The Development Team In general, the developer’s role in a resort project is to orchestrate the development process and bring a project to fruition. Depending on the type of resort, the developer may also be the resort operator, assuming responsibility for the ongoing management and operations of the resort and its various components. In large multiuse

FIGURE

1-1

Feasibility Analysis and Planning Process

Project Feasibility Project Initiation

Concept Planning

Feasibility Analysis

l Investigate market demand l Investigate alternative sites l Select site for further analysis l Select development team

Determine the following: l Buildable area l Development capacity l Access l Community governance options

Undertake the following studies: l Detailed market analysis l Site characteristics l Regulatory analysis l Financial feasibility

Refine concept plan Feasibility analysis unfavorable / Select alternative site

Product Programming Determine the following: l Neighborhood/planning concepts l Residential product types and mix l Hotel product types l Timeshare product types l Community association structure l Amenity program l Development phasing

Plan Preparation and Processing Preliminary Planning and Design

Processing and Approvals

Final Planning and Design

Define the following: l Market research l Land and product design options l Mix of uses l Land plan l Community association structure, operating plan, and budget

From the following: l Local agencies (planning board or commission, zoning board, city council, county board, etc.) l Nonlocal agencies (federal, state, regional, and quasi-public agencies with discretionary authority) l Citizens’ groups

l Further refine development program l Fine-tune market research l Prepare final plan and design specifications l Prepare legal documents l Obtain final permits (e.g., building and grading)

Financing l Negotiate construction contracts/bids l Obtain financing l Initiate construction (grading, roads, utilities, sales center, etc.) Marketing l Select marketing and sales management team l Prepare marketing program and budget l Prepare public relations program l Begin advertising and promotion campaign

resort developments, which frequently require several decades for completion, developers often change over time, and several different developers may play major roles in a community’s creation, maturation, and evolution. Moreover, large multiuse resort communities may

involve various levels of developers such as a master developer, who usually programs the resort concept and develops the infrastructure, and various subdevelopers— such as hotel developers, homebuilders, condominium developers, timeshare developers, retail developers, and

Introduction 33

golf course developers—who develop specific properties within the resort. The process of resort development is quite complex and therefore requires experts from various disciplines to participate in a wide range of decision making. An individual developer can never expect to be an expert in all disciplines. Even for small-scale projects, a team of experts is required. The developer functions as the team leader throughout the development process. In most development companies, an individual is designated as the project manager and assigned the responsibility for day-to-day decision making. As the project changes direction or proceeds from one stage to the next, it may be appropriate for different individuals to fill the role of project manager. Throughout the development process, however, owners and investors retain ultimate responsibility for determining how to proceed in accordance with the realities of the marketplace. Their decisions must be based on qualified input from all members of the development team. Competent, experienced team members can help maximize a site’s potential for development, decrease construction and operating costs, and add immeasurably to a project’s marketability. Depending on the project, assistance from the following types of professionals (as well as others not listed) may be required: land planners, architects, landscape architects, construction managers, engineers, environmental scientists, financial and market analysts, financiers, attorneys, management and marketing advisers, public relations advisers, real estate agents, resort operations professionals, sales and marketing managers, and environmental consultants. For discussion and organization purposes, team members can be generally grouped into five disciplines: planning/design, legal, financial, management, and marketing. Effective organization and management of the development team is fundamental to project success. Part of the developer’s responsibility as team manager is to ensure effective communication among the various members of the team. Team review and coordination meetings are essential in optimizing efficiency and making sure that the overall effort stays on the right track. Most developers, even large diversified development companies, do not retain a staff with all the technical talents needed by a development team. Instead, they hire consultants. One advantage of relying on consultants is that their expertise can be tapped only when needed. Individual consultants and multifaceted consulting firms can provide services pertaining to every

34 Resort Development

issue associated with resort development. The other advantage is that consultants who specialize in a particular expertise are likely to stay more up to date and proficient than can a busy staff professional with more generalized experience. In seeking consultants, developers should inspect other projects in which prospective consultants have participated and review their qualifications and experience with other developers. Developers must also be certain that the most competent members of the consultant’s staff will be assigned to their projects. Before retaining a consulting firm, developers should meet with key members of the firm’s staff to gauge each individual’s—as well as the firm’s—qualifications. The development team should also include individuals with extensive local experience, knowledge of the relevant regulatory processes, and a demonstrated ability to anticipate potential public concerns. Developers should avoid assembling a team of consultants who are experienced in designing and constructing the type of project planned but lack a full understanding of the local environment. An appropriate mix of national and local talent is generally more successful in getting the job done. Stages of the Development Process The development process for resort and resort communities consists of three general stages: feasibility analysis and planning (including permitting and financing), construction, and operations/management. Because the development of a resort community is often undertaken as a number of separate but interrelated development projects, each with its own development time line and development team, the general stages often overlap during the creation, maturation, and evolution of a specific resort or resort community. Feasibility Analysis and Planning. The feasibility analysis and planning for a resort or resort community begin when a developer becomes interested in developing property in response to market demand in a particular geographic area. During this stage, the developer evaluates market demand, surveys sites and identifies a preferred development site, formulates a development concept, refines the project concept, determines whether the concept is feasible, prepares site and building plans, obtains the necessary approvals, and arranges the needed financing (see Figure 1-1). In some cases, the developer begins with a determination of the best use for a specific site. In other cases, the developer begins with knowledge about a potential

New Name and Life for Idaho Resort When it opened in 2004, Idaho’s Tamarack Resort was the first all-season ski and golf resort developed in the United States in more than 20 years. Located 90 miles (145 km) north of Boise on the western shore of Lake Cascade, the resort’s ski slopes stretch to the top of West Mountain, 2,800 feet (850 m) above the lake level at a summit elevation of 7,700 feet (2,350 m). Since opening, the resort has sold over 500 residential properties and opened a boutique hotel and conference center; construction of a European-style retail village is underway. Tamarack’s path to success has not been quick or easy. More than two decades ago, the project (first named Valbois) originally was conceived as one of the world’s largest ski resorts in the world, but county and state officials, investors, and community residents aligned against the plan. A decade later, it was reconceived as WestRock Resort, with alpine ski slopes crossing federal and state forest lands, an 18-hole golf course, 850,000 square feet (79,000 sq m) of commercial/retail space, and 3,460 luxury housing and hotel units. The still-outsized proposal failed to gather the public and private support needed to gain entitlements or to raise the investment capital of $271 million. In 1999, French entrepreneur and investor Jean-Pierre Boespflug created a new development program, scaling back and reconfiguring the project to 2,000 units. This new proposal received all entitlements except water rights within a year. National environmental organiza-

tions challenged the resort’s water rights by contending that the projected revenue and absorption targets were unrealistic. The state land board, relying heavily on testimony by the developer’s team, backed the developer. The final challenge was a ten-year Idaho constitutional limit on state land leases, which Tamarack overcame by obtaining unanimous approval from the Idaho house, senate, and governor. Financing was the next obstacle. After seeking capital from institutional debt and equity sources, private equity, and hard money lenders, the team decided on a presales strategy as the lead source of equity. More than $50 million was spent to start construction and complete the first wave of infrastructure and amenities. Residential presales sold 100 percent of available inventory over three-day periods, raising more than $88 million. By 2006, the resort’s six real estate releases netted over $350 million. During the presales, the longer than usual processing time allowed each sale to be fully executed and notarized, with deposits entered into escrow within minutes of lot selection. A trade show highlighted custom homebuilders, architects, and interior designers. The six buildings that compose the recently completed Village Plaza house cafés, boutiques, galleries, resort services, and luxurious condos. Source: Adapted from Matt Shanaberger and Robert Burnett, “New Name and Life for Idaho Resort,” Urban Land, August 2004, p. 110.

SHERRI HARKIN/TAMARCK RESORT

Tamarack Resort is an all-season ski and golf resort in the mountains north of Boise, Idaho.

Introduction 35

COURTESY OF WATG

Vilamoura is a large-scale, multiuse resort on the coast of Portugal. Shown here is the Lake Resort component.

market and initiates a search for the best available site. Experience has shown that the latter approach stands a better chance of success for new development. Too frequently, problems stem from attempts to force a project on a particular site simply because the developer already owns or controls the site and not because the desired use or site is appropriate. Much resort development today, however, involves the repositioning or expansion of existing resort properties, which must necessarily begin with a specific site. Nevertheless, while the initiating factors differ from one case to another, the development practices required to plan a project and ensure its success are similar. Essentially, creating a project concept calls for identifying the nature of the proposed development, including a general land use plan, markets to be served, and general design concepts. Preliminary decisions must be made about the types of required facilities, their arrangement and quality, operational needs, marketing techniques, and many other details. As will be reiter-

36 Resort Development

ated throughout this book, piloting a project through to maturity involves constant thinking and rethinking of the project concept as well as a continual reevaluation of available information and refinement of projections, especially in the case of large-scale, long-term multiuse resort projects. The ongoing effort requires reconnaissance of the prospective market at the same time that product types and densities, amenities, facilities, and buildout periods are conceptualized and potential constraints evaluated. All these items require a preliminary investigation. Thereafter, as each step of feasibility analysis is completed and used in further refining the project, more detailed steps must be pursued. Construction. The construction stage is inaugurated with the ground breaking. This does not mean that the planning stage ends; it remains an ongoing part of the process, along with the marketing and sales program. Especially in phased projects, planning often involves changes to the development concept, development program, and development plans in response to new

information about market demand, site conditions, competition, and other factors. During the construction stage, the developer is exposed to many uncertainties, all of them potentially expensive. Unlike the planning stage, where an option on the land may have kept cash contributions to a minimum, major amounts of cash and human effort will now be committed. The developer must be able to manage the construction activities—ensuring that all players complete their jobs on time and within budget—in an environment characterized by a high degree of uncertainty. In most large resort projects, the developer acts as the master developer and brings in other developers or general contractors to undertake various individual projects; in some aspects of land development, the developers may act as general contractor. The developer plays a vital role in coordinating all the players during the construction process. The developer must also make sure that construction and marketing occur within budget and with long-term management in mind, especially in complex multiphase developments that involve numerous projects or subdevelopers/builders. The construction phase may begin and end many times over the life of a project as different phases and elements are started and completed. Operations/Management. The operations/management stage begins when the first element of the resort is ready for use. This project element may be a hotel or lodging facility, a timeshare or vacation ownership product, a fee-simple housing product, or a recreational facility or program. The operations/management stage extends for the life of the development, even after the original developer may no longer be involved. Revitalization, renovation, and repositioning of the resort or of elements of the resort can be an integral part of this stage of development. The management of the residential component of resort communities differs from that of primary-home residential communities in that owners often reside in their units only periodically. This factor often necessitates more extensive professional property management services, including rental programs, landscape maintenance, and security. Where properties are available for rent, an intensive property management system similar to a hotel operation is required. Where major amenities are involved—such as golf, skiing, or marinas—specialized management structures will be needed. Resort communities and facilities can be owned and managed as commercial for-profit enter-

prises or as part of a nonprofit community association of the property owners. Developers often plan for the eventual transfer of community amenities and management functions to community associations. When a community association is to be thus empowered, the particulars of control should be clearly disclosed in consistent documents covering land covenants, bylaws, sales literature, sales contracts, and property reports. The period of developer ownership and support should be precisely defined, with an appropriate transitional phase and legal documentation of the specific terms and conditions. The access rights of nonproperty owners to facilities (through club ownerships, for example) must be clearly defined. Specialized contracted management can be particularly useful when commercial ownership or community association expertise is not available or is uneconomical. This strategy requires careful negotiation of a management services contract that specifies the level of management involvement and financial objectives. Sustained, effective communication between owners and operators is important to ensure the proper level of management.

Notes 1. Amy Willard Cross, The Summer House: A Tradition of Leisure (Toronto: HarperCollins, 1992), p. 105. 2. Robert A.M. Stern, ed. The Anglo American Suburb, Architectural Design profile 37 (New York: St. Martin’s, 1981), p. 68. 3. Andrea Chambers, Dream Resorts: 25 Exclusive and Unique American Hotels, Inns, Lodges and Spas (New York: Clarkson N. Potter, 1983), p. 36. 4. Stern, Anglo American Suburb, p. 69. 5. Ibid., p. 73. 6. John Bowermaster, “Aspen: The Call of the Wild,” New York Times Magazine, January 21, 1990. 7. Gadi Kaufmann and Adam Ducker, “The Future of Resort Development,” Urban Land, February 2008, p. 40. 8. Ibid.

Introduction 37

38 Resort Development

2. Market Analysis

A well-conceived resort project must begin with a thorough understanding of its prospective markets. Market analysis is fundamental to a development project’s financial feasibility and success. No matter how attractive a project’s physical plan or how resourceful its financing, the numbers will not work unless the project identifies and appeals to appropriate market segments. Market analysis must start with an understanding of the broad national and international demographic and psychographic trends that drive opportunities for resort development. It must then follow up with careful research into the competitive situation for a specific concept and location—including both demand and supply factors—to guide the identification of a strategic insight and a development opportunity. Depending on the objectives, the nature of the site, and the type of development, market analysis may involve several types of markets, including recreational user markets, residential markets, shared ownership markets, day trippers, hotel and guest markets, and commercial real estate markets. As such, market analysis for resort development requires some of the more complex types

Atlantis Hotel and Casino, grand staircase, the Bahamas.

WILSON ASSOCIATES-INTERIOR ARCHITECTURAL DESIGN

of feasibility studies. Further, the potential markets for resorts may be national or even international in scope, unlike most other types of real estate, which typically rely on a more localized market. Market research is particularly important for resort and second-home projects because of both demand timing issues (the decision to take a vacation or purchase a second home is discretionary and can be postponed or accelerated) and location issues (vacationers and second-home buyers can choose to travel or locate to any number of areas around the world). Given that vacations and second homes are not necessities, estimating the quantity and quality of demand does not rely solely on population or household growth. This characteristic necessitates a close examination of the qualitative factors of potential demand. Moreover, resort demand is guided by the economic conditions of the resort’s feeder markets. As a result, the analyst must determine from where the demand for second homes and room reservations is likely to emanate—from the immediate state, from a multistate area, from completely different regions or other countries, or from international locations. As an example, California is a primary feeder market for resorts in Hawaii, Baja Mexico, the desert Southwest, and the Pacific Northwest. Therefore, the demand for resort

Market Analysis 39

GRECOTEL

Families with children often are drawn to resorts with special programs like the Grecoland Club at Grecotel El Greco in Crete.

properties in these locations is in part a function of the California economy. The Caribbean, on the other hand, historically has drawn from the northeastern United States, and increasingly from Europe. Most resorts compete over a much wider geographic area than commercial hotels and traditional primary-home residential communities. Resort hotels in Hawaii draw from the entire United States as well as from Japan, other Pacific Rim nations, Europe, and South America—almost the entire globe. Even regional resorts draw from a relatively broad geographic market compared with other types of real estate. For example, the Semiahmoo Resort in Blaine, Washington, draws approximately one-third of its second-home buyers from Washington State; one-third from outside the state, particularly from California; and one-third from Canada.

Understanding Demographics and Psychographics James Chaffin, president of the Spring Island Company in South Carolina, notes, “Remember, ours is not a need business, ours is a want business. Our markets do have increasing discretionary time and money, but they are increasingly sophisticated consumers demanding higher quality in real value, more services, and more conveniences. We must first find out what people want, and then find out if we can figure out a way to give it to them.”

40 Resort Development

Looking backward, it is easy to see market changes that have occurred. But more important is forecasting the changes that will take place as a development proceeds, particularly those that may create a need for continual evolving of product and strategy even after the resort is up and running. The immediate task is to examine the demand profile ahead and design a resort that will meet those demands. The people who will spend their leisure hours in resorts being planned today can be counted and understood today. Data can be studied that predict demographics over the next decade or two, including age, ethnicity, household composition, income bracket, educational attainment, and so on. From these basic data, it is possible to predict a broad range of consumer wants and needs. Demographic trends suggest slower population growth in the United States and Europe but increased diversity by household type, ethnicity, and geography. International travel is a growing force, both in terms of Americans traveling abroad, and foreign tourists traveling worldwide. An increasingly segmented marketplace will require careful targeting of locations and product types. In the United States, a key market segment is the baby boom generation: the 76 million born between 1946 and 1964, currently representing 28 percent of the population. This segment is not only large, it is also now at the life stage when people have discretionary incomes and the resources to travel and purchase second homes. On the other hand, the baby bust genera-

tion that followed is only half as large, which may have some impacts on future demand dynamics.

CONRAD HOTELS & RESORTS

Household Structure Since the 1960s, the United States has moved inexorably away from the traditional household model of a married couple with several children at home. Today, only 52 percent of households consist of married couples, down from a high of 78 percent in 1950. In 2000, only 23.5 percent of all households accounted for married couples with children at home. Another 28 percent of households were married couples without children at home, 12.5 percent were single parents with children, 26 percent were single people living alone, and 10 percent encompassed other types of family and nonfamily households. Homebuyers, shoppers, and workers consist of the full range of household types, and their makeup helps to determine their choices.1 Understanding today’s evolving demographics is extremely important for product development and marketing. For example, the percentage of single timeshare owners rose from 7.4 percent in 1978

to about 20 percent today. Further, single women are increasingly interested in second-home ownership. Income. Since about 1980, economists have noted the degree to which America’s rich are getting richer as the poor account for a larger percentage of the population and the middle class shrinks. While there is some basis to each of these contentions, the various income trends deserve more detailed examination. For example, while the overall median household income in 2006 was $48,000, there were wide disparities among age cohorts. Households headed by people between 50 and 54 years of age registered the highest median income at about $66,000 a year, followed by $63,600 for households aged 45 to 49 years.2 So not surprisingly, the resort industry has found that travelers in their late 40s and 50s have the most discretionary income and are the dominant segment of second-home buyers. Traditionally, Americans have constituted a more significant travel market than they do today or will in the future. The huge growth of the Asian middle classes and the relaxation of restrictions on travel mean large

The growth of the Asian middle class, increased spending power in Europe, and greater worldwide mobility have expanded the Asian resort market. Pictured: Conrad Bali Resort & Spa, Indonesia.

Market Analysis 41

EDSA

The National Sporting Goods Association ranks swimming the second most popular participatory sport (after exercise walking), and pools are often the focal point of a resort. Pictured: The Westin Casuarina in Grand Cayman in the Caribbean.

numbers of people from those countries now have the resources to travel within Asia and to venture overseas. Europeans as well have enjoyed greater spending power since the advent of the euro. But developers must keep in mind that discretionary income does not have to be spent; it can be invested. And savings rates typically rise as people age. To the extent that the baby boomers view second homes as investments, developers can benefit from consumer interest in investing rather than spending. Ethnicity. One of the most significant demographic shifts in the United States is the population’s growing ethnic diversity. It is estimated that in 1990, non-Hispanic whites represented 75 percent of the population; by 2006, they had declined to 66 percent, while African Americans accounted for 12 percent, Hispanics 15 percent, Asian Americans 4 percent, and mixed-race Americans more than 1 percent.3 Much of the increased diversity is owing to in-migration, especially from Asia and Latin America. A large portion of minorities have middle-class incomes

42 Resort Development

or greater, yet the real estate marketplace has not recognized ethnic diversity sufficiently. Specialized demand is strongest for residential and retail projects, but more inclusive marketing could benefit most land uses, particularly for second homes, resorts, and timeshares. Racial and ethnic stereotyping, however, must be carefully avoided, as such methods are offensive and often illegal. Psychographics and Recreational/Leisure Preferences Resort demand should be approached in terms of the demand for the enjoyment of a particular amenity or lifestyle that is to be offered and marketed to the visitor or buyer. The analysis must consider the psychographics of the market as well as its economics and demographics. It must determine what recreational and leisure pursuits interest particular market segments as defined by geographic area, demographic characteristics, and income level. Specifically, the analysis must determine what combination of leisure pursuits, settings, and residential accommodations are underserved in the market.

It is useful to gather and evaluate data on recreation and sports participation rates to understand what the potential market prefers in leisure activities and whether the market encompasses underserved segments. Each year the National Sporting Goods Association conducts a national survey to determine the recreation and sports participation rates for dozens of recreation/sports activities. These data can be used to identify emerging trends in recreational patterns. For example, golf showed a dramatic increase in participation rates from 1996 to 1998, rising from 23.1 percent to 27.5 percent, but then declining back to 24.4 percent by 2006. Fishing reached peak participation in 2000 at 49.3 percent but then declined to 40.6 percent in 2006, still remaining one of the more popular sports. On the other hand, alpine skiing participation has been relatively static for more than 20 years. Resorts can offer especially attractive environments for many recreational activities. Swimming, the secondranking activity, is a perfect example of an activity that can be more attractively offered in a resort than in most urban areas. (See the discussion of swimming pools in chapter 4.) Many activities are poorly suited to primary residential communities but lend themselves well to a recreational or resort setting. These include fishing, camping, hiking, hunting, mountain biking, backpacking, Alpine skiing, canoeing, snorkeling, scuba diving, climbing, and kayaking. Other activities such as bicycle riding, boating, golf, and tennis can be accommodated attractively in both primary residential and resort environments. A resort must carefully assess how it can differentiate its recreational offerings to attract a market that already has the same offerings at home. Usually, the setting itself is the primary means of differentiation, but other design and programming features should be considered when assessing market potential. Surprisingly, resorts often fail to accommodate some of the simplest activities in an appealing fashion. For example, exercise walking—the top-ranking activity in the sports participation survey—merely requires an aesthetically pleasing pathway or trail. Yet, it is striking how many resorts do not provide attractive walking facilities. Many, in fact, are designed in ways that prohibit walking.

Conducting Overall Resort Market Studies For sizable resort ventures where site plans indicate that they can accommodate a variety of resort uses, detailed market studies should be conducted to indicate the potential revenues and absorption associated with

; residential properties in terms of price, rental rates, ownership types, lots versus built units, single-family versus multifamily units, and owner-occupancy versus vacation use; ; hotel rooms in terms of quality classification, facilities, and average room rates; ; shared ownership properties in terms of interval/ share price, ownership types, and unit sizes; ; potential revenue-producing recreational facilities such as golf, skiing, marinas, tennis, and so on; ; retail commercial areas in terms of tenant mix, supportable square footage, and obtainable lease rates; and ; other types of development opportunities such as recreational vehicle parks. Market Study Components The market analysis should include, but not necessarily be limited to, the following tasks: ; Defining the source markets from which buyers and tourists could be expected to be drawn. Source market definitions should be based on such factors as timedistance relationships, comparable travel costs, the information available at competitive projects, and tourist origin and destination data. Particularly in the post9/11 environment, travel time, cross-border passport control, airport security processing times, and similar “hassle factors” have increased in importance. ; Estimating the potential demand for various types of development within the defined market. Demand estimates should be based on past preferences of different income groups as reflected in the purchase of second homes and building lots and modified to reflect current and projected economic conditions and buyer attitudes toward recreational properties. Estimates should be linked to product type and price range to ensure an appropriate product-market fit and to further reflect the buyer’s proclivity to purchase. ; Identifying and surveying related competitive projects in the primary market area. Projects should be surveyed in terms of such factors as access to market, physical features, recreational orientation and facilities, locational characteristics, and unit types, price ranges, features, and amenities. The intent of such a survey is not only to develop a profile of competitive projects but also to synthesize relevant trends in products and markets and to determine the success of recent projects in the current market. In pioneering locations, or when introducing a new resort into a market, an understanding of the com-

Market Analysis 43

FIGURE

2-1

Factors to Examine for a Resort Market Analysis

Economic Trends

The Site

Local Government Climate

In Resort Area

Attractiveness/Views

Public Regulations

In Market Area

Access

Decision-Making Process

Labor Force/Unemployment

Proximity to Airport

Reaction to Change

Income

Quality of Air Service Surrounding Uses

Survey of Potential Consumers

Population Trends

Utilities and Services

Awareness

In Resort Area

Drive-By Traffic

Likelihood of Purchase Composition

In Market Area Magnitude

Competition

Desired Product

Composition (age, income, family type)

Resort Lodging

; Type

Hotels/Motels

; Season

Tourist Attractions

Resort Condominiums

; Price

Outdoor Recreation

Vacation Homes

; Size

Scenic Features

Timeshares/Vacation Ownership Options

; Access

Cultural/Historic Features

Camp Resorts

; Amenities

Business/Shopping Opportunities

Costs/Rates

; Services

Conferences/Conventions

Quality

Regional/Destination

Absorption Rates

Climate

Occupancy Rates

Image and Reputation

Existing and Proposed Image and Reputation

Tourism Trends Number

Market Area

Origin

Location/Delineation

Seasonality

Size

Composition (age, income, family type)

Existing Penetration

Expenditure Patterns

Remaining Potential

Repeat Visits

Composition

Length of Stay

Access (distance and costs)

petitive set is useful in determining how to differentiate the project. Figure 2-1 provides a framework for organizing the type of data and information necessary for a market analysis. A thorough evaluation of supply and demand characteristics should indicate the product type (including a breakdown of the unit mix), price, and absorption rates that would maximize market opportunities for new resort development. An analysis of the effect of various recreational development programs and facilities on potential sales and prices should suggest a suitable recreational amenity package. Based on the projected increases in visitors and residents, potential demand can be estimated for various types of retail and commercial recreational facilities. The market study findings provide physical and economic planners and market analysts with guidance for jointly developing a realistic plan for land

44 Resort Development

use allocations for the various development components. Ideally, the market analysis can be conducted in tandem with the initiation of the physical land planning. The land planner is able to determine what parts of the site are developable, explore their physical relationships to each other, and calculate the development capacity. The market research provides insights into appropriate products, amenities, and lodging elements for which there are demand. Other disciplines are also necessary, including civil engineering, archaeological and environmental investigations, and a thorough understanding of the legal and regulatory climate affecting the development. Successful resort community developers understand that different motivations and factors influence the purchase decisions of the various segments that make up the residential resort market. Less successful or unsophisticated developers often emulate the physical plan, amenities, and real estate products of existing

resort communities without understanding the market segmentation of the buyers attracted to those communities. Increasingly, the most successful developments are those that can differentiate themselves within an increasingly crowded landscape. While market segments may appear demographically similar, specific segments embody varied push and pull factors. Market analysis for a primary-home development involves a fairly straightforward process. Demand for homes is driven by local employment, population, per capita income, and other key variables. For a resort community, however, several different components of housing demand might come into play, including secondhome investment, second-home use, and preretirement-, retirement-, and primary-home use, each of which is explained below. It is also important to understand that each of the product types may satisfy a variety of purchase motivations during the ownership cycle. What may start as an investment purchase may become a retirement home over the course of years. Thus, an entire development that starts as a resort can change to a largely retirement community at maturity, which will have long-term consequences on the amenity base use, need or desire for transient accommodations, and so on. While second homes can be found in nearly every part of the United States, as well as many countries abroad, certain regions are more popular than others. According to a 2007 report from the National Association of Realtors, two-thirds of vacation-home buyers wanted to be

near a lake, river, or ocean, whereas 31 percent wanted to be near mountains. Of vacation homes purchased in the United States in 2006, 38 percent were in southern states. The Northeast was home to 25 percent of purchases, and 20 percent were in the West. The remaining 17 percent of vacation homes were located in the Midwest.4 Residential Market Segments Each resort community is oriented to different market segments that are based on location, pricing, and the various characteristics and features of the resort. While some communities are completely dominated by a single principal market segment, others appeal to a range of market segments and differ by the proportion of the targeted segments. For example, WaterColor in northwestern Florida draws from a relatively regional market consisting of the surrounding states of Georgia, Alabama, Tennessee, Louisiana, and Texas, but the majority of buyers come from the Atlanta metro area. Doonbeg Golf Club in Ireland has reached an evenly split market of Irish citizens and those from Kiawah Island, South Carolina, with which it shares ownership. Certain developers have a following regardless of where the project is located, and buyers within one of their projects may acquire additional properties in three or four locations in and outside the country. According to the National Association of Realtors’ 2007 Investment and Vacation Home Buyers Survey, vacation and investment home purchases combined

POSS ARCHITECTURE + PLANNING/ STEVE MUNDINGER

Eagles Nest Cottages are among the custom homes at Aspen Glen in Carbondale, Colorado.

Market Analysis 45

PAT SUDMEIER

Esperanza Resort in Cabos San Lucas, Mexico, is a mixed-use resort that includes a boutique hotel and a private residence club. The 63 villas were sold as whole or fractional ownership.

accounted for 33 percent of all home sales in 2007. The most typical reason for purchasing a second home (84 percent) is to use it for vacations or as a family retreat. Other reasons for purchase include to use it as a primary residence in the future, to diversify investments, to rent to others, or for the tax benefits. Second-home buyers can be divided generally into two groups: those who purchase investment properties and those who purchase vacation homes. There are numerous differences between these two groups. Vacation-home buyers typically spend more on their purchases than do investment-home buyers. Vacationhome buyers rarely rent their vacation homes to others. Investment-home buyers often seek properties in a location that is relatively close to their primary residence and typically do not use their second homes personally. Regardless of whether their second-home purchases are vacation or investment homes, nearly all second-home buyers consider these properties to be good financial investments. Second-Home Investors. These buyers are generally attracted to an area by a wide variety of resort experiences. Most such buyers prefer primary resort locations

46 Resort Development

dominated by natural amenities—the ocean, mountains, lakes—and are most likely to purchase properties in communities with an active resort component and an excellent rental occupancy history. These buyers, like other second-home buyers, are attracted to the idea of owning a second home for their own or business use but either cannot afford or cannot rationalize the purchase without rental income to offset the cost of ownership. Beyond the natural assets of the area, second-home investors are interested in the same kinds of amenities that attract resort guests to an area: a wide variety of recreational amenities and experiences, shopping opportunities, restaurants, entertainment venues, and an emotionally satisfying lifestyle. Since second-home buyers by definition want to rent their units when not occupying them, the ease of ownership, availability of high-quality property management services, extent of the community’s marketing efforts, and history of rental occupancy become influencing factors. Further, with the second-home tax benefits eliminated by the Tax Reform Act of 1986, second-home buyers are now principally interested in a property’s cash flow and appreciation expectations. The expecta-

RAIMON LAND PUBLIC COMPANY, LTD.

and image in the market but making it subservient to the broader community/destination experience. Second-Home Users. Second-home users or owners are differentiated from pure investors principally by their financial independence. Given that these owners may not require rental income to support their investments economically or emotionally, they can select from more alternatives. They may purchase in an active resort community or in a more low-key community, depending on family needs and personal preferences. The most affluent buyers in this segment are multiplehome owners who may own three or four homes. The segment includes buyers from around the globe. The options are limitless for this group, and therefore the competition is difficult to define. Since second-home buyers largely do not rent their properties to others and instead maintain their units for personal and business use, access to the properties is a major influencing factor. At the high end of the market, access by air and even the availability of small airports

RAIMON LAND PUBLIC COMPANY, LTD.

tion of rental income must be tempered by realistic considerations. A property located in an established location with already strong hotel demand may do well, but one in a location without a proven track record may not. Also, the closer a property is located to the core amenity (such as the base of ski lifts), the higher the occupancy generally will be compared to a like property a few blocks away. The type of real estate product also plays a part: condominiums generally rent better than single-family homes. The second-home market is typically made up of families whose household heads are in their 40s and early 50s, with incomes in the top 1 to 2 percent of all households. Although interest in purchasing a second home is often strong at household incomes above $100,000, there is a frequently a disparity between this desire and the ability to purchase. Because of the product they provide, some developers target only those prospects above the $250,000 income level. Others, based on positioning, underlying development costs, and so on, can appeal only to buyers with a net worth of between $3 and $5 million. Buyers frequently are drawn from large metropolitan areas, where the stress of everyday life provides an additional motivation to own property in a completely different environment. Although the type of product preferred by the second-home market segment differs among communities and between locations, the market generally favors condominiums or small detached cabins or cottages, with landscaping and exterior maintenance managed by a condominium regime or homeowners’ association. In general, those units that rent best to transient guests are in greatest demand. Therefore, a community’s guest market orientation has a considerable impact on the buyer’s product preferences. For example, in areas dominated by conference guests, a one-bedroom condominium may rent well and therefore have strong buyer appeal; in areas dominated by family vacationers, two- and three-bedroom cottages or condominiums may be the preferred rental product and thus the product most in demand by the second-home investor. Depending on positioning in the marketplace, the role of a hotel also should be considered. A large hotel catering to group business can provide a sense of confidence to the real estate buyer, but it also can become a deterrent, with buyers fearing that transient resort guests may dominate the experience. Increasingly, higher-end developments are downplaying the hotel element, using a hotel brand to establish a quality level

Second homes are a global market, in terms of both supply and demand. The Heights Phuket overlooking Kata Beach includes 51 two- and threebedroom whole-ownership flats.

Market Analysis 47

Trends in Wealthy Market Segments Even during downturns in the housing market, upscale communities around the world are reporting robust activity. This should come as no surprise, as an unprecedented transfer of wealth is now underway. An older generation is passing the torch to their offspring, who are relatively wealthy as a result of the strong economy during many of their peak earning years. Data compiled for a recent study conducted by Mendelsohn Media Research for the American Association of Advertising Agencies supports this thesis. The study focused solely on the U.S. households among the top one-quarter according to income. This group contains some 29 million affluent households with incomes above $85,000,accounting for 57 percent of all U.S. household income. The survey included a comparison of the total affluent marketplace with two distinct subcategories: households with incomes of $250,000 or more, and households reporting liquid assets of $1 million or more. Liquid assets exclude real estate. According to the report, approximately 3 percent of the total affluent group, or 867,000 households, fall into both categories.

Characteristic

Total Incomes over $85K

Incomes over $250K

Assets over $1M

Average Household Income

$157,700

$483,300

$300,400

Average Household Assets

$427,000

$1,374,000

$2,246,000

47.8

50.3

57.4

9

11

32

Average Age Percentage Retired

serving private aircraft are important considerations. For most of the market, however, driving time from the owner’s primary residence is an important, if not pivotal, consideration. People buy second homes to get away, to retreat from their everyday life, to relax and recharge. They also buy second homes to escape harsh winters or hot summers. The locations that appeal to most buyers offer high lifestyle and activity contrasts to the location characteristics of the owners’ primary homes. The three major types of second-home users are weekend-home users, seasonal-home users, and vacation-home users. ; Weekend homes are generally located within a twoto three-hour drive of the owner’s primary residence.

48 Resort Development

The households with high liquid-asset levels exhibit an average household income level of $300,400, twice as high as the total group’s average of $157,000, but 38 percent lower than the income of $1 millionplus asset households. Conversely, liquid-asset levels are significantly high for this group as shown in the accompanying table. Perhaps the most provocative demographic characteristics relate to life stage. While the entire affluent group has an average age of 47.8 years, households with the most significant liquid assets average ten years older. Of the group with incomes of $250,000 and above, 11 percent are retired; the group with $1 million and above in assets are nearly one-third retired. This segment will be responsible for a significant transfer of wealth in the coming years. On a global basis, the 11th annual World Wealth Report produced by Merrill Lynch and Capgemini finds the world’s high net-worth population grew to 9.5 million, with average assets of $37.2 million. A 62 percent share of this population resides in North America, while a similarly productive group resides in Europe.

Owners generally occupy their units on weekends and holidays throughout the year for a total of more than four to five weeks annually. ; Seasonal homes are often located beyond a two- to three-hour drive of the owner’s primary residence. Owners typically occupy the units full time for more than four to five weeks during all or part of a specific season. ; Owners of vacation homes generally occupy their units for less than four to five weeks during a year, typically over school vacations. While some second-home buyers choose condominium ownership, most prefer a detached product: single-family homes, cottages, or cabins. According to the National Association of Realtors’ survey, 59 percent of vacation homes purchased in 2007 were single-family

Methodologies vary when evaluating the ultrarich market segment. The American Affluence Research Center (AARC) defines the affluent segment as the wealthiest 10 percent of U.S. households based on net worth, as determined by the most recent Federal Reserve Board study. Based on this definition, the segment has an average annual income of $256,000, accounts for 36 percent of all income earned, and exhibits an average net worth of $3.1 million. This more refined sample, comprising 11.2 million households, has an average financial asset value of $1.3 million. According to the AARC’s 2006 survey, this group has an average primary residence value of $1.2 million, and among the wealthiest households, about two-thirds had plans for major expenditures over the ensuing 12 months. Given the 11.2 million U.S. households represented by the survey, AARC calculated that the segment represents approximately 605,000 primary and vacation residence acquisitions. Just over one-quarter of the AARC respondents reported owning multiple homes for personal use, and the large majority of those own two homes. Not surprisingly, ownership of three or more homes for personal use tends to be concentrated among the wealthiest groups. Based on the survey of the nation’s wealthiest households, the average value of the primary vacation home was $865,000. For those in the highest net-worth group ($6 million and above), the average value was $1.3 million. The average primary residence market value associated with the multihomeowners was about 60 percent greater than the average value of the segment’s vacation homes.

homes, down from 67 percent in 2006. In addition, a portion of this market buys a lot in anticipation of building a second home at some time in the future. Some lot buyers are attracted by the quality of a golf course and associated club facilities or other amenities in a private community and purchase property primarily to secure access to private club facilities. Many of these buyers never build. In recent years, there has been a declining propensity to purchase lots. In today’s market, with consumers feeling constrained by increasingly complex schedules, there has been a shift to built products that can provide instant gratification and that avoid the complexity of managing a construction process from afar. This is particularly true in offshore locations. Vacation Ownership Buyers. Like second-home investors, vacation ownership buyers are generally attracted

While the overall “affluent” group appears relatively large, a closer look reveals a variety of different segments. Resorts competing for these groups have tried a diversity of techniques to attract their business, and common “hooks” include passive and active recreation, lifelong learning, guided events and tours, health and wellness, culture and entertainment, and culinary experiences. Increasingly, culinary experiences such as cooking lessons and celebrity chefs complement more conventional amenities like golf courses and spas. According to the International Spa Association, 19 percent of U.S. spas now offer cooking experiences that include private lessons and celebrity chefs, 40 percent offer healthy eating classes, and 26 percent offer weight control education. Spa visitors also are interested in environmental sustainability, and more than three-quarters of all U.S. spas apply environmentally sustainable practices such as on-site organic gardens and natural products made from locally grown fruits, vegetables, and herbs. The growing wealthy market segment offers considerable business potential, but a close analysis of income, home values, and life stages reveals a diverse group presenting both challenges and opportunities for creative development professionals. Source: Adapted from Judith She, “Trends in . . . Wealthy Market Segments,” www.bowdensmarketbarometer.com, February/March 2008.

to an area as a result of their vacation experiences. Yet, they usually purchase a “fixed-price” vacation rather than a real estate asset. In addition to all the factors that motivate second-home investors and second-home users, vacation ownership buyers are attracted by the flexibility inherent in a program and the quality of other resorts or locations that are part of any exchange program in which the property participates. Vacation ownership buyers tend to be younger and less affluent than second-home buyers, but they represent a large and rapidly growing segment of today’s second-home market. Preretirement- and Retirement-Home Buyers. The preretiree purchases property with the intent of eventually using it as a retirement home. Typically, the buyer is still working and is five to seven years away from retirement. The preretiree may use the property as a

Market Analysis 49

second home until retirement, thus making it difficult to distinguish the preretiree purchaser from the secondhome purchaser. Even after retirement, many buyers think of their property as a second home if they continue to maintain a home in their previous location. The mindset of a preretiree, however, differs significantly from that of other the market segments. Preretirees are attracted by a community’s recreational amenities but are also concerned about its social fabric. For preretirees, privacy and security issues assume greater importance in view of the likelihood of their establishing permanent residence. As a result, preretirees are more likely than other segments to buy property in a private community. In addition, while preretirees are more likely to buy in a less established community, they are still interested in climate, the quality of an area’s medical facilities, convenience shopping and services, cultural opportunities, the cost of living, and learning opportunities. Preretirees are likely to buy a building lot or a singlefamily detached home. However, they are likely to buy an attached product only if driven to that product by price considerations or if they plan to maintain their existing home and divide their time between their new community and their previous location. Some recreational communities position themselves as “adult” communities and partially target the preretirement market. Retiree households are looking for a place for immediate occupancy. While they may buy a lot and build a custom home, they are typically concerned about the ultimate cost of the home and are drawn to built-for-sale single-family detached homes. It is not uncommon for this buyer segment to purchase both a built product and a lot, living in the former while the latter is being built. Primary-Home Buyers. Primary-home buyers are distinguished from other market segments in that they are either currently employed in the area or planning a move to the area. Many of these households include school-age children and therefore prefer to buy singlefamily detached homes. Primary-home buyers typically make up a small percentage of the buyers in secondhome communities; the market share, however, varies considerably by location.

Residential Market Analysis Market analysis is the study of demand and supply. It considers the demographic and economic characteristics of households within a determined market area.

50 Resort Development

Analysis of supply examines the competition in terms of price, characteristics, and absorption. Market analysis is more art than science because it requires an understanding of a broad range of subjective data. The analysis should seek to answer several questions, including the following: ; Who is the target market? ; What is the appropriate price or rent range for the target market? ; What types and sizes of homes meet the desires of the target market? ; What amenities and features do they prefer? ; What are the expected absorption and market capture rates? ; What is the future supply chain? ; What are the barriers to entry? ; What is the entitlement environment? Because resort-home purchases are generally discretionary purchases that compete with many other discretionary purchases, it is more difficult to determine demand for resort homes than for primary homes. For example, a particular household that fits a certain demographic profile almost certainly occupies a primary home that fits its profile; this same household will not necessarily buy a second home even if its profile points to the household’s financial ability to do so. In addition, while resort-home markets generally track closely with the economic cycle, their swings are often more severe, creating significant risks for the resort homebuilder and developer. Particularly on the demand side, a market study for a resort community differs significantly from a traditional market study. While the process and data required may differ somewhat from one project to another, the basic steps for the demand analysis are as follows. Identify the Market As with all other types of real estate, forecasting the demand for a second-home community begins with who the buyers will be and where they will come from. With primary homes, this projection is fairly straightforward, and the market area is generally quite small. With second homes, however, much depends on the type of resort. A modest resort will typically draw from a nearby market area such as a nearby metro area or a nearby portion of several states. For example, a small community on Maryland’s Eastern Shore would likely

Supply Factors The current and projected stock of second homes that are deemed competitive with a proposed development forms the supply side of the market analysis equation. If the project is of a regional nature, the competitive projects will lie within the region. For example, Hampton Lake in Bluffton, South Carolina, competes for residents with other drive-to resorts in the Carolinas for buyers who come from the Northeast, Midwest, Atlanta metro area, and Florida. This breakdown was determined by investigating other nearby resorts during the project’s preliminary planning. Supply factors include the number of units by type, price range, and absorption. For example, if a proposed project includes luxury condominium units ranging from $600,000 to $1 million or more, the analyst should study resorts marketing similar units at a similar price range to learn the demographics of buyers they draw, where buyers come from, how many units they sell per month (or per year), which units sell best, and what buyers tend to like and dislike about the properties. This information is largely qualitative and must be derived from field

NATELLI COMMUNITIES

draw nearly all its residents from the Baltimore and Washington metro region. But a distinctive community with a highly desirable setting and world-class amenities might draw from a large part of the country or even the world. For example, some resorts in Hawaii draw residents from throughout the United States and Asia. The definition of the appropriate market area is derived by learning and making comparisons from developments similar to the one proposed. Once the market area is determined, demographic trends and projections are studied. Again, because it is more difficult to determine what proportion of the target market actually will buy a vacation home, this exercise is more complex than it is for primary homes. Population growth, income and economic trends, and previous buying patterns are studied. In more distant markets, air travel patterns, visitor volumes and characteristics, horizontal infrastructure and services, and the experience of other market comparables provide better indicators of demand. Basic economics tells us that demand is one blade of the scissors and supply the other. To see the whole picture, however, demand and supply must be analyzed together.

Sunset Island, a resort community of 546 single-family, townhouse, and condo units in Ocean City, Maryland, draws mostly from a regional market of second-home buyers.

Market Analysis 51

LOKAHI VENTURES LLC

Wailea Beach Villas bring 98 luxury residential condominium units to an existing resort in Maui, Hawaii.

LOKAHI VENTURES LLC

Wailea Beach Villas site plan.

research and interviews. In some resort locations, actual transactions data are available through the tax assessor’s office, but in non–public disclosure states and most countries outside the United States, such concrete data are virtually impossible to obtain. The analyst is also challenged with distinguishing between “sales” that are merely reservations and those that have actually closed. Reservations frequently fail to close and thus can vastly overstate real experience. But this is only the beginning to knowing the competition. By the time a proposed project comes online, most of the current projects will be sold out or, if large,

52 Resort Development

may still be selling but may have changed their products and pricing. So it is important to learn what will be competing in the future. Some of this information can be gleaned by contacting planning departments in the region to learn about rezonings. More useful information can be gathered simply by staying well-informed about the regional, national, and even international resort markets. Most real estate market research firms maintain extensive databases of current and planned projects on which to base their analyses. Usually a developer will employ a market research firm with experience in second-home products. There are many

national firms and, in some areas, even local firms with such expertise. Lenders and investors require a solid market analysis before committing to any project. With some kinds of real estate, demand is generally what drives the absorption forecast; supply plays a lesser role. With second homes, however, demand is so elastic that more often supply drives the absorption forecast. By comparing future demand projections with future supply projections, analysts can determine which side of the equation is the constraint or which side may generate an imbalance. If no perceived supply constraint would limit absorption to a level below that projected by demand, demand projections become the absorption projections. In the case of a projected demand/supply imbalance, significant price adjustments would likely result. Qualitative factors, however, play a significant role in real estate, and this is truer for resort properties than for any other type of product. For instance, many markets have planned developments in the supply pipeline that can represent years’ worth of any normal demand expectation. At the same time, it is not unusual for some planned resorts to remain unbuilt. A market study may indicate that the timing for development is not quite right. A regional market may be so saturated that many months or years must elapse before demand will be sufficiently strong to support additional supply. A market study might also indicate that investment in a particular development would yield a higher payoff if postponed to a period when the projected demand and supply balance is more favorable.

A decision to postpone development involves weighing carrying costs against the present value of future income streams. In these cases, a monitoring system can be useful in determining shifts in optimum development timing. A monitoring system will focus on the key variables identified by a market study as driving the demand for a product in an area. Gathering data on a regular basis and comparing them with projections to identify the stage of the market cycle and to forecast imminent turning points in the market should be an integral part of any resort development plan. It can prevent disaster and help a developer secure maximum returns. In summary, understanding and selecting the market analysis technique best suited to a resort community is important because resort projects involve higher risks and more complicated market research challenges than in the case of primary-home developments. In particular, a developer cannot rely on a cursory analysis of the history of comparable developments in the market area. To do so would be shortsighted, as major turning points could be overlooked. In addition, market analysis should identify different demand components and source markets for each component. Timeshare/Vacation Ownership Markets Timeshare/vacation ownership has been a vibrant subclassification of the resort real estate product mix since the 1970s, both domestically and worldwide. It generally has taken three forms of ownership:

OZ ARCHITECTURE; ©FRED J. FUHRMEISTER/TIME FRAME IMAGES

The LEED-certified Village at Northstar in Lake Tahoe, California, includes whole and fractional ownership units.

Market Analysis 53

Caribbean Timeshares on the Rise Timeshare properties are growing as the preferred residential product in Caribbean resorts. Timeshare guests visit regularly and stay longer than other guests, allowing a long-term relationship to develop. Timeshare properties also generate higher income for the resort and place less stringent demands on infrastructure and labor compared with constructing and maintaining a new hotel. The Wyndham Aruba Resort, for example, recognized the need for more rooms and has made the cost-effective decision to develop an adjacent property to provide timeshare units. In addition, timeshare properties within resorts offer extra inventory. Guests seeking reservations at a soldout hotel at Atlantis in Paradise Island in the Bahamas are offered a stay at its vacation ownership property, Harborside Resort; by doing so, the resort not only can charge a significantly higher rate but also now has a potential buyer for minimal marketing dollars. The timeshare industry has evolved from a small number of entrepreneurs to numerous professional resort development companies. Brand names such as Disney, Marriott, Hilton, Hyatt, Starwood, and Fairmont have raised the quality and image of the industry, improving buyers’ perceptions and reducing the anticipated risk associated with this kind of purchase. Over the past five years, the proportion of timeshare industry sales contributed by brand-name hotels grew from 30 to 70 percent. In turn, revenues for brands have increased by as much as 42 percent after they joined the timeshare market. The 3 million timeshare owners in resorts in more than 70 countries are responsible for $3 billion in

annual gross sales volume. The United States and the Caribbean account for 50 percent of world sales, and the U.S. timesharing sector predicts 10 percent compound growth over the next few years. A study by the Caribbean Tourism Organization indicates that timeshare properties are the top vacation preference for travelers heading to the Caribbean because they offer the most widely preferred vacation amenity: the beach. The timeshare industry is now the biggest business in the Caribbean, providing a permanent, sustainable, and major contribution to the region’s economy, which is almost solely dependent on tourism. Timeshare owners and other guests are spending more than $6 million annually in Caribbean communities. The Caribbean Hotel Association, which has strategic alliances with several timeshare operators and supports the advancement of the Caribbean hotel and tourism industry, is working to create greater visibility for the timeshare industry. As developers respond to increasing consumer demand and a willingness to pay more for timeshare products, costs are increasing. However, with about 70 percent of timeshares being financed, developers can expect a considerable amount of advance revenue to support the growth of a resort. Developers should plan on investing almost 30 percent of their net sales revenues in future construction and land acquisition. Timeshares’ attractiveness to resort operators and guests alike have propelled them from a niche product to a mainstream residential option.

; A right to use with no outright ownership of the asset, but use still confined to a fixed calendar period of time, generally a one week increment. ; A fee simple ownership, also confined to a fixed calendar week. Most such offerings break the year into various subsets of time based on seasonality, and price the time accordingly. ; A points based system, also predicated on right to use, wherein a buyer has more flexibility of use (periods shorter than a week, the ability to go at different times of the year, etc.). The price of the purchase is driven by the number of points one wishes to purchase.

States study traces the growth of U.S. timeshare resorts since 1975. It provides an indication of a solid industry that has exhibited generally steady growth, punctuated by two major spurts. The first occurred at the industry’s outset, when between 1975 and 1982 the number of resorts grew by an average of 105 resorts per year. The next was from 1998 to 2001, when the number of resorts grew by an average of 87 per year. In other years, growth has averaged 25 to 30 resorts per year. Developers have built larger resorts as the industry has matured. In 1975, the average resort had about 27 units. By 1990, that number had more than doubled to 56, and today it stands at just over 109 units per resort. Of course, many vacation ownership resorts are much larger. This trend of larger average resort size is likely

The American Resort Development Association’s 2007 State of the Vacation Ownership Industry—United

54 Resort Development

Source: “Caribbean Timeshares on the Rise,” Urban Land, August 2005, p. 46.

to continue, capitalizing on both healthy demand and economies of scale. In 2006, vacation ownership sales totaled $10 billion, and there were nearly 538,000 intervals sold for an average price of $18,500. Today’s Vacation Ownership Buyer A 2006 report entitled Resort Timeshare Consumers: Who They Are, Why They Buy highlights the following characteristics of the U.S. consumer, the products, the purchasing processes, consumer benefits, and community benefits.5 The Consumer

; The median income is $74,000 among recent buyers and $81,000 among all owners. ; About half (51.9 percent) of recent buyers have incomes of between $50,000 and $100,000. ; The median income of all owners is significantly higher than that of all households in the United States: $81,000 compared to $44,685. ; 17.0 percent of recent buyers are singles, compared with only 12.8 percent in 2002. ; The average age of recent buyers is 52. Only 18.5 percent are under 40, while 30.4 percent are 60 and over. Some 23.0 percent are in their 40s, and 28.1 percent are in their 50s. The Product

; Some 49 percent of recent buyers purchased a timeshare at a location within 400 miles (640 km) of their homes, compared with only 41 percent of all owners—perhaps suggesting an increasing interest in vacationing closer to home and a decreasing interest in air travel in recent years. ; The average timeshare owner owns 1.8 weeks. ; Of recent buyers, 55 percent have access to a lock-off unit, as compared with only 43 percent of all owners. ; Of recent buyers, 65 percent purchased points, as compared with only 38 percent of those purchasing in 2002. ; The average price per week among recent buyers purchasing from developers was $15,000. ; Some 23 percent of recent buyers paid more than $20,000 for their intervals. Purchasing Process

; About 57 percent of recent buyers purchased directly from developers, while 43 percent purchased or otherwise acquired their timeshares from other sources.

Included in this latter group are 25 percent who purchased from homeowners’ associations, 7 percent who purchased from previous owners as resales, and 11 percent who acquired their timeshares as gifts, inheritances, or from some other source. ; The proportion of recent buyers purchasing directly from developers has steadily declined from 86 percent in 1996 to only 57 percent in 2005. ; The average recent buyer attended 2.6 sales presentations before making a purchase. ; The opportunity for external exchange now ranks as only the fifth most important reason for purchasing a timeshare, whereas it traditionally was the first or second most important. ; Higher-ranking motivations include overall flexibility of use, certainty of quality accommodations, credibility of the timeshare company, and the opportunity for internal exchange. ; Most recent buyers do not make same-day purchase decisions, citing possible future maintenance fee increases, price of the interval, and concern about the annual maintenance fee. Use of Timeshares

; Of all owners, 36 percent personally used their own timeshare purchases during the past 12 months, while 47 percent exchanged or space-banked it, 4 percent rented it, and 3 percent gave it away. ; Only 9 percent of time owned by all owners went unused during the last 12 months. ; The average size of timeshare visitor parties is 3.8 persons. The average timeshare visitor party spends 8.6 nights per vacation. Fractional Ownership Market Coinciding with the growth of the conventional timeshare/vacation ownership market, a more elaborate form of resort product has emerged, further bridging the gap between whole ownership and timeshare. Since the late 1990s, the fractional market has exploded, much like the early growth of timesharing. As with timesharing, it can take many forms. Most offerings are fee-simple ownership and may offer intervals from as long as weeks to as short as four weeks. Use generally is divided evenly during the peak demand periods of the year on a reservation basis to ensure that all owners have an equal opportunity to secure prime times. Owners can come for virtually any length of stay; they are not limited to a one-week format. Generally, half of the use opportunities are allo-

Market Analysis 55

Vacation club ownership is one of several fractional ownership types. At the Residence Club at PGA West in La Quinta, California, members purchase a one-ninth interest in one of 32 furnished vacation homes.

cated to shoulder seasons. The appeal is to a consumer who cannot justify the cost of whole ownership versus their realistic expectations of use and who wants a different experience than the more conventional interval ownership product. Typically, the owner of this product is significantly more affluent than the timeshare owner and has sufficient assets to purchase a whole-ownership second home (and may have one in addition). In many instances, the appeal of this product is the “club” experience more than the real estate purchase. The number of units contained in these developments therefore tends to be smaller than in timeshares, typically 40 to 60 units, providing a more intimate experience. At the high end of the market, these facilities are frequently referred to and marketed as “private residence clubs.” Physically, the units are usually larger than timeshare units, with sizes typically ranging 1,800 to 2,200 square feet (165 to 200 sq m) containing three to four bedrooms. The general guideline has been that the combined retail value of the shares sold ranges from two to two and a half times the retail value of a comparable wholeownership unit. That retail value compensates for the added cost of a furniture, fixtures, and equipment (FF&E) package, as well as somewhat higher sales and marketing expenses. It is not uncommon for higher-

56 Resort Development

end fractional units to sell at $1,800 per square foot ($18,000 per sq m) (2007 dollars). A good number of fee-simple fractional clubs offer some reciprocal use with a limited number of other resorts to provide a broader appeal. This is similar to the exchange programs offered by conventional timeshares but with a significantly smaller range of possible locations. Some clubs, such as Exclusive Resorts, use a different formula. Rather than provide fee-simple ownership in any single location, they offer access to numerous locations via a membership structure. The owner of the properties is the club, and in exchange for an initiation fee and annual dues, members are provided access to each club-owned property for a prescribed number of weeks per year. These clubs have proven to be extremely popular. International Market International vacation owners fall into one of two categories: “onshore” owners, who own a timeshare within their home country; and “offshore” owners, who own a timeshare outside their home country. Developers generally prefer onshore buyers because they visit more often and constitute a more consistent market. However, market analysts perceive that the major timeshare opportunities of the future increasingly will be

ETHAN KAMINSKY ETHAN KAMINSKY

Castello di Casole offers whole or fractional ownership of restored Tuscan farmhouse estates. A boutique hotel and spa round out this resort.

worldwide, not domestic. Current vacation ownership market polls concur. While the United States accounts for the largest number of timeshares, international markets are increasingly important. Travel patterns influenced by concerns for security, value, short travel distances, and the desire for resort community experiences have benefited resorts in Mexico, Central America, and the Caribbean. Europeans are flocking to traditional vacation spots in Spain, Portugal,

and Italy, as well as fast-growing tourist destinations in Greece, Cyprus, Turkey, Croatia, and Bulgaria. Traditional favorites of the Caribbean have been joined by new largescale developments in the Cayman Islands, the Dominican Republic, and Puerto Rico. European properties are drawing increased interest, particularly for branded products at the higher end.6 Some analysts believe that various resort locales in the Middle East—especially Dubai, Abu Dhabi, and Qatar—offer great potential as well.

Market Analysis 57

The Wellness Trend Healthy adults under 65 need at least 20 minutes of moderate aerobic physical activity five days a week, according to the American College of Sports Medicine. This advice has been heeded by baby boomers of all ages as they seek assistance in remaining healthy. Increasingly, access to health and wellness information and facilities is important for those seeking a resort for a weekend getaway or a second home. Since opening its first community in Tucson, Arizona, in 1979, Canyon Ranch has been considered the forerunner of wellness-oriented resort communities. The concept’s success has resulted in many communities offering full-service spas. To serve the significant market segment that does not have the means for a second home, day spas and resort spas have seen tremendous growth in recent years. Chicago-based Bridgeland Development, LLC, is planning a $240 million family-oriented destination spa on 155 acres (63 ha) at the former Belchertown State School in Massachusetts. The Quabbin Resort Spa will focus on attracting the middle and upper-middle market segments with a full-service spa facility and a 350-room hotel, restaurant, and conference center. Located south of the Quabbin Reservoir, the project also will include an equestrian center and a museum. Owner of eight premier master-planned communities at the southern edge of the Blue Ridge Mountains in the Carolinas, the Cliffs Communities has been another leader in wellness resort communities. While it is well known for a portfolio of high-quality golf and recreational amenities, the company is becoming equally acknowledged for what it describes as a “wellness culture.” While all of the Cliffs’ private residential communities have wellness centers, the organization’s focus is on enabling the residents to recognize and use their own resources for health and wellness by providing them with the necessary tools. In addition to visitor amenities, the Cliffs management fully embraces the health and wellness culture with a 12-week immersion program for employees, stressing education and goal setting. The Cliffs at Keowee Springs in South Carolina is the company’s first family wellness destination resort. The resort boasts a 50,000-square-foot (4,600-sq-m) wellness center and a 23,000-square-foot (2,100-sq-m) full-service spa. Encompassing nearly 2,000 acres (800 ha), it is the first Cliffs community to have a dedicated resort component that will contain 120 fully furnished and professionally managed residential units. The project also includes condominium apartments and lakefront residences. The private component will comprise approximately 700 custom home lots at least

58 Resort Development

one acre (0.4 ha) in size, with prices ranging from $250,000 to $3 million. At the Cliffs Communities, resources are provided to nurture the body, the mind, and the spirit. Wellness coaches and personal trainers are available in each community, and a mobile dietician, behavioral therapist, exercise physiologist, physician, and nurse practitioner are available on an as-needed basis. Their roles are to assist, educate, and encourage, because a healthy lifestyle isn’t necessarily a “walk in the park.” A fully staffed primary-care medical facility is located nearby as a complement to all of the Cliffs properties, located within a 90-minute drive of each other. In addition to the fitness training facilities, many recreational activities are offered, including guided hiking, biking, fishing, canoeing, kayaking, swimming, and more. Classes in aerobics, yoga, Pilates, and spinning (stationary cycling) are also offered, as well as forums on healthy eating. Lunch-and-learn programs have a different focus each month, as do fireside chats in the evenings, often touching on wellness topics. Web conferencing is provided for those residents who cannot attend. A tour of the local supermarket and clubhouse dining that emphasizes healthy menu options and proper serving proportions respond to baby boomers’ passion for food and the role it plays in wellness. If desired, individual wellness prescriptions are crafted to assist residents in achieving their individual goals. The Cliffs communities target the aging boomer demographic, and the average resident age is 62. Children are also well represented and well served. Keowee Springs’ amenities also include a water park, a climbing tower, a ropes course, a supervised section of a creek for children to play in, and a “Kids in the Kitchen” program. Golf is a mainstay at the Cliffs Communities, and the latest addition to the amenity package, the International Institute of Golf at Keowee Springs, recognizes the sport’s continued popularity. Several of the courses, including the course at Keowee Springs, are walking courses. Through its well-integrated combination of facilities, staff, and programming, the Cliffs Communities respond to their visitors’ growing interest in cultivating a healthy lifestyle. Given an aging U.S. population increasingly interested in wellness, they represent a sound investment for the future. Source: Adapted from “Amenity Amplification,” www.bowdensmarketbarometer.com, April/May 2008, and “Development Developments,” www.bowdensmarketbarometer.com, October/November 2007.

Hotel and Guest Market Analysis The success of a resort hotel and guest rental program depends on the developer’s and operator’s understanding of the dynamics of each segment of market demand. Equally important is an understanding of consumer trends such as geographic origin and the demographics and values that influence demand within each market segment. Owing to climatic conditions, lodging demand in many resort areas exhibits distinctive seasonality patterns that are reflected in peak and off-peak periods. Peak periods are generally characterized by maximum published room rates and occupancy levels. In contrast, off-peak periods are characterized by lower published room rates and generally reduced occupancy levels. In certain market areas, intermediate periods marked by moderate demand are referred to as shoulder seasons and characterized by published room rates and occupancy levels that fall below peak periods but exceed off-peak periods. It is not uncommon for off-peak rates to be half of the peak season rates. Given that some groups prefer to take advantage of the cost savings associated with off-peak periods, the growth of the group and convention market segment helps balance seasonal variations in many resort markets. The ability to penetrate this market is affected by a number of variables, including the scale of the hotel, its amenity array, and the convenience of travel. Market Segments Traditionally, several major market segments generate resort market demand. In general, market segments are defined in terms of purpose of trip, seasonality, length of stay, price sensitivity, the nature of the facilities and amenities required, and the number of rooms required. Market segments include the free independent traveler (FIT) market, the group market, the wholesale market, and the commercial market. FIT Market. The FIT market segment consists of destination tourists and other transient travelers. Destination tourists represent visitors who have selected a resort market area as their primary vacation destination and arrange for their accommodations either directly with the hotel or through a travel agent. Because individuals book their own accommodations, little or no discounting is available. A range of on-premises recreational amenities and facilities such as beach frontage, casino gaming, swimming pools, tennis courts, golf, and spa attracts the FIT

segment. In addition, a strategic location near such recreational and entertainment centers as theme parks, national parks, world-class golf courses, snow skiing areas, water sports venues, shopping opportunities, cultural activities, or spectator sports facilities can be an important factor in effectively marketing to the FIT segment. Typically, this segment is not price-sensitive. Peak seasons and weekends account for significant FIT demand. The FIT market encompasses many secondary demographic segments, including singles, couples, and families—all in a variety of price ranges. Condominium and second-home rental programs are particularly appealing to these travelers. Specifically, families and extended families often seek accommodations larger than a single hotel room. Wholesale Market. The wholesale market segment includes tourists who purchase discount packages that include any combination of hotel, airfare, food and beverage, automobile rental, tours, or discounts at retail outlets. Travel agents and tour operators—the primary vendors of discount packages—typically negotiate room rates with a range of resort properties on an annual basis. The negotiations specify the number of rooms booked and the time of year that the rooms are available. Accordingly, room rates are generally much lower relative to other demand segments. Discount packages are popular, particularly among less experienced tourists or those going to a new destination with which they are not familiar, because of the assurance that travelers’ full range of needs will be addressed without unexpected expenses. Some consumers purchase discount packages based on the price/value relationship, while others like the convenience of making a single purchase for all their vacation needs. Wholesale travelers are generally extremely price-sensitive and therefore tend to travel during off-peak seasons. As with the FIT market segment, the wholesale market segment looks for the availability of a range of on-premises recreational amenities and facilities, coupled with a strategic location near recreational and entertainment centers. Group Market. The group market segment generally includes three major segments: corporate group meetings, association groups, and special-interest groups. Because of the nature of the clientele and the source of business, room rates for this segment are negotiated and specify the number of rooms booked and the time of year that the rooms are available. One of the most significant trends in the operation of resort hotels over the past 20 years has been the

Market Analysis 59

EDSA

Large hotels often rely on conferences for a major portion of their business. Grand Cypress Resort in Orlando, Florida, features two resort hotels and a self-contained conference center.

marked shift to conference business as one of the major contributors to resort occupancy. Although a limited number of resort hotels rely almost entirely on occupancy by free independent travelers, most have mounted major efforts to attract conferences and business meetings as an economic necessity. For most large resort hotels, between 45 and 70 percent of occupancy now takes the form of group business. The corporate group segment consists of groups such as individual companies and professional organizations that select a resort as a meeting location. The purposes of these meetings are generally twofold: to

accomplish the business of the organization and to provide an opportunity for group members to socialize. In addition, incentive travelers—travelers who take advantage of travel programs sponsored by a company or a corporation as a reward for employee service or achievement of a particular objective or goal—are included in this category. These groups generally require audiovisual equipment, banquet facilities, and professional support in technical and meeting planning. Golf is a particularly important amenity for this segment. Association groups are professional or fraternal groups in excess of 75 members that meet to discuss new developments or issues affecting their area of expertise or concern. This segment includes trade associations as well as industry and trade exhibitions. The association group market generally exhibits price sensitivity and prefers to schedule events during off-peak periods. Special-interest groups are made up of individuals who travel to a resort to partake of a specific activity. The category includes social organizations and individuals who share a common set of interests, goals, or objectives. Meeting purposes include varied forms of information dissemination, sales, or training. The segment also includes professional seminars designed primarily for presenting and discussing specialized information. Such seminars may be hosted by companies that provide topic-specific seminars or by business organizations that provide seminars on a recurring basis. The special-interest segment is similar to the associa-

TETON MOUNTAIN LODGE

Teton Mountain Lodge in Jackson Hole, Wyoming, features a range of luxury accommodations from studios through three-bedroom suites with fully equipped kitchens.

60 Resort Development

RITZ-CARLTON

The Ritz-Carlton Lake Las Vegas has been a key component to the success of the resort community.

tion segment, but these groups are often less formally organized and do not necessarily meet on a regular schedule. In addition, gatherings of special-interest groups are often smaller than association gatherings. Because of core design issues, hotel property developers must realistically assess which group markets are available to them and the degree to which the hotel will rely on the group business segment. The vast majority of groups number fewer than 100 people. Thus, it is likely that any single hotel will be accommodating multiple groups at any point in time and will have to provide adequate spaces for breakout periods, assembly, displays, and a variety of room configurations to insure that the groups do not interfere with each other. Typically, the greater the reliance on group trade, the larger the meeting space requirements. Smaller hotels that cater primarily to the FIT market may only have 30 to 50 square feet (3 to 5 sq m) of meeting space per sleeping room, while larger properties with more reliance on the group segment will have from 75 to over 100 square feet (7 to over 9 sq m) of meeting space per room.

Commercial Market. The commercial market segment, made up of both domestic and international business travelers, typically represents a minor source of demand for resorts. Business travelers include managers at all levels, sales representatives, official trainees, and recruits. A crucial criterion in their selection of lodging facilities is location. Primary locational considerations include proximity to centers of business activity and ease of access to and from airports. The typical length of stay is approximately one to two days, while seasonality and price sensitivity are limited concerns. Commercial market demand is typically concentrated on Monday through Thursday nights. In many resort markets, however, some commercial visitors will extend their stays through the weekend to enjoy the resort and its amenities.

Analysis of Supply and Demand An accurate hotel market analysis calls for a close consideration of several interrelated circumstances, including location of the subject site with regard to market demand generators, the sources and strengths of transient travel, location of competitive properties and

Market Analysis 61

CAROL RUNZEL

The Hyatt Regency Huntington Beach Resort & Spa in southern California combines conference facilities with resort amenities to capture a broadbased clientele.

their physical and operational characteristics, current and future travel patterns, economic growth within the market area, and special local conditions and trends. The analyst must collect both quantitative and qualitative data. The market area for a lodging facility is the geographic region embodying the facility’s major sources of demand. To determine the boundaries of the market area, the market analysis should survey competitive hotels and gather data regarding the segmentation and origination of their major sources of business; the travel patterns and trends of vacation, commercial, and convention visitors to the proposed site; the distance between the proposed site and major recreational centers (theme parks, public parks, ski slopes, oceans or lakes, golf courses, tennis facilities, and the like); expenditure patterns of area visitors; and existing socioeconomic boundaries. Perhaps most important is understanding the qualitative differences between com-

62 Resort Development

petitive properties and the proposed project. It is crucial that the analyst paint a realistic picture of the competitive status of the proposed resort property. Macro Demand: Four Categories of Data. The researcher typically begins by understanding macrolevel demand. This requires a study of national or international travel statistics and broad economic trends and projections. The data to be collected can be broken into the following four broad categories. ; Category 1 consists of information directly pertaining to the use of resort accommodations. These data relate to the number of travelers using resorts in an area—a direct measure of lodging demand. They most clearly indicate the current status of the resort industry because the data require little interpretation. Examples of Category 1 data would include a survey of the number of travelers using resort accommoda-

tions and quantification of the occupied resort rooms within a specific macro market over a certain period. ; Category 2 information pertains to travel that may entail the use of resort accommodations. This type of data does not directly reflect demand for resort accommodations; rather, it provides a basis for drawing inferences that could lead to supportable estimates. Examples of Category 2 data include information on the amount of airline travel, attendance at recreational attractions, and the number of travelers visiting an area in general. ; Category 3 data indicate the general condition of a regional or national economy and describe the broad demographic trends that can indirectly impact the use of resort accommodations. Like Category 2 data, this type of data does not directly reflect the demand for commercial accommodations; only indirect inferences can be drawn. Examples of Category 3 data include statistics on population growth and disposable income and various types of economic trend indicators. ; Category 4 information details specific characteristics of travel demand (such as reasons for travel, types of accommodations selected, length of stay, and size of party). These data are used to evaluate the relative competitiveness of various types of resorts within a specific market. The best type of data for quantifying resort demand, evaluating historical trends, and formulating projections is Category 1 data. This type of data can be obtained nationally from government-administered sources, such as SECTUR and FONATUR in Mexico, charged with the task of tracking travel data of all sorts. On a regional or micro level, most analysts develop their own information on the specific market areas surrounding their subject properties and then augment their findings with competitive data provided by third-party data services and affinity organizations such as the Caribbean Tourism Organization. Micro Demand. Once a broad picture is established, the analyst needs to focus on more specific demand characteristics. Accurate quantification of micro demand is essential. The room night, defined as one transient room occupied by one or more persons for one night, is the unit of measurement commonly employed. The total number of room nights within a defined market area represents the total potential demand, which can be measured daily, weekly, monthly, or yearly, depending on local travel patterns. The total demand for transient accommodations within a micro market is generally quantified by using

the build-up approach based on an analysis of lodging activity; secondary support is provided by the build-up approach based on an analysis of demand generators. To apply the build-up approach based on an analysis of lodging activity, an area’s transient room-night demand is estimated by totaling the rooms occupied in competitive resorts. Through interviews with resort operators, owners, and other knowledgeable individuals, occupancy levels for individual lodging operations and area occupancy trends can be established. The area’s total room-night demand can be quantified and segmented by type (group, FIT, and so on) by combining the estimated number of occupied resort rooms for each property and adding a factor for latent demand. The build-up approach based on an analysis of demand generators involves interviews and statistical sampling market research. Lodging demand is estimated by totaling the room nights generated from sources of transient visitation. Drawing from a sample of major transient generators located within a defined market area, interviews and surveys are conducted to determine the amount of demand each source attracts during a specified period. When these data are combined with other survey information such as facility preferences, price sensitivity, the nature of the demand, and travel patterns, the analysis of demand generators provides both support and amplification for the findings derived from the analysis of lodging activity. Analysts often use a combination of the two procedures. An overall area demand is first established by analyzing lodging activity. Then selective interviews are conducted at one or more major generators of visitation to verify the transient demand and establish traveler characteristics. By defining not only the quantity of transient demand but also its lodging characteristics, the analyst should have enough data to develop a micro demand projection. Because each market area is unique, the analytic approach must be adjusted to account for particular demand characteristics. For instance, in emerging markets or when introducing a new type of hotel into an area, it is frequently necessary to go beyond the statistical approach and conduct primary research as well. This can take the form of focus groups, meeting planner surveys, and in-person interviews with tour operators and other travel providers. Lodging Supply. The supply side of the analysis can also be broken into macro and micro factors. As with demand, macro refers to the national or international supply, while micro includes characteristics of the specific market.

Market Analysis 63

Macro Supply. Smith Travel Research (STR) and PKF

WILSON ASSOCIATES INTERIOR DESIGN

Hospitality Research are two consultants that quantify the supply of hotels and resorts in the United States and Canada. STR tracks the number of lodging units currently operating in the United States and Canada and compiles occupancy, average room rates, and other operational statistics about thousands (but not all) of hotels. This information is then published in composite form and made available to their subscribers. Both STR and PKF also can be commissioned to generate specific data such as information about market share and penetration or to produce a trend report detailing supply, demand, occupancy, average rates, and RevPAR (revenue per available room) trends for a particular collection of hotels. While this information can be valuable in mature markets, it may have limited applicability in emerging destinations with no previous experience. Micro Supply. Another term for the micro supply of hotels and resorts is competition. A competitive analysis begins with a classification of lodging accommodations by the type of facilities offered, the class, annual

occupancy, average annual room rates, and the location. Compiling this information on all the hotels and resorts within a local market area enables an analyst to identify the primary and secondary competition and evaluate the relative competitiveness of each property. These tasks are fundamental to the build-up approach based on the analysis of lodging activity. The analyst’s next step is to determine the future guest room supply, considering both the addition of new properties into the market and the removal of existing obsolete rooms. From this information, the total room nights available can be projected. The latent demand that can be accommodated and the total usable latent demand are then calculated to project areawide occupancy. The last step in the market analysis is to evaluate the relative competitiveness of all hotels within the market area. This evaluation forms a basis for projecting the future market share of a proposed resort. The ultimate goal of the market analysis process is the identification of a currently underserved market

The developers of Montage Laguna Beach in southern California identified demand for a luxury hotel and tailored the product to meet this demand.

64 Resort Development

EDSA

A shopping village is part of Disney’s Old Key West Resort in Orlando, Florida.

demand. Once the market share has been determined, the number of room nights captured and the resulting projected occupancy can be calculated.

Commercial Real Estate Markets Shopping is one of the primary activities of vacationers, so it follows that resorts can meet some shopping demand on site. Commercial components associated with resort markets can range from a simple camp store to sophisticated niche boutiques and from varied food, beverage, and entertainment venues to mass-market retail, service, and office complexes. The purpose of these facilities can extend from providing essential household supplies and traditional souvenirs to offering alternative leisure activities, elaborate home and lifestyle support services, and business support services for the rapidly growing telecommuting (full-time and part-time) workforce. The potential role for commercial facilities/ services as part of the recreational or vacation-related experience is considerable and growing. Retail facilities can boost a resort’s revenues considerably. A well-planned retail component adds to the visitor

and resident experience. It can act as a gathering place, before or after other activities. Retail activity can even draw more visitors and keep them at the resort longer. Conventional retail market analysis can offer some clues regarding the level of demand for some commercial products and services such as simple grocery products, while general patterns of expenditures can be tracked for impulse clothing shopping and other traditional vacationrelated acquisitions. The demand for other types of goods and services is, however, more difficult to predict. Leisure, the outdoors, socialization, and entertainment form the basis for tourist-based retail villages. Creating the right mix is important because of retail’s susceptibility to changing consumer trends. Unlike traditional shopping centers, successful tourist-based retail villages or centers usually have the following characteristics: ; The businesses are geared to visitors and unable to survive on local traffic alone. ; The village center offers a distinct ambience and strong pedestrian character. ; Shopping creates an experience that increases the lifestyle appeal of the resort.

Market Analysis 65

OZ ARCHITECTURE; FLASH PHOTOGRAPHY

At 22 Station in Squaw Valley, California, a ski in/ski out village combines first-level shops, restaurants, and galleries with upper-level condominium residences.

; The retail component presents a distinctive and consistent architectural design and merchandise that conveys a unifying theme. ; A variety of eating and drinking establishments help to create a social ambience. ; Usually there are no anchor tenants. ; Logo shops and high-end merchandise offer niche appeal to tourists. ; An ongoing program of events and activities are part of the offerings. A developer or operator contemplating a typical recreational-based commercial business needs to approach the initial market analysis by relating the concept under consideration to specific examples of the type of environment envisioned. For more unusual niche concepts, such as a shop selling indigenous crafts, the market potential is not likely to be quantifiable in conventional terms and must instead rely on common sense and the operator’s ability to keep abreast of the needs and wants of the resort’s users. The size, location, and nature of ancillary commercial elements in resort or recreational projects are derived from three principal influences: purpose and character of the resort; the size, competitive mix, and character

66 Resort Development

of the market; and the availability and type of existing off-site facilities. These commercial components may be subsidized in some form by a master developer, operated as freestanding profit centers, or owned and managed by independent operators. Type of Resort Many different project types have been outlined elsewhere in this book, each with its own particular needs, features, and demand for commercial facilities. For example, a remote seasonal hotel destination may feature specialized sports clothing and equipment shops, whereas a new large-scale retirement community may require a full complement of seemingly conventional stores and service facilities. A luxury resort may feature high-end boutiques and galleries. A recent trend is for resorts to sell some of the products they use, from toiletries and bathrobes to deluxe linens and mattresses. Whether a second-home community is reachable primarily by car (for weekend use) or by air (for longer stays) is another example of the myriad variables that affect the relative importance of locally available commercial operations. With the exception of some hotel-anchored destinations, most successful recreational projects will not

succeed without proximity to a minimum of essential retail/support services. In their most highly refined form, commercial facilities can become a major attraction in and of themselves. More than just a shopping opportunity, a village center can set the tone for a resort, expand on the amenity orientation, and provide a gathering place and opportunities to walk, window-shop, people-watch, and so on. Resort shops offer a mix of necessities and luxury goods for residents, and they tend to be heavily oriented toward restaurants and entertainment. For many years, European resorts have been developed around town or village centers. A few examples are France’s Cannes, Italy’s Portofino, and Britain’s Brighton. Ski area villages developed in the past several years (such as Whistler, Squaw Valley, Northstar, and Sun Peaks) with resort accommodations built over retail space are good examples as well. Lake Las Vegas Resort (see case study, chapter 7) is built around a village center filled with shops and restaurants that add value and an activity node. WaterColor Inn and Resort (see case study, chapter 7) also has a village center for its retail core, but it also offers a more conventional shopping center to house the large supermarket, drugstore, and other stores that residents want but that do not suit a village center model. A major factor in evaluating the need for commercial facilities (which, unfortunately, is not synonymous with substantiated demand) is an understanding of what facilities and services can be profitable and, if not directly profitable, critical in helping to attract, maintain, and expand the overall project’s user base. Commercial facilities can offer six broad types of goods and services:

the total potential business volume in any one year could be stretched relatively evenly throughout the year, which invariably is not possible in a resort location. Unlike their metropolitan-based retailers with a more consistent customer base, most businesses in resort locations cannot justify the space, inventory, and experienced staff needed to serve the infrequent days of high-volume sales potential. The situation becomes even more uncertain given the risks of unfavorable weather, restricted travel considerations, or other factors that can wash away the biggest potential sales days of the year. An important factor to consider is the sources of demand surrounding a proposed development. The critical mass sufficient to support a collection of commercial establishments may already exist but remain underserved because of a perceived lack of appropriate locations, conservative local business practices (including approaches to financing), and a general slowness in defining or recognizing the magnitude of recreationbased demographic and economic change. Obviously, great care must be applied when estimating demand potential within the area surrounding a given project, and critical distinctions must be made between the local population and visitors. Finally, a significant determinant of the prospects for operating local commercial establishments relates to the possible interest, depth of talent, and financial resources represented within the local population. A base of skilled people located in or near the resort with capital sources and with an interest in establishing their businesses in recreational environments can provide an important source of entrepreneurs and labor.

; essential provisions such as groceries and drug store items; ; comparison items such as clothing, personal and home accessories, and electronics; ; alternative leisure activities for persons not engaged in the project’s primary recreational or business purposes; ; collectibles not available elsewhere; ; medical and other professional or personal services; and ; essential dining and entertainment services.

Competitive Context Many well-positioned resort locations are rendered unmarketable because they lack reasonably convenient or appropriately targeted supporting services. In some cases, commercial operations at a new resort can take advantage of an established destination’s business infrastructure. Not only do existing facilities provide convenience for the visitor to the new project, but the presence of such operations enables a new development to pick and choose what might make the sensible additions. Such was the case with WaterColor Inn and Resort in northwest Florida, which built upon the existing commercial offerings at the adjacent resort, Seaside, rather than try to compete with those businesses. The result is a broader mix of shops and services that better serves the residents of both communities.

Market Size and Characteristics The challenge of programming commercial facilities for resorts—already complicated by the discretionary nature of spending on recreational activities—is compounded by issues of seasonality and peak demand. Many commercial establishments might be economically viable if

Market Analysis 67

MICK MATHEUSIK

At Kicking Horse Mountain Resort in British Columbia, Canada, a general store has become a destination apart from the resort.

Depending on the extent to which a new resort can draw from surrounding markets, there may be an opportunity to create an inflow of demand, particularly with “experiential”-based resort retail offerings. An example is the Kicking Horse General Store at Kicking Horse Mountain Resort near Golden, British Columbia, in the Canadian Rockies. Following the master-planned ski resort community’s vision and based on an extensive market and trend analysis, this nostalgic general store’s unusual combination of gourmet, convenience, comparison, and gift items in a rustic period setting quickly made it profitable, despite the limited visitor market at Kicking Horse. By catering to consumers’ five senses, the store’s distinctive design, theme, and merchandising mix have made it a must-see regional attraction. Distance from a resort community to such commonly needed facilities as a convenience grocery store, drugstore, service station, and restaurants should not generally exceed 15 to 20 minutes by car. Other needs such as hardware, clothing, medical facilities, and so on can range farther, but one-way distances beyond 30 minutes stretch most visitors’ comfort limits.

68 Resort Development

Where existing commercial offerings may be underserving a market, the decision to construct additional facilities can be attractive. The potential benefits may include both direct economic returns and significant indirect marketing and image-related bonuses. When studying the role of existing commercial facilities—in particular, retail operations—it is valuable to remember that the business life cycles of retail centers and operators may be short-lived, especially at resort destinations. The dynamics of retailing therefore can enable a new entrant with a superior location or product the possibility of successfully realigning a market that otherwise may seem oversupplied. Many successful retailing operations actually can grow out of creating a market where none was apparent before.

Notes 1. Data tabulated from Table DP-1, Profile of General Demographic Characteristics: 2000, factfinder.census.gov/servlet/QTTable?_ bm=y&-geo_id=01000US&-qr_name=DEC_2000_SF1_U_DP1&ds_name=DEC_2000_SF1_U&-_lang=en&-_sse=on. 2. Table HINC-02, Age of Householder—Households, by Total Money Income in 2006, Type of Household, Race, and Hispanic

3.

4.

5.

6.

Origin of Householder, pubdb3.census.gov/macro/032007/hhinc/ new02_001.htm (accessed February 6, 2008). ACS Demographic and Housing Estimates: 2006, factfinder. census.gov/servlet/ADPTable?_bm=y&-geo_id=01000US&qr_name=ACS_2006_EST_G00_DP5&-ds_name=&-_lang=en&redoLog=false&-format= (accessed February 6, 2008). “Vacation-Home Sales Rise to Record, Investment Sales Plummet in 2006,” www.realtor.org/press_room/news_ releases/2007/phsi_apr07_vacation_home_sales_rise.html (accessed February 8, 2008). Ragatz Associates, Resort Timeshare Consumers: Who They Are, Why They Buy (Washington, D.C.: American Resort Development Association International Foundation, 2006). Mary Scoviak, “EMEA’s Next Generation,” Hotels, February 2007, p. 44.

Market Analysis 69

70 Resort Development

3. Feasibility Analysis and Financing

Feasibility analysis and programming involve defining and testing a project concept and program for a specific site. They include the preparation of a detailed financial model and a financing plan. The feasibility analysis and programming process varies with the situation and the developer’s objectives. Projects sometimes begin with sites but more often with concepts and ideas or perceived opportunities. Ultimately, the process analyzes the opportunities associated with a particular site. Through constraint analysis, market analysis, financial feasibility analysis, and programming, the developer analyzes development opportunities and develops, tests, and refines the physical and programmatic elements of a project. Continual reevaluation of project feasibility and the program is required during all stages of the development process. A comprehensive feasibility analysis seeks to determine whether the economic, legal, political, physical, financial, and marketing environments favor implementation of a proposed project. Simply put, the feasibility analysis and programming process is intended to identify an optimum development program that will succeed finan-

Montage Laguna Beach main swimming pool.

MONTAGE HOTELS & RESORTS

cially. The process usually tests several different concepts to determine whether any are viable or optimum. Feasibility analysis must contain alternate sensitivities that provide for unforeseen changes in circumstances. Even the best-conceived development plans can be undermined by changes in economic conditions, delays in obtaining government approvals, unexpected construction delays and cost overruns, slower-than-forecast housing sales or hotel revenues, lower-than-projected revenue from other components, higher-than-expected interest rates, and a host of other problems. The more complex the project and the longer the time required to complete it, the more uncertain is its financial feasibility. Given the element of unpredictability in any project, feasibility analysis operates in the realm of probability. It can be used to make reasonable estimates of a project’s financial practicability under a variety of scenarios. While it cannot ensure a project’s success, it is an invaluable tool in helping developers decide whether to proceed with a project and helping lenders or investors decide whether to finance it. This chapter reviews feasibility analysis and financing by first discussing the development program and its many possible elements. The second section covers the site selection and analysis process. The third sec-

Feasibility Analysis and Financing 71

GRAND CAYMAN MARRIOTT BEACH RESORT

The resort concept should be reflected in every aspect of the property. Pictured: The lobby at the Grand Cayman Marriott Beach Resort in the Caribbean.

tion presents a detailed hypothetical financial model for a multiuse resort, and the fourth section discusses the financing of a resort property.

Development Program Establishing the right program for a successful resort is a challenging undertaking. The programmatic elements of a resort may include recreational facilities and programs, housing units, hotel and conference facilities, commercial facilities, community infrastructure and services, club membership structures, and community governance structures. The development program typically describes the location, size, number, and character

72 Resort Development

of these elements. Phasing, which describes how the facilities and programs will be staged over time, is central to the product programming process and often critical to financial feasibility. The development program and amenity program must be determined early in the process and should be adjusted and refined continually throughout the planning, construction, and operations phases. Flexibility is essential. The more latitude that can be built into the development program upfront, the easier it will be to adjust to changes in the market and other factors that affect the project’s potential success. A resort developer embarking on a development process should first consider a range of options and identify

a general project concept. Many variables in combination determine the appropriate concept. The developer might begin with a certain site whose best use is readily apparent, though not automatically assumed to be appropriate or available under applicable entitlements. Or the developer might be interested in tapping a potential market and therefore seek to identify an appropriate site. Experience has shown that the latter approach stands a better chance of success. Too frequently, problems stem from attempts to force a project on a particular site simply because the developer owns or controls the land, not because the site is necessarily appropriate. Nevertheless, while the initiating factors differ from one case to another, the development process that guides a project to success exhibits general similarities across circumstances and project type. Essential to a calculated resort development process is the constant fine-tuning of the development concept, the continual reevaluation of available information, and the subsequent refinement of projections. This approach requires the developer to survey the prospective market while simultaneously conceptualizing the product type, project densities, costs and income projections, and buildout periods for evaluation against the constraints projected over the development period. All these considerations require preliminary investigation. Yet, as each element of feasibility is addressed and used in further refining the development concept, more detailed steps are essential. Without the careful coordination of development considerations, a resort project may easily be flawed from the start. One mistake often made in this process is to contract with an outside firm for a one-time market and feasibility analysis at the outset of a project, without bringing the consultant back to review, update, and refine the development concept when conditions change. Establishing a psychological goal and specific target market helps determine a project’s image or intended ambience, which in turn influences decisions on facility types, facility arrangement and quality, operational needs, marketing techniques, and many other details. Chapter 4 discusses the myriad product and design choices to be considered in planning a resort property. The importance of developing a long-range development concept early in the planning process cannot be overstated. Certainly, small projects will experience fewer complications, but in any situation that involves phased development, the initial actions and expenditures must support the long-term goal and development

budget, which points to the importance of establishing development standards. To this end, the developer must answer a plethora of detailed questions. In fact, building resort communities is not unlike building new communities in general. The resort developer needs to consider the roles he or she will play throughout the life of the project—from its beginning to its maturity. Those roles may include an involvement in hotel and recreational facility operations, home construction, new home sales, real estate resales, rental programs, retail management, golf course management, and so on. Chapter 5 addresses the issues associated with resort operations and management. The Amenity Program and Strategy To begin, the developer must consider what amenities to include in the project. That decision should draw on the market studies already completed. At the outset, the developer should identify the natural amenities such as beaches, wetlands, streams, hillsides, woodlands, and vistas to be protected and then determine how those amenities can be enhanced. For example, a beach can be created on an existing lake, or a woodland can be made more accessible with trails for hiking, cross-country skiing, or mountain biking. An existing facility such as a theme park, historic building, or ski facility may also serve as an attraction. Following this assessment, the developer should consider the creation of additional primary amenities. If golfing, skiing, boating, or tennis are to be primary attractions, they demand an early and obvious commitment. The following four major questions should guide determination of the amenity package: ; How does the amenity fit into the total project— physically, economically, and thematically? ; What quantity of the amenity should be provided? ; What should be the timing for construction? ; Is the cost justified and, at a minimum, fully recoverable in the business plan? In general, created amenities should be planned and constructed well or not at all. Since the purpose of a resort is to offer a pleasant and substantive experience, inferior facilities that disappoint or frustrate the user are worse than no facilities at all. The selection and quantity of amenities depends on the type of consumer targeted, the significance of other attractions, and the project’s lodging types. Added ame-

Feasibility Analysis and Financing 73

EDSA

An expansion of the Dubai Creek Golf and Yacht Club added 94 private villas, a hotel, spa, and conference facilities to the existing marina and golf course.

nities can provide an alternative to heavy use of other recreational facilities, but only if they respond to consumer interest. To some degree, amenities can be added or extended as demand grows. The amenity strategy also must formulate an operational plan that delineates who will develop, own, and operate the facilities and for how long, as well as who will use the facilities on what terms. The challenge is to plan a specific mix of recreational facilities and programs that best reinforces the development’s real estate and operating objectives. Potential guests and property owners closely consider a resort’s range of activities and the quality of its facilities and amenities. As a result, two sometimes conflicting realities drive amenity planning: the amenity benchmark established by competitive resorts and the patterns of consumer use. Even though demographic trends and participation rates may suggest that tennis is waning or that community pools will attract only limited use, departures from the market standard for inclusion of tennis courts and swimming pools may prove risky. On the other hand, no developer wants to overspend on amenities that remain relatively unused. Thus, a careful assessment of the costs and benefits associated with each amenity is essential. A successful strategy for determining the mix of recreational amenities should

74 Resort Development

; match the mix, quantity, and quality of amenities to the project’s market concept; ; set clear priorities for the expected roles of the amenities over the project’s life; ; balance the timing and magnitude of capital expenditures for amenities against the benefits derived from them; ; ensure adequate developer control over the operations and management of the amenities; ; allow the developer sufficient flexibility to react to changing conditions; and ; provide for rational transfers of ownership, use privileges, and management control as the project matures. Clearly, an amenity package should reflect the nature of the overall project and the type of residence or accommodation provided. A conventional hotel room or timeshare unit is likely to create more demand for recreational services than a single-family, fee-simple second home, which is considerably more self-contained and less intensively used. Condominiums available for rental fall somewhere between these two types of accommodation in terms of intensity of use and their associated demand for recreational facilities. While the nature of the residential uses may not matter to the

short-run investor, residential types, user habits, and satisfaction with the quantity and quality of demanded and provided recreational amenities may affect future land values and potential profits from overall operations. In addition, the developer must relate the amenity package not only to resort visitors and guests but also to the surrounding community. This relationship is particularly important when facilities such as ski resorts depend on an operating cash flow to support themselves and must at times rely on off-site consumers for a substantial part of their revenue. In some cases, however, the amenity package is designed for the exclusive use of owners and guests—as with a private club—so that off-site support is not an issue. Making a profit from or at least breaking even on commercial recreational operations should be a development objective. When recreational development is slated for an isolated location without a threshold community population, however, the developer is sometimes well advised to subsidize certain facilities or activities, such as limitedversion golf, swimming, restaurant dining, and special convenience services. In the case of a large community, facilities ultimately should pay for themselves directly. The size of an amenity is an important component of the programming process. For example, to be feasible, golf courses require a certain number of users and private country clubs a minimum number of members,

which in turn will depend in part on the size of the proposed resort community. Statistics on amenity use by resident households vary widely, so it is important to understand such data for the particular location, product niche, and characteristics of the target market. And because resort amenities and activities go in and out of fashion, such research must be current and ongoing. A primary obligation of the resort developer is to maintain expected standards of quality in all recreational facilities. For example, when golf is promoted as the chief amenity and facility usage exceeds capacity, the developer must provide another facility within or beyond the confines of the resort. Otherwise, users will grow dissatisfied as the project is built out. Other facilities, such as tennis, are simpler to add or expand than a golf course. A golf course consumes over 25 times as much land as a tennis facility capable of handling a comparable number of users. Golfing areas, though, offer substantial aesthetic, environmental, and other values that can justify their expense. In working up an amenity package, the recreational planner must undertake the same careful demand evaluations and apply the same types of standards that drive the overall resort development process. To some extent, the developer is in a position to influence demand through the amenities provided but cannot guarantee that such amenities will contribute effectively to the development.

WATG (WIMBERLY ALLISON TONG & GOO ARCHITECTS)

The quality of amenities must match the project’s market concept. Pictured: Hilton Sanya in the resort district of Sanya, China

Feasibility Analysis and Financing 75

TUCKER’S POINT CLUB, BERMUDA

Design guidelines must be established for homebuilders so that the resort’s quality is maintained. Pictured: Tucker’s Point Club, Bermuda.

Residential and Lodging Program and Strategy Market analysis (discussed in chapter 2) will suggest the appropriate mix of hotel, condominium, timeshare, and single-family products, along with some indications for size, style, ownership types, and price range. While amenities may be the primary drawing card for a resort, programming an appropriate mix of residential and hotel products is the bread and butter of a profitable resort development. The sale or operation of these properties is the source of most project revenues. The numerous real estate strategies for developing resort homes and accommodations each have their own sets of advantages and disadvantages. While most strategies involve land development, they diverge when it comes to the real estate product offered and the

76 Resort Development

developer’s level of long-term involvement. The strategies may range from lot sales to homebuilding (both single- and multifamily) to timeshare development to hotel operation. Multiuse resorts might offer all these product types, in which case additional issues pertain to which product will be developed first and who will manage the development over the short and long terms. Lot sales have historically represented a profitable type of resort development in that they require less capital investment and less managerial skill than other alternatives. Depending on the improvements made to the land, land sales transfer most of the carrying costs, construction, and operational responsibility to others. If, however, the quality of the overall resort environment is to be maintained, the developer must establish and

enforce design guidelines and other standards as part of any lot sales program. Indeed, responsible resort developers usually maintain long-term stakes in their projects. As a result, they may be willing to assume the burden of building extensive amenities, roads, and utilities as part of a lot sales package. Such an undertaking, though, is not without risk. Competitors can enter into lot sales development relatively easily in rural areas, particularly given the frontier appeal and low utility of undeveloped parcels. Often, instead of selling individual lots, developers of large resort communities sell parcels to builder/developers on a controlled and phased basis. Carefully timed and coordinated sales of land tracts for purchase under specific restrictions and covenants can help maximize returns by allowing land values to increase in advance of sales. Hotel and timeshare properties also can be developed through land sales strategies. Given that these are specialized operations that demand particular expertise, they might require the involvement of outside entities. In some cases, a resort developer might enter into a joint venture with such an entity. When the resort developer also builds and markets the residential units, the developer has the opportunity to profit not only from land sales but also from home sales. Building the units provides the developer with additional control over the product and with the flexibility to plan for open space and unit density, which would not be possible under many lot sales programs. When a resort community is located in an isolated setting with no suitably equipped local homebuilding industry, the developer may have no choice but to initiate a building program. Although the construction of units can increase gross profits, it also increases capital needs and risk. In an economic downturn, the developer/ builder may have to carry the land as well as the buildings. At any rate, combining land development with building requires additional construction, managerial, and marketing skills. An increasingly popular strategy for resort residential uses has been developing and marketing a complete resort home product package, including interior furnishings and even housewares. Such a program is particularly common when units are part of a rental program. One example of this kind of effort is the Carneros Inn (see case study, chapter 7) in Napa, California, where the developer wanted to control the quality and style of the entire product to ensure that the rental guests’ experience would meet the resort’s standards.

A strategy that involves an even greater long-term commitment and added risk is the operation of the resort’s residential and hotel facilities—whether that means managing a hotel, operating a unit rental pool program, or providing maintenance services or a resales program. This strategy provides the ultimate degree of control over a project’s destiny, along with the benefits of long-term profits, the potential for continued cash flow when the project is completed or sales slow, influence over and capture of increased land values as a result of a successful resort operation, and an increased ability to maintain project standards (perhaps through subsidization). Again, a successful operations program requires extensive management expertise and financial backing and is usually combined with the long-term operation of other elements such as amenities and commercial uses. Many multiuse resorts now employ all of the above strategies, thereby enabling the astute resort developer to benefit from a flexible business plan that builds on the strengths of the individual strategies. Occasional land sales may help generate funds for debt service or new capital expenditures. Joint ventures that involve partners in ownership and operations can reduce risk as well as management requirements. A building program can create momentum during a lull in land sales and help generate sales that increase the market for existing amenities and facilities. Owning and operating a resort over the long term can yield attractive profits once the project matures. The developer assumes fewer risks by spreading the investment over the many business aspects of a resort/ residential development. As further incentive, the developer may realize certain tax benefits from balancing profits and losses across the various facets of resort recreational development. Programming Commercial Uses Under normal circumstances, the best measure of potential for a commercial operation is the level of interest demonstrated by third parties—such as retailers—in investing in and operating facilities. Such feasibility testing presumes a typically motivated economic interest, which cannot be assumed in the context of many recreational developments. Many resort locations are too small, too immature, too seasonal, or otherwise lacking a major attribute necessary to justify independent commercial operations. In the early stages of development, a resort community will not have enough residents to support a

Feasibility Analysis and Financing 77

Making Condo Hotels Work Involves Challenges and Rewards Perhaps the greatest satisfaction of working in the real estate industry is that a single transaction can produce so many winners. Properly structured deals can offer multiple rewards for buyers, sellers, developers, lenders, consumers, builders, managers, operators, communities, and entire local economies. On the flip side, poorly structured deals often end up badly for all involved and can be played out in expensive litigation. This is the context within which the industry must approach the current condominium hotel boom. Can condo hotels be a win-win-win-win situation? Undoubtedly, yes. Can they also be a lose-lose-lose-lose situation? Yes again—and developers, lenders, and other participants need to protect themselves against the inevitable fallout when a condo hotel regime fails. Why such extreme scenarios? A successful condo hotel project demands that intricate legal and operational threads, each representing the competing interests of numerous parties, be woven together. A tightly woven deal involves such complex structuring that even the most sophisticated of deal makers can miss a few of the many-layered details in their rush to participate in this profitable wave of development. Yet, it takes only one pulled thread for this delicate project tapestry to unravel. The term “condo hotel” is used indiscriminately to refer to a divergent array of products with both residential and hotel components. Some condo hotels consist of a traditional hotel with primary residences that are not rented to the public. Others involve a hotel operation where some—or even all—of the rooms are condominiums owned by individuals who may make them available to hotel guests through a rental agreement. Condominium units may or may not be branded with a hotel’s name. Condominium owners may or may not have access to hotel amenities such as housekeeping, room service, spa privileges, parking, and the like. The income derived from renting a condominium unit as a hotel room may be accounted for by each unit (the general trend in the United States because of securities laws) or pooled and divided among participating condominium owners on a pro rata basis. Condominium participation in the hotel’s rental management program may be voluntary or mandatory. Condominium owners may have unrestricted use of their units or may be precluded from using them except during specified windows of time or on a space-available basis. The current boom in condo hotels is driven by an unprecedented alignment of the economic interests of developers, consumers, hotel operators, and lenders. For hotel developers, the condo hotel model is a financing bonanza. Construction debt for hotel projects typically

78 Resort Development

runs 50 to 60 percent of cost. When condominiums are added to a hotel project, equity credits earned through condominium presales can provide debt financing approaching 90 percent loan-to-cost leverage. Developers are achieving significant front-end profits on the sale of condominium units in this scenario. And because the “hotel amenity” component creates a 15 to 40 percent premium value over the sale price per foot of comparable units, developers are also keen on the condo hotel model. Consumers, particularly baby boomers nearing retirement, have an interest in owning additional real estate for both personal reasons and investment purposes. Owning a unit in a resort location, with hotel-style amenities and conveniences that are provided by the condo hotel, can be an attractive option. Add the investment potential—particularly through appreciation—and the possibility of defraying costs of ownership by renting the units out as hotel rooms, and it becomes easy to see why boomers are buying them. The condo hotel also has become a favored vehicle for effecting tax-free exchanges under Internal Revenue Code Section 1031 and for facilitating the enormously popular tenancy in common (TIC) market. Most hotel operators are happy to have a new supply of properties with which to expand their brands and to generate fees from the management and franchising of condo hotels. They may also earn additional fees from renting the units placed in the rental management program and for managing various condominium homeowners associations (HOAs). They may even participate in royalty fees derived from licensing their names to the condominiums and collect a percentage of the sales price of units sold. Lenders are finding the financing of condo hotel conversion and development projects attractive because the presales of units eliminate substantial risk during the construction phase. Typically, such projects experience a fast payoff as the condominium units are sold, transferring the lending risk to the mortgagee for the individual unit holders. There are some drawbacks, however. The legal structure, design, construction, marketing, and hotel operations all affect one another. Seemingly simple changes in one aspect often have a ripple effect on all the others. Throw in the concerns of hundreds of individual unit owners, and there can be a potential minefield of problems. Once there is a rend in the overall fabric of a condo hotel deal, it can be impossible to mend because consent may be required from some or all of the divergent stakeholders. Developers can refer back to the thorny legal issues surrounding the early timeshare market and apply

those lessons when structuring condo hotel deals. Further, many traditional condominium developers entering the condo hotel arena know more than they probably care to know about construction defect litigation. The adverse impact of these problems will be mitigated if deals are carefully structured on the front end. Developers need to be hypervigilant regarding the marketing of for-sale units in a condo hotel project. If sales and marketing representatives are not properly trained and monitored, they can trigger liability under securities law that ultimately could wipe out a developer’s potentially heady profits. From a legal standpoint, federal and state securities law implications have a dominant influence on the structure and marketing of condo hotels. While a simple condominium sale usually does not involve the sale of a “security,” a security will be involved once a sale includes almost any discussion of rental management services—through a hotel or otherwise—unless strict limitations are faithfully observed. The information provided in connection with a condominium sale cannot emphasize the economic or tax benefits of the rental arrangements, despite the investment motive of many condominium purchasers. In fact, about the only statement that can be made to a prospective condominium purchaser in literature or discussions is a bland statement to the effect that “ownership may include the opportunity to place your condominium in a rental arrangement.” Any further inquiry by a prospective condominium purchaser must be referred to the rental management company, which must maintain physically separate offices and staff. The rental management company’s staff (but not the condominium sales staff) can provide interested purchasers with condominium sales and rental history of comparable properties, but this information cannot be edited or compiled. Virtually all condominium and condo hotel regimes seek to avoid security status, using the guidelines handed down by the Securities and Exchange Commission (SEC), including a relative breakthrough in 2002 in the Intrawest “no-action” letter, which limits marketing the investment nature of the condominiums to prospective purchasers, pooling rental income of the units, and the restrictions developers may place on an owner’s use of the unit. Ironically, avoiding security status requires that no one provide projections of rental rates or expected occupancies. This deprives condominium investors of a great deal of relevant and helpful information for evaluating their purchases. It also tempts aggressive salespeople to furnish the prohibited information on the side, which upon discovery can turn the whole scheme

into an illegal offering of a security with attendant civil and criminal penalties, not to mention rescission rights for unit purchasers, which could run for many years. Avoiding security status also means that the condominium unit purchaser can make only a voluntary decision to participate in a rental management program after purchasing the unit (or at least after executing the unit purchase documents, but possibly before the purchase closing if the rental management agreement is contingent on such closing). For this reason, it would also be impermissible to place other restrictions on the condominium owner’s personal use of his or her unit (such as might be contained in covenants, conditions, and restrictions [CC&Rs] or HOA documents) until after the unit is sold. A few rare exceptions may be available through a private SEC no-action letter, whereby some restrictions on use may be required to comply with local zoning laws or entitlements. And in certain instances, condominium owners may be encouraged to put their units into a rental management program by product location (for example, at a ski resort), design considerations (for example, a 300-square-foot [28-sqm] unit that would not be suitable for long-term use), or economic incentives (such as a greater share of revenues for use of the unit if the room is placed in the hotel rental management program for longer periods). However, if the unit owner’s decision to use a hotel rental management program is voluntary and occurs after the purchase of the unit, the rental management agreement or a sale-leaseback can extend for a long period (such as five or ten years) and can limit or prohibit the unit owner’s personal use of the hotel condominium. The agreement also can include other restrictions on the unit owner, such as requiring a specified minimum notice prior to the owner’s use of the unit. Limited or prohibited use may encompass prohibiting an owner from ever occupying his or her unit, or prohibiting use by the owner for more than 30 or 60 days or during certain “blackout periods.” This restriction is related to but different from (or can be combined with) permitting an owner to use a condominium only if it is available some period of time before the intended use, such as 60 days. How else can a hotel operation know that it will have an adequate inventory of rooms to guarantee that guests booking in advance will have rooms available? Of course, the more onerous the restrictions on the owner’s use of a unit, the less potential buyers are likely to pay or the less likely many people are to buy the unit at all. Onerous restrictions in a rental program agreement also may deter owners from placing their units in the program, thus defeating a major goal and value of having condominium units as part of a condo hotel.

Feasibility Analysis and Financing 79

Making Condo Hotels Work Involves Challenges and Rewards So why not structure the deal as a security and avoid these limitations? The advantages include the ability to pool income and expenses from the project as a whole, to require mandatory participation in the rental program, to impose restrictions on owners to ensure an adequate inventory of hotel rooms, to promote the project on the basis of the hotel rental management agreement, and to use projections of hotel rentals. Most developers nevertheless shun securities compliance as too expensive, time-consuming, and ill suited to the customs and practice of real estate sales. They do not want to offer and sell their units only through registered securities brokers and salespersons or to comply with strict disclosure and liability rules. Many states require “merit review” of securities offerings, imposing daunting warnings of risk, high suitability standards, and limitations on the method of offering. The private placement exemption prohibits public solicitation of customers, and the intrastate offering exemption might work in some particular locations and circumstances but is simply not feasible in others. Any misstatements or omissions of relevant information can spawn securities fraud liability that potentially lasts for years.

continued

There is no single formula that will make a condo hotel successful. Viable structures will vary by situation, regime, and circumstance. Developers need to appreciate that hotels are a different kind of real estate, and that condo hotels are a hybrid with their own distinctive issues, as well as significant opportunities. The conflicting needs and interests of all parties must be reconciled through a complex layering of CC&Rs, HOA documents, rental management program agreements, hotel management agreements, operating business plans, and the like. Achieving a structure with the right balance of profitability potential and longterm viability is critical for a win-win-win-win project. If handled to meet the expectations of all involved, with the right structure, sponsorship, and integration of the hotel and condominium components, there could be a bright, long-term place in the mixed-use spectrum for condo hotels. The alternative presents an unnecessary blight on the industry that could last for years. Source: Adapted from Jim Butler and Guy Maisnik, “Condo Hotels,” Urban Land, February 2005, pp. 32–35.

; Determine the significance of a given service to the project’s broader development purpose, including tolerable or appropriate consumer inconvenience thresholds. ; Consider a range of options and activities to stimulate commercial activity, including creation of a partnership that operates on- or off-site establishments, shoring up or repositioning an existing operation, or entering into

80 Resort Development

OZ ARCHITECTURE; ASA PHOTOGRAPHY

desired amount of retail services, but the importance of commercial development to the overall success of the resort must be gauged. A motivated developer must look for ways to close the gap between insufficient economic feasibility and a need to provide goods and services to residents. Strategies might take the form of free or subsidized rent, assistance in financing startup costs, or other cost-covering devices. Two important opportunities for the developer interested in promoting commercial services are leveraging customer expectations of high prices and capitalizing on the available owner/staffing labor pool that may be willing to accept lower earnings in exchange for the benefit of residing near the recreational environment. The following rules can guide development planning for commercial elements in a resort community:

The Village at Baytowne Wharf, part of the Sandestin Resort in northwest Florida, is patterned after a southern fishing village. It brings retail and commercial activity to the resort, with residences on upper levels.

KITTY HAWK LAND CO.

Large resorts are generally developed in phases. The Currituck Club in Corolla, North Carolina, is a mixed-use, multiphase resort.

a joint venture with perceived competitors to help kickstart the requisite commercial facilities. ; To the extent possible, conduct feasibility analyses that use conventional norms in their marketing and operating assumptions for commercial facilities. Far too often, commercial commitments in recreational environments are subjected to little, if any, market and operational feasibility analysis. Even worse, they are forced to function in totally inappropriate settings and thus are virtually condemned to failure. ; Explore opportunities to piggyback commercial operations with other building uses or operational activities. Examples include shared staffing, encouragement of coordinated off-site vendor deliveries, or inclusion of provision-stocking services in conjunction with housecleaning services. ; Investigate ways for the real estate or resort component to capitalize on and promote its identity by licensing the use of its logo on clothing, equipment, and novelties offered for sale locally. ; Prepare for changes as the resort evolves and matures. Allow for a range of possible on-site commercial facilities or, if appropriate, secure off-site locations. If projections call for increased full-time residential occupancy, the development plan should provide ground for commercial facilities well into the future. By allowing for lifestyle changes and going so far as to dedicate ground for seniors’ housing, the initial developer may be able to achieve the desired marketing impact while retaining flexibility and avoiding any material commitments.

; Conduct an initial screening and undertake subsequent monitoring of commercial operations. Avoid excessively optimistic or inexperienced operators who may leave a trail of oversupply, vacancies, and generally negative impacts. Furthermore, in most instances, the priority of maintaining and enhancing the desired image of the larger development points to the importance of targeting the right service niche. ; Link up with experienced third-party owners and operators of commercial establishments in resort locations with opposite seasonality. ; Keep to the core recreational businesses, especially in the early stages of a project. If the feasibility of a particular resort investment depends on seeding and sustaining independent commercial operations, then these operations must be viewed as part and parcel of the core business. When the need for a range of commercial operations is less clear, caution is in order. Phasing and Timing Phasing and timing are fundamental dilemmas in resort development. Adequate infrastructure, recreational amenities, and commercial facilities should be provided at the outset of project development to draw and satisfy customers in sufficient numbers and thus meet the developer’s growth needs. Yet, recreational amenities in particular require heavy front-end financing, first for construction and second to cover high initial operating losses. Until the number of visitors or residents and the concomitant revenues begin to support the facilities’ operating costs, the front-end capital costs and early operating losses

Feasibility Analysis and Financing 81

82 Resort Development

COURTESY OF TRANSCONTINENTAL PROPERTIES, INC.

will remain sizable, causing the initial returns on the total investment to remain unsatisfactorily low for long periods. Balancing Upfront Costs and Benefits. The amount of existing recreational consumer traffic in the area of a new project is an important consideration in sizing the initial amenities. For example, a resort community located within a well-established and substantial user market can select from several options. On one hand, the project might start with a sizable amenity package and tap existing demand, thus helping ensure that facilities do not operate at a loss from the outset. On the other hand, the project might forgo upfront amenity development and instead rely on the area’s existing amenities. Another possibility is to establish cooperative use agreements with other projects, allowing the residents of one development to use the facilities of another. In the absence of consumer traffic in a project’s immediate vicinity, the developer can still choose from a range of phasing strategies. Rather than start with a full complement of amenities, the developer may rely on the area’s existing natural amenities while concentrating on the construction of accommodations. A portion of the targeted market will be drawn to the development simply because of its attractive natural surroundings. As the number of accommodations increases, the community will establish a sufficiently broad base to justify the installation of such operating amenities as a golf course. With the addition of amenities, the developer can step up the promotion campaign and growth rate so that the revenue-producing amenities will break even as soon as possible. In addition to these approaches, developers can use various strategies to postpone the development of some recreational amenities, to pass along the costs of amenity development, or to accelerate the revenues produced by amenities built upfront. To develop a golf course at the outset of a project, for example, developers can donate land to a golf course operator who then constructs the course. The developer thereby avoids the front-end costs but retains the land premiums from golf course frontage. In adopting this strategy, the developer should include in the agreement provisions that course design, construction, and operation will meet specific project standards. Another strategy is to open recreational facilities to nonresidents either as member or nonmember users. Ideally, this strategy offers two advantages: it attracts potential real estate prospects by exposing the project to a wide audience, and it provides dues or fee revenues.

At Lake Las Vegas Resort, developers invested $90 million in amenities and other infrastructure before the first house was built.

For projects marketed as “exclusive,” however, residents may perceive the opening of facilities to outsiders as compromising the value of the amenity and the community. For major projects, the upfront development of at least one high-profile amenity is critical in establishing the resort as a new destination. When a property is large and the developer properly capitalized, building extensive and high-quality amenities upfront is often the best strategy. At Lake Las Vegas Resort (see case study, chapter 7), a second-home recreational community in Nevada, the developer invested approximately $90 million in amenities and other community infrastructure before building the first house. The first amenity to be developed was a 320-acre (130-ha) lake that serves as the community’s focal point. Following the lake were two 18-hole golf courses designed by Jack Nicklaus and Tom Weiskopf. A $500 million town center also was built early on by a separate developer, Intrawest. These major upfront investments paid off in helping establish Lake Las Vegas Resort as a desirable and distinctive address. While controlling the costs of upfront amenity development is a legitimate concern, developers need to be careful not to underfund or underdevelop an amenity

package in ways that make a project less appealing to the market relative to competing projects. For example, including a nine-hole golf course when the market standard is a full 18 holes would create a significant disadvantage. On the other hand, it might be totally acceptable to develop an amenity package with a focus on less costly amenities than golf courses, if the market indicates demand for such amenities. At Hampton Lake (see case study, chapter 7) in Bluffton, South Carolina, developers determined that the regional market for golffocused resorts was saturated, giving them the impetus to explore other, less expensive amenities. Instead, they created a lake-focused, family-oriented community that has carved out its own successful market niche. Operational Control and the Exit Strategy. The developer needs to retain control over recreational facilities and the property as a whole for a substantial portion of the buildout period. Maintaining control means the ability to ensure that the construction, operation, and maintenance of facilities remain at a level commensurate with the project’s overall image and objectives. In most cases, operational control also extends to the assumption of operational expenses and risks. Relinquishing control to an independent operator to avoid these expenses and risks gives rise to another risk: that the facilities may be improperly operated or maintained, which might result in tarnishing the project’s image. The recommended period of developer control over major amenities in resort communities usually lasts until the project is 80 to 90 percent sold out, but a variety of factors, including lender requirements, may cut it short. Whatever the time period, the developer must sustain

residents’ confidence in the operation and long-term viability of the amenities. Many developers have learned that an advisory committee or board made up of club members or community residents is a useful vehicle for improving developer/community relations and easing the ultimate disposition or transfer of amenities. A developer normally separates from a resort community development in accordance with a carefully planned exit strategy that involves the orderly sale and disposition of real estate, recreational facilities and programs, and other assets, as well as the orderly transfer of management responsibilities. This exit strategy must include contingency plans for dealing with sudden and unforeseen changes in circumstances—economic downturns, financial problems, shifts in government policy, or unexpected turns in the market. In certain projects with capital-intensive, profit-oriented amenities—such as most ski resorts—amenity disposition is not generally an issue. The developer of a ski resort usually plans to retain—either directly or through a subsidiary corporation—operational control and ownership of the ski facilities. For many second-home community projects, on the other hand, amenity disposition is usually a central issue that demands resolution early in the development process. These projects usually transfer (essentially give away) or sell recreational facilities to residents, club members, or a third party, which is often a company specializing in club operations. Developers typically dispose of project amenities for economic reasons. In cases when the amenities primarily add real estate value (as opposed to operating profits), the economic value of the amenities package

©GRECOTEL 2008

A good site is competitive and capable of supporting a marketable concept. Pictured: Grecotel Eva Palace, Kommeno, Corfu.

Feasibility Analysis and Financing 83

to the developer declines with the sale of each parcel of land or housing unit. Accordingly, when the project is substantially sold out, the economic value of the amenities to the developer is exhausted—unless the amenities are profit centers within themselves. Increasingly, however, resort developers are programming recreational amenities as ongoing profit-making centers to be retained or sold at a profit. Chapter 5 provides a detailed discussion of various strategies involved in managing and exiting from a resort development.

Site Selection and Analysis A good site is one that is marketable, competitive, and capable of supporting a market-based development concept. The chief criteria for selecting a site for a resort relate to the overall setting, access, physical constraints, the regulatory environment, and price in relation to economic potential. For years, the rule was that the least justifiable reason for developing a parcel was that the developer already owned it. Instead, it was reasoned, developers should identify a concept they wish to carry out, based on the findings of a thorough market analysis, and then locate a site with the appropriate characteristics. But today, given the scarcity of “ideal” sites, developers often must find a site and then create a concept that works for it. This book is filled, in fact, with examples of concepts tailored to a site that the developer owned or acquired before settling on an appropriate resort concept. While the standards and practices for assessing a site’s physical and environmental constraints are growing increasingly sophisticated, the difficulty of locating suitable sites for development also has increased markedly. Because of escalating land costs in prime locations, sites previously considered undevelopable have emerged as candidates for development. On the other hand, environmental standards and constraints have complicated site selection in desirable locations; often the most desirable resort sites are located in environmentally sensitive areas. Therefore, careful analysis is necessary early on to evaluate a site’s suitability for development. The frequent requirement for an early environmental impact assessment for private development (whether mandated legally or merely part of good practice) has brought with it the necessity of accurately measuring any environmental constraints—constraints that must be recognized before the purchase of the site is negotiated—that might restrict the land’s ultimate use. This

84 Resort Development

early environmental assessment further requires some preliminary indications of development size, grading and drainage needs, alternative site uses, projected traffic generation, and mitigation actions. Much of the conceptualization underlying project design should be generated during this initial site evaluation of project feasibility. The increased front-end costs involved in employing specialists in zoning, land planning, geology, civil and traffic engineering, and the social and biological sciences are justifiable as a protective investment for the developer. In the end, such an investment can significantly shorten the time required for project planning and approvals. Without an early evaluation, a developer could purchase land with physical, social, or political constraints that could prove insurmountable. Further, an early study phase provides the developer with the opportunity to seek an option on the property and thereby limit long-term financial exposure. Most letters of intent allow for a “free look” period before the developer must commit to purchasing the property. The Setting The starting point for any successful resort is a compelling natural environment or cultural setting. It is within such a setting that recreational facilities can supplement and provide a focus for resident/guest activity; the amenities rarely supplant the setting. The determinants of setting include aesthetic and climatic attributes, cultural attractions, recreational opportunities related to the setting, the character and compatibility of nearby and surrounding uses, and the availability of services. These factors should be evaluated for their compatibility with the proposed development’s image. Virtually all successful resorts and recreational communities have aimed to conserve and enhance the best of their natural and social settings. Some of a setting’s valuable attributes may be obvious, such as mountain views or a seashore. Others are more subtle, such as wildlife or vegetation, evidence of past settlements, or local cultural attractions. The Carneros Inn (see case study, chapter 7) in Napa, California, for example, capitalizes on the local wine culture and the desire of visitors to participate in that regional culture. When considering sites, a developer should first examine how the setting may affect the requirements for recreational facilities. If protected and enhanced, the natural features of some sites can serve the same value-creation function as built amenities. Thus, the need for additional recreational amenities may be mini-

Selecting a Resort Destination What do developers say is important in choosing a resort destination today? “We look for four things,” says Harry Frampton, president of Colorado-based East West Partners, which has developed, is building, or plans to construct resorts in a number of areas, including Vail Beaver Creek and Breckenridge, Colorado; Deer Valley in Salt Lake City; North Lake Tahoe in California; downtown Charleston, South Carolina; and, most recently, Banff, Alberta, Canada. “We seek extraordinary places and terrific vistas. They need to be close to a metropolitan area. They should have great airline service and, fourthly, be places where entitlements are difficult to obtain.” This strategy has served Frampton well through four or five downturns and upturns over his 40 years as a developer. “We’ve tried to apply what we’ve learned during those decades, and first and foremost is that resorts must have breathtaking locations—some of the best of the country,” he continues. “Critical mass is also important. Vail, Tahoe, and Breckenridge have critical mass, for instance. We want our developments to be in driving distance of major metropolitan areas. Vail and Breckenridge are near Denver, Deer Valley is 40 minutes from Salt Lake City, North Lake Tahoe is two or three hours from 15 million people, and Banff is an hour from Calgary.” Airline service is critical for ferrying in residents and guests. “Every one of our resorts is close to an airport. Vail is near two, Lake Tahoe is close to Reno, and Banff

is an hour away from Calgary,” Frampton says. “You need a lot of airlift—significant air service that will bring people in.” In addition, Frampton concentrates on mountain destinations, which offer two different seasonal opportunities for residents. “Skiing is critical, but summer is just as important,” he says. “If you buy in Mexico or Hawaii, for instance, you get only one experience. A lot of people came to our resort first to ski but stayed because of the wonderful summers we have.” East West Partners does not like destinations where anyone can build a resort. “We seek places where entitlements are difficult to obtain,” Frampton says. “We’ve found over the years that real estate developers will always overbuild. They can’t if it’s difficult to get entitlements. Once you get those entitlements and have the land, you’re very well positioned.” Banff is East West Partners’ newest destination, and Frampton thinks it offers excellent opportunities. “We think the province of Alberta will prosper in a phenomenal way because it has extraordinary levels of oil reserves, and with the American dollar now on par with the Canadian dollar, we think that part of the world will be very successful in the next ten to 15 years. It’s going to be an exciting resort destination.”

mal, especially in the case of smaller projects. The Roaring Fork Club (see case study, chapter 7), an ownership club in Basalt, Colorado, owes much of its appeal to the Roaring Fork River, which provides not only a lush woodland setting but also the resort’s major attraction: world-class fly-fishing. In many projects, it may be possible to create value through site planning strategies that maximize views rather than by adding a golf course. Moreover, if accessible and high-quality recreational facilities—such as a public golf course, tennis courts, or a park or open space that can be used for cross-country skiing or hiking—are located nearby, a developer may not have to provide similar amenities on site.

location, and land and development costs. The location for a resort project can range from undeveloped to fully established; it can take the form of one of six general location types: virgin, emergent, defined, mature, dense, or saturated. Traditionally, most successful resort projects have been developed around established resort areas. Pioneering a new area presents a far greater risk than creating a new offering within an established area. Public recognition and acceptance of an area as a vacation destination have been important factors in the marketability of most resorts. Further, established resorts offer many built-in entertainment and physical amenities desired by consumers. In some cases, developers have succeeded in creating new resort destinations—in essence, they have opened up new areas. New destination developments are typically large-scale operations that expand on a natural feature—such as a body of water or a mountain—with the construction of golf, tennis, skiing, boating, or swimming

Location Several major factors should be considered in evaluating a potential resort location: the desirability of the location as a resort destination, ease of access to the

Source: Mike Sheridan, “Selecting a Resort Destination,” Urban Land, February 2008, p. 183.

Feasibility Analysis and Financing 85

PAT SUDMEIER

The Mexican government created the infrastructure for Cabo San Lucas. Then private companies developed the hotels, communities, and other facilities. Pictured: Esperanza, a luxury hotel and residential resort.

facilities in some combination to create a wide range of recreational alternatives. This project type is extremely expensive, requiring the developer to construct all the amenities and undertake a substantial marketing effort to promote the property. However, the land for such a development can often be acquired at lower cost than land in an existing destination, and the potential to create value once the location is established is tremendous. The problem is to stay the course long enough for that value to be captured—a most challenging task that requires exceptional financial and organizational resources. The recreational developments in the area around Orlando, Florida, offer a case in point. Before the construction of Disney World, land values in Orlando’s outlying areas were low, and recreation was not an important factor in the local economy. But the theme park and its satellite developments have come to represent a critical mass of recreational and entertainment amenities that now attract millions of visitors each year. Similar examples can be found along the coasts of Mexico, where resorts such as Cancún and Cabo San Lucas have established strong destinations where none previously existed. The character and marketability of any resort project depend on such factors as distance from population centers and the types of available transportation services, which are measured in terms of frequency, quality, and cost. An inaccessible resort location will experience dif-

86 Resort Development

ficulty in maintaining significant occupancy levels and sales volume. As a result, access issues often become determining factors in programming a resort. For example, an emerging but relatively inaccessible location may be suitable only for modestly sized facilities targeted to adventure travelers or ecotourists. Or it may be suitable for an ultraluxury resort that is accessible by private planes. A resort that enjoys good air access but is remote from its primary markets must rely on its setting and range of offerings to compensate for the distance or inconvenience involved in getting there. Improving the major means of transportation to a resort is usually beyond the resources of a developer, since it involves extremely long lead times and heavy capital investment. In other words, a resort should be located so as to take advantage of already operating transportation facilities that, if not adequate, could be upgraded. The larger the contemplated resort, the more important is the availability of high-volume commercial transportation. Finally, the remoteness of a location will have an impact on land, development, and operating costs. While a remote location may have lower land costs, it may be difficult to bring in labor and construction materials. A remote location may also involve higher operating costs related to training and recruiting of management and other staff. In some remote locations, housing may need to be provided for staff, further adding to expenses.

Physical Analysis Once a developer has identified a potential site, closer physical scrutiny of the tract is in order. The developer must collect all existing base data for the site and identify future information needs. Physical analysis studies should address the site’s

Information from these studies should be synthesized into a series of analysis drawings and reports that will provide a factual basis for the proposed project’s ongoing planning, engineering, and design efforts. At the same time, the developer must continue to refine development areas and concepts and identify areas of high construction cost and environmental sensitivity, as well as areas possessing special physical characteristics and the potential for high-priority recreational attractions, which in turn deserve more concentrated study.

DESTINATION RESORTS & HOTELS

; topography and slope; ; hydrology—major and minor drainage and water source features and resources, including flood hazards and erosion; ; geology—surface and subsurface conditions; ; oceanography—shoreline, littoral drift, soundings, and wave action (where applicable); ; vegetation—major vegetative covers, forests, and agriculture; ; wildlife; ; meteorology—wind, temperature, humidity, rainfall, and sun angles; ; other ecological and environmental factors—views, sounds, and special conditions; ; utilities—power, water, sewage, and communication services;

; circulation and related infrastructure—highways and roads, railways, airports and air routes, ports and harbors, and bridges and dams; ; natural resources; ; historic sites and landmarks; ; existing land uses and proposed future changes or developments; and ; permitting process and legal restrictions—zoning, building codes, and applicable restrictions (including proposed changes); certainty of approvals over time; and easements and deed restrictions (covered in the following section).

Every aspect of a site must be analyzed in terms of its potential. Pictured: Destination Resorts Hawaii.

Feasibility Analysis and Financing 87

FIDDLER’S CREEK, A GULF BAY COMMUNITY

Fiddler’s Creek in Naples, Florida, comprises over 2,000 residences, nature preserves, two golf courses, a spa, a swimming pool complex, and other amenities.

Once the site is deemed generally suitable for the proposed concept, it is time to develop and evaluate one or more concept designs to determine how a proposed program or programs might fit on the site. The data and studies developed during the physical analysis form the basis for preliminary programs for facility types and attractions. Based on these studies, the developer’s team can make recommendations for the specific areas with the greatest development potential. The team’s work should include ; conceptual diagrams; ; ideal functional relationship diagrams; ; site-related functional diagrams, with special attention to land particularly well suited to resort development; ; preliminary land use diagrams; ; capacity studies of gross areas available for development and of probable areas for preservation; ; suitability studies of various alternative land uses; ; alternative density and yield evaluations; ; other illustrations and perspective drawings that may be required to show more fully any special project features or characteristics; and ; preliminary project staging plans.

88 Resort Development

Regulatory Analysis Some of the early measures to take in preparing a development program and plan call for identifying and cataloging the relevant public agencies charged with granting permits, preparing to meet with public officials in proper sequence, and crafting a plan for negotiating the needed public approvals. In addition to the usual approval requirements mandated for typical urban development, a resort development may have to overcome environmental hurdles as well as to address such issues as the public service demands associated with a large project in a rural area and local officials’ lack of familiarity with planning for resort development. The development approval process is critically important. Denial or delay of a permit or approval can kill or stall a project and lead to financial disaster. Even when a project proposal represents the best land use practices, addresses all environmental concerns, and meets all stipulated regulatory requirements, it is not guaranteed approval. To obtain permits and approvals in the shortest time, the developer should at the earliest possible stage prepare a regulatory analysis and plan of action. That analysis should identify all the factors, conditions, and forces, both favorable and unfavorable, that could influence the

FIGURE

3-1

Sample Site Analysis Checklist

Mapping

Vegetation

Utilities

l Boundary survey/acreage

l Species present on site

For each, describe location, design, pur-

l Legal description

l Woodlands, fence rows, vegetative masses

veyor, availability, tie-in distance from

l Patterns of ownership

l Locations/sizes of specimen trees

site, costs borne by utility company, and

l Easements (by type and location)

l Special features/habitats

developer fee structures. Note any potential for moratoriums or other factors that could

l Rights-of-way l Aerial photography

Land Use

delay or prohibit development.

l Regional/site location

l Existing on-site uses (structures

l Sanitary sewer l Water

and activities) Topography l Slopes (mapped by percentage categories) l Elevations (high and low points) l Ridges

l Historical site uses (potential for

l Stormwater l Electricity

disturbance) l Surrounding uses (any objectionable

l Natural gas l Cable television

uses or activities)

l Telephone

l Drainageways

l Adjacent plats

l Special features (e.g., rock outcroppings)

l Open space/vacant land

l Views (on- and off-site)

l Qualitative assessment of neighborhood

Public Services/Conveniences

l Growth/development patterns in area

l Schools l Location/proximity to site

Soils

l Capacity

l Types and characteristics

Regulations

l Depth of topsoil

l Government authorities (city, county,

l Subsoil conditions l Potential “borrow” sites for construction materials l Depth to bedrock/groundwater

l Reputation of school district

school district, park district, utility

l Parks and recreational services

districts, other)

l Emergency services

l Master/general plan policies

l Fire

l Existing zoning (for site and adjacent parcels)

l Police

l Subdivision ordinance

l Ambulance/paramedic

Drainage

l Applicable development/impact fees

l Public transportation/transit

l Surface drainage features

l Special assessments

l Commercial services/shopping

l Groundwater table

l Other applicable municipal, regional,

l Employment services

l Floodplain boundaries

and state regulations

l Wetlands/marshes

Other Features

l Locations of wells

Transportation/Circulation

l Prevailing wind direction

l Depth to groundwater

l Existing traffic patterns

l Climatic conditions

l Sources of on- and off-site pollution

l Access points/entries

l Archaeological sites

l Tide data

l Proximity to regional transportation system

l Wildlife (special and habitats)

l Planned/proposed transportation system

l Sources of noise

improvements

l Aesthetic quality of site and environs

l Trails/paths (existing and planned) l Access to transit

decisions and actions of public officials, community leaders, and special interest groups. The analysis should present a thorough and fair assessment of the project’s predicted impact on the community. In the face of any rapid changes in social, political, and regulatory conditions, the developer is obligated to update the regulatory analysis. The analysis should include as much relevant information as possible about potential issues of public concern and the individuals likely to be involved in the approval process. Specifically, the developer should determine the likely position of public officials and inter-

est group leaders with regard to the project. Obviously, these persons may wield significant influence in controlling the permits and approvals required for development. Chapter 4 provides further detail on regulatory issues and the approval process.

Financial Analysis A financial or cash flow model is essential to the successful development of resort projects. The model is used to forecast, evaluate, and monitor the financial

Feasibility Analysis and Financing 89

analysis must yield a result that can work financially over both the short and long terms. As noted earlier, the optimum program may change over time, thus underscoring the importance to the developer of a flexible position. The model can inform the developer/investor of investment requirements and may prompt variations in phasing strategies to reduce capital outlays. The following procedures are recommended in undertaking a financial analysis:

The Financial Model The ultimate purposes of a financial analysis are to model and define a proposed project’s expected profitability and rate of return, and to determine whether the proposed project represents the optimum program that will meet the financial objectives established by the developer/owner. Central to the analysis is the preparation of the project’s pro forma cash flow statement, which contains an estimate of the project’s revenues, costs, and net cash flow before and after debt service. The exercise is completed most effectively by evaluating several development alternatives to determine the preferred strategy. The program, phasing, and financial

; Develop input parameters not otherwise generated in the market analysis. Examples include infrastructure costs for roads, sewers, drainage, utilities, and so on; hotel construction and furnishing costs; residential site development and construction costs; development costs for such amenities as golf courses, swimming pools, bicycle paths, tennis courts, and the like; and assumptions regarding such items as depreciation rates, the capitalization of development costs, financing costs, engineering and consultant fees, real estate taxes, promotion and advertising expenses, project management and overhead, and expenses for maintenance and utilities.

GRAND TIMBER LODGE

performance of the proposed program. During planning it is used to evaluate feasibility, guide revisions, estimate investment requirements and determine cash flows and investment returns. It is an important tool for optimizing the recommended composition and phasing of the development to maximize financial returns consistent with the developer’s goals. During implementation, it will provide a database and convenient means of monitoring and maintaining financial control.

Grand Timber Lodge is a timeshare property in Breckenridge, Colorado. Opened in 1998, it was renovated in 2003.

90 Resort Development

; Analyze the effects of inflation on project costs and revenues and calculate the necessary inflation adjustment for inclusion in the financial model. ; Prepare a pro forma income statement, cash flow statement, and profitability analysis by individual land use components. These pro forma statements should be provided for as long a period as necessary to reflect the full buildout and absorption of the property, or at least to that point at which a positive and continuing cash flow is established after financing charges are deducted. ; Revise the proposed development plan in accordance with a review of the financial analysis and discussions held between the developer and physical planning consultants. ; Interpret the results of the financial analysis and its recommendations concerning the feasibility of the development’s timing, phasing, strategy, marketing program, and potential for joint venture or bulk sales. A cash flow statement measures cash flow over a period of time, usually the length of the project. For example, a statement may show cash flow annually over a ten-year project. The statement can be structured to show pretax cash flow, cash flow after taxes, and cash flow before and after debt service. In a largescale, long-term project, the cash flow in the later years may be highly speculative but should nonetheless be included to project a complete potential scenario. In estimating project return, developers often use discounted cash flow analysis (DCF) to account for the time value of money. This analysis recognizes that tomorrow’s cash is usually worth less than today’s cash and applies an appropriate discount to the cash to be received in the future. Various methods of discounted cash flow analysis are available, including net present value (NPV) and internal rate of return (IRR) analyses. A project’s financial model should be used throughout the planning and implementation period to test various alternatives and to evaluate financial sensitivity. Sensitivity analysis measures the impact of changed financial and operating assumptions on a project’s profitability and financial returns. Often, a developer bases the financial model of a project on different scenarios— pessimistic case, base case, optimistic case—to generate a likely range of financial returns. A primary assumption in any analysis involving the sale of homes or timeshares—one that must be both carefully estimated and managed—is the sales or

absorption rate. If the sales rate proves to be significantly lower than that assumed in the pro forma, carrying costs and other soft costs will increase and possibly lead to serious cost overruns. Incorrectly estimating or managing the sales rate is a far more likely cause of cost overruns than construction problems. This is why it is important to price real estate products appropriately, based on thorough market research. Developers often focus more on price point and forget that the absorption rate is also critical. A key question that must be addressed is, How many units do you need to sell over what period to break even? The remainder of this section presents a hypothetical example of a financial analysis for a multiuse resort. Robert Chickering of the San Francisco office of Economics Research Associates prepared the example and wrote this section. Hypothetical Example The sample analysis (summarized in Figures 3-2 through 3-13) is based on a hypothetical multiuse resort community concept. The project encompasses a mix of residential real estate, resort leisure amenities, lodging facilities, and related commercial activities. While the example sets forth valid analytic approaches, the figures do not necessarily represent typical numbers. The projections are expressed in inflated dollars based on 2008 base estimates and do not include taxes, depreciation, or debt service. The inflation factor should be set as a variable that can be readily changed to see the effects of inflation. Constant dollar analysis can be easier to understand, but inflation should always be included when financing is included in a model. The core components of the sample concept are as follows: ; Residential real estate ; Homesites ; Golf villas ; Clustered townhouses ; Timeshare condos ; Resort hotel ; Semiprivate resort golf course ; Commercial complex In addition to the facilities listed above, the hypothetical site will be distinguished by high-quality landscaping and leisure facilities within each development parcel. Amenities include tennis courts and walking and jogging trails.

Feasibility Analysis and Financing 91

LANDDESIGN, ©DENISE RETALLACK

Diamond Creek is an 800-acre (324-ha) residential golf course community located in Avery County, North Carolina.

Land and Infrastructure Costs. Figure 3-2 details land

and infrastructure costs. Land value could be based on recent purchase price, the owner group’s internal valuation, or a recent appraisal. The example has assigned a land value of $10 million. Infrastructure costs include all projectwide infrastructure such as primary arterials, utility trunk lines, entry treatment, landscaping, off-site costs, and other similar costs. The example estimates these costs at $5 million subject to 20 percent for soft costs and a 5 percent contingency. Consolidated Cash Flow. Figure 3-3 sets out a consolidated cash flow expressed in current inflated dollars and presented before development financing. Land acquisition and site development commence in year one. Land, projectwide infrastructure costs, and project management and overhead are deducted from the net cash flow contribution of the various project components. For a project involving multiple developers, it is often useful to allocate land and infrastructure costs to each land use or each profit center so that the investment return calculations for each land use include allocated projectwide costs. Regardless of how many different entities are involved in a project, however, the nonallocated approach should be used to determine the feasibility of the overall project.

92 Resort Development

Homesites. Figure 3-4 presents cash flow projections for

homesite development with absorption projections and pricing based on market analysis. The model shows that homesites will be placed on the market in four phases, with phase I commencing in year three. Total lots: 200 Average lot size: 45,000 square feet (4,180 sq m) Selling price per lot (2008 $) Phase I Phase II Phase III Phase IV

$150,000 $160,000 $170,000 $180,000

Absorption period: 4 years Average annual absorption: 50 units Commissions: 6% Closing: 2% Marketing: 4% Site improvement costs: $40,000 per homesite Development costs include all in-tract costs such as roads, utility infrastructure, and lot grading and all

in-tract amenities such as playgrounds, paths, and landscaping. Soft costs are estimated at 20 percent and contingency at 5 percent. Marketing and improvement costs lead sales by one year. Detached Golf Villas. Figure 3-5 shows the cash flow projections for the detached golf villas. The value of these units would be greatly enhanced if they were developed around the golf course or with views or water frontage. Once again, pricing and absorption rates must be based on market analysis. Villas will be sold in three annual phases commencing in year three. Total units: 150 Average villa size: 2,400 square feet (223 sq m) Selling price per unit (2008 $) Phase I Phase II Phase III

$750,000 $775,000 $800,000

Absorption period: 3 years Average annual absorption: 50 units Commissions: 6% Closing: 2% Marketing: 4% Construction cost has been estimated at $175 per square foot or $420,000 per unit. In addition, in-tract site improvements are estimated at $40,000 per unit. Hard costs are subject to an additional 20 percent soft cost and 5 percent contingency allowance. Clustered Units. Figure 3-6 shows the cash flow analysis for clustered units, which consist of a series of low-rise attached townhouses developed in clusters. It is assumed that units will be sold in four annual phases commencing in year three. Total units: 200 Average unit size: 1,800 square feet (167 sq m) Selling price per unit Phase I Phase II Phase III Phase IV Absorption period: 4 years Average annual absorption: 50 units

$550,000 $575,000 $600,000 $625,000

Commissions: 6% Closing: 2% Marketing: 4% Preliminary construction cost estimates have been set at $175 per square foot ($1,885 per sq m) or $315,000 per unit. In-tract site improvement costs are estimated at $20,000 per unit. Soft costs have been estimated at 20 percent and contingency at 5 percent. Timeshare Condos. Figure 3-7 analyzes the timeshare condos. Standalone timeshare developments of good quality in an attractive environment can succeed but require assertive marketing over a longer absorption period, as is reflected in the financial analysis set out in Figure 3-7. The following specifications are assumed for the timeshare condos: ; The standard, quality, and design of the complex will be high. ; The units will be developed into a village-style cluster served by leisure amenities (pool, tennis courts, children’s play area). ; The development will be professionally marketed; however, we do not assume that the village will be a product of a major hotel or entertainment organization. ; Seven-day shares will be sold (weekly intervals) with 50 shares per unit. Additional assumptions pertaining to the timeshare village are detailed below: Total units: 50 Total shares: 2,500 Average unit size: 1,200 square feet (111 sq m) Absorption period: 4 years Average annual absorption: 720 shares The high-quality golf and country club facilities will create an attractive resort environment. While share prices generally vary depending on season or other variables, the model uses an average price of $20,000. The norm for timeshare cost of sales (other than for major hotel and entertainment organizations such as Disney, Marriott, Hyatt, and others) is 35 to 50 percent. The model uses 40 percent: 10 percent for commissions, 5 percent for closing, and 25 percent for marketing. The high cost of sales reflects the high marketing

Feasibility Analysis and Financing 93

THE RESIDENCE CLUB AT PGA WEST

The Residence Club at PGA West in La Quinta, California, offers one-ninth ownership interests in a golf resort setting. Each of the single-family homes includes a pool and a guest cottage. Owners have access to five championship golf courses.

costs typically required to sell a high number of available shares. The construction cost is estimated at $150 per square foot ($1,620 per sq m) or $180,000 per unit. In addition, furniture, fixture, and equipment costs are estimated at $30,000 per unit and site improvement costs at $10,000 per unit. Construction costs include timeshare-specific leisure facilities. We have assumed 20 percent soft costs and a 5 percent contingency. Golf and Country Club Operations. Figures 3-8, 3-9, and 3-10 show inputs and analyses for the golf and country club facilities. The golf and country club operation is analyzed differently than the real estate cash flows. Since the golf and country club is an operated profit center, it is necessary to project a budgeted operating statement for the facilities. The net operating income generated from the facilities is then shown as one of the primary sources of funds in the cash flow analysis, along with membership sales proceeds. The provision of high-quality recreational facilities in a club environment is one of the key strengths of a resort, particularly with regard to selling real estate at premium prices. It is thus necessary to include suf-

94 Resort Development

ficient amenities such as food and beverage facilities in the clubhouse and to budget for ancillary facility costs, especially if the goal is to sell memberships as well as to provide high-quality amenities to resort guests. It is assumed that the clubhouse is 15,000 square feet (1,400 sq m). Accordingly, the golf and country club encompasses the following facilities: ; an 18-hole resort golf course; ; a driving range; ; eight tennis courts; ; a children’s playground; ; an outdoor leisure pool; ; a poolside bar; ; a members’ bar and dining room; ; an informal food and beverage operation; and ; a dining room suitable for banquets. The golf and country club commences operation in year three. It is important to initiate the golf operations as soon as possible to stimulate real estate sales and hotel room occupancy. Golf and country club member-

ships will be sold optionally to property owners and will offer free access except for carts, priority tee-off times, and other benefits. Initiation fees will increase annually as the project approaches buildout. The operating assumptions are listed below shown in 2008 dollars. Memberships: 425 Initiation fee (nonequity): $25,000–$30,000 Monthly dues: $350 Transfer fees: 25% of initiation fee Projected golf rounds Members Members’ guests Hotel guests Timeshare residents Daily-fee rounds

50 rounds per year per membership 10 rounds per year per membership 0.15 rounds per occupied room night 0.3 rounds per occupied unit night 3,000 per year

Greens fees (including carts) Guests of members Resort guests Timeshare guests Daily fee

$50 $60 $60 $80

Other revenues Member cart per member round Food and beverage revenues per round Merchandise per round Driving range per round Club rental/miscellaneous per round

$8 $10 $8 $4 $1

Cost of sales Food, beverage, and banquets Merchandise Club rental/miscellaneous

33% 70% 40%

Operating expenses (2008 $) Course maintenance $1,100,000 Golf operations (pro shop, carts, range) $400,000 Food, beverage, and banquet (50% of sales) $210,000 Undistributed clubhouse $100,000 Equipment leases $150,000 General and administrative $600,000 Replacement reserve (3% gross) $100,000 Total $2,660,000

Resort Hotel. Figures 3-11 and 3-12 show a bud-

geted operating statement and cash flow projections for a 150-room resort hotel. High-specification rooms and public areas are assumed. The projected annual occupancy for a stabilized year (estimated to be year three of the operation) is 70 percent. Occupancy builds from 55 to 70 percent over the first three years. It is assumed that the published rate for a standard double room is $180 to $240. It will be necessary to offer discounts to certain market sectors such as inclusive tour groups, the off-season short-break market, and conference groups. The model uses an average daily room rate (ADR) of $200, growing in constant dollar terms to $230. Other operating assumptions are listed below. Revenue and expense factors are based on results reported by PKF in 2007 for resort hotels. Department Rooms Food and beverage Telephone Other Total

$ per night $200 118 4 40 $362

% of revenues 55.3 32.6 1.0 11.1 100

As mentioned previously, the ratio of department costs to total revenues includes spending by hotel guests and function groups. Department expenses Rooms Food and beverage Telephone Other

% of revenues 14.7 24.0 0.7 5.7

Undistributed operating expenses General and administrative Franchise fee Marketing Property operations and maintenance Utilities

7.1 1.2 5.1 5.0 3.8

Fixed charges Insurance Property taxes Management fee

1.4 2.5 3.0

Net operating income is set out in Figure 3-12 and has been projected before depreciation and debt service.

Feasibility Analysis and Financing 95

COURTESY OF THE BROADMOOR

Many of today’s best resorts are older properties that marry yesterday’s charm with today’s luxuries.

Leasable area: 15,000 square feet (1,400 sq m) Stabilized occupancy: 95% Average rent per square foot (NNN): $27 Operating expenses: 10% of lease revenues Assuming a construction cost of $125 per square foot ($1,340 per sq m) of gross leasable space, the model has used a development cost estimate of $1,875,000. Soft costs and contingency have been estimated at 20 percent and 5 percent, respectively.

96 Resort Development

COURTESY OF THE BROADMOOR

Development costs for the hotel include furniture, fixtures, and equipment. Soft costs and contingency have been estimated at 20 percent and 5 percent, respectively. Commercial Complex. Figure 3-13 shows projections of both operations and cash flow for a small retail center that primarily supports the residential component. Country club visitors and resort guests would also use the center, which would incorporate a mix of retail, restaurant, and entertainment facilities.

FIGURE

3-2

Sample Resort Complex Pro Forma Model—Land and Infrastructure Costs Thousands of 2008 Inflated Dollars Land Costs Total Land Cost

$10,000.0

Total Number of Acres

500

Land Cost per Acre

$20.0

Infrastructure and Common Area Costs Roads

$2,000.0

Utilities/Landscaping

$3,000.0

Subtotal Hard Infrastructure Costs

$5,000.0

Soft Costs @ 20.0%

$1,000.0

Contingency @ 5.0%

$250.0

Total Infrastructure and Common Area Costs

$6,250.0

Source: Economics Research Associates. Pro forma spreadsheets are available on this book’s website at www.uli.org/resorts

FIGURE

3-3

Sample Resort Complex Pro Forma Cash Flow Model—Consolidated Cash Flow Thousands of Inflated Dollars/Inflation 3% Total

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

1.00

1.03

1.06

1.09

1.13

1.16

1.19

1.23

1.27

1.30

$9,598.8

$0.0

$0.0

$0.0

$0.0

Inflation Factor Net Cash Flow Residential Homesites

$21,522.2

$0.0

($2,893.3)

$4,318.3

$4,928.0

$5,570.4

Golf Villas

$21,952.1

$0.0

($30,688.9)

$4,936.9

$6,285.4

$41,418.7

$0.0

$0.0

$0.0

$0.0

$0.0

Clustered Units

$25,768.0

$0.0

($22,475.1)

$3,636.8

$4,946.2

$6,331.0

$33,329.1

$0.0

$0.0

$0.0

$0.0

Timeshare Condos

$19,180.0

$0.0

$0.0

($3,933.8)

$3,531.7

$5,128.9

$7,551.5

$6,901.6

$0.0

$0.0

$0.0

Golf & Country Club

$12,429.0

$0.0

($7,403.1)

($6,406.9)

$2,662.9

$2,493.7

$3,175.8

$3,829.8

$1,177.5

$1,212.8

$11,686.4

Resort Hotel

$92,962.3

$0.0

($38,625.0)

$3,639.5

$5,488.2

$6,236.2

$6,729.1

$7,246.1

$7,463.4

$7,687.3

$87,097.5

$4,796.6

$0.0

$0.0

($2,561.1)

$318.6

$389.7

$401.4

$413.5

$425.9

$438.7

$4,969.9

Cash Flow before Projectwide Costs

$198,610.2

$0.0

($102,085.4)

$3,629.6

$28,161.1

$67,568.7

$60,785.8

$18,391.0

$9,066.8

Land Cost

Commercial Complex

$9,338.8 $103,753.8

($10,000.0)

($10,000.0)

Infrastructure Costs $6,250.0

($6,343.8)

($3,125.0)

($3,218.8)

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

Project Management and Overhead

($2,300.0)

($300.0)

($500.0)

($500.0)

($400.0)

($300.0)

($300.0)

$0.0

$0.0

$0.0

$0.0

$182,266.4

($13,425.0)

($105,804.1)

$3,129.6

$27,761.1

$67,268.7

$60,485.8

$18,391.0

$9,066.8

$9,338.8 $103,753.8

—

($13,425.0)

($119,229.1) ($116,099.5)

($88,338.4)

($21,069.8)

$39,416.0

$57,807.0

$66,873.8

$76,212.6 $179,966.4

Net Cash Flow Cumulative Cash Flow

Internal Rate of Return

21.2%

Net Present Value @ 12%

$41,106.0

Source: Economics Research Associates.

Feasibility Analysis and Financing 97

FIGURE

3-4

Sample Resort Complex Pro Forma Cash Flow Model—Homesites Thousands of Inflated Dollars/Inflation 3% Total

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

1.00

1.03

1.06

1.09

1.13

1.16

1.19

1.23

1.27

1.30

Inflation Factor

Revenue Assumptions Projected Absorption

200

0

0

50

50

50

50

0

0

0

0

$0.0

$0.0

$150.0

$160.0

$170.0

$180.0

$0.0

$0.0

$0.0

$0.0

$36,698.9

$0.0

$0.0

$7,956.8

$8,741.8

$9,566.8

$10,433.5

$0.0

$0.0

$0.0

$0.0

$2,201.9

$0.0

$0.0

$477.4

$524.5

$574.0

$626.0

$0.0

$0.0

$0.0

$0.0

Price per Unit (000’s of constant $)

Sales Proceeds (inflated) Gross Sales

Less Commissions @ 6% Less Closing @ 2%

$734.0

$0.0

$0.0

$159.1

$174.8

$191.3

$208.7

$0.0

$0.0

$0.0

$0.0

Less Marketing @ 4%

$1,468.0

$0.0

$318.3

$349.7

$382.7

$417.3

$0.0

$0.0

$0.0

$0.0

$0.0

Net Proceeds from Sales

$32,295.0

$0.0

($318.3)

$6,970.5

$7,659.8

$8,384.1

$9,598.8

$0.0

$0.0

$0.0

$0.0

In-Tract Improvements $40.0

$8,618.3

$0.0

$2,060.0

$2,121.8

$2,185.5

$2,251.0

$0.0

$0.0

$0.0

$0.0

$0.0

Soft Costs @ 20%

$1,723.7

$0.0

$412.0

$424.4

$437.1

$450.2

$0.0

$0.0

$0.0

$0.0

$0.0

Development Costs (per site)

Contingency @ 5%

$430.9

$0.0

$103.0

$106.1

$109.3

$112.6

$0.0

$0.0

$0.0

$0.0

$0.0

Total Development Costs

$10,772.8

$0.0

$2,575.0

$2,652.3

$2,731.8

$2,813.8

$0.0

$0.0

$0.0

$0.0

$0.0

Net Cash Flow

$21,522.2

$0.0

($2,893.3)

$4,318.3

$4,928.0

$5,570.4

$9,598.8

$0.0

$0.0

$0.0

$0.0

—

$0.0

($2,893.3)

$1,425.0

$6,353.0

$11,923.4

$21,522.2

$21,522.2

$21,522.2

$21,522.2

$21,522.2

Cumulative Cash Flow

Net Present Value @ 12%

$11,922.8

Source: Economics Research Associates.

98 Resort Development

FIGURE

3-5

Sample Resort Complex Pro Forma Cash Flow Model—Detached Golf Villas Thousands of Inflated Dollars/Inflation 3% Total

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

1.00

1.03

1.06

1.09

1.13

1.16

1.19

1.23

1.27

1.30

0

0

50

50

50

0

0

0

0

0

$0.0

$0.0

$750.0

$775.0

$800.0

$0.0

$0.0

$0.0

$0.0

$0.0

$127,147.3

$0.0

$0.0

$39,783.8

$42,343.2

$45,020.4

$0.0

$0.0

$0.0

$0.0

$0.0

Less Commissions @ 6%

$7,628.8

$0.0

$0.0

$2,387.0

$2,540.6

$2,701.2

$0.0

$0.0

$0.0

$0.0

$0.0

Less Closing @ 2%

$2,542.9

$0.0

$0.0

$795.7

$846.9

$900.4

$0.0

$0.0

$0.0

$0.0

$0.0

Less Marketing @ 4%

$5,085.9

$0.0

$1,591.4

$1,693.7

$1,800.8

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$111,889.6

$0.0

($1,591.4)

$34,907.3

$37,154.9

$41,418.7

$0.0

$0.0

$0.0

$0.0

$0.0

$66,856.2

$0.0

$21,630.0

$22,278.9

$22,947.3

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$6,367.3

$0.0

$2,060.0

$2,121.8

$2,185.5

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$13,371.2

$0.0

$4,326.0

$4,455.8

$4,589.5

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

Inflation Factor

Revenue Assumptions Projected Absorption

150

Price per Unit (000’s of constant $)

Sales Proceeds (inflated) Gross Sales

Net Proceeds from Sales

Development Costs (per unit) Construction Costs $420.0 In-Tract Improvements $40.0

Soft Costs @ 20% Contingency @ 5%

$3,342.8

$0.0

$1,081.5

$1,113.9

$1,147.4

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

Total Development Costs

$89,937.5

$0.0

$29,097.5

$29,970.4

$30,869.5

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

Net Cash Flow

$21,952.1

$0.0

($30,688.9)

$4,936.9

$6,285.4

$41,418.7

$0.0

$0.0

$0.0

$0.0

$0.0

—

$0.0

($30,688.9)

($25,752.0)

($19,466.6)

$21,952.1

$21,952.1

$21,952.1

$21,952.1

$21,952.1

$21,952.1

Cumulative Cash Flow

Net Present Value @ 12%

$6,545.6

Source: Economics Research Associates.

Feasibility Analysis and Financing 99

FIGURE

3-6

Sample Resort Complex Pro Forma Cash Flow Model—Clustered Units Thousands of Inflated Dollars/Inflation 3% Total Inflation Factor

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

1.00

1.03

1.06

1.09

1.13

1.16

1.19

1.23

1.27

1.30

Revenue Assumptions Projected Absorption

200

0

0

50

50

50

50

0

0

0

0

$0.0

$0.0

$550.0

$575.0

$600.0

$625.0

$0.0

$0.0

$0.0

$0.0

$130,583.2

$0.0

$0.0

$29,174.8

$31,415.9

$33,765.3

$36,227.3

$0.0

$0.0

$0.0

$0.0

Less Commissions @ 6%

$7,835.0

$0.0

$0.0

$1,750.5

$1,885.0

$2,025.9

$2,173.6

$0.0

$0.0

$0.0

$0.0

Less Closing @ 2%

$2,611.7

$0.0

$0.0

$583.5

$628.3

$675.3

$724.5

$0.0

$0.0

$0.0

$0.0

Less Marketing @ 4%

$5,223.3

$0.0

$1,167.0

$1,256.6

$1,350.6

$1,449.1

$0.0

$0.0

$0.0

$0.0

$0.0

$114,913.2

$0.0

($1,167.0)

$25,584.1

$27,552.0

$29,615.0

$33,329.1

$0.0

$0.0

$0.0

$0.0

$67,868.9

$0.0

$16,222.5

$16,709.2

$17,210.5

$17,726.8

$0.0

$0.0

$0.0

$0.0

$0.0

$4,309.1

$0.0

$1,030.0

$1,060.9

$1,092.7

$1,125.5

$0.0

$0.0

$0.0

$0.0

$0.0

Soft Costs @ 20%

$13,573.8

$0.0

$3,244.5

$3,341.8

$3,442.1

$3,545.4

$0.0

$0.0

$0.0

$0.0

$0.0

Contingency @ 5%

$3,393.4

$0.0

$811.1

$835.5

$860.5

$886.3

$0.0

$0.0

$0.0

$0.0

$0.0

Total Development Costs

$89,145.2

$0.0

$21,308.1

$21,947.4

$22,605.8

$23,284.0

$0.0

$0.0

$0.0

$0.0

$0.0

Net Cash Flow

$25,768.0

$0.0

($22,475.1)

$3,636.8

$4,946.2

$6,331.0

$33,329.1

$0.0

$0.0

$0.0

$0.0

—

$0.0

($22,475.1)

($18,838.3)

($13,892.1)

($7,561.1)

$25,768.0

$25,768.0

$25,768.0

$25,768.0

$25,768.0

Price per Unit (000’s of constant $)

Sales Proceeds (inflated) Gross Sales

Net Proceeds from Sales

Development Costs (per unit) Construction Costs $315.0 In-Tract Improvements $20.0

Cumulative Cash Flow

Net Present Value @ 12%

$8,292.9

Source: Economics Research Associates.

100 Resort Development

FIGURE

3-7

Sample Resort Complex Pro Forma Cash Flow Model—Timeshare Condos Thousands of Inflated Dollars/Inflation 3% Total Inflation Factor

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

1.00

1.03

1.06

1.09

1.13

1.16

1.19

1.23

1.27

1.30

0

0

20

15

15

0

0

720

720

720

340

0

0

0

Revenue Assumptions Units Built

50

Projected Absorption of Shares

2,500

Cumulative Units @ 50 shares/unit

0

0 0

0

14

29

43

50

50

50

50

50

$0.0

$0.0

$0.0

$20.0

$20.0

$20.0

$20.0

$0.0

$0.0

$0.0

$56,755.7

$0.0

$0.0

$0.0

$15,735.3

$16,207.3

$16,693.5

$8,119.6

$0.0

$0.0

$0.0

$5,675.6

$0.0

$0.0

$0.0

$1,573.5

$1,620.7

$1,669.4

$812.0

$0.0

$0.0

$0.0

Price per Unit (000’s of constant $)

Sales Proceeds (inflated) Gross Sales

Less Commissions @ 10% Less Closing @ 5%

$2,837.8

$0.0

$0.0

$0.0

$786.8

$810.4

$834.7

$406.0

$0.0

$0.0

$0.0

Less Marketing @ 25%

$14,188.9

$0.0

$0.0

$3,933.8

$4,051.8

$4,173.4

$2,029.9

$0.0

$0.0

$0.0

$0.0

Net Proceeds from Sales

$34,053.4

$0.0

$0.0

($3,933.8)

$9,323.1

$9,602.8

$12,159.6

$6,901.6

$0.0

$0.0

$0.0

$10,102.7

$0.0

$0.0

$0.0

$3,933.8

$3,038.9

$3,130.0

$0.0

$0.0

$0.0

$0.0

Furniture, Fixtures + Equip. $30.0 $1,683.8

$0.0

$0.0

$0.0

$655.6

$506.5

$521.7

$0.0

$0.0

$0.0

$0.0

In-Tract Improvements $10.0

$561.3

$0.0

$0.0

$0.0

$218.5

$168.8

$173.9

$0.0

$0.0

$0.0

$0.0

$2,020.5

$0.0

$0.0

$0.0

$786.8

$607.8

$626.0

$0.0

$0.0

$0.0

$0.0

Development Costs (per unit) Construction Costs $180.0

Soft Costs @ 20% Contingency @ 5%

$505.1

$0.0

$0.0

$0.0

$196.7

$151.9

$156.5

$0.0

$0.0

$0.0

$0.0

Total Development Costs

$14,873.5

$0.0

$0.0

$0.0

$5,791.5

$4,473.9

$4,608.1

$0.0

$0.0

$0.0

$0.0

Net Cash Flow

$19,180.0

$0.0

$0.0

($3,933.8)

$3,531.7

$5,128.9

$7,551.5

$6,901.6

$0.0

$0.0

$0.0

Cumulative Cash Flow

—

$0.0

$0.0

($3,933.8)

($402.1)

$4,726.8

$12,278.3

$19,180.0

$19,180.0

$19,180.0

$19,180.0

Net Present Value @ 12%

$9,302.5

Source: Economics Research Associates.

Feasibility Analysis and Financing 101

FIGURE

3-8

Sample Resort Complex Pro Forma Cash Flow Model—Golf and Country Club Operating Assumptions Thousands of Inflated Dollars/Inflation 3% Total Inflation Factor

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

1.00

1.03

1.06

1.09

1.13

1.16

1.19

1.23

1.27

1.30

0

0

100

100

75

75

75

0

0

0

0

0

100

200

275

350

425

425

425

425

$0

$0

$25,000

$27,000

$28,000

$30,000

$30,000

$30,000

$30,000

$30,000

Revenue Assumptions Membership Sales Country Club Memberships

425

Cumulative Memberships Initiation Fee (constant $, not thousands) Transferred Memberships @ 5% Transfer Fees @ 25% Membership Sales Proceeds (infl.)

$14,314.8

Monthly Dues (constant values, not thousands)

14

18

21

21

21

21

$7,000

$7,500

$7,500

$7,500

$7,500

$7,500

$0.0

$0.0

$2,652.3

$2,950.4

$2,473.9

$2,764.9

$2,874.7

$193.7

$199.5

$205.5

$0

$0

$350

$350

$350

$350

$350

$350

$350

$350

0

0

5,000

10,000

13,750

17,500

21,250

21,250

21,250

21,250

Projected Golf Rounds Membership Rounds @ 50 Guest Rounds @ 10

0

0

1,000

2,000

2,750

3,500

4,250

4,250

4,250

4,250

Hotel Guests @ 15% room nights

0

0

4,517

5,338

5,749

5,749

5,749

5,749

5,749

5,749

Timeshare 80% occ. @ 30% unit nights

0

0

0

1,261

2,523

3,784

4,380

4,380

4,380

4,380

Daily Fee @ 3,000

0

0

10,000

7,000

5,000

3,000

3,000

3,000

3,000

3,000 0

Total Projected Rounds

0

0

20,517

25,600

29,772

33,533

38,629

38,629

38,629

38,629

Greens Fee Revenues Member Guest Fees @ $50.00

$1,581.5

$0.0

$0.0

$53.0

$109.3

$154.8

$202.9

$253.7

$261.3

$269.2

$277.3

Hotel Guest Fees @ $60.00

$3,148.6

$0.0

$0.0

$287.5

$350.0

$388.2

$399.9

$411.9

$424.2

$436.9

$450.0

Timeshare @ $60.00

$1,829.1

$0.0

$0.0

$0.0

$82.7

$170.4

$263.2

$313.8

$323.2

$332.9

$342.9

Daily Fee @ $80.00

$3,388.0

$0.0

$0.0

$848.7

$611.9

$450.2

$278.2

$286.6

$295.2

$304.0

$313.1

$1,383.4

Pro Forma Greens Fees

$9,947.2

$0.0

$0.0

$1,189.3

$1,153.9

$1,163.5

$1,144.2

$1,266.0

$1,303.9

$1,343.1

Less Misc. Discounts @ 15%

($1,492.1)

$0.0

$0.0

($178.4)

($173.1)

($174.5)

($171.6)

($189.9)

($195.6)

($201.5)

($207.5)

Net Greens Fees

$8,455.1

$0.0

$0.0

$1,010.9

$980.8

$989.0

$972.6

$1,076.1

$1,108.4

$1,141.6

$1,175.9

Source: Economics Research Associates.

102 Resort Development

FIGURE

3-9

Sample Resort Complex Pro Forma Cash Flow Model—Golf and Country Club Budgeted Operating Statement Thousands of Inflated Dollars/Inflation 3% Total Inflation Factor

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

1.00

1.03

1.06

1.09

1.13

1.16

1.19

1.23

1.27

1.30

Operating Revenues Annual Dues

$13,284.5

$0.0

$0.0

$445.6

$917.9

$1,300.0

$1,704.1

$2,131.4

$2,195.3

$2,261.2

$2,329.0

Greens Fees

$8,455.1

$0.0

$0.0

$1,010.9

$980.8

$989.0

$972.6

$1,076.1

$1,108.4

$1,141.6

$1,175.9

Member Cart Fees @ $8

$1,265.2

$0.0

$0.0

$42.4

$87.4

$123.8

$162.3

$203.0

$209.1

$215.4

$221.8

Food & Beverage @ $10

$3,150.9

$0.0

$0.0

$217.7

$279.7

$335.1

$388.7

$461.2

$475.1

$489.3

$504.0

Banquets

$3,897.7

$0.0

$0.0

$200.0

$300.0

$400.0

$500.0

$597.0

$614.9

$633.4

$652.4

Merchandise @ $8

$2,520.7

$0.0

$0.0

$174.1

$223.8

$268.1

$311.0

$369.0

$380.1

$391.5

$403.2

Driving Range @ $4

$1,260.4

$0.0

$0.0

$87.1

$111.9

$134.0

$155.5

$184.5

$190.0

$195.7

$201.6

$315.1

$0.0

$0.0

$21.8

$28.0

$33.5

$38.9

$46.1

$47.5

$48.9

$50.4

$34,149.6

$0.0

$0.0

$2,199.5

$2,929.5

$3,583.5

$4,233.1

$5,068.3

$5,220.4

$5,377.0

$5,538.3

F & B & Banquet Sales @ 33%

$2,326.1

$0.0

$0.0

$137.8

$191.3

$242.6

$293.3

$349.2

$359.7

$370.5

$381.6

Merchandise Sales @ 70%

$1,764.5

$0.0

$0.0

$121.9

$156.7

$187.6

$217.7

$258.3

$266.0

$274.0

$282.2

Club Rental/Misc. @ $1 Gross Operating Revenues

Less: Cost of Goods Sold

Club Rentals/Misc. @ 40%

$126.0

$0.0

$0.0

$8.7

$11.2

$13.4

$15.5

$18.4

$19.0

$19.6

$20.2

Net Operating Revenues

$29,933.0

$0.0

$0.0

$1,931.1

$2,570.4

$3,139.8

$3,706.6

$4,442.4

$4,575.6

$4,712.9

$4,854.3

Operating Expenses Course Maintenance

$10,377.3

$0.0

$0.0

$1,167.0

$1,202.0

$1,238.1

$1,275.2

$1,313.5

$1,352.9

$1,393.4

$1,435.3

Golf Ops. (pro shop, carts, range)

$3,773.6

$0.0

$0.0

$424.4

$437.1

$450.2

$463.7

$477.6

$491.9

$506.7

$521.9

F&B & Banquet (50% of sales)

$3,524.3

$0.0

$0.0

$208.8

$289.9

$367.5

$444.4

$529.1

$545.0

$561.4

$578.2

$943.4

$0.0

$0.0

$106.1

$109.3

$112.6

$115.9

$119.4

$123.0

$126.7

$130.5

Equipment Lease

$1,415.1

$0.0

$0.0

$159.1

$163.9

$168.8

$173.9

$179.1

$184.5

$190.0

$195.7

General and Administrative

$5,660.3

$0.0

$0.0

$636.5

$655.6

$675.3

$695.6

$716.4

$737.9

$760.1

$782.9

Undistributed Clubhouse

Replacement Reserve @ 3%

$870.6

$0.0

$0.0

$0.0

$0.0

$107.5

$127.0

$152.1

$156.6

$161.3

$166.1

Total Operating Expenses

$26,564.6

$0.0

$0.0

$2,701.9

$2,857.8

$3,120.0

$3,295.7

$3,487.2

$3,591.8

$3,699.6

$3,810.6

Net Operating Income

$3,368.5

$0.0

$0.0

($770.8)

($287.4)

$19.9

$410.9

$955.1

$983.8

$1,013.3

$1,043.7

Source: Economics Research Associates.

Feasibility Analysis and Financing 103

FIGURE

3-10

Sample Resort Complex Pro Forma Cash Flow Model—Golf and Country Club Cash Flow Thousands of Inflated Dollars/Inflation 3% Total Inflation Factor

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

1.00

1.03

1.06

1.09

1.13

1.16

1.19

1.23

1.27

1.30

$0.0

$0.0

($770.8)

($287.4)

$19.9

$410.9

$955.1

$983.8

$1,013.3

Sources of Funds Net Operating Income

$3,368.5

$1,043.7

Asset Value @1 10%

$10,437.2

$10,437.2

Membership Sales Proceeds

$14,314.8

$0.0

$0.0

$2,652.3

$2,950.4

$2,473.9

$2,764.9

$2,874.7

$193.7

$199.5

$205.5

Total Sources of Funds

$28,120.4

$0.0

$0.0

$1,881.4

$2,662.9

$2,493.7

$3,175.8

$3,829.8

$1,177.5

$1,212.8

$11,686.4

$8,363.6

$0.0

$4,120.0

$4,243.6

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

Uses of Funds Development Costs (2008 $) Golf Course Construction $8,000.0 Maint./Grow-in $500.0

$530.5

Clubhouse & Amenities $3,500.0

$3,659.1

$0.0

$1,802.5

$1,856.6

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

Soft Costs @ 20%

$2,510.6

$0.0

$1,184.5

$1,326.1

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

Contingency @ 5% Total Uses of Funds

Net Cash Flow

$627.7

$0.0

$296.1

$331.5

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$15,691.4

$0.0

$7,403.1

$8,288.3

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$12,429.0

$0.0

($7,403.1)

($6,406.9)

$2,662.9

$2,493.7

$3,175.8

$3,829.8

$1,177.5

$1,212.8

$11,686.4

—

$0.0

($7,403.1)

($13,810.0)

($11,147.1)

($8,653.3)

($5,477.6)

($1,647.7)

($470.2)

$742.6

$12,429.0

Cumulative Cash Flow

Net Present Value @ 12% 1

$530.5

$662.3

Assumes asset sale in Year 10.

Source: Economics Research Associates.

104 Resort Development

FIGURE

3-11

Sample Resort Complex Pro Forma Cash Flow Model—Resort Hotel Operating Statement Thousands of Inflated Dollars/Inflation 3% Total Inflation Factor

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

1.00

1.03

1.06

1.09

1.13

1.16

1.19

1.23

1.27

1.30

Operating Assumptions Number of Rooms Average Annual Occupancy Rate Projected Room Nights Average Daily Room Rate (constant $, not thousands)

0

0

150

150

150

150

150

150

150

150

0%

0%

55%

65%

70%

70%

70%

70%

70%

70%

0

0

30,113

35,588

38,325

38,325

38,325

38,325

38,325

38,325

$0

$0

$200

$205

$210

$220

$230

$230

$230

$230

Operating Revenues Gross Room Revenues 55.3%

$77,227.8

$0.0

$0.0

$6,389.3

$7,971.9

$9,058.4

$9,774.4

$10,525.3

$10,841.0

$11,166.3

$11,501.2

Food & Beverage 32.6%

$45,526.7

$0.0

$0.0

$3,766.5

$4,699.5

$5,340.0

$5,762.1

$6,204.8

$6,390.9

$6,582.6

$6,780.1

Phone 1.0% Other Depts. 11.1% Gross Operating Revenues 100.0%

$1,396.5

$0.0

$0.0

$115.5

$144.2

$163.8

$176.8

$190.3

$196.0

$201.9

$208.0

$15,501.4

$0.0

$0.0

$1,282.5

$1,600.2

$1,818.2

$1,962.0

$2,112.7

$2,176.0

$2,241.3

$2,308.6

$139,652.4

$0.0

$0.0

$11,553.8

$14,415.8

$16,380.4

$17,675.3

$19,033.0

$19,604.0

$20,192.2

$20,797.9

Operating Expenses Departmental Expenses (% of revenues) Rooms 14.7%

$12,111.7

$0.0

$0.0

$1,698.4

$1,171.9

$1,331.6

$1,436.8

$1,547.2

$1,593.6

$1,641.4

$1,690.7

Food & Beverage 24.0%

$33,516.6

$0.0

$0.0

$2,772.9

$3,459.8

$3,931.3

$4,242.1

$4,567.9

$4,705.0

$4,846.1

$4,991.5

$977.6

$0.0

$0.0

$80.9

$100.9

$114.7

$123.7

$133.2

$137.2

$141.3

$145.6

$7,960.2

$0.0

$0.0

$658.6

$821.7

$933.7

$1,007.5

$1,084.9

$1,117.4

$1,151.0

$1,185.5

$46,605.8

$0.0

$0.0

$4,552.2

$4,732.6

$5,377.5

$5,802.6

$6,248.4

$6,435.8

$6,628.9

$6,827.8

Telephone 0.7% Other 5.7% Total Departmental Expenses

Undistributed Operating Expenses General & Admin. 7.1%

$9,915.3

$0.0

$0.0

$820.3

$1,023.5

$1,163.0

$1,254.9

$1,351.3

$1,391.9

$1,433.6

$1,476.7

Franchise Fee incl. Mktg. 1.2%

$1,675.8

$0.0

$0.0

$138.6

$173.0

$196.6

$212.1

$228.4

$235.2

$242.3

$249.6

Marketing 5.1%

$7,122.3

$0.0

$0.0

$589.2

$735.2

$835.4

$901.4

$970.7

$999.8

$1,029.8

$1,060.7

Property Ops. & Maint. 5.0%

$6,982.6

$0.0

$0.0

$577.7

$720.8

$819.0

$883.8

$951.7

$980.2

$1,009.6

$1,039.9

Utilities 3.8%

$5,306.8

$0.0

$0.0

$439.0

$547.8

$622.5

$671.7

$723.3

$745.0

$767.3

$790.3

$31,002.8

$0.0

$0.0

$2,565.0

$3,200.3

$3,636.5

$3,923.9

$4,225.3

$4,352.1

$4,482.7

$4,617.1

Insurance 1.4%

$1,955.1

$0.0

$0.0

$161.8

$201.8

$229.3

$247.5

$266.5

$274.5

$282.7

$291.2

Property Taxes 2.5%

$3,491.3

$0.0

$0.0

$288.8

$360.4

$409.5

$441.9

$475.8

$490.1

$504.8

$519.9

Management Fees 3.0%

$4,189.6

$0.0

$0.0

$346.6

$432.5

$491.4

$530.3

$571.0

$588.1

$605.8

$623.9

Total Undistributed Operating Expenses Fixed Charges

Total Fixed Charges

$9,636.0

$0.0

$0.0

$797.2

$994.7

$1,130.2

$1,219.6

$1,313.3

$1,352.7

$1,393.3

$1,435.1

Total Operating Expenses

$87,244.7

$0.0

$0.0

$7,914.4

$8,927.6

$10,144.3

$10,946.1

$11,787.0

$12,140.6

$12,504.8

$12,880.0

Net Operating Income

$52,407.8

$0.0

$0.0

$3,639.5

$5,488.2

$6,236.2

$6,729.1

$7,246.1

$7,463.4

$7,687.3

$7,918.0

Source: Economics Research Associates. Operating factors from PKF Trends in the Hotel Industry, 2007, for “All Resort Hotels.”

Feasibility Analysis and Financing 105

FIGURE

3-12

Sample Resort Complex Pro Forma Cash Flow Model—Commercial Complex Cash Flow Thousands of Inflated Dollars/Inflation 3% Total

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

1.00

1.03

1.06

1.09

1.13

1.16

1.19

1.23

1.27

1.30

$0.0

$0.0

$3,639.5

$5,488.2

$6,236.2

$6,729.1

$7,246.1

$7,463.4

$7,687.3

Inflation Factor

Sources of Funds Net Operating Income

$52,407.8

Asset Value @1 10%

$79,179.6

Total Sources of Funds

$7,918.0 $79,179.6

$131,587.3

$0.0

$0.0

$3,639.5

$5,488.2

$6,236.2

$6,729.1

$7,246.1

$7,463.4

$7,687.3

$87,097.5

$30,900.0

$0.0

$30,900.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

Soft Costs @ 20%

$6,180.0

$0.0

$6,180.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

Contingency @ 5%

$1,545.0

$0.0

$1,545.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

Total Uses of Funds

$38,625.0

$0.0

$38,625.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$92,962.3

$0.0

($38,625.0)

$3,639.5

$5,488.2

$6,236.2

$6,729.1

$7,246.1

$7,463.4

$7,687.3

$87,097.5

—

$0.0

($38,625.0)

($34,985.5)

($29,497.3)

($23,261.2)

($16,532.0)

($9,286.0)

($1,822.5)

$5,864.8

$92,962.3

Uses of Funds Development Costs Construction $30,000.0

Net Cash Flow

Cumulative Cash Flow

Net Present Value @ 12% 1

$19,341.8

Assumes asset sale in Year 10.

Source: Economics Research Associates.

106 Resort Development

FIGURE

3-13

Sample Resort Complex Pro Forma Cash Flow Model—Commercial Complex Cash Flow Thousands of Inflated Dollars/Inflation 3% Total Inflation Factor

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

1.00

1.03

1.06

1.09

1.13

1.16

1.19

1.23

1.27

1.30

Revenue Assumptions Gross Leasable Area (s.f.) Average Annual Occupancy Rate Average Rent per s.f. (constant values) Lease Revenue

0

0

0

15,000

15,000

15,000

15,000

15,000

15,000

15,000

0%

0%

0%

80%

95%

95%

95%

95%

95%

95%

$0.00

$0.00

$0.00

$27.00

$27.00

$27.00

$27.00

$27.00

$27.00

$27.00

$3,155.1

$0.0

$0.0

$0.0

$354.0

$433.0

$446.0

$459.4

$473.2

$487.4

$502.0

$157.8

$0.0

$0.0

$0.0

$17.7

$21.7

$22.3

$23.0

$23.7

$24.4

$25.1

Operating Revenues Ops. & Maint. @ 5% Gen. & Admin. @ 5%

$157.8

$0.0

$0.0

$0.0

$17.7

$21.7

$22.3

$23.0

$23.7

$24.4

$25.1

Total Operating Expenses

$315.5

$0.0

$0.0

$0.0

$35.4

$43.3

$44.6

$45.9

$47.3

$48.7

$50.2

$2,839.6

$0.0

$0.0

$0.0

$318.6

$389.7

$401.4

$413.5

$425.9

$438.7

$451.8

$0.0

$0.0

$0.0

$318.6

$389.7

$401.4

$413.5

$425.9

$438.7

Net Operating Income

Sources of Funds $451.8

Net Operating Income

$2,839.6

Asset Value @1 10%

$4,518.1

Total Sources of Funds

$7,357.7

$0.0

$0.0

$0.0

$318.6

$389.7

$401.4

$413.5

$425.9

$438.7

$4,969.9

$0.0

$0.0

$0.0

$2,048.9

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

Soft Costs @ 20%

$409.8

$0.0

$0.0

$409.8

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

Contingency @ 5%

$102.4

$0.0

$0.0

$102.4

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$2,561.1

$0.0

$0.0

$2,561.1

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$4,796.6

$0.0

$0.0

($2,561.1)

$318.6

$389.7

$401.4

$413.5

$425.9

$438.7

$4,969.9

—

$0.0

$0.0

($2,561.1)

($2,242.4)

($1,852.7)

($1,451.3)

($1,037.8)

($611.9)

($173.3)

$4,796.6

$4,518.1

Uses of Funds Development Costs Construction $1,875.0

Total Uses of Funds

Net Cash Flow

Cumulative Cash Flow

Net Present Value @ 12% 1

$921.5

Assumes asset sale in Year 10.

Source: Economics Research Associates.

Feasibility Analysis and Financing 107

Hotel Restored with Innovative Financing At the turn of this century, the prognosis for the historic Skirvin Hotel in downtown Oklahoma City was dismal. Built in 1910 by oilman William Skirvin, the hotel fell victim to hard times and changes of ownership and in 1989 closed its doors, as have other downtown hotels. In 2002, a financing plan to bring back the hotel was developed that would ultimately blend public money with private dollars in an innovative patchwork. Led by Catherine O’Connor, assistant city manager and finance director, the city purchased the property and then issued a request for proposals to development and investment groups. The Urban Renewal Authority and city council eventually designated Partners in Development, the representative of Skirvin Partners, LLC, as the redeveloper of the hotel. The total cost of the hotel’s restoration was estimated at $50.4 million, of which Skirvin Partners agreed to put up $32.4 million. The hotel was to be renamed the Skirvin Hilton and managed by Marcus Hotels and Resorts, a Wisconsin-based company that has created its own niche in historic hotel rehabilitation. The remaining $18 million came from a financing package cobbled together by the city—one that would actually provide a return on its investment.

City officials believed they could be more patient than commercial lenders, so rather than setting fixed rent payments, they entered into a percentage rental agreement— a model more forgiving at the front end, needed if the project was to get off the ground, and more lucrative later as the hotel built its guest base. Sales taxes generated by the hotel will also go toward paying back the city. Federal income tax credits for historic preservation— the hotel is on the National Register of Historic Places— were included, as were a complementary state tax credit for eligible historic rehabilitation costs and community development block grant money assembled by the city. Passage of a modification to the New Markets Federal Tax Credit Program made the hotel eligible for a tax credit under a clause for economically distressed areas. “Lots of other cities use tax increment financing, but this is a true public/private partnership,” summarizes O’Connor. The Skirvin Hilton opened for business in early 2007. Today it boasts 225 guest rooms, 18,000 square feet (1,670 sq m) of meeting space, a full-service restaurant, a swimming pool, and a fitness center.

Financing

; early planning, in which developer/owner equity investment is essential; ; land acquisition, possibly first through land options with purchase by a mortgage, seller’s note, or other traditional method; ; site improvements commercially financed through presales or other means with the land as collateral; ; construction financing in the form of a short-term funding proposition requiring guarantees to satisfy the risks to lending institutions; and ; permanent financing, in which evidence of market viability permits long-term mortgage repayment of interest and principal on the full development, if necessary.

There is no single formula for financing resort development. Each project is distinguished by various characteristics of ownership, development needs, and market conditions and therefore requires different financing arrangements. The customized financial package that is the lifeblood of a given resort development is determined by, among other considerations, the merit of the particular proposal, the business reputation and development experience of the developer (applicant), the applicant’s equity and collateral, the type of financing institution involved, the attitude of the lender, the general economic prospects of the times, and the currently available financial instruments. Resort development financing has its counterpart in many other types of real estate development, from small-scale land sales that may be financed entirely with equity and short-term construction loans to large-scale new communities that require direct long-term ties with numerous money sources. In general, the financing needs typical of real estate development extend to

108 Resort Development

Source: Adapted from “Hotel Restored with Innovative Financing,” Urban Land, November/December 2006, p. 27.

The sources of funds are many and relate to the type of financing. Money may originate from individuals, partnerships, public companies, investment banks, commercial banks, insurance companies, pension funds, foreign investors, government programs, savings institutions, public bonds, and others and might be structured in a variety of ways such as conventional mortgages,

OZ ARCHITECTURE

In Keystone, Colorado, the 47-unit Lone Eagle condominiums offer ski in/ski out accessibility. Amenities include a concierge, fitness center, outdoor pool, and fire pit.

loans with equity kickers, loans with options to acquire ownership, and joint ventures. Often, resorts are selffinanced by a parent company, as were several of the case studies in this book. Banyan Tree Lijiang in China and Doonbeg in Ireland are two examples. Depending on the nature, size, and organization of the project, financial sources more typical of commercial businesses might be available, such as unsecured lines of credit, inventory and receivables loans, and preferred stock, although the last example is unusual. In some situations, public financing may be available, particularly in the Caribbean and Mexico, where some governments have a strong interest in using resorts to spur economic development. In Puerto Rico, for example, several entities and programs have been established to provide financial assistance to and to engage in joint ventures with resort developers. Fonatur, Mexico’s national trust for the promotion of tourism, initiated and financed the development of Cancún, Cabo San Lucas, Ixtapa, and other major resort areas in Mexico. With the above forms of financing fairly common in the real estate industry, this book does not address them all in detail. Rather, it focuses on the particular financing requirements, problems, and opportunities

most associated with resort development, especially large-scale resort communities and multiuse resorts. Special Resort Financing Problems One reason that financing resort development is different and difficult is that resorts involve, to varying degrees, specialized facilities, services, activities, and amenities not normally associated with other types of real estate development. In particular, the economics and long-term financial implications of providing specialized facilities have not been the subject of careful study. Therefore, it is little surprise that many would-be lenders or investors are not inclined to finance a development type that is perceived as risky and remains largely unknown. To complicate matters, resorts are frequently seasonal operations that rely on good weather for much of their success, making them inherently risky undertakings for investors and lenders over the short term. A three-month period of relatively inclement weather during the peak season can ruin a whole year, especially in the case of beach resorts and ski operations. It is also important to recognize that resort home sales typically involve a slow-paced sales program that may take many more years to complete than a similarly

Feasibility Analysis and Financing 109

TAMARACK RESORT/SHERRI HARKIN

Opened in 2004, Tamarack Resort, near Boise, Idaho, is an all-season resort community.

sized primary-home community. For resort projects, the time required to pay off construction loans and provide equity returns is considerably longer than for primary residential project sales, thereby exposing investors and lenders to more cycles of economic risk. Attempts to analyze the economics and financial needs of a given project are likewise complicated by the typically long-term nature of resort land development and the related susceptibility of a project to wide swings in the economy, market attitudes and tastes, inflation, interest rates, availability of credit, labor supply, and more. By contrast, most real estate developments, with the exception of large land developments, are relatively short-term projects that permit the developer to identify and remain relatively certain of construction costs, interest rates tied to permanent financing, and revenues associated with presales or preleasing. Finally, other factors compounding the difficulties associated with long-term resort development are the often required heavy front-end costs during the period of negative cash flow and the fact that, in many

110 Resort Development

cases, investments can be recovered and profits realized only in the final phases of development. General Resort Financing Guidelines In part because of the special issues and problems associated with financing resort developments, the financial community has not developed a good understanding of long-term resort community development. As a result, the resort developer may have to make do with financing techniques and approaches intended for quite different undertakings. Because of the considerable financial risks involved, a resort developer should use prudent financing strategies and devise a contingency plan to deal with sudden and unforeseen changes in circumstances. Such contingencies might call for maintaining reserve equity, investigating refinancing options, accelerating land sales, halting construction, or even selling out. On the extreme downside, a developer may require a complete strategic and functional overhaul, which usually occurs when the existing owners—or, more probably,

alone will not impress investors or lenders. Thus, a sophisticated and well-presented feasibility analysis is an indispensable tool in soliciting financing support. Pro forma statements are essential in making the go/no-go decision and obtaining a financial commitment. A strong managerial commitment is also necessary. The mixed success of large diversified corporations in real estate development during the last two decades attests to the need for specialized managerial skills. In particular, an experienced financial intermediary with personal contacts, knowledge of markets, and a demonstrated ability to structure deals can be an invaluable asset to the development team by seeking out funds in what is generally an imperfect capital market. In many instances, the developer goes ahead with the project with whatever financing can be obtained, however inadequate or unrealistic it may be. This approach accounts in some measure for the high failure rate of resort properties and the belief that a resort project must go through much hardship and two or

AUBERGE RESORTS

the project’s creditors—lose confidence in a project. An overhaul may accompany a foreclosure, further funding, or an outright creditor takeover. Whatever the circumstances, a development in such a precarious financial position must be turned around if investors are to recover their outlay. Perhaps the best advice is to rely heavily on equity in the early stages of resort community development. Hampton Lake in Bluffton, South Carolina, for example, relied on equity for about onethird of the funds to purchase its land. The heavy-equity approach to an inherently risky, long-term venture will likely require creative partnership arrangements with equity partners willing to sacrifice short-term returns for long-term values. The alternative solution is for the resort developer simply to revise, modify, and tailor the development program to fit the available financing. The circumstances can be optimized by making the financial proposal as attractive as possible. The applicant’s proven skills and the project’s physical appeal

Calistoga Ranch, in California’s Napa Valley, combines a boutique hotel with a private residence club on a 157-acre (64-ha) site.

Feasibility Analysis and Financing 111

three owners before it can succeed. Clearly, few people genuinely understand the complex long-term economics of such developments. Too often, projects are financed in a way that dooms them to failure, except under the most favorable circumstances. Land Acquisition Financing A developer can finance the acquisition of land in many ways, the most common of which are discussed below. Generally, lenders make land acquisition loans only to their strongest customers and only if developers have secured the necessary entitlements to develop the land and can demonstrate the ability to repay their loans from sources other than the sale or development of the land. Thus, land acquisitions are usually financed with a large portion of equity, options, or agreements with landowners. To finance the long entitlement process, developers of the Reserve at Indian Wells in California (see case study, chapter 7) assembled a group of shareholders who put up nearly $2 million. Developing a strategy to lower the immediate cost of carrying the land is always prudent. For example, most developers try to presell as many lots as possible to spec builders even before undertaking the project. Retail and commercial lots can also be sold or joint ventured at the front end, which tends to reduce the risk. Optioning the Land. An option on land enables developers to buy time by obtaining control of a property for a short period while retaining the option to buy the parcel later for a specified price. Developers usually make a small cash payment to the landowner and may pay some of the property’s carrying costs (interest charges, overhead, inflation, or property taxes) during the option period. Options permit developers to explore the need for a rezoning, determine whether the land has environmental problems, and secure a commitment from a lender or investor to finance development—all before deciding to purchase the land. At the end of the option period, they give up the option, negotiate its renewal, or exercise it and buy the land. The price paid may be contingent on the density of the development permitted. Developers can develop contiguous land parcels incrementally through a so-called rolling option, which covers a number of tracts. The developer buys and develops the initial tract and, if the development succeeds, exercises the option to buy the next tract and so on. Examples of this option abound in the Scottsdale, Arizona, market, where large parcels under the control

112 Resort Development

of the Arizona State Land Department have been privately master planned by developers and then taken down as needed for development. Agreements with Landowners. The seller can help finance acquisition of the land through carryback financing, meaning the seller acts as a lender to the developer in lieu of receiving cash. Dealers in real property may not use the installment method of payment, although investors can still use the installment method with certain restrictions on the amount receivable in any one year. Consequently, the availability of financing by the seller may depend on whether the seller is also a dealer in real property. If the landowner is unwilling to take back a purchase mortgage and the developer cannot obtain a land acquisition loan from a lender, the landowner and developer may enter into a contract for the developer to acquire the land at a specified time. Alternatively, the landowner and developer might enter into a joint venture, usually in the form of a partnership, to develop the land. The landowner might contribute the land in return for an equity interest equivalent to the agreed-upon value of the land, together with a profit interest in the development. The owner is paid out of initial development proceeds. The developer contributes the equity capital and arranges financing for the project. Construction Financing Following land purchase, construction financing is secured to pay for site improvements, amenities, and buildings. A construction loan is a short-term loan that typically runs from six months to three years. Site Improvements and Infrastructure. To prepare land for the construction of homes and other accommodations, developers typically need to grade the land, build roads, construct drainage and flood-control facilities, and install sewer, water, and other utilities. If a major amenity is planned as a primary attraction—such as a golf course and clubhouse—it too is often developed early in the process. For a project to be economically feasible, developers must seek out the most cost-effective sources to fund these expensive upfront site improvements. Site improvements and infrastructure can be financed with the acquisition of land as part of the construction loan, with a standby or construction/miniperm loan as part of the permanent project financing, or through various public/private financing alternatives. The principal alternatives for public/private financing are assessment districts, special districts or taxing authori-

ties, tax increment financing, and federal and state grant and loan programs. The major source of public financing for land development is municipal bonds. Counties, cities, and local government agencies issue municipal bonds for a variety of purposes, including construction of highways, roads, bridges, sewer systems, parks, and other infrastructure improvements. Increasingly, large-scale developments are relying on municipal bond financing not only for its tax and marketing advantages but also because such financing may be more accessible than large-scale loans from financial institutions. Another advantage of hard financing is that developers do not have to increase the price of the lots or houses to cover the costs of the infrastructure and other facilities. Rather, the costs are passed along to homeowners in the form of higher property taxes or an annual assessment for bond repayment. As such, bond financing of improvements might dampen housing sales in districts where property taxes and housing costs are already relatively high. For example, the Promontory second-home recreational community adjacent to Park City, Utah, was able to provide for water to serve its multiple golf courses and 1,900 homesites on 7,000 acres (2,833 ha) by obtaining public bonding, through a county-controlled water service district, of a water pipeline project from the nearby Weber River. The costs of this bonding ultimately are recovered through water tap fees, paid at the time of home construction. The fees are typically included in each resort homeowner’s construction loan. Building Construction. Construction of buildings on land acquired and prepared for development by the developer usually is financed with a construction loan and the developer’s equity. The loan also may cover some or all of the costs of site development. The greatest risk with a construction loan is that the community may not be completed on schedule and within budget. For example, delays in construction can result from labor strikes, material shortages, inclement weather, poor workmanship, or other problems. Another risk is that residential units may not sell or rent as rapidly as expected or for the price projected in the pro forma. Meanwhile, the carrying costs mount, resulting in cost overruns that may require the developer to raise additional equity or return to the lender to request an increase in the amount of the construction loan. For a hotel or other income-producing project, the loan is repaid from the long-term (permanent) mortgage when construction is completed and cash flow

established; for a for-sale residential project, the loan is repaid from the proceeds of residential sales. The construction loan is secured by a mortgage that gives the lender a first lien on the land and improvements. The lien is removed from each residential unit when the unit is sold and the loan paid down by a specified amount. Workouts The term “workout” refers to piloting a financially distressed project through a strategic and functional overhaul with the hope of turning losses into profits or at least minimizing further losses. Workouts, common in resort development, are a consequence of the high risks associated with the real estate development business. The typical workout strategy is to overhaul the development program and operation aggressively. The sale of the most marketable assets may help in regaining financial stability and maximizing immediate returns. Thus, if a project can sell for a price greater than the outstanding debt, it should be sold. A workout is not just about economics; it is also a political process. Therefore, the relationship between developer and lender is critical during a workout. The developer needs to be effective in managing negotiations with the lender to avert an unnecessary bankruptcy. At the same time, the developer and lender should realize that, through their interdependent involvement in a large real estate development, they may eventually become active partners. However, developers who wish to continue managing their projects must present a variety of feasible alternatives to lenders. They must convince the lenders that they are as good or better than any other management choices. If a lender rejects a developer’s restructuring proposals, the developer should offer further alternatives even up to the moment of foreclosure; continuing attempts to negotiate are essential. Workout programs often call for diversifying a project’s market appeal and product line. For example, a resort rental program may be instituted to help carry the operation and introduce potential buyers to the property. Lowering prices is generally not a good practice unless the product was overpriced at the outset. Price cuts can seriously undermine the true value of a project and cause conflict between the developer and buyers who purchased for the initial (higher) prices.

Feasibility Analysis and Financing 113

114 Resort Development

4. Planning and Design

Resorts are made up of an interrelated set of programmatic and physical elements that may include any or all of the following: recreational facilities and programs, housing, hotels and conference facilities, commercial facilities, community infrastructure and facilities, and open space. Once a developer decides on a development program, he or she must oversee the formulation of a master plan that incorporates all the specified elements, and must guide the design and construction of infrastructure and individual project elements. This chapter provides an overview of the major types of land use and physical elements typically incorporated into resort development projects, as well as planning and design issues and processes associated with these various uses. Because the elements are in a constant state of evolution and are closely tied to specific locations, hotel brand, and market needs, a successful developer must remain flexible concerning the selection, definition, and creation of each element for the duration of the development process. This is especially true for large-scale, mixed-use projects developed over a long period.

Open-air lobby at the Sarojin, Phuket, Thailand.

THE SAROJIN

Site Planning Issues Site plans differ widely according to the project’s environment, site, and purpose. The site characteristics of a mountain resort community, for example, differ greatly from those of a desert or coastal setting. Site planning for a resort involves weaving various land uses into the natural environment to create a high-quality setting that will attract visitors and residents. While the physical attributes of the site define the project, the quality of the buildings and other facilities and how well they are integrated with the setting are also critical in determining the character of the resort environment. Creating a Sense of Place A primary objective of resort planning is to create a sense of place. It is important first to shape the overall setting and the visitors’ or residents’ perception of the place. In the end, the process calls for a theme or vision of what the resort should be and what kind of experience it should provide. The developer should observe the surrounding area and visit and learn from successful resorts and tourist destinations distinguished by their own distinctive senses of place. Legendary resort developer Charles Fraser, who developed Hilton Head and Kiawah Island, once described his approach as follows:

Planning and Design 115

DALE A. HORCHNER/DESIGN WORKSHOP

The Inn at Biltmore Estate in Asheville, North Carolina, draws on the historic Biltmore mansion for its design theme. The historic property also attracts clientele for the resort hotel.

For the most part, the architectural community and developers

start, don’t buy the land, don’t go out searching for land. First,

both have failed themselves and their customers by not devel-

look for cost-effective activities and amenities that your guests

oping something unique and distinctive, something that builds

and residents can enjoy at your future resort, and then search

on what has made well-planned resorts successful over time. I

for visual images of what you are going to build and what you

have now reached the opinion that no one should start buying

envision the place to be like in the future.1

land or planning the use for land until they first buy a camera and go out on field trips or tear pictures out of books and magazines and plaster pictures on a wall of places and designs that form a starting point, a vision for what will be developed. The uniqueness of a good resort is not odd, never-seen-before buildings, but the integration of appropriate, appealing buildings into the natural environment of the site. Until you have evolved in your mind an image of a new or old style or theme that fits a particular area and a particular target market, don’t

116 Resort Development

Fraser also noted that “The places that have the huge flow of people today are often places that are rich in culture. For example, Charleston, South Carolina . . . attracts four or five times as many vacation visitors as Hilton Head Island, with its beaches and 20 golf courses.”2 Some of the finest resorts today—such as the Boca Raton Resort and Club, the Homestead, Pinehurst Resort and Country Club, and the Sagamore—are old,

filled with fantasy versions of other times and places: Caesar’s Palace takes visitors back to ancient Rome, the Venetian re-creates indoors the shop-lined canals of Venice, and Paris Las Vegas features a scaled-down Eiffel Tower. One well-known example of creating a sense of place through traditional architecture and design is Seaside, Florida, started in the 1980s by Robert Davis and designed by Andrés Duany and Elizabeth Plater-Zyberk. This resort community re-created the spirit and character of an early 20th-century Florida Panhandle beach town through town planning principles, architectural guidelines, and the work of numerous designers. Seaside was so successful that it inspired others, spurring a resort development boom on the once remote Gulf Coast Panhandle. One development after another recreated beach towns of bygone eras. Rosemary Beach was developed as a Caribbean-inspired town, and then WaterColor (see case study, chapter 7) latched onto Seaside’s edges, followed by a string of other resort communities hugging the shore. A more rural character was instilled by the rustic architecture at Koelbel & Company’s Rendezvous, a

COURTESY OF WATG (WIMBERLY ALLISON TONG & GOO)

established resorts that are still operating because of the sense of place they evoke through their historic buildings and high-quality site design. Some resort sites feature historic buildings and other features that can be used to create a sense of place. Old farm, plantation, or ranch buildings, as well as historic mansions, can add character to a resort site. In some cases, historic sites can be redeveloped or enhanced to create an attractive resort setting. For example, Keswick Hall in Charlottesville, Virginia, was built in 1912 as a private home. Today it is a 48-room hotel and the centerpiece of an amenity-laden, 600-acre (240-ha) luxury resort. Silverado Country Club and Resort in Napa, California, also incorporates a historic mansion as its cornerstone. The mansion, built in the 1870s, now houses restaurants, a spa, and condominium units. The Inn on Biltmore Estate in Asheville, North Carolina, while not historic itself, draws on the adjacent Biltmore mansion for its design theme; it is a modern interpretation of the mansion, which in turn was modeled after Chambord, a Loire Valley château. The inn’s site plan incorporates themes from the mansion’s landscape, which was designed by Frederick Law Olmsted. Most resorts do not have the luxury of an authentic historic past, but developers often re-create the past through architecture and design or rely on regional cultural themes as a way to create a sense of place. Some use historic design themes to blend with the surrounding communities. For example, Doonbeg Golf Club in Ireland (see case study, chapter 7) was designed to resemble historic Irish country homes. Designers went to great lengths to collect antique art and furnishings for the interiors of the finely detailed buildings. Montage Laguna Beach (see case study, chapter 7) takes its design cues from the Arts and Crafts style indigenous to the area to create a sophisticated yet casual aesthetic, helping it to meld with the surrounding upscale community. Others create imaginary places that transport visitors to faraway places or long-ago times. Disney Resorts is a master at such fantasy. Disney’s Grand Floridian Hotel in landlocked central Florida borrows liberally from the architecture of the historic Hotel del Coronado in San Diego, evoking the ambience of a Victorian seaside resort, complete with a manmade sand beach and lake. Lake Las Vegas Resort (see case study, chapter 7) is focused around a town center that brings an Italian hill town to life in the Nevada desert. The resort’s centerpiece is a manmade lake traversed by a bridge modeled after Florence’s Ponte Vecchio. Indeed, Las Vegas is

Outside the Venetian, Las Vegas.

Planning and Design 117

COCO COLLECTION. COCO COLLECTION.

Coco Palm Dhuni Kolhu, in the Maldives south of India, consists mostly of open-air buildings. Guest cottages are built on a pier over the water.

118 Resort Development

750-acre (300-ha) mountain resort community in Colorado’s Fraser Valley. Here, homes were built to reflect the character of nearby mining towns, using steep rooflines, corrugated metal, and log construction. History is not the only way to create a sense of place. A resort can also create its own identity through contemporary design. Sea Pines Plantation on Hilton Head Island, South Carolina, based its architectural style on the modernist movement of the 1960s. Today, many resorts are returning to the modern aesthetic. Disney has hired celebrity architects to create signature resort hotels such as Disney World’s Swan and Dolphin hotels, designed by Michael Graves. The Carneros Inn (see case study, chapter 7) in Napa, California, has created its own twenty-firstcentury aesthetic and sense of place with architecture and design based on sustainability and green building. Many resorts throughout Mexico are showcases of contemporary design. The Westin Resort and Spa in Los Cabos is composed of two massive mid-rise arch structures jutting out of the hillsides and framing ocean views. Whatever image or style is sought, contextual design and sensitivity to the surrounding area are important for creating the appropriate sense of place. The Grand Wailea Resort on Maui in Hawaii, for example, is located within a larger community characterized by a distinctive local culture. The resort’s design guidelines and the master plan limited density and building heights in order to preserve views and the low skyline typical of the area. The project effectively complements the local architecture and indigenous landscaping. Similarly, Coco Palm Dhuni Kolhu, a beach resort in the Maldives, aims to keep a small footprint while taking full advantage of its island setting. Its open-air public buildings were designed in the local style, and thatchroofed guest villas occupy a pier over the turquoise water. Another destination, the Sheraton Internacional Iguazú Resort in Argentina’s Iguazú National Park, makes optimal use of its waterfall views, visible from the pool and most guest rooms. Establishing a Sense of Authenticity In addition to a sense of place, resorts should strive for a sense of authenticity. Without the appropriate focus and attention to detail, a “sense of place” remains little more than theming. The contrived architectural styles of formulaic resort developments can overwhelm or eliminate the indigenous character of a region that made it a popular destination in the first place. The challenge for design teams is to dig deeply into the aspects that

make a region special, and to celebrate that identity in their resort designs. The growing popularity of ecotourism destinations demonstrates a significant demand for authentic places where guests can experience the surrounding landscape, become immersed in the local culture, learn traditional arts, experience historical or cultural sites, and leave their vacation feeling that they experienced “the real place.” More than ever, vacationers are researching their options to identify those locales that will provide them with a more authentic, “off-the-beaten-path” experience. Establishing a sense of authenticity begins with a strong analysis and framework for the site, research into the arts and culture of the region, and a master plan that paints the vision of the place. Some of the guiding principles include the following: Architecture

; Build to scale with the surrounding buildings and within the context of the site. ; Build in a style that does not intrude upon the region’s overall character. ; Use a color palette that is harmonious with the surrounding character. ; Use indigenous building technologies and locally sourced materials. ; Strive for a timeless visual character that is not tied to contemporary trends or fads. Site Access/Circulation

; Blend into the existing fabric or pattern of the land. ; Allow historical patterns to show through, including farms, fields, coastal transportation routes, beach access, and walking trails. Culture/Customs

; Preserve the local customs. ; Use the indigenous language in signage and symbols. ; Incorporate traditional dress into the employee uniforms. ; Feature traditional foods in the resort’s cuisine. ; Focus educational programs on the region’s culture, history, flora, and fauna. Environmental/Climatic

; Use native plant materials. ; Respect the region’s ecological systems. ; Maintain or establish wildlife corridors. ; Preserve the character of the landscape.

Planning and Design 119

Nature Bound One of the travel industry’s strongest trends continues to be ecotourism, which has been growing by over 20 percent a year. Ecotourism combines specialized leisure travel with a focus on environmental protection and visitor education and generally takes place in environmentally distinctive destinations. These properties often include an on-site hotel or resort within an unspoiled or reclaimed environment of indigenous flora and fauna, usually protected by a local or national government. Such destinations vary from wildlife parks and nature preserves to jungle hideaways like the Coconut Beach Rainforest Resort in Queensland, Australia; guest (dude) ranches like Hidden Creek Ranch near Harrison, Idaho; beachfront properties like Wilderness Safaris’ North Island in the Seychelles off the coast of South Africa; and small hotels that celebrate the local culture like Lisu Lodge on the edge of a village in northern Thailand’s mountains. Ecotourists generally range in age from 35 to 54 years old (the baby boom generation and younger), with a 50-50 male/female gender split, according to the International Ecotourism Society. Approximately 82 percent are college graduates, although more leisure travelers overall are turning to ecotourism. The majority (60 percent) prefer to travel as couples on trips that last one to two weeks. Ecotourists have a high level of environmental awareness and a philosophy founded on protecting the environment. They express an interest in learning more about the ecosystem they are visiting, and they favor beautiful scenery as well as the opportunity to view wildlife and to have new experiences. Currently, the majority of ecotourists come from the United States, Canada, Great Britain, Germany, and the Netherlands. Ecotourism and the principles behind it are regarded as important to the hospitality industry primarily because a number of governments now are mandating ecotourism-based zoning and policies. The state of Queensland, Australia, for example, has enacted ecotourism development policies, establishing standards that ecoresorts must meet to receive government accreditation. In addition, some hotel companies— particularly owners of independent properties—are expressing an interest in applying ecotourism principles. The World Tourism Organization, the International Society of Ecotourism, and a number of other ecotouristrelated organizations have published guidelines that range from building design and materials to water conservation. Current demographic changes reflect an increased interest in ecotourism. The aging of the baby boomers in North America and Europe has made somewhat passive outdoor recreational activities such as bird-watching and nature hikes more attractive to this group as leisure travel activities—with ecotourism

120 Resort Development

a logical beneficiary of this shift. Finally, ecotourists tend to be affluent and frequent travelers; therefore, they are seen as a potentially highly profitable market. The challenge for large hospitality companies and individual hotel owners, as well as developers, is to create the kind of ecotourist properties that environmentally minded leisure travelers are looking for— ecotourist destinations that will serve the environment, guests, local residents, and the bottom line. Ecotourism sites need to be identified and preserved based on ecological, scientific, economic, aesthetic, recreational, and regional concerns. Planning studies should identify the habitat of the site and specify the maximum visitor capacity to avoid negative effects on flora and fauna. Environmental protection should be the priority; the influx of tourists must be carefully planned and managed. Environmental protection, reclamation, and enhancement—including any repatriation or introduction of flora and fauna species to the development site—should be part of a formal plan. For example, the Begawan Giri Estate, a 19.8-acre (8-ha), 22-suite resort in Bali, took four endangered Bali starlings from London and repatriated them, instituting a program that has produced four dozen birds ready for breeding. The plan is to produce around 1,000 birds within the next three years and release them into the wild. Wilderness Safaris, an Africa-based ecotourist resort developer and tour operator, not only is preserving the 500-acre (200ha) North Island in the Seychelles but also is in the process of reversing 200 years of human impact with a full-scale, ecological restoration that includes removal of nonnative flora and fauna and the reintroduction of endangered native species, including the giant tortoise and the nearly extinct Seychelles magpie robin. Everything that has to do with water must be carefully planned. Hydrological studies should analyze the impact of ecotourism on a site’s natural hydrology. Taking obvious water-conserving steps, such as planting native vegetation rather than thirsty tropical plants in a desert environment, are often not enough. Sometimes, water conservation requires a major shift in the mindsets and behavior of guests. Maho Bay on water-scarce St. John in the U.S. Virgin Islands does not provide private baths in its guest accommodations. Instead, it has centrally located bathhouses with low-flush toilets and pull-chain showers connected to a recycling system that irrigates the surrounding vegetation. A property zoning plan should be established that sets up a hierarchy of uses, such as areas that prohibit tourists, wilderness zones that allow only pedestrian activity, moderate tourist-use zones, and zones for actual development. Existing regional planning guides should

be used to create a land use plan for a resort site that will accommodate tourists while protecting the environment. The Great Barrier Reef in Australia, for example, is a nationally protected ecosystem in which overlay zones designate specific areas for both tourism and scientific research. The Rio Bravo Conservation and Management Area in Belize has set aside areas for nature reserves, sustainable forestry and farming, and tourism. A site plan for buildings, walkways, and other tourism-related facilities should disturb the environment only minimally. The Kakum National Park, a 140-square-mile (360-sq-km) preserve in Ghana’s Upper Guinean rain forest that harbors many endangered species, has more than 1,000 feet (300 m) of walkways suspended 100 feet (30 m) above the forest floor, enabling visitors to view both flora and fauna with minimal environmental impact. Structures should be built into an ecotourism site to make them part of the landscape, clustered to minimize the impact to the land, oriented to capture breezes, and designed to use renewable energy sources. Harmony Studios on St. John in the U.S. Virgin Islands designed two-story, passive solar buildings that use photovoltaics, rain collection, and roof scoops that draw breezes through the rooms. Interactive computers in the apartments monitor energy use on a daily basis. Local communities should be involved and educated in ecotourism planning and management and the conservation of local natural and cultural resources. Ecotourism should provide an economic incentive for these communities to coexist with—and protect—an environmentally sensitive resource, and the host country should receive economic and cultural benefits. The founders of Lisu Lodge in northern Thailand have worked closely with village elders to identify potential employees, with farmers to coordinate food production for the lodge’s restaurant and for expansion into new markets, and with craft workers to build a center to showcase and sell local products. Similarly, the Shangaan people in Zimbabwe participated in the negotiations with Zimbabwe Sun hoteliers and CAMPFIRE (Communal Area Management Programme for Indigenous Resources) to develop Mahenye Safari Lodge, an ecotourism lodge on an island in the Save River adjacent to the Gona-re-Zhou National Park. Mahenye now allots 10 percent of its profits to the neighboring Shangaan village, whose people also staff the resort’s photographic and hunting safaris. The program has been credited with transforming former poachers into wildlife guardians and has funded a variety of community projects. Ecotourist resorts often require alternate construction techniques that will minimize the impact to sensitive ecosystems. Maho Bay was built using hand construction methods rather than bulldozers, backhoes,

and cranes. The environment was left relatively undisturbed and soil erosion was avoided, which would have endangered the nearby beach and coral formations. Appropriate durable and nontoxic building materials should be used, including indigenous and recycled materials. Harmony Studios was constructed with recycled building materials such as plastic lumber, glass tiles, recycled steel nails, and rubber-tire rugs. Lisu Lodge used local materials for its wood frames, thatched roofs, woven bamboo walls, and rattan floors. Idaho’s Hidden Creek Ranch used only dead and fallen trees to construct its buildings. Living trees were not cut down—instead, buildings were built around them. Harvesting local materials should not cause habitat destruction, topsoil erosion, or pollution runoff. The use of concrete and plaster on site either should be minimized or eliminated. As much of the construction process as is possible should be planned and assembled off site. The Phinda Forest Lodge in South Africa’s northern Zululand relied heavily on prefabricated elements manufactured elsewhere and assembled on site. Finally, the long-term maintenance of an ecotourist destination should be managed meticulously to protect natural habitats and regulate resource consumption. The operations plan should include programs to benefit the local community, such as training area residents for on-site staff and managerial positions. Lisu Lodge, for example, is managed and operated by local mountain people who also staff the wilderness expeditions. Locally produced foods can be used to support the indigenous population and to increase guest awareness of the surrounding culture. The management plan also should provide conservation incentives. For example, Hidden Creek Ranch’s owners present an award each month to the employee providing the best idea for living greener. The critical educational components of an ecotourism destination should be preplanned, maintained, and continually upgraded. Education should include “backof-the-house” tours so that visitors can see the property’s renewable energy, water conservation, and other ecologically based systems and procedures in action. As more of the world becomes heavily populated and industrialized, ecotourism is bound to become increasingly popular. Ironically, however, too many visitors will invariably damage and even destroy the fragile environment that attracted them in the first place. If properly designed, ecoresorts and the tourism they attract can be managed so that the winners will continue to be many: visitors, area residents, and the environment. Source: Larry Pearson, “Nature Bound,” Urban Land, August 2002, pp. 56–69.

Planning and Design 121

Sustainability and Environmental Preservation Environmental issues are of greater importance to resorts than any other kind of development. After all, it is most often a resort’s natural environment that draws customers. Thus, resort planning must preserve its reason for being, while integrating the amenities and services necessary for users’ comfort and enjoyment. Environmental law plays some role in the planning and design of resorts. In the United States, the National Environmental Policy Act (NEPA), the Clean Water Act, and the Endangered Species Act have been the most influential federal laws affecting resort and recreational communities. NEPA was the springboard that propelled the federal recognition of environmental concerns into state and local regulations. Because resort development typically takes place in environmentally sensitive areas, most often on previously undeveloped sites, developers frequently experience the most direct effects of the myriad environmental laws that have been enacted at all levels of government. But it is not just environmental regulations that affect resort developers. The strong environmental interests of resort users and homebuyers also influence site planning. Polls indicate that a high proportion of Americans now claim that they are environmentally sensitive. As a result, particularly in second-home communities, citizen concern over the preservation of open space is increasing. And second-home owners are generally more environmentally sensitive at second-home locations than at their primary-home locations. Ecotourism is defined

DESTINATION HOTELS & RESORTS

The Royal Desert Camp in Pushkar, Rajasthan (northwestern India), is an example of a resort destination that establishes a sense of authenticity. Dating back to the early 17th century, when the Indian emperor Jahangir embarked on a pleasure trip to Kashmir, traveling tent communities were established to ensure that the ruler’s accommodations would be up to his standards. Today, Pushkar’s Royal Desert Camp comprises 234 comfortable tents with connected bathrooms, beds, fans, and heaters. Meals feature local specialties. Nightly entertainment features regional dance and music, and local art can be purchased at the nearby Pushkar Fair, the world’s largest camel trade fair. The Four Season Resort Costa Rica at Peninsula Papagayo, in the Guanacaste region, is a less rustic example of a destination resort that evokes authenticity. Positioned within the tree line of the surrounding vegetation, the resort structures incorporate a soft, brown hue. Barrel tiles were handcrafted by local artisans to achieve the gently sloping roofs and vaulted ceilings, a signature feature of the architecture. The golf course enables golfers to experience multiple waterfalls and howler monkeys during their round of play. Many other examples demonstrate the principles of authenticity in design. The luxury resorts in Santorini, Greece, are still being built today as local buildings were a thousand years ago, with minor modern improvements. The overwater grass huts of Bali would seem out of place anywhere else in the world, yet they fit within the context of their pristine, tranquil island setting.

Destination Hotels & Resorts works toward environmental sustainability with their Destination Earth program. At SunRiver Resort, near Bend, Oregon, company practices include purchasing organic, environmentally responsible products and retrofitting for more energy efficiency.

122 Resort Development

as “responsible travel to nature areas that conserves the environment and improves the well-being of local people.”3 Once considered a fringe market, it is now the fastest-growing market in the tourism industry. Sustainable tourism means preserving and protecting resources. Edward McMahon, ULI’s senior resident fellow for sustainable development and environmental policy, says that sustainable tourism both promotes the place and protects it; while mass market tourism is characterized by high numbers, high impact, and low yield, sustainable tourism is characterized by lower numbers and impact, but higher yield. The more a resort does to conserve its unique resources—both natural and cultural—the more it will appeal to tourists as a compelling destination. McMahon outlines six recommendations relating to sustainable development: ; Focus on authenticity. Every effort should be made to preserve the authentic aspects of local heritage and culture, including landscape, history, architecture, traditions, arts, and so on. ; Ensure that the resort is architecturally end environmentally compatible with its surroundings and respects the specific scale, character, and functions of the surroundings. Tourists crave integrity of place, and corporate chain architecture works against such integrity. It is the search for something different that has given rise to the boom in bed-and-breakfasts, adventure travel, and heritage tourism. ; Interpret the resource. Education and interpretation are keys to sustainable tourism. Visitors want information about what they see. Education also can result in better-managed resources through explaining why they are important. Interpretation instills respect and fosters stewardship in both visitors and residents and can instill community pride and strengthen a sense of place. ; Consider aesthetics and ecology. Clean air and water and healthy, natural systems are fundamentally important to sustainable tourism, and so is appearance. Protecting scenic views and vistas, planting trees, and landscaping parking and other utilitarian areas are all fundamentally important. ; Enhance the journey as well as the destination. Tourism is the sum total of the travel experience. It is not just what happens at the destination; it involves everything that people see and do from the time they leave home until the vacation is over. Getting there

frequently is not half the fun. Developing heritage corridors, bike paths, hiking trails, and other forms of alternative transportation helps create a complete vacation experience for resort visitors. ; Recognize that tourism has limits. How many tourists are too many? Tourism should not exceed the carrying capacity of the ecosystem or fail to respect the local community’s sense of place, or it risks destroying the very attributes that tourists are seeking.4 Many tools exist to assist developers with environmental planning. Hospitality Valuation Services (HVS) has developed Ecotel certification based on five areas of environmental responsibility: environmental commitment, solid waste management, energy efficiency, water conservation, and employee education and community involvement. HVS inspects hotels upon request to determine the degree of sensitivity in these five areas and then publishes a directory of certified properties.5 For resorts with golf courses, environmental guidelines are being advocated by the National Golf Foundation. The U.S. Green Building Council has established a rating system for constructing green buildings. Called LEED, or Leadership in Energy and Environmental Design, the standards are being used by an increasing number of resort developers to guide their planning and design. LEED certification may qualify a project for tax rebates, zoning allowances, and other incentives, as well as being a marketing tool. Green Globe, a worldwide benchmarking and certification program for the travel and tourism industry, also can be useful in helping develop sustainable principles for a resort development. Numerous resorts in a variety of settings—ocean, mountain, and desert—reflect the importance of environmental considerations. One early project that was especially influential in furthering environmental values in resort planning was Sea Pines on Hilton Head Island, South Carolina. The success of Sea Pines, started during the 1950s, was attributable largely to the developer’s extensive planning efforts to ensure that the community would engender a distinctive sense of place with minimal disruption to the natural environment. Initiatives included preserving and enhancing Native American ruins on the site, establishing a forest preserve, restricting tree cutting, controlling building heights, and preserving sand dunes. Another early resort community that made environmental sensitivity its hallmark was Sea Ranch, developed in the 1960s in Sonoma County, California. Before

Planning and Design 123

SEA PINES RESORT

Sea Pines Resort, on Hilton Head, South Carolina, created a distinctive sense of place with minimal environmental disruption.

preparing the site plan, landscape architect Lawrence Halprin carefully studied the ecology of the coastal location’s wooded hills to the east and meadows to the west, and the rows of trees that divided the meadows and protected against strong winds. The Halprin plan tucked houses into the woods and along the windrows, leaving the meadows as open space. Today the community’s CC&Rs continue to govern everything down to the planting of non-native species. Today, ecological considerations are central in resort planning, as developers worldwide recognize that environmental assets are the primary amenities that attract visitors and homebuyers. The South Seas Island Resort off the west coast of Florida recently underwent a major renovation. Even with over 600 guest rooms and cot-

124 Resort Development

tages and a wealth of amenities, care was taken to protect about half the property as a wildlife preserve and estuary. The resort’s owners realized that its natural landscape was its main amenity. Its beaches are among the world’s best for shell gathering, and guests can find ideal bird-watching and other nature-focused activities. To protect its abundant wildlife, the resort built an extensive network of off-road bike paths and developed a master plan based on an analysis of what was needed to protect the island’s natural systems. The plan set a limit on the island’s population consistent with its water supply, the habitat needs of wildlife, and the need to evacuate before hurricanes. By establishing development standards based on ecological constraints, it has managed to preserve one of America’s most

exceptional subtropical environments while continuing to accommodate tourists and residents. With the growing interest in rain forests, Costa Rica has become a favorite destination for ecotourists, and many of the country’s resorts have made sustainability their hallmark. Lapa Rios calls itself a “luxury ecolodge.” Set in a private, 1,000-acre (400-ha) nature preserve, this resort consists of a main lodge and 16 guest bungalows set along ridges overlooking the sea. Commanding daily rates as high as $3,000, this resort has no air conditioning, telephones, television, or music. Even hair dryers are not permitted, because the resort’s generators cannot handle them. Amenities are largely the pristine natural surroundings—the resort provides a multitude of hiking tours and other ways to enjoy nature. Similarly, Turtle Island, an exclusive luxury resort in Fiji, offers no elaborate amenities but instead 14 thatched cottages on an unspoiled island, where visitors can experience natural habitats and local culture. The resort was founded as a way to restore and preserve the island’s ecosystem. Ecolodges such as Lapa Rios and Turtle Island wrestle with the same systems of sustainable design as larger

resorts, but they also incorporate other elements unique to the true ecolodge model. Hitesh Mehta, a well-known ecoarchitect and planner, has considered the design principles critical to ecolodges and defines them as follows: ; helps in the conservation of the surrounding flora and fauna; ; endeavors to work collaboratively with the local community; ; offers interpretive programs to educate both its employees and tourists about the surrounding natural and cultural environments; ; uses alternative, sustainable means of water acquisition and reduces water consumption; ; provides for careful handling and disposal of solid waste and sewage; ; meets energy needs through passive design and renewable energy sources; ; uses traditional building technology and materials whenever possible and combines these with their modern counterparts for greater sustainability; ; has minimal impact on the natural surroundings during construction;

COURTESY OF CHAFFIN/LIGHT ASSOCIATES

Roaring Fork Club in Basalt, Colorado, was developed with respect for its natural surroundings.

Planning and Design 125

; fits into its specific physical and cultural contexts through careful attention to form, landscaping, and color, as well as the use of vernacular architecture; and ; contributes to sustainable local community development through educational programs.6 Many of the case studies discussed in this book have been developed in concert with environmental preservation and sustainability. Roaring Fork Club in Basalt, Colorado, was built with an emphasis on natural habitat conservation. The project included restoring the Roaring Fork River as a fishery habitat. An irrigation ditch was rebuilt as a trout stream on the golf course, and native plants were used for landscaping. Builders made use of dead tree logs on site for log cabins. The Carneros Inn in Napa, California, takes an assertive approach to sustainability. Developed on reclaimed land that had been an RV storage site, the resort is geothermally heated, and all stormwater is processed and reused for on-site irrigation. Trees original to the site were stored during development, then replanted on the property. Similarly, Montage in Laguna Beach, California, also was developed on reclaimed land with original trees boxed and replanted upon completion. Montage also created a linear park, restored the beach below the resort, and opened both to the public. The resort’s low-profile, Craftsman-style architecture respects the history of Laguna Beach.

CENTRAL COUNTRY ESTATE, INC.

Positioning Uses While every site is different and amenity programs vary, there are universal principles that define a destination

property. The resort experience begins with a guest’s arrival and first impressions. It may be characterized by a first glimpse of clear, blue water or a vista of a mountain peak. Often, some of the most spectacular land is preserved for that first impression of a place. Whether it’s a drive through a rain forest or a stroll through the ruins of an old coffee plantation, the arrival should be a carefully choreographed set of experiences that frame a guest’s first impression of a destination. Two often overlooked aspects that can detract from this arrival sequence are the location and design of the service and maintenance facilities that support the resort. Everything from laundry, housekeeping, delivery docks, and grounds maintenance buildings to large-scale engineering complexes, water desalination, fire protection, and police facilities must be carefully considered early in the planning process to ensure that these necessary functions do not impinge on the resort experience. Consideration must be given to active versus passive recreation, and loud and raucous versus tranquil and serene activities. It would be unwise, for example, to position a children’s pool adjacent to a spa treatment garden, or a wedding chapel next to a service yard. Golf courses require a lot of developable land, which must be balanced against land that will be set aside for open space, residential development, and other amenities. Along with open-space systems, trail networks should be identified early in conceptual planning. It is a common misperception that resort guests can use golf cart paths as walking trails; safety and liabilities issues discourage this relationship.

Resort site plans must accommodate residences, hotels, and amenities in ways that maximize views and access, and that minimize conflicts. Shown here Lakeshore, a 630-acre (250-ha) resort community in Luzon, Philippines.

126 Resort Development

A major challenge in planning a resort’s layout is to position residences, hotel rooms, and other accommodations in a way that provides each use with maximized views and access to amenities while creating rational relationships among uses and maintaining a degree of privacy. The premiums commanded for a residence or hotel unit with a prime view or location can be considerable, so it is to the developer’s advantage to maximize the orientation toward views and amenities for as many units as possible. Each resort has its own hierarchy of preferred locations based on views and proximity to amenities. In a beach resort, the prime location is obviously the waterfront; in a ski area, it is next to a ski run. The next preferred location might be frontage on or a view of some secondary amenity such as a water feature, wetland, open space, or golf course. The third-ranking location is an “overview,” which permits views of an overall amenity such as the ocean, golf course, or ski slope from a distance and across other properties. Lesser locations are next to less important amenities and views. The developers of Montage Laguna Beach went to great lengths to provide an ocean view from every guest room, as well as from all the amenities. The developer believed it was worth the extra expense to design the hotel with single-loaded hallways, so that all rooms face the ocean side. The lobby, restaurants, and spa all feature large windows facing west, and the outdoor recreation areas are oriented toward the ocean as well. Homesites are situated so that each has either a full or partial ocean view. Designers went a step further and considered the views of those who live beyond the resort. Care was taken to protect the views of existing residents by keeping the resort’s building profile low. In fact, Montage is barely visible to outsiders, who only see the landscape and ocean. Lake Las Vegas Resort created its own prime views by centering the project around a manmade lake with sand beaches and a Renaissance-inspired town center. Secondary views, also highly desirable, are of the surrounding mountains and golf courses. Overviews from some points include the downtown Las Vegas skyline, aglow at night. The resort’s hotels are all located along the lake, with guest rooms and amenities oriented toward it. The most desirable homesites also enjoy lake frontage. The sloping terrain enables many homesites away from the lake to benefit from lake vistas and downtown overviews as well. Besides views, other factors must be considered to create a successful resort plan. Plans should maximize the best open space and should concentrate activities to

create synergies, enhance user convenience, and maximize management functionality. At Montage, the core of activity is the pool, with all other amenities clustered around it and the hotel. Rather than locate the spa in an isolated corner, planners located it adjacent to the pool so that it would be easily accessible and draw the attention of guests using other facilities. At the same time, the spa maintains quiet and privacy behind its stone walls. Clustering housing is a common way to conserve open space. At River Dunes, a sustainable boating community along North Carolina’s Pamlico Sound, 600 narrow, new urbanist–style single-family lots are clustered in three tight neighborhoods. In this way, nearly 400 acres (160 ha) of wetlands—and regional water quality—are protected. There are no curbs or gutters; instead rainwater is channeled into swales and naturalized road shoulders. Special Considerations for Mountain Sites There is perhaps no greater challenge than creating a high-quality resort on a mountainside while simultaneously respecting a mountain’s splendor. Because the natural topography of a mountain so dominates the possibilities of a site plan, a successful plan requires a thorough understanding of the mountain’s geologic processes, watersheds, and ecology. Several physical factors to consider in planning a mountain resort or recreational community vary by the type of mountain environment. Older and more inactive geologic mountain ranges such as the Appalachians and the Adirondacks are relatively stable and thus fairly predictable. Younger, more active geologic formations such as those in the Rocky Mountains pose potentially dangerous geologic hazards. Mountain topography is a complex web whose many variables challenge the feasibility of building. The following factors must be considered: ; steep slopes, unstable slopes, and rockfall zones (in general, slopes exceeding 30 percent are not suitable for building); ; amount and weight of snowfall; ; avalanches; ; microclimate conditions such as wind hazards; ; riparian zones and wetlands; ; flooding and unstable surface water flows; ; adverse air quality conditions due to inversions; ; vistas; and ; sun orientation and shadows.

Planning and Design 127

DALE A. HORCHNER/DESIGN WORKSHOP

DALE A. HORCHNER/DESIGN WORKSHOP

The developers of Snowshoe Mountain Resort, West Virginia, sited the village center and guest accommodations to take advantage of mountain views.

128 Resort Development

Increasingly, mountain resorts are four-season destinations. As a result, planning must carefully consider the implications of seasonal changes on a resort’s activity patterns. Moreover, with modern construction technology, it is possible to construct buildings previously considered unbuildable. Accordingly, a more complex analysis of environmental concerns is necessary to determine just how much risk is reasonable. Yet, the issue of planning around slopes is often the overriding consideration. Snowmass Village, Colorado, offers an example of a prominent ski resort that has experienced growth pains as a result of initially building on a steep gradient. The unpredicted implications of growth, coupled with a limiting environment, have forced Snowmass Village into a less-than-ideal situation. At the outset in the 1970s, the objective at Snowmass Village was to provide a village or series of villages similar to those in the Alps. For the developers, the most important planning determinant was proximity to the ski slopes. While the village could have been sited on the valley floor, such an arrangement would have compromised access to the ski slopes and limited the ski in/ski out alternatives. Instead, the developers wanted to unite the ski slope and village experience, so they sited the village on a relatively steep slope (10 to 15 percent) along the side of the mountain.

Except for the arterial road that runs through the center of the village (a 14 percent slope that requires electric heating in winter), the Snowmass Village street system is limited to a series of finger roads perpendicular to the arterial road and the ski slope. The village itself consists of a series of pedestrian malls and lodges placed along contour lines; the main pedestrian mall is lined with retail stores and provides access to transportation services. While the mall has been updated, the resort still does not convey a sense of community like neighboring Aspen does. Indeed, the resort plan resulted in a disjointed series of pedestrian malls and lodges. Yet, once the resort’s configuration had been established, town planners and council members dogmatically refused to authorize the modifications necessary to create a more coherent town center. If the village had been sited at the base of the mountain, the community could have achieved a better sense of place, thereby making a smoother transition from a ski resort to a conventional community. Special Considerations for Coastal Sites As the interface between two ecologies, the coast supports a rich web of life that easily can be stressed by development. Consequently, coastal developers face the combined barriers to entry of a shortage of suitable land, extremely high land prices, and stringent envi-

DESTINATION HOTELS & RESORTS

Mountain resorts must appeal to guests year-round. The Resort at Squaw Creek in Lake Tahoe, California, features a wealth of activities: downhill and Nordic skiing in winter, and golf, swimming, hiking, biking, and fly-fishing the rest of the year.

Planning and Design 129

©RICHARD SEXTON

At Rosemary Beach, on Florida’s Panhandle, wooden walkways and native plantings protect the dunes from erosion, helping to mitigate storm damage.

ronmental protection laws. New coastal development stands little chance of gaining approval unless it reflects extreme sensitivity to the environment. Beach erosion—the single greatest problem faced by developers of coastal resorts—is an inevitable process and must be respected. Many older resort communities and towns (including Atlantic City, New Jersey; Fort Lauderdale, Florida; and Ocean City, Maryland) have suffered from erosion as a result of placing buildings at the ocean’s edge, in defiance of natural processes. Destruction of the dune systems has necessitated restoration, which is continual and costly and compromises beach quality. Not surprisingly, restrictive laws have redefined development along the U.S. coast so that building envelopes and setbacks from the beach are deep (often 180 to 240 feet, or 55 to 75 m) and densities typically low. In addition, the laws require primary and secondary dune preservation for erosion control and other ecological purposes. Today, beach resort development is typically connected to the shore with elevated walkways, thus enabling beach access without disturbing delicate dunes. Doonbeg Golf Club (see case study, chapter 7) was developed in accordance with an agreement with Ireland’s National Park and Wildlife Department to protect 52 acres (21 ha) of adjacent centuries-old dunes along the resort’s shoreline. In addition, the golf course was designed to fit the natural terrain, causing the least dis-

130 Resort Development

turbance possible, rather than bulldozing to create an artificial landscape. Sound environmental practice can protect more than the natural landscape. In 2005, when Hurricane Dennis hit Florida’s Gulf Coast, many beaches were destroyed. But the resort communities of Seaside and WaterColor suffered little damage because they had been built largely away from the beach, protected by a system of dunes. Neighboring communities where homes were built closer to the beach suffered far greater damage. Dewees Island, a private-home recreational community near Charleston, South Carolina, has addressed erosion problems by planting indigenous sea grasses to buffer the primary and secondary dunes, thereby creating more stable beaches and inviting a more diverse wildlife habitat consistent with the island’s mission statement: “A private oceanfront island retreat dedicated to environmental preservation.” Dewees Island leaves untouched the beached flotsam of storms, thus allowing it to help anchor sand against the grinding of the surf. In some areas, the island has experienced an accretion of its beaches, which is partly the result of favorable tidal currents. Wetlands are potentially a major development deterrent in coastal areas, particularly along the southeastern U.S. coasts of Florida, Georgia, and South Carolina. In such lowland areas, intracoastal islands and the mainland are characterized by large expanses of wetlands.

Landscapes Going Greener Resort patrons increasingly are amenable to making small sacrifices for the sake of a healthier planet. Surveys show that a majority of guests say they are willing to reuse towels, forego daily sheet changes, and accept “water by request” restaurant policies. While that’s good news, most hoteliers would agree that the best eco-friendly elements are those that help them save money and gain “green” marketing points without asking their pampered guests to sacrifice anything whatsoever. Sustainable exterior elements do that. Indeed, green landscaping not only requires no sacrifice from guests, it often allows them to enjoy a dynamic range of natural amenities that are byproducts of a developer’s or owner’s heightened sensitivity to the concept of preserving and showcasing a site’s natural attributes. Nature-oriented amenities such as botanical gardens, heated rock grottoes, and waterfalls with wading ponds, as well as restorative features like wildlife habitats, bird sanctuaries, and butterfly gardens are the sorts of amenities increasingly prized by ecoconscious consumers. Each is a perfect complement to exterior environments that have been developed or renovated to include sustainable elements. Little Palm Island Resort & Spa in the Florida Keys is a case in point. An internationally acclaimed resort of 30 secluded, thatched-roof villas, accessible only by boat or seaplane, Little Palm draws an elite clientele that values the location’s privacy and lush tropical ambience. In 1998, massive storm damage necessitated a total renovation of its grounds. After an initial site evaluation, the design team realized that the existing water management system was woefully inadequate for a proper renovation and had in fact always limited the island’s landscaping potential. Potable water came via two 20-year-old 1¼-inch (3-cm) service lines. The water traveled from 5/8-inch (1.5-cm) water meters on the mainland and was delivered into a 30,000-gallon (113,600-l) cistern for storage. Often, passing boats would hit the submerged potable water lines, leaving the resort without water until they could be repaired. Most days, there was not enough water to satisfy both resort and irrigation needs. Not only did the existing plantings suffer, but the island’s full potential as a lush property had never been fully developed. An onsite wastewater treatment plant was antiquated, unreliable, and impractical for plant irrigation. Owner Noble House Hotels agreed that the only long-term solution to Little Palm’s water shortages was to create a sustainable, green irrigation system. Irrigation Design Group came up with a complete reconstruction plan, based on water harvesting and graywater usage. The resulting harvesting system captures all potable water for the resort. The treat-

ment plant has been updated to recapture some of the reclaimed water that previously had been disposed of through deep-well injection. A dual water storage system—two 15,000-gallon (56,800-l) tanks, one for potable and one for reclaimed water—has doubled the island’s irrigation water supply. A system of sophisticated flow-control valves, sensors, and water-level control devices is incorporated into both the potable and reclaimed water delivery systems and is operated by a centrally programmed logic controller located within each of two pumping stations. The potable water delivery system uses conventional overhead spray, which waters all turfgrass areas and all landscaped areas around the pool facility and restaurant. Nonpotable water is delivered by low-volume water-conserving equipment that precisely places the reclaimed water directly onto intended areas, keeping it from coming into contact with guests. Resort patrons never see the 15,000 water storage tanks, the flush valves, or the treatment plant. What they do see is a completely different landscape—more lush and colorful, filled with native, drought-tolerant trees, and a much broader variety of flowering trees and eye-catching plants than would have been possible under the previous persistent water shortages. Originally, the resort was communal in design, with open public spaces between villas, only minimally landscaped because of irrigation limits. Those spaces are now filled with intimate gardens and privacy landscapes, lending each villa a secluded atmosphere. Guests don’t see the complex maze of mulch-covered drip equipment. But they do see botanical gardens and a Zen garden meditation area. They also see wildlife drawn to the island by the new plant varieties. Providing adequate water supply for irrigation and ensuring that the water is applied with efficiency and precision to prevent waste are always wise first steps, whether launching a new project or renovating an existing site. Thanks to the improved water supply at Little Palm Island, the landscape designers were able to use mature trees and plants in the restoration, giving the resort a dramatic, mature look just three months after the restoration project began—and just in time for its high tourist season. Incorporating sustainable elements into exterior designs can help hotels and resorts meet green certification requirements from the various national and international organizations that offer those designations. Each has its own definitions and criteria, but the categories for exterior environments are similar. Following are some sustainable solutions that make sense for virtually all resorts and hotels, whether or not owners are seeking a formal “green hotel” designation.

Planning and Design 131

Landscapes Going Greener

continued

WITKIN HULTS DESIGN GROUP

WITKIN HULTS DESIGN GROUP

Drought- and salt-tolerant sod and native, drought-tolerant plant species thrive on Little Palm’s sustainable irrigation system based on graywater and water harvesting.

Graywater and Water Harvesting One of the areas of biggest cost savings is converting to graywater and harvested rainwater for all exterior water use. Water harvesting is usually a simple, lowcost process, especially when it is part of initial project construction, although even existing buildings can be transformed fairly easily into effective rainwater collection surfaces. The investment for graywater treatment systems is more significant, but nonpotable water becomes a more important landscape maintenance tool every year, owing to warming and drought factors that are diminishing groundwater supplies. When using

132 Resort Development

graywater, it is imperative that landscape watering be done at night and halted during high winds, to limit guest exposure. Proper levels of filtration and purification must be maintained to ensure public safety, eliminate trace odors, and prevent system clogs. Whatever type of water source is being used, it is smart to have multiple control systems, not just rain sensors, to detect line breaks and leaks before plant life is compromised. Landscape Design and Maintenance Standard xeriscape techniques have substantial impacts on water use and maintenance costs. Sod

is the biggest water hog in any landscape plan and should be used as little as possible, not only because of its drain on irrigation resources but also because it requires mowing, which creates air and noise pollution. Much better choices, especially for large expanses, are drought-tolerant natural sods, native grasses studded with wildflowers, decorative rocks and sand, or mulch from on-site tree-trimming, which can make an attractive ground cover and also reduces evaporation and erosion while nourishing the soil. Nature provides many choices. For example, instead of sodding beachside space, consider planting railroad vines, which grow on sand, require no watering, and create a natural green backdrop for pathways to the beach. In especially arid locations, use droughttolerant materials around amenities to maintain a consistently lush look. Decorative flowering plants should be used sparingly and clustered into accent beds to boost their visual impact. Plants with similar water and sunlight needs should be grouped together. Canopy vegetation can retard water evaporation over plants that require lots of moisture. Natural Pesticides and Fertilizers To improve environmental conditions without jeopardizing plant performance, use compost tea (compost steeped in water) as a supplement or replacement for traditional pesticides and fertilizers. Compost teas can balance PH and eliminate fire ants and other pests with no toxic side effects. Most plants thrive on compost. Miami’s 18-acre (7-ha) Parrot Jungle, an expansive, lush tropical oasis, has embraced composting and now uses no commercial pesticides at all. Compost teas can be purchased or created on site by using cut grass and other organic materials such as food scraps from resort restaurants. Composting areas should be located near the maintenance shed, well out of guest traffic. Compost also offers a wide range of benefits in terms of overall stormwater management: it helps prevent erosion, reduces runoff, improves downstream water quality, improves soil quality, and effectively removes sediment from stormwater. Lighting, Wind, and Solar Power Use low-voltage (12V) fixtures instead of 110V lines for landscape lighting. Typically, put about two-thirds of the lights on timers from sunset to midnight. Illuminate security paths and major trees all night, using photo cells. In addition, consider using renewable energy sources such as wind and solar power to support at least part of the exterior lighting needs. New small and

efficient wind turbines can be installed on parking-lot and amenity light fixtures to power lamps even when wind is minimal. They are virtually noise-free and highly vandal-resistant. A wide range of solar lighting and heating products also are available and are becoming a mark of forward-looking exterior design. Paving, Paths, Pools, and Fountains For large parking lots, use permeable pavers so that automobile oils can be filtered somewhat before reaching the water table. Permeable materials should be used for paving near trees, to give roots adequate air and moisture. Discourage the use of motorized vehicles within the resort by providing inviting paths for walking, hiking, and biking, and for Segways and other vehicles that use electricity from renewable sources. Install chemical-free filtration systems and solar heating systems in pools and spas and cover them when not in use. Use harvested water to support fountains. If possible, provide a tree canopy to reduce evaporation. Siting and Shading The principal siting goal is to minimize disturbance to the site, which means clearing as little land and saving as many mature trees as possible. Views, walkways, and amenities should be designed to emphasize the natural topography and vegetation. Bring the architect and landscape architect together early in the design process to ensure that buildings are sited to reduce heating and air-conditioning needs and to ensure that shade trees will be planted to provide maximum cooling impact without obscuring premier views. Planting deciduous trees on the west and southwest sides of buildings can cut roof and wall temperatures by up to 20 degrees. Landscape elements such as shrubs and vines on arbors or trellises are also good shade sources. When shade tree positioning interferes with long-perspective views, use accent landscaping to create inviting close-up miniviews. When locating structures and power lines, incorporate existing trees and leave room for growth. Green Roofs Green roofs can encompass everything from gardens to roofs equipped with some form of green technology such as solar panels, wind generators, or waterharvesting systems. When used for vegetation, plants are installed over a waterproofing membrane and may have additional layers such as a root barrier and drainage and irrigation systems. Roof gardens can serve as delightful amenities, where guests can commune with nature while enjoying panoramic views.

Planning and Design 133

Landscapes Going Greener

continued

Implementation Strategies Many sustainable practices can be implemented at existing hotels and resorts. But they are usually most effective and least costly when they are included in the initial development strategy. The early involvement of landscape architects and civil engineers also can help prevent unintended environmental mishaps, which can be costly to reverse. Hotelier Wen-I Chang of the Altman Hospitality Group advises developers to “register your project for certification early in the development process, as the U.S. Green Building Council is always revising the LEED [Leadership in Energy and Environmental Design] requirements. Then, once a project is registered, you are not working with prerequisites that can change midproject.” In June 2007, Wen’s Gaia Napa

Valley Hotel & Spa became the first hotel to earn a LEED Gold rating. Charles, the Prince of Wales, who serves as president of the International Business Leaders Forum, has noted that “The [hospitality] industry as a whole now needs to design, develop, refurbish, and operate a new generation of tourism destinations that have a minimal ecological footprint, and which also support and strengthen the communities in which they operate.” Many major players in the hospitality industry agree, and they have green-branded properties in the pipeline or already in operation. Green is moving rapidly from a trend to standard practice, both for the cost savings it can generate and for the social consciousness it represents.

Over 25 percent of the 5,000 acres (2,025 ha) of land at Brays Island, a hunting and second-home community in South Carolina, has been deemed wetlands. The community’s planners, however, have been able to transform the wetlands into an amenity by using the area for hunting and preserving it as natural open space. As demonstrated by major recent storm events such as the Indian Ocean tsunami of 2004, Hurricane Katrina, and Cyclone Nargis in Myanmar, protections from wind and storm surge damage are vital considerations. The conflict between guests’ desire to be close to the water and the need to set buildings back behind the primary dunes is a challenge that can be overcome with proper planning techniques. The most important consideration for siting buildings in tropical storm regions is to establish a proper finished floor elevation (FFE) above the anticipated storm surge height and to incorporate a comprehensive storm drainage system that will move water away from the structures during a storm event. Wind is the driving force behind hurricanes, but water is the more devastating culprit in tropical storms. Through an integrated storm management plan, water can be collected through a series of biofilter swales and then allowed to drain through a series of retention swales and drainage basins. Often, golf courses can provide the infrastructure through which this is possible. “By looking at the site holistically and developing environmental techniques for dealing with the movement of water, filtration of pollutants, and protection of the coastal habitat, landscape architects can lead the way in

site planning for hurricane regions,” notes Jerod Costner of Design Workshop.7 Other potential development problems in coastal areas include water availability; water quality in adjacent rivers, lakes, streams, or the ocean; sea turtle protection; and the necessity of hurricane evacuation.

134 Resort Development

Andrew Witkin, ASLA, Witkin Hults Design Group, Inc.

Special Considerations for Desert Sites The elemental harshness and solitude of desert landscapes present several challenges for resort developers. In particular, water is costly and often must be pumped from great distances. Further, the acquisition of water rights is a difficult process. Third, drainage concerns are paramount. Deserts are not simply flat wastelands that lend themselves readily to development. A desert floor is made up of intricate networks of drainage beds and arroyos that may remain dry for months but become pathways for flash floods after a rainfall or mountain snowmelt. Parched soils are easily saturated with rain and can shed large amounts of groundwater along the paths of least resistance—the seemingly innocuous dry riverbeds. Thus, a proposed desert development plan requires careful analysis of natural drainage systems and soil conditions. Despite water availability issues, golf courses are a fairly ubiquitous component of desert resorts. Responsible golf course design is shifting now toward smaller target greens, reduced grass in fairway widths and lengths, and native grasses in the rough areas, all of which contribute to reduced water consumption.

LOEWS HOTELS

Loews Ventana Canyon, a 1,042acre (420-ha) master-planned resort, takes stewardship of its desert landscape, making use of indigenous plantings and protecting wildlife habitats.

Closely related to water availability are deserts’ plant ecologies. Indigenous plants require significantly less water than nonindigenous species and are more durable, require less attention, and stabilize soils against erosion. Xeriscaping offers a landscape approach that reinforces the natural equilibrium of the ecological system. By using the seven fundamental principles of xeriscaping, a landscape has a higher potential for success. These principles include planning and design; creation of practical turf areas; selection of water-efficient and drought-tolerant plants; incorporation of soil amendments; use of mulches; efficient irrigation; and proper landscape maintenance. Xeriscaping has become an integral aspect of many highly successful developments that focus on the desert’s starkly attractive vistas and diverse ecology. Landscape plans for desert resorts can follow one of several approaches, ranging from careful preservation of the existing desert ecosystem to complete transformation of the landscape into an oasis.

Well-known Arizona resorts such as Desert Highlands, the Boulders, and Ventana Canyon Resort have all assumed roles as land stewards seriously committed to the inherent values of the desert. In particular, they have provided housing designs that complement the desert environment and selected high-quality desert landscaping. The Reserve (see case study, chapter 7) in Indian Wells, California, has made considerable efforts to preserve its desert landscape. The developer, design team, and biologists collaborated for ten years with environmentalists and the local community to preserve wildlife habitats and plant life. The plan retained hundreds of acres of natural desert and salvaged more than 700 native trees and more than 1,000 indigenous shrubs. Much of the rock that was removed was used as building material to integrate the architecture with the surrounding landscape. The JW Marriott Starr Pass Resort and Spa (see case study, chapter 7) in Tucson also has been recognized for its desert preservation efforts. This resort used a three-to-one plant replace-

Planning and Design 135

ment strategy to replant native cacti that were uprooted during construction. Coupled with the importance of environmentally responsible development is the role of contextual design. Because the topography of the desert suggests a reduced-height profile, resort developments generally should deemphasize their structures. For example, Ventana Canyon Resort, a resort and recreational community outside Tucson, reflects the lines and proportions of the surrounding hills. Its low-rise hotel at the base of the rugged Sonoran foothills affords views of the saguaro cactus forests and surrounding mountains without competing for attention. The visual mass of the hotel is tamed by the alternating setbacks of the topstory rooms, while ribbed, vertical columns displace the structure’s bulk. The facade’s local aggregates blend with the soft hues and rugged texture of the surrounding foothills and desert.

Regulatory Issues Before physical planning can begin, a developer needs to evaluate the relevant regulations that might constrain the proposed development. With the benefit of basic

community regulatory and political information, the developer should prepare a plan of action for negotiating the approval process—particularly as relates to the stakeholders and other interested parties and the issues to be addressed. The plan should identify all the formal permits required from each of the various federal, state, and local agencies, as well as the estimated time and work needed to obtain each. If well conceived, the developer’s strategy can help avoid time-consuming and costly surprises and identify tools to be used in overcoming anticipated opposition. Early on, the developer should undertake studies that specify strategies for mitigating adverse environmental impacts, document beneficial economic and fiscal effects, and accomplish whatever else may be required to address each particular issue and concern. Public Policy Issues Federal regulations affect resort development both directly and indirectly. The deductibility of second-home mortgage interest from federal income taxes, interstate land sales laws, and environmental protection regulations that govern wetlands, endangered species, floodplains, and coastal areas are but a few examples.

Sunset Island is a resort community of 546 homes on a 34-acre (14-ha) island in Ocean City, Maryland. The developer worked extensively with federal, state, and local agencies to develop a plan to stabilize the island and protect the shoreline.

136 Resort Development

As a landowner, the federal government also has a potentially significant role to play in the development and redevelopment of resort real estate. The management of national parks and forests, the relationship between national parks and surrounding communities, and the use of U.S. Forest Service land for recreational pursuits present a range of significant opportunities and constraints for future resort development. State governments increasingly recognize the benefits of land preservation and economic development involving resort development. For example, Florida’s ambitious Florida Forever program targets the preservation of sensitive environmental resources through land acquisition and other protection strategies. It also administers the Coastal and Estuarine Land Conservation program, which provides funds for projects that protect coastal areas threatened by development. The North Carolina Division of Coastal Management works to preserve and manage coastal lands through planning and permitting, and operates coastal reserves. The state wetlands conservation plan inventories and assesses wetlands and monitors development planning so as to avoid, at all reasonable cost, disturbing the most ecologically important wetlands. Other examples abound for the state role in guiding and controlling land use in rural areas that offer resort development opportunities. Localities vary considerably in their level of regulatory control. In locations where local governments are ill-equipped to regulate development in a responsible manner, it may become incumbent on the developer to educate the locality about responsible land use practices. Further, since resorts are often built in remote, previously undeveloped areas, the resort may cause fundamental changes in the local character and economy, something area residents are likely to find disconcerting. For these reasons, cultivating a good relationship with the local government is essential.

Despite a developer’s best efforts, a comprehensive development proposal may be subject to years of exhaustive study, negotiation, and waiting. The developer must anticipate delays and, in trying to expedite the process, remain respectful of the various participants. The developer should encourage cooperation and take care not to assume an adversarial role. A design and legal team with experience in approvals is essential to this process.

Managing the Approval Process After completing the regulatory analysis, a developer representative should meet with appropriate elected and appointed officials to brief them on the proposed project concept and learn firsthand of their concerns. If this meeting is arranged before the project is presented to the community and special interest groups, officials will have an opportunity to express their opinions and suggest any revisions. Conceptual approval might be possible at this point. Although such approval would be informal, it can help to justify more detailed planning.

Community Needs and Local Benefit For resorts, being a part of the local community is more important than ever. A resort must be able to define its benefits to area residents. Simply “doing no harm” is longer sufficient; a resort must give something back to the community that provides the setting, history, and culture, as well as a large portion of the labor force. Some areas in which the developer can consider making contributions are infrastructure improvements, establishing educational programs, and creating entrepreneurial programs for local businesses.

Flexibility Concerns Developing a workable plan and successfully negotiating the potential pitfalls that characterize the approval process requires balancing short-term objectives and long-range needs. Flexibility is of utmost importance. First, because consumer demand is constantly shifting, developers need to maintain the flexibility to create what people want over time. Second, developers must stay abreast of the economic climate. Projects that begin when the economics are favorable may be stalled—sometimes for years—or reduced in scale because of downturns. Developers must carefully examine the legal aspects of their relationship with the local government and its approach to private covenants with property owners. Approval to develop and operate a particular type of resort property usually boils down to a political decision that depends on the shifting dynamics within a community. The pitfalls facing the developer revolve around the crucial point of obtaining long-range approvals to develop properties that will meet the resort’s needs years after the initial development proposal is approved. Local governments want to know how a development complements the overall community plan, so there is often pressure on the developer to be specific about development plans. Failing to lock in a certain level of flexibility at the project’s inception can inhibit profitable development years in the future.

Planning and Design 137

CAROL RUNZEL

As part of a development agreement with the city, developers of the Hyatt Regency Huntington Beach Resort & Spa built a pedestrian bridge across a highway to connect the resort to the beach. It allows access to resort guests and the public.

For example, Mahogany Run, located in St. Thomas, U.S. Virgin Islands, created a “Resorts to Reading” program to help improve the local literacy rate. It donated $25,000 to the community to help build a public library and offered discounted rates on golf to reward readers. The Four Seasons Resort Great Exuma at Emerald Bay in the Bahamas contributes $1.6 million annually through direct employment, and visitor spending also is infused into the island’s economy. The resort built a reverse osmosis plant that can process in excess of 1.5 million gallons (5.7 million l) of freshwater per day and serves as an emergency backup provider for Exuma’s residents and businesses.

Site Planning Process The site planning process typically involves a methodical sequence that usually is divided into three incremental stages: the concept plan, the preliminary plan, and the final plan. Each stage produces a master plan that evolves as the project develops. Limiting parameters— whether environmental, legislative, political, or otherwise—are often major forces that influence a project’s design. For this reason, the stages should be organized

138 Resort Development

in a way that allows considerations from different disciplines to be synthesized in an appropriate sequence. Developers and planners of a resort community should examine a variety of alternative primary layout schemes to ascertain which options will produce the best and most productive plan. Edward D. Stone, Jr., chairman of the planning and landscape architecture firm EDSA, suggests the formulation and analysis of at least three serious site plan alternatives. Planning the project layout requires the synthesis of many variables and calls for a large measure of flexibility. The three-stage process (concept, preliminary, and final plan stages) involves the collection and analysis of detailed information about the site, the identification and evaluation of alternatives based on programming and feasibility analysis, and the selection and refinement of a preferred alternative among the several alternatives studied in the initial stages. Highly interdependent, these activities are normally undertaken in several cycles during each stage. Because each project is unique, however, the planning process must be tailored to site-specific needs. Variations occur according to the environmental risks, political issues, phasing considerations, and other factors. A well-drained and relatively flat project site, for example,

does not require the same level of attention as a mountainside that needs to be analyzed to determine what, if anything, can be built on it. Moreover, for some projects, portions of the proposal might remain in the concept stage while another portion of the proposal is in the final stage. Finally, the terms “concept plan,” “preliminary plan,” and “final plan” are not universal to all developers but rather are general terms that many developers and planners use. These terms should be backed up with specific deliverables in the proposal to limit any potential confusion between the design team and the developer.

PROJECT BY LANDDESIGN

Concept Planning Concept planning involves collecting and evaluating information about a site to guide an understanding of the site’s development potential for a particular resort type. It deals with site-specific issues at the broadest possible level. Best conducted before committing to purchase a site, concept planning explores both opportunities and constraints. Often referred to as “due diligence,” this phase of work combines three aspects of design that should help a developer understand a site’s potential and the feasibility of a proposed project. These should

include a site analysis to determine the amount of developable land, a market study to determine the proper product type and positioning for the market, and conceptual design studies to gauge the site’s ability to accommodate the desired program. This effort should result in a graphic plan that depicts generalized land use areas and amenities, product type and density, major roads and circulation, and the overall landscape character. Resorts and recreational communities generally place substantial emphasis on the conceptual planning stage as a means of properly analyzing risk. Owing to the sensitive environments of most resort areas, the rules and procedures associated with the permitting process have become increasingly stringent. Developers must invest substantial upfront capital during the concept plan stage for information and analysis of site-specific risks, especially environmental conditions—such as protected wetlands or coastal areas—that may make development difficult or even infeasible. For instance, determining during the conceptual planning stage whether the geology and slope of a mountain is suitable for building can dramatically affect the value of the land as well as the project’s potential profit margin.

Site plan for Seaside Mariana, a 920-acre (370-ha) golf and spa resort located on the Pacific coast of Nicaragua.

Planning and Design 139

THE GROVE ISLE HOTEL & SPA

A welcoming entrance creates a memorable first impression. Pictured: The Grove Isle Hotel & Spa, Miami, Florida.

A detailed concept plan should include the following elements: ; A written program that conveys the vision of the project. The program should outline architectural themes, seasonal uses of amenities, and recreational activities. ; A site analysis mapping using geographic information system (GIS) technologies to produce and examine slope, elevation, hydrology, scenic views, geology, wildlife and vegetative habitat, wetlands, and transpiration. All of these variables should be included in a developable land summary map. ; A graphic depiction of the project’s general land uses. Often “bubble” diagrams identify locations for different land uses and include a rough estimate of the number and size of housing or lodging units. ; An analysis of land resources based on a written explanation of the land’s assets and liabilities. ; A market analysis that indicates demographic, psychographic, and sociographic trends. ; An economic analysis that outlines rough costs and expenses as well as a financing strategy. A comprehensive database of physical land constraints should be completed by the end of the concept

140 Resort Development

plan stage. The project team always should seek existing data from local sources before engaging teams to produce site-specific geophysical and other data. Often, information about the site may be available from municipal agencies, planning staffs, public works and building departments, utility companies, state highway departments, county offices, and local engineering firms. A data search generally should yield topographic maps, soil surveys, soil borings, percolation tests, wetlands mapping, and environmental assessments for other projects in the area. Tax assessment offices and recorded deeds offer sources of information on easements, rights-of-way, and covenants. Some municipalities have posted interactive GIS data on Web sites, where much of this information can be found. The telephone company or the electric utility may contract periodically with a major engineering firm for controlled aerial photographs. Identifying existing data that cover the target site and its surroundings can be a great time and money saver. In general, a planning/engineering firm with extensive experience in the jurisdiction can greatly facilitate the data-gathering process. Concept planning presents the developer with the first opportunity to test several alternative development programs for the site under consideration. Because sev-

eral alternative development programs often need to be considered, several concept plans should be prepared to determine whether a program can be effectively accommodated. Although there is usually no formal requirement for it, a preapplication conference with local officials during the concept planning phase is generally a prudent move. Successful developers typically meet with local officials as early as possible to establish a working dialogue so that they can keep subsequent surprises to a minimum. In addition, developers generally should review a range of development options for a site during a town meeting to gauge the community’s receptivity to various alternatives. The developer thus can gain insight into what type of local resistance may arise and how to respond to it. Typically, the concept plan stage moves into the preliminary planning stage when the physical planning database is complete. The concept plan stage’s master plan should include a schematic presentation of land uses. A complete concept plan should enable the developer and planner to determine whether the site merits further investment. If so, they then move to the next stage of creating a strategy for phased implementation. Preliminary Planning As new information about the site becomes available and alternative preliminary plans are evaluated, the preliminary master plan begins to evolve. By this stage, the project planning team should be able to identify prototypical building footprints for the various land uses under consideration. These building footprints may be refined later, as the study of alternative preliminary plans progresses. During this stage, the planning team ; prepares preliminary cost estimates for all facilities for review and refinement by the marketing/economic planners; ; updates and refines facility designs with the marketing/ economic planners; ; prepares detailed plans for land use areas, while allowing for continual physical refinement and financial analysis; ; refines capacity studies of gross acres or hectares of developable land and facilities; ; prepares interim financial projections portraying development alternatives for evaluation by the economic planners; ; prepares preliminary project design guidelines; and

; expands the consultant team to include architects, engineers, and other specialists. Local requirements vary for submission of a preliminary plan for public review, but they generally include written documents, site plans, and other graphic information. The list of required documents may include but is not limited to the following: ; a legal description of the site, including ownership; ; a statement of planning objectives for the project; ; a construction schedule; ; quantitative information, including number of housing units, lot sizes, lot coverage and densities, and total amenities and nonresidential construction; and ; any additional market, feasibility, or other studies required by the reviewing body. Required graphic information may include the following: ; site plans showing existing site conditions; ; proposed lot lines and plot designs; ; maps showing the location and size of all existing and proposed structures and improvements; ; maps showing the location and size of all areas to be reserved as common open space, developed as recreational facilities, or allocated to other uses; ; a general landscape plan, which may include the proposed treatment of the development’s perimeter; and ; any additional information regarding adjacent areas that might assist in the evaluation of the proposed project’s impact. Typically, local officials do not require specific building information until submission of the final site plans or building plans. Developers who submit detailed building information before it is required run the risk of limiting their flexibility to alter plans and adapt to changing market conditions. They may, however, submit design intent or architectural precedent and character images. The local planning commission normally reviews the preliminary plan, often under a time limit imposed by ordinance. During this period, staff members may confer with the developer to clarify matters or to request additional material. The developer often has an opportunity to make a formal presentation about the project at a hearing before the planning commission. If a development is to be phased, as most resort projects are, the developer should submit a preliminary plan only for the first phase.

Planning and Design 141

On the secluded, windswept southeastern shore of St. John in the U.S. Virgin Islands, one resort is growing in harmony with nature. Estate Concordia is the second of New York–based developer Stanley Selengut’s ecoresorts on the island. Nestled among native vegetation and overlooking the Caribbean Sea, this 51-acre (21-ha) retreat caters to vacationers who value sustainability and enjoy communing with their natural surroundings. According to Selengut, the target audience is not vacationers seeking predictability and traditional amenities, but rather those who want to “see the other side of the mountain”—to learn and interact with others. Estate Concordia evolved from Maho Bay Camps, a 13.8-acre (5.6-ha) resort Selengut began developing in 1976 on leased property within the Virgin Islands National Park. As the camp’s 114 tent cottages grew in popularity, Selengut purchased land on the other side of the island for Estate Concordia. Construction began in 1994, and currently the resort features 25 eco-tents and nine studio units, as well as a restaurant, general store, pool, and yoga pavilion. It is approved for a total of 106 units, and 25 acres (10 ha) are reserved for sale as one-acre (0.4-ha) residential lots. Both resorts have incorporated green building techniques and materials to minimize their impact on the island’s fragile wildlife and to reduce the use of limited resources such as water and electricity. There is also an emphasis on reuse and recycling of everything—from glass and aluminum to bed sheets. Estate Concordia is designed to provide creature comforts compatible with the local environment at a range of prices that are more affordable than typical luxury resorts in the area. Development Process and Financing Knowing that the lease for the Maho Bay Camps site would expire by 2012, Selengut began purchasing land on the island’s southeast side in the 1980s. The property, once part of a larger 58-acre (23-ha) tract, was already zoned for resort and residential uses. Selengut eventually acquired 51 acres (21 ha) bordered by the national park to the south and residential development to the north. The property juts into the Caribbean, and portions of it rise 300 feet (90 m) above the sea, providing for dramatic views. Both Maho Bay Camps and Estate Concordia were financed entirely with equity from the operation of the resorts, as well as the sale of Estate Concordia’s residential lots, which are priced from $500,000 to over $1,000,000. Selengut built the first five eco-tents at Estate Concordia in 1994. The white-cloth roofed eco-tents and connecting walkways cost about $80,000 each to build. Combining rusticity with luxury, they feature private

142 Resort Development

ESTATE CONCORDIA

Estate Concordia, St. John, U.S. Virgin Islands

Estate Concordia eco-tent.

bathrooms, refrigerators, and other amenities. However, the cloth walls and roofs allow guests to hear the sounds of nature outside, and they can be opened easily to admit cooling ocean breezes. The studio units, with solid walls, doors, and roofs, offer more privacy. Typically, between five and 15 units are built at a time to test new technologies and gather customer feedback. The drawback is that existing regulations for construction do not always address innovations. When Selengut wanted to install composting toilets at Maho, there were no provisions in the islands’ Department of Health guidelines, and so he was issued an experimental permit. Selengut says the Coastal Zone Management Commission and other regulatory agencies have been willing to allow him to try new things because he has built a good reputation on St. John. Design and Construction Construction at Estate Concordia has disturbed as little of the ecosystem as possible. Many of the building components, such as insulated wall panels, were fabricated off site to minimize construction debris. Larger structures that required concrete foundations, such as the cisterns that hold rainwater, were located near the

road, making it easier for crews to pump the concrete to the site without disturbing the surrounding area. The swimming pool—which is filled with water collected during rainstorms—transitions from shallow to deep sideways, following the natural slope of the ground. To create a more authentic environment, invasive plant species were removed and replaced with native varieties. This has resulted in operational cost savings by reducing the need for water and fertilizer, as the native species are better suited to existing conditions. Selengut has found that after major hurricanes such as Hugo in 1989, when the leaves were stripped off most vegetation on the island, the native species recovered in about a month, while the exotic plants at some resorts took over a year to regrow. As feral animals are removed, indigenous species return. The various native birds, lizards, and other animals feed on insects and reduce the need for pesticides. Pathways have been built around existing landscape features and often have been elevated to keep foot traffic from construction crews and tourists alike from disturbing vegetation. This also allows for utilities to be run under boardwalks rather than placed underground. Waste reduction is a major drive at both Maho and Concordia. The eco-tents are equipped with composting toilets to minimize water use and waste disposal needs. The graywater resulting from showers and other water uses is distributed through a trough at the base of each tent, where it nourishes native plants that attract butterflies and other fauna. The studio units at Concordia are connected to septic tanks, while the staff housing makes use of an artificial wetland to further treat wastewater. To further reduce waste and save money on hauling trash from the island, the resorts feature several recycling and reuse programs. When guests check in, they are shown the “Help Yourself” area, where departing guests can leave any unused items such as sunscreen, books, and even refrigerated food. Because this also can help guests save money and trips to the store, Selengut feels it breaks down barriers and prepares people to be more accepting of other conservation measures. “Trash to Treasure” programs at Maho currently recycle glass from both resorts into decorative pieces. There is a residency program for visiting glassblowers, some of whom sell items in the adjacent store for $1,000 and up. Aluminum cans are melted down in another center to create jewelry. A fabric studio turns used sheets into rugs. The environments of Maho and Concordia are markedly different. The tents of Maho are nestled among the trees; Concordia lies on the windward side of the island, where low vegetation allows much more direct sunlight. This has enabled the new resort to take better advantage

of solar energy through photovoltaic panels on each tent. The lack of tree cover also makes water collection from the roofs of tents and other buildings easier, since there is little debris. The availability of energy and water collection for each eco-tent frees the resort from having to pay for either. There are preliminary plans to incorporate a wind energy generator in a cogeneration project with the Virgin Islands Water and Power Authority. Concordia’s tents and studios are arranged to take maximum advantage of the trade winds that blow across the site. In spots sheltered from the wind, Selengut is seeking further ways to conserve energy, such as building with heavily insulated wall panels with R-values approaching 40. A cooling system will blow air across the cool water collected in cisterns under the units. However, the structures also will be designed to accommodate traditional air-conditioning units, perhaps at an additional fee for guests. Many buildings use recycled materials, including composite lumber, recycled nails, and fiber cement siding. Rather than construct concrete retaining walls for the yoga pavilion, builders stacked gabion baskets—metal cages filled with rock—to create the necessary walls. Gabion baskets allow water to pass freely through the walls and provide for movement in response to changes in the ground. The cut and fill for this project were balanced to eliminate the need for dirt removal or replacement. The residential lots are one acre (0.4 ha) each and come with several deed restrictions limiting the size of the house and the proportion of the lot that can be cleared. Selengut offers resources to owners seeking green building technology, as well as access to a staging property off site in order to minimize disturbance to the site during construction. Performance Marketing for these projects has been minimal, relying mostly on articles in the U.S. press and word of mouth. Both Estate Concordia and Maho Bay Camps have an occupancy rate of about 95 percent in season. Estate Concordia, which was closed for a month of construction in 2007, still maintained an overall annual occupancy rate of 64 percent. Selengut estimates that 50 percent of the resorts’ 12,000 visitors annually are repeat customers. In-season (December 15—April 15) daily rates for the eco-tents range from $155 to $185. The studio units are priced from $150 to $225, depending on size and ocean view. Off-season daily rates are $105 for eco-tents and $105 to $160 for studios. Trey Davis, Urban Land Institute

Planning and Design 143

As a part of the hearing, the public is entitled to make comments—both favorable and unfavorable—about the project. The commission then approves, approves with conditions, or denies the development plan. Often, it grants conditional approval and requires the applicant to change or modify the proposal before granting final approval. In the case of a denial, the applicant usually has a right to appeal the decision. After the preliminary plan is approved, the developer must submit a final plan within a specified period. If the developer fails to meet the deadline, the planning commission usually revokes its preliminary approval. In fact, if within a specified time a developer has not moved toward completion of the final plan for the phase under consideration, in some cases the planning commission may nullify all previous approvals. In the case of a zoning variance, it too can be withdrawn, causing the zoning to revert to the original class. Final Planning The major difference between preliminary and final plans is the level of detail required by the locality. Drawings that might have been presented in schematic form in a preliminary submission must be engineered for the final master plan. Site plans must be sufficiently detailed for legal recording, and any other graphic information, such as landscape plans, must also be submitted in final form. Legal documents required for establishing a community association or dedicating public land also may be required. The final plan normally is submitted to the planning commission, which may issue another staff report documenting compliance with the preliminary plan and any conditions of preliminary approval. Because approval of the final plan usually requires legislative action related to acceptance of dedicated properties or approval and recording of site plans, responsibility for the grant of final approval typically rests with the city council or other local legislative body. Following approval of the final plan, the developer must obtain any other necessary administrative approvals. With the issuance of building permits, construction can begin. Failure to undertake construction within a specified period normally results in revocation of the approval. The approval process can take several years. Therefore, the first phase should be scaled to coincide with market demand at the time construction is likely to proceed. Often, a developer must change the master plan in response to market shifts or other factors. Sometimes

144 Resort Development

the limits of permitted deviations from the plan are specified; other times they are left to the discretion of public officials. While minor changes usually do not affect the overall integrity of a project and are easily addressed at a municipal staff level, major changes may force the developer back through the preliminary plan approval process. Developers should be aware of the local agency’s parameters for allowing amendments to the master plan. Unless a change is absolutely necessary, applicants should not deviate from the approved plan.

Project Design The development team must consider the characteristics of the site and the list of components that will make up the development. Then it can begin to make broad decisions regarding how the land will be divided and used. Many factors influence these decisions and affect the design of the project: ; the site’s size, shape, and topography; ; the physical conditions of the site, its surroundings, and infrastructure capacity; ; land use controls, zoning, and other regulatory requirements; and ; market factors, including product types, density, and types of ownership of residential products. The components that make up a resort development range from major infrastructure like roads and lakes to hotel complexes, landscaping, and recreational amenities. They are discussed in the following sections. Transportation and Utilities The larger and more complex a resort, the greater its infrastructure requirements. Although all resorts rely on transportation and utility infrastructure, some also need civic and institutional facilities such as schools and services such as police and emergency rescue operations. The need to provide sites for these buildings depends on the availability of such services off site and plans for their future provision. The developer should determine appropriate locations for any on-site public buildings during the overall site planning and design process. Resort developers and operators have two main transportation challenges to address: making it easy for guests (and employees) to reach the resort site, and facilitating mobility within the resort. Traffic congestion and long drives can detract from the resort experience;

nities in the composition of the streets, layout patterns, street widths, and even the modes of transportation. For example, at Brays Island Plantation in South Carolina, except for the asphalt entrance road that leads to the sales office, all new roads are unpaved, much like those found on traditional plantations. The unpaved roads provide an environmental and aesthetic asset that would be inappropriate in most primary-home communities. Dewees Island, also in South Carolina, bars all vehicles except electric golf carts and relies on sand-based roads with crushed oyster shells and crushed limestone, which reduces infrastructure costs, enhances environmental preservation, and adds to the informal atmosphere. Similarly, the Hualalai Resort on the Big Island of Hawaii placed its parking areas close to the entrance; guests use electric golf carts to get around the property. The purchase price for each residence includes a golf cart. At Sun City Las Vegas, the city of Las Vegas agreed to accept narrower street widths in recognition of the reduced traffic and parking requirements of the community’s retirees and active adults. A modification to Nevada’s motor vehicle regulations also permitted the use of golf carts for intracommunity transportation, in accordance with Sun City’s transportation strategy. Residents enjoy cart access to all areas of the community without leaving the internal street system. Specially designed entrances reduce the speed of vehicles entering the community, and the design of the internal street

RNM DESIGN

sites closer to airports have an advantage over those requiring a long drive to reach them. While remote locations may be desirable, ease of access is still important. In some areas, plans to add or expand a resort will trigger community concerns about traffic congestion. At the Deer Valley ski resort in Park City, Utah, the developers addressed local concerns about increased traffic by including remote parking lots where hotel employees can park and take shuttles to the resort.8 Similarly, the Roaring Fork Transit Agency in Aspen, Colorado, provides a free shuttle connecting ski areas, the airport, and park-and-ride lots along the city’s main highway. Because parking garages and lots can detract from the aesthetics of a site, concealing them with grading, landscaping, and careful placement makes sense. Designers for the Grand Resort Lagonissi in Athens, Greece, took advantage of their site’s hilly topography, sinking parking levels into the ground as much as possible. “The entire parking structure is invisible to guests,” says Pablo Savid-Buteler, an architect at Sasaki Associates. “They see only the retaining walls and landscaped slopes that conceal the upper structure of the garage. This solution allows guests to drive to the highest point and drop off their cars in a spectacular setting.” In mountain resorts, underground parking is essential to protect automobiles from the elements. Roads and Streets. The internal road system is the basic element in any resort transportation plan, and its design often differs from that in primary-home commu-

Access roads and parking must be carefully planned to avoid detracting from the resort’s aesthetics. Pictured: Disney’s Old Key West Resort, Orlando Florida.

Planning and Design 145

PROJECT BY LANDDESIGN; RENDERING BY GENESIS

To minimize transportation needs, many resorts are designed as pedestrian-oriented villages. Drawing: Towne of Seahaven, Panama City Beach, Florida.

system discourages use by regional traffic not accustomed to golf carts. In addition, residential garages and commercial and recreational facilities are designed to accommodate cart parking. In some cases, portions of the transportation and street network may be public. At Wailea Resort on Maui in Hawaii, the county of Maui owns the main thoroughfares and beach access roads, including paved parking along with the restrooms and beach showers near the beaches. Wailea Resort, however, privately maintains these facilities for use by the public. The arrangement ensures public access to the resort’s amenities as well as a consistent standard of maintenance within the resort. Wailea also provides an internal shuttle system that serves its hotels and all major amenities. To minimize the need to drive and to create more accessibility, many resorts are designed as pedestrian villages, allowing guests to walk between amenities and lodgings, often on meandering pathways that create anticipation and provide a sense of discovery. “In designing a boutique ski resort, we used an approach common

146 Resort Development

in good retail planning, which tends to have a destination or anchor at each end,” says architect Bill Gartz, a principal of Callison. “The base village might have the gondola on one end and, on the other, a day lodge, an upper-end restaurant, or a large plaza that offers ice skating.” The base village at Canyons in Park City, Utah, put retail, dining, and residential uses close to the chairlifts and other recreational amenities to keep everything in walking distance. Vehicles are largely prohibited from the village. Most guests arrive by air or by car and park at the outskirts; a people mover brings visitors to and from the village center. Special Transportation Facilities/Services. Resorts sometimes rely on private transportation facilities or services. The monorail system at Disney World connects Disney’s Contemporary Resort, Disney’s Grand Floridian Resort and Spa, Disney’s Polynesian Resort, and the transportation and ticket center, with a connecting monorail to Epcot. Telluride and Breckenridge, Colorado, use gondolas, operating year-round, to transport people between major destinations.

TRANSCONTINENTAL PROPERTIES

Providing water can be a major effort for resort developers. At Lake Las Vegas Resort, lake water, which comes from Lake Mead and the Colorado River, is used to irrigate the golf courses.

Dewees Island and Daufuskie Island in South Carolina use passenger ferries to transport visitors to their properties. Some resorts even provide their own on-site airfields. At Horseshoe Bay Resort in Texas, a lighted airport provides landing aids and complete fuel facilities, 24-hour propeller and jet plane maintenance and service, hangar facilities, and a luxury passenger lounge. An on-site people mover serves the airpark. The 6,000foot (1,830-m) runway on a hill overlooking the resort can handle DC-9s. The resort also recently began offering a private charter jet service for its customers. Utilities. In providing utilities and other infrastructure, resort community developers often face challenges that developers of other product types do not. Many resorts occupy remote locations that lack preexisting water and wastewater systems and that may be too distant

to connect with public systems. Some developers even need to construct private on-site utility systems. Therefore, the early planning efforts must identify the community’s infrastructure requirements and determine how various systems will be accommodated. At the same time, the developer should make every effort to obtain accurate cost estimates. Water. Providing water is typically the responsibility of a municipality or a special district. Particularly in the western United States, where long-term availability of water is a politically charged issue, developers often must assist a municipality or special water district in identifying potential water sources. Sometimes suitable sources of groundwater or surface water are available on site. Even then, obtaining the right to use the water may prove difficult. If an off-site source of water is

Planning and Design 147

RENAISSANCE ARUBA RESORT & CASINO

The resorts on the Caribbean island of Aruba receive water from a municipal desalinization plant.

available, the developer may need to subsidize the construction of infrastructure needed to tap the source and transport water to the site. Such associated infrastructure can include wells, reservoirs, storage tanks, and treatment facilities. Particularly if water availability is an issue, the developer will find it advantageous to incorporate water conservation measures into the development plans, thereby minimizing long-term water needs. A central water supply is always preferable to individual wells. As areas develop, the supply and water quality of wells may become undependable. Two or more wells placed near each other can interfere with one another, and saltwater intrusion is a common problem in coastal areas. Small private water companies often can deliver satisfactory service when larger municipal water services are not available; they also can be cost-effective and become profit centers as a community reaches maturity. When considering extensions of water mains, developers should be aware not only of who pays but also of the legality of the extensions. In general terms, the obligation of a private water company to extend its lines within its franchised territory is undeniable. With nonfranchised companies or those operating outside their franchised territory, however, the obligation is based on the extent of their profession of service. A company denied an application for extension can appeal to the state public utilities commission and, ultimately, to the courts. Some cases require unusual solutions, and even relatively small resort projects can face daunting challenges when it comes to providing water service. During the 26-room expansion of the Ventana Inn in Big Sur, California, for example, the developers experienced a major challenge in providing water services. One of the solutions to developing the inn’s environmentally sensi-

148 Resort Development

tive site was a comprehensive water management and water monitoring program that evolved over a severalyear period. The plan provides for conjunctive use from several sources, including wells, streams, and springs, with limits on water quantities that can be drawn from each. A detailed monitoring program measures all major sources and uses of water and requires the compilation of an annual report for submission to the California Coastal Commission. Resorts located in remote or island locations have incorporated desalinization or reverse osmosis plants to generate their own freshwater. A variety of strategies can reduce the amount of water a resort requires. These include landscaping with native, low-water plants; irrigating with reused graywater, blackwater, and harvested rainwater; specifying low-flow water fixtures and dual-flush toilets in all buildings; and monitoring overall water use. Beaver Creek Resort in Colorado’s Rocky Mountains installed a five-mile (8-km) drip irrigation system to minimize water use, and cut down on evaporation by using mulch and compost on flowerbeds. Stowe Mountain Resort in Stowe, Vermont, built a storage reservoir that holds 111 million gallons (420 million l) of water for snowmaking use during periods of low water availability, keeping streams from falling below ecologically sound levels. Wastewater. Two basic alternatives are available for disposing of domestic waterborne wastes: piping the wastes off site to a municipal sewage treatment system, or treating and disposing of the wastes on site. From a developer’s perspective, public sewer systems are preferable but not always available. The developer’s next choice is an on-site, small-scale community system rather than individual on-lot disposal. Such systems mandate a state permit for any discharge of sewage efflu-

Sewage disposal by septic tanks and tile fields is generally the least preferable alternative. If, however, the densities are low and the soils appropriate, individual septic systems may be the most cost-effective choice. Individual on-lot disposal requires a sufficiently large parcel of land for an adequately sized disposal field. The disposal field must slope away from the house and be kept free of trees and shrubbery to permit needed sunlight action. The soil and subsoil types affect both the amount of area needed and the possibility of polluting nearby surface water or wells. If developers are considering individual septic tanks, they must receive approvals, usually from the state board of health. They must also conduct percolation tests to determine the final required dimensions of the lots. This approach can be very time-consuming because of all the field testing and permitting for each system. Developers should bear in mind that disposal fields might have to be abandoned after some years, as reconstruction of septic tanks is seldom practical or satisfactory. In any case, proper design and construction are essential. Sustainable approaches to treating wastewater are becoming more common. The Smugglers’ Notch Resort in Vermont has installed a treatment facility that relies on natural biological processes rather than chemical treatments. Its large greenhouse contains a series of reactors housing a variety of environments; in each,

GRECOTELS

ents into streams and rivers, and effluents must meet standards for the receiving body of water. In most cases, secondary treatment is a requirement. At Horseshoe Bay Resort, a 4,500-acre (1,820-ha) resort community 50 miles (80 km) west of Austin, Texas, the developers formed a municipal utility district and installed one of the state’s first tertiary sewage treatment plants, as well as one of the first major pressurized sewage collection systems in the United States. The sewage effluent is used to irrigate the resort’s golf courses. At the Grand Cypress Resort in Orlando, Florida, the resort donated land for a potable water plant and a county wastewater treatment plant, which were constructed at the developer’s expense. The water treatment facility serves not only the resort but also other developments in the vicinity. The treatment plant’s effluent is used for irrigating the resort’s 45-hole golf course. The arrangement reflects the resort’s respect for neighboring communities’ water conservation concerns and provides a safe means for disposing of wastewater. “We are increasingly seeing resorts in remote locations turning to prefabricated wastewater treatment plants,” reports architect John Hill, principal of HKS Hill Glazier Studio. These factory-assembled “package plants” range in size and can be assembled quickly on site. These typically are placed near the entry as part of a maintenance complex, Hill notes.

Beaches are a highly marketable amenity for a resort. At Aquila Elounda Village on the island of Crete, a series of saltwater swimming pools complements the beach.

Planning and Design 149

KAPALUA LAND COMPANY, LTD./KAPALUA RESORT

On the Hawaiian island of Maui, the Kapalua Resort is a master-planned resort that includes estate homes, vacation rentals, and a Ritz-Carlton Hotel. The resort is surrounded by two nature preserves, a pineapple plantation, and the Pacific Ocean.

plant habitats support natural bacteria that treat a particular aspect of the wastewater. The final clarifying tank houses fish who remove algae. The resort offers guided tours through the greenhouse to explain the process to guests. At Old Greenwood in Truckee, California, rainwater and melting snow flow into on-site retention ponds, which filter the water and make it available for irrigating golf courses. Water Amenities and Boating Facilities Water views, waterfront locations, water-moderated climates, and various shore and water-based activi-

150 Resort Development

ties appeal to a large number of people, making water amenities critical assets for many resort communities. A site’s waterfront and land/water interface can be programmed for a variety of low- to high-intensity uses, including the following: ; Natural Beaches—For natural beaches, the most passive and easily accommodated waterfront uses are sunbathing, swimming, and beachcombing. Natural beaches are a highly marketable amenity for a resort and can be left largely undeveloped, although many require some modification and may carry substantial

maintenance requirements. Bathhouses and food facilities can be added where appropriate. Complementary activities can include snorkeling and scuba diving. ; Open Space/Trails—In areas without natural beaches, such as around many lakes or wetlands, waterfront areas can provide attractive open space for trails and bicycle paths as well as appealing sites for fishing or camping. The trend toward ecotourism makes open space and trails increasingly popular. They can incorporate waterfront environments for observing wildlife and waterfront ecosystems. The Grand Cypress Resort in Orlando created a series of interconnected lakes that emulate the regional geography while retaining runoff, enhancing the visual experience, and allowing for a variety of recreational uses. ; Golf Courses—In some situations, golf courses can be an attractive and sensitive use for waterfront areas. The Pebble Beach Resort and Spanish Bay Resort in Monterey, California, for example, have established themselves among the nation’s premier resorts owing in large part to the outstanding oceanfront settings of their world-class golf courses. Other resorts with oceanfront courses include Kiawah Island in South Carolina, with ten holes along the ocean; Hammock Beach Resort in Palm Coast, Florida; and numerous resorts in Hawaii, including Kapalua and Turtle Bay, both of which are home to two championship courses. ; Marinas and Boating Activity—Providing facilities for boating and other marine activities often requires substantial waterfront development, such as the creation of marinas, although sailboat and windsurfing rentals often can be accommodated with little development. Boating activities rank among the most popular forms of recreation, and resort environments can offer excellent opportunities for boating. (See the next section for an extended discussion of marina development.) ; Residential Development—Sensitive residential development of waterfronts generally provides the best balance between ecological preservation and economic return. Waterfront homesites command significant premiums over nonwaterfront sites. Given that residential development can range from high-rise condominiums to single-family homes, the degree of ecological balance varies from project to project. ; Commercial Development—Commercial development makes the most intensive use of a resort’s waterfront areas, usually for hotels, retail establishments, and restaurants. Many waterfronts are ecologically or otherwise unsuitable for intense commercial development.

Waterfront Design. In water-oriented resort communi-

ties, residents and guests want to be near the water and to use it for a variety of recreational activities. At the same time, they demand preservation of the waterfront’s beauty and natural qualities to the greatest degree possible. “Providing guests with views of water is a great amenity,” says Howard J. Wolff, senior vice president of Wimberly Allison Tong & Goo (WATG). “Instead of choosing to maximize residential density, some developers choose to provide pristine views from every location to enhance the project’s long-term viability. They might have fewer units, but they can target a more exclusive market.” Types of Boating Facilities. Patterns of water sports and boating activity—fishing, waterskiing, sailboarding, canoeing, kayaking, powerboat cruising, sailing, and racing—vary widely with the body of water and its geographic region, climatic differences, and the influence (or absence) of boating traditions. As a result, the type of boating support facility also varies and may accommodate sailboats, windsurfers, canoes, or personal motorized watercraft rented at the beach or stored in dry dock; simple boat launching facilities for small watercraft; small docks for individual homes; touring or sightseeing boats; and small to large marinas. For example, at Lake Las Vegas Resort, the resort’s touring vessel provides sightseeing and dinner cruises. The resort also includes a beach and docks for nonmotorized craft. From a resort developer’s point of view, a marina is the most challenging type of boating facility to develop. Marinas have evolved from typically ramshackle boatyards to luxurious waterfront complexes that can serve as a pivotal recreational amenity in a second-home community or the principal organizing element for an entire resort area. Marinas have become the central features of some well-known resorts such as Hacienda del Mar, an exclusive mixed-use resort nestled in a cove in Cabo San Lucas, Mexico, and Bay Harbor, Michigan, where the marina is the focal point of a multiuse resort community. Marina Site Requirements. Including a marina in a project can greatly complicate the site selection process. Developers should recognize that money spent on rigorous analyses of alternative marina sites will probably pay off by preventing crippling problems later in the development process. A poorly sited facility can complicate the development approval process, result in added development and maintenance costs, and ultimately prove unpopular with boaters. Today’s environmental regulations limit the number of locations available for marina development and place

Planning and Design 151

VICTOR INTERNATIONAL

The marina at Bay Harbor in Michigan occupies reclaimed land along the shores of Lake Michigan.

constraints on the kinds of sites suitable for marinas. “Rocky shorelines with quick drop-offs are better candidates than sandy shores with shallower depths,” notes landscape architect and land planner Todd Hill, a principal of EDAW. “Not only is sand very expensive to excavate, but it is also important not to disrupt sand migration patterns along the shore.” He adds that the presence of sea grass or coral beds may require environmental mitigation, which may be prohibitively expensive or infeasible if the sea grass provides a breeding habitat or if the coral beds are too extensive to be moved. Jurisdictions are also sensitive to saltwater intrusion into subsurface groundwater, so it is important to make sure in advance that the site does not contain a freshwater lens that could be disrupted by the creation of the marina. The one site requirement that most clearly separates a marina from other uses is that the facility must offer safe access to a usable body of water. What consti-

152 Resort Development

tutes “usable water,” of course, depends on the anticipated market characteristics and local use patterns. The water access requirements for deep-sea fishing, for example, differ sharply from those for small sailboats, although some marina sites can accommodate a range of boating uses. The St. Lucie River in Stuart, Florida, at the site of Harbour Ridge, for example, is about a mile (1.6 km) wide and about an hour away under power from the open ocean; thus, it is suitable for cruising and deep-sea fishing craft, as well as for small sailboats and freshwater fishing boats. Physical site selection variables for a marina can be conveniently divided into onshore characteristics and offshore characteristics. The basic onshore requirement for a marina is adequate space; the land area should be roughly equal to the water area regardless of facility size. If at all possible, the land to accommodate onshore facilities should lie above the floodplain

DESTINATION HOTELS & RESORTS

At Wild Dunes in Charleston, South Carolina, some waterfront homes come with boat slips.

and demonstrate adequate bearing capacity to support construction. Particularly in areas of recent fill, soil characteristics demand careful examination. Where fill operations are proposed, the developer must check the quality of the source material. The developer also should pay careful attention to shoreline conditions. Marina development can exacerbate erosion or sedimentation potential unless the shoreline is stabilized with bulkheads, revetments, or other measures. Onshore factors for successful marinas do not differ significantly from site factors for any development activity: appropriate access, sufficient space, adequate soil properties, and so on. Two key offshore factors are water depth and water-level fluctuation. An ideal minimum depth for a marina site is eight feet (2.4 m) below the low-water datum. If an offshore site is too shallow, the marina will be unable to accommodate a wide range of craft. Admittedly, basins can be dredged, but the cost of dredging depends largely on the bottom material’s physical and chemical makeup. Extremely deep basins, on the other hand, may not provide adequate protection from wave action or may inhibit proper water circulation. They also limit pier design alternatives. The variable water levels associated with tides, storm surges, wind and wave action, precipitation, and, in reservoirs, periodic drawdowns clearly pose a threat to marina facilities and equipment. Therefore, feasibility

considerations as well as later design and engineering considerations must account for seasonal wave and wind action; ice’s seasonality, thickness, and movements; and various other climatic and topographic factors that could push water levels to extremes. In severe climates, marinas often are designed so that virtually everything can be removed from the water. Finally, a marina needs adequate water flows, without which it will likely face a number of water-quality problems such as stagnation, pollution from runoff or fueling operations, and the accumulation of floating debris. Planning the Water and Boating Component of a Marina. Boating facilities must relate to the characteristics of the water to which they provide access. The water’s extent, connections, recreational value, and other basic traits largely determine potential boat traffic. At the same time, activity at the marina is a function of the character of and access to the facility’s landside facilities. Any successful marina development must carefully mesh water- and land-based program elements. The design criteria should reflect the program’s demands as well as the site’s capabilities. Based on an analysis of the market, the program should include preliminary determinations of ; expected boat size (length, beam, and draft); ; percentage of sailboats and powerboats;

Planning and Design 153

LANDCORP

Mandurah Ocean Marina is a 62-hectare (25-ha) integrated marina, residential, commercial, and recreational development south of Perth, Australia. It was developed to stimulate the local economy, while balancing environmental concerns.

; transient slip demand; ; required services; ; cruising versus racing orientation; ; shoreside amenities; and ; seasonal variation in use. “While megayachts have become popular in recent years, developers should carefully consider the costs of accommodating these vessels,” reports Todd Hill. “Megayachts may be touted as one of the fastestgrowing segments of the boating market, but they still make up only a small fraction of the overall number of boats. Building a marina to handle vessels of that size may take up to 18 acres [7 ha] of developable land that could be put to other kinds of revenue-generating use.” Howard Wolff notes that it is essential to understand the target audience—“not just the demographics and psychographics, but what kinds of craft they are likely to use. It’s a good idea to design for flexibility, so a berth might hold two 25-footers or one 50-footer.” The heart of the marina design problem lies at the land/water interface. Although a marina’s basic configura-

154 Resort Development

tion is usually a function of the site’s geography, some sites can accommodate a number of configurations. Besides geography, the factors that influence marina configuration are permit requirements, cost, environmental protection, navigational safety, and water circulation. In most jurisdictions, permit requirements increase in direct proportion to the amount of dredging and filling needed. Built-in and landlocked marinas require the most dredging and filling, making them also generally the most expensive configuration, although the breakwater and special deepwater pier anchorage system requirements for some offshore marinas can be extremely expensive. Where bottom conditions are unsuitable for an offshore configuration, recessed marinas offer the principal advantage of allowing for an economical balance of dredge and fill. Material inland of the original shoreline is dredged and deposited offshore to raise the bottom to a suitable level. Alternatively, material dredged beyond the bulkhead line is used to fill and stabilize the upland area for building sites. On rivers and estuaries, protruding marinas (offshore and recessed) may pose navigational hazards. Built-in

and landlocked marinas offer the greatest protection against weather and wave action but may be prone to water stagnation problems. Nonetheless, they provide the best opportunities for locating real estate frontage on moorings while retaining open views to the larger body of water. Mooring layout is clearly a function not only of a site’s constraints and opportunities but also of the expected market. At the outset, laying out mooring space is similar to designing a parking lot or subdividing land into building lots. In many instances, especially for small or relatively simple marinas, considerations of maximum efficiency govern most design decisions for the water area. But as in parking lot design and subdivision planning, the developer must often couple efficiency with other considerations. Except for perhaps the saltiest boating enthusiasts, endless rows of boats are only marginally more attractive than unrelieved rows of parked cars or identical tract houses. One of the most important decisions in marina planning is the choice between floating or fixed piers. Fixed piers are generally easier and less costly to maintain and are stronger and more stable. Floating piers, on the other hand, are safer in areas with marked water-level fluctuations and permit easier expansion and modifica-

tion. The appropriate pier type depends primarily on the expected water-level fluctuation at the marina site, the marina budget, and concerns about safety and convenience—which largely relate to user characteristics. Some marinas effectively use a combination of floating and fixed piers. The major structural elements of a marina—bulkheads, breakwaters, and piles—form the basic framework for piers, slips, and other service facilities. Along with dredging and sometimes locks, these features also account for the major costs in marina construction and operations. Although the design and engineering of structural items are best left to experienced marina engineers, a developer considering a marina as an amenity should have a grasp of the basic issues associated with these critically important elements. The placement of breakwaters (used to protect a marina from wave action), channel entrances, bulkheads (used to prevent erosion of the shoreline and to provide safe and convenient access to the waterborne parts of the marina), and other marina structures can have significant impacts on existing natural patterns of siltation and erosion. For example, by modifying the existing bottom profile and hydraulic regime, dredging often exacerbates siltation problems. Excessive siltation

ROYAL PHUKET MARINA

Royal Phuket Marina in Thailand combines waterfront residences with a 300-berth marina that features restaurants, shops, and recreational amenities along a boardwalk.

Planning and Design 155

can prevent needed marina expansion. Maintenance dredging and disposal to alleviate siltation is expensive and inconvenient. Erosion can pose a threat to piles, bulkheads, and other marina structures. Bulkheading can preclude development of a beach area, which, even when small, remains an extremely popular marina amenity. Revetments—bank protections usually made of concrete or riprap that lie at the shoreline’s natural angle of repose—are much less expensive than bulkheads and provide superior wave attenuation and a more congenial environment for fish habitat. Thorough analysis of natural hydraulic patterns can help avoid siltation, erosion, and water-quality deterioration. The developer who hires an experienced coastal engineer for this analysis is spending money wisely. Planning the Land Portion of a Marina. In a resort setting, marinas must serve more than boaters’ needs. Resort marinas often include such facilities as restaurants, a beach, or shops that support other project elements. Marinas that resemble fishing villages more than boatyards—that is, those planned to establish a close relationship between the project’s real estate, boats, and the water—are likely to create considerable real estate value. However, the more functional components—heavy equipment, paint shops, fuel docks, dry stack storage, loading and unloading areas, and service yards that use flammable, toxic, or foul-smelling materials—do not harmonize well with a marina’s recreational and tourism aspects. The potential conflict between the social and industrial aspects of a marina also affects the layout of roadways, parking areas, and pedestrian circulation ways. Marinas that offer a wide range of service and repair facilities attract and therefore must be able to accommodate a variety of vehicles. “Proper planning is essential,” says Raj Chandnani, director of strategic planning and consulting for WATG. “If possible, the design should provide separate circulation patterns for frontof-house and back-of-house functions. With a marina, it is difficult because there is no real back, so you have to place the parking carefully and use landscaping and well-thought-out circulation patterns to avoid blocking views of the water as people approach.” Marina clubhouse design is not unlike clubhouse design for golf or tennis amenities. And boaters, like tennis players, are less likely than other resort users to expect a luxurious setting and a high standard of personal service in their recreational facilities. As previously noted, however, resort marinas often include support facilities that are not necessarily targeted to boaters.

156 Resort Development

Mountain Amenities and Ski Facilities Given the economics of resort operation and climate change’s effect on snow levels, mountain resorts have been seeking to broaden their offerings to provide yearround appeal. For example, cross-country ski trails or snowmobile trails can make attractive hiking, backpacking, or mountain biking trails in the warm months. Golf courses and fly-fishing can complement ski areas to create multiseason attractions. Most mountain resorts have added conference centers, as group business is extremely important in the nonwinter months. Many are offering more programmed activities such as jazz festivals, film festivals, and wine tastings. They are installing mountain bike trails and creating alliances with river rafting companies. Important amenities include spas and health-related facilities, as well as retail- and entertainment-based offerings. Many mountain resorts are adding downhill mountain biking to their repertoire, building challenging singletrack trails and terrain parks and replacing lift chairs with bicycle carriers. Whistler Blackcomb Resort in British Columbia, Canada, includes 125 miles (200 km) of lift-serviced trails designed for three different skill levels. Dirt jumps, berms, wooden ramps, and elevated catwalks through forests provide variety. Whistler also has a 10,000-square-foot (929-sq-m) indoor mountain bike training facility called the Air Dome, with a foam pit, ramps, a quarter-pipe, and a half-pipe. The creation of a mountain bike trail system might at first seem an expensive and daunting undertaking, but a careful review of the terrain may reveal otherwise. Winter Park Resort, Colorado, for example, offers over 500 miles (800 km) of mountain bike trails that were, for the most part, already in place. The trails are generally old logging trails, mining trails, and railroad rights-of-way. The resort simply mapped the trails, marked them with signs, and promoted them. To draw attention to its mountain biking offerings, Intrawest has created annual mountain bike competitions at both Whistler and Winter Park Resort. One point to consider with mountain biking, however, is the need to avoid conflict between bikers, hikers, and equestrian riders. Trails dedicated to one activity or the other can prevent problems. Cross-country skiing high in the mountains, accessible by lifts, takes advantage of dramatic views. At Beaver Creek Resort near Avon, Colorado, for example, cross-country ski and snowshoe trails at the top of the mountain offer breathtaking vistas. However, crosscountry skiing is more sensitive to global warming, cau-

INTRAWEST PLACEMAKING

The Four Seasons Resort Hotel is a condo hotel, offering whole-ownership units. It is one of about two dozen guest accommodations at Whistler in British Columbia, Canada.

tions Chris Dunn, a principal at EDAW. “With downhill slopes, you can always make more snow if natural snow levels are low. But it’s very difficult to justify the cost of snowmaking for cross-country skiing, because the trails are spread out over a large area.” Snowboarding has brought new life to many ski resorts, which have been adding half-pipes and terrain parks. Although the sport is not growing as much or as rapidly as it has in the past, it still is outpacing the skier market. Real Estate Development at Mountain/Ski Resorts.

For large mountain resort projects, cost is the major single impediment to development. “Very few mountain resorts have been developed in the United States in the past ten years because of the high costs for infrastructure, and the environmental regulations can be very time-consuming,” explains Dunn. Sizable soft costs for planning, engineering, and securing the necessary approvals add to the complexity. The lead time

for mountain resort development can be quite long. In Idaho, investors began planning to build a resort on the western shore of Lake Cascade in the early 1980s. After a change of investors and several name changes, the resort finally had its grand opening as Tamarack Resort in 2004. For Rocky Mountain and other western ski facilities, which are often developed on public land, the approval process can be especially difficult. While slopes and related facilities may be the key amenity at a ski resort, real estate sales (rather than lift tickets) are the primary source of revenue. Most ski resorts include a large number of collateral development opportunities: resort hotels, second-home communities, vacation condominiums, timeshare projects, and fractional ownership opportunities. With proximity to the slopes being the most important consideration, higher-density housing is common in ski resorts. Jackson Gore at Okemo Mountain Resort (see case study,

Planning and Design 157

Mont Tremblant: A Revamped Resort the verge of bankruptcy. In the early 1990s, the Laurentian region had high unemployment and declining real estate values. In order to attract development, the government offered Intrawest grants and loans of $140 million ($180 million in Canadian dollars) for infrastructure installation and improvements. Intrawest chose to create three distinct neighborhoods. At the mountain base, the historically inspired existing buildings were expanded, matching the architectural massing and materials of the existing buildings. Twelve of the original buildings were relocated to form a new commercial and hospitality core. On the mountainside, Intrawest built ski in/ski out townhouses and multistory condominiums. Off the mountain, both townhouses and detached houses are located adjacent to two 18-hole golf courses. A new eight-person, heated gondola transports nonskiers to the top of the mountain.

MOUNT TREMBLANT - INTRAWEST

The Mont Tremblant redevelopment concept revolutionized the ski resort industry in the 1990s. Before the resort was expanded and repositioned, the real estate at the base of most ski mountains was used primarily for ski support facilities. Intrawest, Mont Tremblant’s current owner and developer, has transformed this undervalued land into a vibrant commercial village that has become a destination in itself. Nestled in the Laurentian Mountains 80 miles (130 km) northwest of Montreal, Mont Tremblant was opened as a ski resort in 1939. It was the first Canadian ski area and only the second in North America. Despite its prominence and historical advantage, it gradually lost popularity to newer ski areas in the northeastern United States and southeastern Canada that were closer to population centers. In 1991, Intrawest, a Vancouver-based resort development firm, stepped in with a plan to purchase the ski area, which was teetering on

158 Resort Development

Various residential product types are available. At the base of the mountain is a private club comprising 87 timeshare condominium units, fully integrated with hotel operations. Fractional ownership options also are available, and virtually every residential product type is represented: condo hotels, condominiums, townhouses, and detached houses. Ten years and $1 billion later, Mont Tremblant has fulfilled its promise as a four-season resort. Thirteen lighted tennis courts, 36 holes of golfing, mineral springs, hiking and biking trails, a full complement of beach and water sports—in addition to the resort’s mainstay of 610 acres (250 ha) and 46.5 miles (75 km) of skiable Alpine trails and 56 miles (90 km) of Nordic trails—help attract 2.2 million visitors (700,000 of them skiers) to Mont Tremblant annually. The resort has won numerous awards from both Ski and Golf magazines for its recreational facilities. All the residential products that have been built have been sold. The 125,000 square feet (11,600 sq m) of commercial space, occupied by 67 shops and restaurants, produce average annual sales per square foot of $550, placing Mont Tremblant within the top 10 percent of all interior retail developments in Canada. The completed project has won both a ULI 2002 Award for Excellence and a 2003 Large-Scale Recreational Award. By successfully integrating four seasons of activities with the needs of various resort users—homeowners, commercial tenants, destination lodging guests, day visitors, and community residents—from an array of demographic categories, Mont Tremblant has captured a desirable market. With this systemwide working template, Intrawest has been able to offset a decline in skier visits by increasing revenues from each skier. Source: David Takesuye, “Mont Tremblant: A Revamped Resort,” Urban Land, August 2003, pp. 106–107.

chapter 7) in Ludlow, Vermont, offers an example of high-density housing helping to revitalize an existing resort. The resort also added all-season amenities to enhance its year-round appeal. Condo hotels within the base village are popular, enabling owners to rent their units (or let the resort rent them) when not using them. The resort benefits not only from increased revenue from renting guests but also from the critical mass of visitors that keeps the village active year-round, avoiding a “ghost-town” feeling. Fractional ownership is also popular. Particularly with high-end products, Dunn notes, fractional owners expect premier locations adjacent to the base area, with the greatest access to lifts. Often, that means hotels and other real estate uses must occupy a secondary position. The properties that command the highest values offer ski in/ski out access, allowing residents to ski directly from the trail to their residences. “These properties command a 50 to 100 percent premium over other properties,” Dunn observes. “However, it is possible to build too many of these and damage the overall skiing experience by disrupting the skier flow and queuing for the lifts.” Ski Site Considerations. What constitutes a large enough site for a ski amenity clearly depends on a project’s market and overall concept. Ski areas can range from less than 100 acres (40 ha) to several thousand acres or hectares. Many potential sites are constrained by inadequate room at the base to accommodate all the necessary support facilities, especially parking. The mountains that operate most efficiently disperse skiers throughout the area via a lift system that radiates from one or more central points at the base. Therefore, a site should be wide enough at the mountain’s base to permit a similar lift pattern. The amount of vertical drop is one simple way of measuring a ski area. Okemo Mountain in Vermont offers about 2,100 feet (640 m) of vertical drop, but an adequate ski hill can provide far less. A small, onelift hill provided as a residential amenity could offer as little as 150 feet (45 m) of drop. Most ski areas with a regional market range between 500 and 1,500 feet (150 and 450 m) of vertical drop, while a few major ski resorts offer considerably steeper drops. For example, Deer Valley, Utah, reports a vertical drop of 3,000 feet (900 m), and Whistler Blackcomb in British Columbia reports a 5,100-foot (1,550-m) drop. A wide variety of gradients is the mark of a potential Alpine ski area. Ideally, the distribution of terrain

Planning and Design 159

DALE A. HORCHNER/DESIGN WORKSHOP

Site plan for Northstar at Tahoe Village. The village is the resort’s focal point, with hotels, conference facilities, shops, restaurants, and a variety of recreational amenities.

types—low, medium, and high gradients—should match the distribution of the market’s skiing ability levels: novice, intermediate, and advanced. A mountain with a predominance of expert terrain—gradients between 45 and 75 percent—would not be financially feasible in most markets. In other words, each market/mountain matchup requires individual analysis. For example, novices may make up 15 percent of the market, but novice slopes can account for less than 15 percent of total slopes because an acre of slope can accommodate more novices than experts. One important consideration in ski area development is that a given area of slope supports fewer and fewer skiers as their ability level increases. In addition, as skiers improve, they become more expensive to accommodate. Expert skiers demand many more vertical feet of skiing per day than novices. And because they demand more vertical drop per day, they ride the lifts more often. Further, experts tend to ski at the top of a mountain, where construction and maintenance costs are greater. Finally, fewer accomplished skiers can be accommodated on a trail because they ski faster. Given that novice and intermediate skiers tend to generate the most revenues per skier visit, most ski area cannot remain financially

160 Resort Development

feasible by catering solely to advanced skiers. In the San Juan Mountains of Colorado, however, Silverton Mountain offers advanced/expert-level terrain for guided and unguided access throughout the ski season. This ski area is a remote destination with only one chairlift that drops skiers into 1,800 acres (730 ha) of wilderness, which requires that skiers undertake a certain amount of ridge hiking and bring along an avalanche beacon, probe, and shovel. While Silverton Mountain does not cater to a wide range of skiing abilities, it does offer a niche experience to advanced skiers and snowboarders. A ski resort’s ability to retain snow is almost as important as its snowfall. Slopes should face predominantly north or northeast to avoid long exposure to the sun. In some cases, modern snowmaking and grooming technologies permit the development of trails on sites with other orientations. Nonetheless, wind can be even more destructive than sun, stripping exposed sites bare in a matter of hours. For obvious reasons, wind is also a problem for skiers. In areas of heavy snowfall, avalanches may also be a concern. Before snowmaking technology made it possible to build successful facilities in relatively snow-barren locations, a prospective ski area site needed at least 100

MOUNTAIN LODGE AT TELLURIDE

Mountain Lodge at Telluride, in Colorado’s San Juan Mountains, is a residential component of a mixed-use resort.

inches (250 cm) of natural snowfall annually to be considered feasible for development. Technology now has made it possible to build facilities in locations where, without snowmaking, the ski season would last less than a week. In most regions, though, to be financially viable a ski area needs a combination of natural and artificial snow that permits about 80 to 100 days of skiing. For snowmaking, this requirement translates into about 800 to 1,000 hours of temperatures below 28 degrees Fahrenheit (-2.2°C). Snowmaking has its own requirements: a dependable, high-quality water supply, sufficient room for a reservoir, and adequate access to utilities. In remote areas, utilities might not be available at reasonable cost. For its first seven years, Vail operated on a central propane system after the developers discovered that the nearest natural gas service was 30 miles (48 km) away. Advances in infrastructure now allow Vail to purchase

enough wind power credits to offset 100 percent of its annual energy use. At the Wisp Resort in McHenry, Maryland, snowmaking ponds were relocated to facilitate the development of a new mountaintop village. The ponds were incorporated into a new residential neighborhood as a waterfront park amenity that added premium values to the lots and units. Soil types are another critical factor in ski area development. Erosion, which can be particularly severe with certain soil types, is one of the greatest environmental challenges in ski area construction and usually requires carefully designed mitigation measures. Similarly, groundwater runoff from subsurface springs can cause snowmelts or icing on slopes. Prevention may require expensive tile systems, culverts, and piping. Vegetation is another important concern, as it defines the edge of a ski trail, frames vistas, provides

Planning and Design 161

DALE A. HORCHNER/DESIGN WORKSHOP

The Little Nell in Aspen, Colorado, enjoys a location with ski in/ski out access as well as Aspen’s downtown, where dining, shopping, and nightlife prevail.

wildlife habitat, and shelters skiers from harsh winds. Often, vegetation must be cleared from trails for access and safety reasons. For ski developments on federal land, the U.S. Forest Service evaluates the site’s ability to “absorb” the development visually, which depends in large measure on the diversity of existing vegetation. Cross-country facilities encounter far fewer site constraints. Given that a much broader range of terrain types is suitable for cross-country skiing and snowshoeing, these facilities can be located closer to major markets. In addition, cross-country and snowshoeing facilities involve much lower capital and operating costs because lifts are unnecessary and trails are relatively narrow. Since they are much less disruptive to the environment, cross-country areas are also unlikely to face substantial regulatory hurdles. Further, with lower fixed and variable costs, a developer can break even on a cross-country facility with a season of only 40 to 80 days. Devil’s Thumb Ranch in Colorado’s Fraser Valley offers 62 miles (100 km) of groomed cross-country skiing trails, hosts regional competitions, and is a training site for the U.S. Olympic cross-country ski team. The 5,000-acre (2,025-ha) resort provides accommodations

162 Resort Development

in a 52-room lodge and 18 cabins, with wedding and conferencing facilities, a world-class spa, and a highly rated restaurant. Base Area Planning and Design. Base areas for large ski resorts follow planning principles similar to those used for many planned communities. The base area, the principal activity focus, is usually surrounded by high-density, high-cost real estate products. Often these are hotels or other accommodations whose occupants stay a relatively short time, but the units are continually occupied. The surrounding land is used for less dense single-family second homes and workforce housing. Base villages are increasingly prevalent and serve as a secondary amenity. “With skiing participation declining, resorts are trying to create a sense of community,” reports architect Bill Gartz of Callison. “The village center creates a place with a community atmosphere, where people can stroll, shop, dine, and hang out.” In Colorado, Vail Resorts is building Ever Vail, a 1 million-square-foot (92,900-sq-m) project that will transform a partly industrial site into a village featuring a hotel, at least 225 condominiums, and more than 100,000 square feet (9,290 sq m) of commercial space. Plans

Retail development is usually arranged to serve a resort’s various user groups, with specialty shops, restaurants, and ski shops and services located close in; convenience retail establishments located in a middle zone; and various services and larger stores set farther out. Satellite development—which may involve lower-priced hotels or condominiums developed independently of (or sometimes in cooperation with) the ski area operator—often occurs still farther from the ski area. Many such projects offer transportation service to the mountain. Most of the basic planning and design criteria related to base facilities, from ski storage racks to remote parking, depend on the number and types of skiers accommodated on the slopes, although some project elements—retail, lodging, second homes—may be planned independently of the ski facilities. From a purely physical standpoint, the most problematic part of base area planning is mitigating the potential conflicts between vehicles, pedestrians, and skiers. Breckenridge in Colorado has mitigated some of this conflict by building a gondola that connects the town of Breckenridge with the base areas of Peaks 7 and 8. Many large ski areas such as Beaver Creek in Colorado, Park Creek in Utah, and Loon Mountain in New Hampshire have located

DALE A. HORCHNER/DESIGN WORKSHOP

also call for a parking garage with up to 800 spaces and a new gondola to access Vail Mountain. Also in Colorado, the first phase of Crested Butte Mountain Resort’s town center, Mountaineer Square, has opened four mixed-use residential buildings with ground-floor commercial uses, food service, a conference center, and recreation facilities over ground-floor parking. The challenge with all base villages is providing year-round activities beyond just the traditional winter activities. Layering in flexibility and spaces for summer activities such as an amphitheater, rock-climbing wall/tower, ropes course, zip line, and mountain biking course is critical to the success of the major mountain resorts. At the Wisp Resort, the integration of an artificial whitewater course as an anchor to the mountaintop village has provided a popular summertime activity. The professional-level course offers class 1 to 4 rapids operated by Adventure Sports Center International and will be home to the International Whitewater Hall of Fame. Residential units in base areas with direct access to the slopes command premium prices. Single-family homesites, which generate fewer dollars per acre, are generally located away from the activity core, often on surrounding slopes with desirable views.

WhistlerBlackcomb in British Columbia is one of the largest ski resorts in North America. Development is focused around a lively village with shops and cafes.

Planning and Design 163

Increasingly common are private residence clubs, which charge significant membership fees in exchange for members-only benefits. At Northstar on Lake Tahoe, California, a private club on top of the mountain is set aside for members during the day and is only open to the public in the evening. The Stratton Mountain Club in Vermont offers access to a 25,000-square-foot (2,320sq-m) facility with both casual and formal dining areas, lockers, a room for children, and a private “great room.” Located close to the gondola terminal, the club offers members private parking, concierge and ski valet service, and exclusive lift access. Even the simplest lodge incorporates space for equipment rental, a ski shop, a first-aid station and ski patrol office, a ski school with adequate gathering room outside, and food and beverage service areas with areas for eating and warming up. A spectrum of high-quality food and beverage services can help carry a lodge through the warm weather months as well. Trail Planning. Designing effective ski trails is an art that requires great sensitivity to both a mountain’s natural features and skiers’ perceptions. Poorly designed

TIMBERS COMPANY

much of their parking underground, thereby reserving the surface for real estate development. This solution, although expensive and with a long return on investment, helps create a safer, more pleasant pedestrian environment and encourages a dense center of activity that results in a cohesive resort village core. Skier service lodges vary tremendously in their design and in the facilities they offer. “Resorts are creating more and smaller lodges spread across the mountain,” reports Dunn. “The cost of building this infrastructure is onerous, so developers are looking for creative ways to provide skier service at less cost.” Developers are also integrating other kinds of real estate into their lodges. At Stowe Mountain in Vermont, the base lodge is being built to include a number of condominium units and a private club. This mix of uses offsets the cost of providing skier services by creating salable real estate within the same structure. Lodges need not be located only at the base. Midmountain lodges, although posing complicated operations problems because of their limited vehicular access, can provide a highly attractive, away-from-it-all atmosphere.

The Timbers Club at Snowmass in Colorado is a private residence club of 288 fully furnished three-bedroom units.

164 Resort Development

trails can be irritating at best and a threat to life and limb at worst. “Each mountain has its own personality. The key is to find the hidden secrets of the natural environment to enhance the trail design,” observes Bill Kane, a principal of Design Workshop, Inc., and former vice president of the Aspen Skiing Company. Trail planners begin by identifying the fall lines (the paths of natural descent from one point on a slope to another) and then looking for logical lift locations. Major cut and fill can be minimized by tucking trails into natural hollows and depressions. Following the fall line as much as possible produces the most efficient and highest-quality trails. Natural clearings can be incorporated into trails and thereby lessen the need for tree removal. For appearance and wind control, the edges of cleared trails should be feathered and uneven, with trees left at varying heights and distances from the trail’s centerline. Islands of trees can channel traffic, separate skiers by ability level, and create visual interest. Of special concern in managing existing mountain vegetation is the degree to which clearing operations may expose weak or shallow-rooted trees to damaging winds. Islands of conifers, for example, may be blown down easily without the protection of a surrounding forest. In the Northern Hemisphere, trails should be oriented primarily north/northeast to shelter snow from the midday and afternoon sun. In the Southern Hemisphere, the orientation would be the reverse. To avoid soil erosion during summer months, reduce visual impacts, and enhance safety, trails on steep slopes should be designed to be as narrow as possible and to preserve native vegetation. “The width of trails generally varies between 80 to 200 feet, depending on the planned capacity of the trail, the trail’s ability level—learning and beginner trails are often the widest—and use,” says Dunn. “A certified race trail will be quite wide even on steep terrain.” Staging areas at the tops of lifts should be sheltered from the wind. Knobs and ridges generally should be avoided. Bailout positions and stopping points should be provided on novice and intermediate trails. To avoid crowding during peak periods, designers must balance the uphill capacity of lifts with the downhill capacity of trails. To ease congestion further, the tops and bottoms of trails should be sufficiently wide. Depending upon a trail’s overall length, periodic landing or resting areas should be considered for novice skiers or snowriders. Typically, they should be wide enough for clear visibility from uphill skiers.

Perhaps most important, a trail should be considered as a series of experiences that add up to a unified, memorable whole. The designer should strive for a variety of speeds, views, and perceptions. Groomed runs, ungroomed runs, runs with moguls (bumps), and snowcat access all should be considered for memorable experience. Skiers entering a trail at the top of a mountain should be able to see enough of the run to determine its general character, but they also should encounter some surprises on the way down. Trail planning should consider the varying special needs of cross-country skiing, snowboarding, snowshoeing, and other snow sports. Golf courses, unused during the winter months, can be ideal for cross-country skiing trails, while nature trails can double as snowshoeing trails. In some areas, snowshoers also enjoy hiking up ski slopes. Golf as an Amenity Golf can be a resort’s primary amenity or one of several primary amenities. It can enhance market positioning, raise project brand image and land values, and, given the right club structure and membership levels, can evolve into a profit center in its own right. In addition, golf course land often qualifies under regulations that require a prescribed amount of open space in development projects. A golf course also can serve as a means of organizing a site plan by clarifying circulation, defining neighborhoods or subareas, and providing the project with an identity. A properly designed course can preserve and enhance water quality, provide fire breaks, protect wildlife corridors, protect and increase wetlands, and provide detention for stormwater runoff. Despite these potential contributions to a resort project, developers should approach golf course development cautiously. The chief reason, of course, is cost: high construction and operation costs, as well as the opportunity cost of devoting a substantial amount of buildable land to golf. Further, the U.S. market for golf has not kept up with the proliferation of courses in recent years. According to surveys by the National Sporting Goods Association, participation in golf declined in the United States from a peak of 27.5 percent of respondents in 1998 to 24.4 percent in 2006.9 Globally, however, there have been increases in both participation and the construction of new courses. Site Considerations. The most crucial site requirement for a golf course is adequate suitable land. Physi-

Planning and Design 165

cal conditions—topography, drainage, configuration, soils, wetlands, streams, and the presence of sensitive habitat—as well as a project’s overall development program affect the amount of land required. While 150 acres (61 ha) might be sufficient for a regulation 18-hole course with modest facilities on a flat, unconstrained site with few jurisdictional wetlands or other sensitive environmental considerations, the same course on difficult terrain might require 200 acres (81 ha) or more. The shape of the property is also important. Long, narrow sites may restrict layout options. Other limitations such as road crossings, difficult access, steep terrain, and poor soils can compromise site suitability. Orientation also may affect a course. A long, narrow site oriented northwest/southeast, for example, means that holes will face the morning or afternoon sun, which can make play difficult. For individual holes, and especially driving ranges, a north/south orientation is best. A course site should offer a combination of sloping and flat areas where tees, greens, and fairways (or landing areas) can be fitted to the land’s contours. Steep, continuous grades can make a site unsuitable. If flatter terraces can be graded (an expensive undertaking), however, a steep site can be made workable. In any event, steep slopes generally increase the cost and acreage required for a course. Flat sites, on the other hand, may offer the player little interest and require costly drainage infrastructure, although careful design of individual holes can overcome the limitations of undifferentiated terrain. The Doonbeg Golf Club in Ireland (see case study, chapter 7) made expert use of the

166 Resort Development

THE GINN COMPANY

KITTY HAWK LAND COMPANY

The Currituck Club is a seaside resort community on North Carolina’s Outer Banks.

One of three courses at Reunion Resort & Club near Orlando shows that interesting terrain can be created on a flat site.

existing topography of its beachfront site. The course makes its way around centuries-old dunes, some as high as 100 feet (30 m), creating an interesting and varied landscape. Kingsbarns near St. Andrews, Scotland, originally a flat and relatively unremarkable farmland

site, was transformed into large dunes and landform features that provide unusual character and relief, creating a memorable golfing experience. Topography is a critical factor for the golf/real estate connection. Sites offering expansive views of the course command premium prices. Most courses include excavated lakes and ponds, and the excavated material is often suitable as fill to create relief and contrast. Topography, of course, is inexorably linked to drainage, another common site limitation. Various types of land not usable for real estate development, such as landfills, quarries, and old mining sites, can make suitable golf course sites. Sometimes, wetlands, floodplains, drainage channels, and dry streambeds can also make suitable courses, but these types of sites have specific constraints and can cause potential permitting problems. An example of a successful golf course on a seasonal drainage course is Gainey Ranch in Scottsdale, Arizona, where one of the nine-hole circuits has been dubbed the Arroyo Course after the seasonally dry watercourses that lace its fairways. In cases where topography or drainage are problematic, course construction costs are proportionately

higher because more earth is required to be moved to create positive drainage flow, and more pipe is required to remove water from the fairways. Among the features required on low sites or in areas with a high drainage table are drainage swales, crowned fairways that shed runoff, sand capping material, and drainage structures such as headwalls, drop inlets, and subsurface tile systems. Inattention to drainage can cost a developer even more. Chronically wet conditions can reduce the rounds played on a course and translate into a corresponding drop in revenues and generally detract from the course, making it less enjoyable to play on and more expensive to maintain. For real estate courses, the drainage system needs to be scaled to accommodate runoff from future development both adjacent to and near the course. At the same time, stormwater management for the real estate component can take advantage of golf course water features for biologic filtering. Vegetation ranks second only to slope in its influence on overall course character. Planted areas, including woods, can be put to good use in enhancing a course’s visual and ecological appeal, separating fairways and providing locations for other recreational uses such

LA PLAYA BEACH & GOLF RESORT

Wooded areas enhance the visual and ecological value of a golf course. Pictured: La Playa Beach & Golf Resort in Naples, Florida.

Planning and Design 167

Already clear sites, such as desert areas or farmlands, offer the advantages of lower site preparation costs and usually fewer environmental restrictions, but may result in higher landscaping costs. Courses on such sites generally look unfinished or immature for several years. An effective approach may be to design a links-style course that is based on grasses and other native vegetation rather than trees. A course’s design should be dictated by the land on which it sits. If the property contains many trees, a parkland course is more suitable. If there are few trees and the site is open, a links-style course should be considered. Ultimately, the golf architect can save costs by matching the design as much as possible to the native landscape. Topsoil is essential to providing and maintaining healthy turf at reasonable cost. During grading, developers should conserve as much topsoil as possible by stripping and stockpiling it. Well-drained, sandy loam soils are the most conducive to course construction, optimum turf growth, and maintenance. An ample supply of water is essential, as are strategies for water delivery, storage, and conservation. From

RESORT AT SQUAW CREEK

as walking, cross-country skiing, or bicycling. A heavily wooded site may incur high costs for clearing the land and disposing of the cleared material in areas where burning and burial of debris are not permitted. Often, a local lumber company can be found to remove trees, and sometimes this process may garner a profit, depending on the quality of the wood and bark. If vegetation serves an important wildlife habitat function, the associated land may not be developable or may require costly mitigation. In many locations, the only way to obtain development permission is to make the course an environmental asset through design and operating methods. Most courses are now being built to meet environmental standards, and the use of best management practices and integrated pest management can significantly reduce public and governmental concern regarding fertilizers, pesticides, and their impact on water quality. In fact, a number of courses now are being planned in sensitive areas as a means of enhancing the environment through restoration of hydroperiods, revegetation, preservation of groundwater recharge, and improved or re-created wildlife habitats.

Mountain resorts are adding golf courses as a way to develop a year-round clientele. Pictured: Resort at Squaw Creek, Lake Tahoe, California.

168 Resort Development

the standpoint of permitting, the lack of irrigation water in many locations poses a major hurdle to course development. A regulation 18-hole course needs between 1.5 and 3.5 million gallons (5.7 and 13.2 million l) of water per week, depending on the amount and type of turf, the irrigation system, and the climate. Irrigation water can come from a variety of sources, including wells, existing watercourses, built or natural lakes, or canals. Treated wastewater is common for irrigation. “Almost all golf courses today, both old and new, are using recycled water,” reports golf course architect Tom Fazio of Fazio Golf Course Designers, Inc. Another option is to purchase irrigation water; this can be extremely costly, however, and purchased water may not be an option in the future at any price. Soil moisture sensors and weather stations provide essential information that allow for the adjustment of irrigation to use as little water as possible. Water-saving sprinkler heads further reduce waste. Scientists continue to work on developing new grasses that are more drought tolerant and that can thrive on less-processed water. The design of a course has a significant impact on the demand for irrigation, and many courses are working to minimize the amount of irrigated turf, down to 93 acres (38 ha) or less. Climate, which affects season length and maintenance needs, is a primary revenue and cost consideration for the golf course developer. While a course in a moderate climate may accommodate more than twice as many rounds per year as a northern counterpart, the northern course will incur sharply lower expenses for maintenance and operations during the cold season. A moderate-climate course, although it too experiences an off season, will continue to incur relatively high costs for maintenance year-round. In the Palm Springs desert, for example, the greatest need for costly irrigation coincides with the off season. More mountain resorts are adding golf courses as a way to increase year-round use. While they can prove an effective summer draw, they pose additional challenges. The need to level steep terrain boosts expenses. At high altitudes, balls travel 10 to 15 percent farther than at sea level, which may require longer courses. Sufficient topsoil is often difficult to obtain in mountain settings without importing it long distances. And with much shorter temperate periods in the mountains, there is less time to construct the course, and vegetation and grass take more time to grow and are harder to maintain. As a result, a course that would

require a year to build at sea level might take two or three times as long in the mountains.10 Planning and Design. A developer should undertake the golf course design and planning process with a clear understanding of the course’s strategic role within the overall project. Where real estate value ranks as the primary concern, the developer needs to site buildings to take advantage of views, plan water elements as both scenic amenities and golf hazards, and consider how the placement of course uses may affect the value of the residential land through creation of premiums and the potential adverse impacts of noise, traffic, and loss of privacy. If image (or accelerated marketing) is the main goal, the developer should construct the course early in the development process, design it to support players of all abilities, and plan memorable, photogenic holes that will take advantage of spectacular site features. If desired, the developer may consider developing the course as a tournament venue for amateur or professional events. Planning should begin early to determine the possibility of hosting such events. An image-conscious course is potentially more expensive to build and maintain than the average course. If the main goal is to provide a high-quality amenity for a targeted real estate market that is likely to include mostly average golfers, the course’s design must emphasize playability and course integrity. Today’s golf players are demanding high-quality courses that are not necessarily of tournament-level quality but that offer both strategic interest and playable, forgiving features. For a time it was thought that average players desired long, difficult, tournament-level golf courses. Todd Schoeder, a principal with Design Workshop, states, “Today, golfers want quality courses that are both challenging and playable. Arguably one of the most popular golf resort destinations is Bandon Dunes in Bend, Oregon. All three courses average 6,700 yards from the back tee. This concept is contrary to recent thinking of lengthening courses. The ‘Tiger effect’ is acceptable for the PGA tour courses, but average golfers are shying away from these courses for their day-to-day play. Golfers want to have fun. We tend to design for the average golfer first, and then back up in order to challenge the scratch golfer.” Tom Fazio comments, “There are so many high-quality golf courses today that the distinguishing characteristics are the quality of the turf and of the experience as people are playing it. Some players may expect resort courses to be more challenging than those in private

Planning and Design 169

OCEAN HAMMOCK RESORT

Today’s players demand high-quality courses. Pictured: Ocean Hammock Resort on Florida’s Palm Coast.

clubs but, in general, the average resort golfer would prefer to play a course that is more forgiving. Additionally, from an operations perspective, difficult courses tend to increase the average time required to play, which is a negative for the facility and for the golfer.” The connection between golf and real estate offers great opportunities but also can pose serious problems. The goal of maximizing residential lot frontage and golf course views can exacerbate problems of maintenance and safety. Siting real estate next to golf holes must be done with extreme care and caution. The minimum corridor width for golf holes that are either single- or double-loaded with real estate should be a minimum of 400 feet (120 m) (500 feet [150 m] are preferred) to the property line and another 50 feet (15 m) to any structure. Mounding and vegetation must be taken into account as potential buffers. Regardless of corridor width, it is a good idea to set aside a buffer of natural landscaping to enhance the golf experience and to create a safety zone for residences.11 This is particularly important during the period when home construction is occurring around the golf course. Golf’s ecological impact is an important consideration, and ecocentric design is now a prerequisite for public approval. Today, designers are striving to

170 Resort Development

reduce golf’s adverse impacts and accentuate its environmentally positive features—to satisfy both permitting requirements and the growing environmental consciousness of homebuyers and golfers. Significant issues include water conservation, protection of groundwater quality by minimizing use of pesticides and fertilizers, and protecting wildlife and native plant habitats. Four organizations focus on improving the relationships between golf courses and the environment. Audubon International is an education organization (not affiliated with the National Audubon Society) that works with landowners, developers, architects, and planners to integrate better environmental practices. Its Audubon Signature Programs provide comprehensive environmental planning assistance to new projects, and its Audubon Cooperative Sanctuary Program for Golf Courses is an education and certification program that helps existing golf courses protect the environment. The nonprofit Center for Resource Management sponsors a Golf and the Environment initiative, a collaborative effort by the golf industry, the environmental community, and government organizations to promote environmental stewardship. Its Environmental Performance Measurement Program includes an annual survey and environmental profile of U.S. golf courses, and

DESTINATION HOTELS & RESORTS

Golf courses at Sunriver Resort are certified by Audubon International, a nonprofit environmental organization that recognizes courses that are designed, constructed, and managed in accordance with best environmental practices.

its Environmental Principles Checklist enables courses to evaluate themselves. The Environmental Institute for Golf, a philanthropic organization of the Golf Course Superintendents Association of America, funds programs and projects that help courses balance environmental, recreational, and economic needs. Basic Course Types. Over the past half century, the regulation course has emerged as the standard golf facility. Generally speaking, a regulation course has 18 holes and plays to a par of between 69 and 72 strokes, with par 72 considered the ideal. Players’ skill levels have grown more diverse, and so multiple tees for each hole—as many as six or seven—are now not unusual. Golf course architect Michael Hurdzan reports commonly designing golf courses that play 7,400 yards (6,767 m) in length from pro tees; 7,000 yards (6,400 m) from blue tees for single-

digit handicappers; 6,200–6,500 yards (5,670–5,944 m) from white tees for many female and junior players; 5,700 yards (5,212 m) from gold tees for seniors; and 5,000 yards (4,572 m) from red tees for junior players, with even smaller lengths for the very young.12 ; Golf course layouts are based on one or a combination of five basic diagrammatic models, with the type of real estate planned for development largely determining the optimum course layout. These descriptions are purely diagrammatic. Rarely is any one used in isolation, with the exception of the core golf course.13 ; In the core course, the holes are clustered together and arranged either in a continuous sequence with one starting hole and one finishing hole at the clubhouse or in returning nines with two starting holes

Planning and Design 171

THE GINN COMPANY

Seven Eagles Club House at Reunion Resort & Club near Orlando, Florida.

and two finishing holes at the clubhouse. This is also called a continuous or nonreturning eighteen. A good example of a nonreturning course is the Old Course at St. Andrews. This arrangement uses approximately 140 acres (57 ha) and offers about 10,000 feet (3,050 m) of lot frontage; its compactness increases the speed of play and reduces maintenance needs; golfers like its integrity. ; The single-fairway, nonreturning, continuous course takes the form of an open loop that starts from and returns to the clubhouse. It requires about 175 acres (71 ha) and provides about 46,800 feet (14,265 m) of lot frontage. With only one starting hole, flexibility of play is limited; with widely spaced tees and greens, maintenance requirements can be high. The layout is not suitable for golfers who want to play only nine holes. ; The single-fairway, returning-nines course has two loops of returning nines with the clubhouse located in the center. The layout needs about 175 acres (71 ha) and offers about 44,000 feet (13,411 m) of lot frontage; two starting holes provide playing flexibility. Maintenance costs can be high because of the dispersed pattern of tees and greens. ; The double-fairway, nonreturning, continuous course features a single loop of adjacent, parallel fairways with one starting hole and one finishing hole at the clubhouse. The layout needs about 150 acres (61 ha) and provides about 25,000 feet (7,620 m) of lot frontage. The single starting hole reduces playing flexibil-

172 Resort Development

ity. Compared to a single-fairway layout, maintenance costs should be lower. ; The double-fairway, returning-nines course uses two circuits of nine holes each with adjacent parallel fairways. It requires 150 acres (61 ha) and offers about 24,200 feet (7,376 m) of lot frontage. Playing flexibility is enhanced by two starting holes. Maintenance is easier than on a single-fairway layout. Each design option carries particular implications for the amount and type of land, the development potential along the frontage, real estate development flexibility, the integrity of the golf experience (the degree to which golfers perceive that surrounding land uses visually or physically impinge on their game), the speed of play, and the cost of course maintenance. A combination of configurations often is dictated by the site characteristics, the objectives for the course, or the objectives for the golf-oriented real estate. It is not unusual for real estate–based courses to incorporate a single fairway on one part of the facility and a double fairway on another, for example. Today, golf courses are undergoing increased scrutiny from a golfer’s perspective owing to overbuilding in many markets. In general, play is decreasing on courses that are surrounded by houses because golfers prefer courses that feel more natural and secluded. Developers must be sensitive to such preferences; creating too much frontage for development may deter both golfers and homebuyers.

If an 18-hole regulation course is not feasible, developers may consider other alternatives. A decision to build a nonregulation facility, however, demands careful analysis of golf’s role in the overall project. If economics or a shortage of land suggest a less extensive alternative, the developer may decide to build a nine-hole regulation course (with or without the intention of adding another nine holes later), an executive course, or a par-3 course. If, by contrast, the project has ample land and a generous budget in conjunction with a strong golf market, the developer may choose to plan a 27- or 36-hole layout or an even more extensive facility. Larger-than-regulation golf amenities usually take the form of a 27- or 36-hole layout, although some resorts may offer 72 holes or more. Laying out 27 or more holes with as many starting and finishing holes as possible—three returning nines rather than one continuous 18 and one returning nine, for example, for 27 holes—provides for the fastest and most flexible play. With careful planning, a 27-hole layout can offer almost as much overall playing capacity as a 36-hole course. Sometimes one segment of the golf course can be geared to novices and high-handicap players, although the concern in resorts is that lower-skilled players will shun the easier course. Design for the Market. Four important market considerations for designing courses include the relationship within the project between golf and real estate, the subject market’s ability levels and diversity of play-

ers, the overall level of demand for the course, and the frequency of play by the same group of users. At one end of the spectrum are courses designed with single fairways to create maximum fairway frontage for homes. Such courses are unattractive to golfers and are declining in popularity. At the other end of the spectrum are courses built to attract serious and accomplished players; to protect the integrity of such courses, the facilities are more likely to be designed as a core layout or with multiple parallel fairways. Between these two extremes lie any number of hybrids and variations. A golf course as the principal amenity in a project with a mix of primary homes, second homes, a resort hotel and conference center, and investor-owned timeshare units needs to cater to an enormously wide range of players. The best solution, if the land parcel allows for it, might be to develop multiple courses, each serving a different group of users. At resorts without many repeat players, the visibility of the green and all hazards from the tee is an important consideration. The most visible holes drop in elevation from tee to landing area and from landing area to green. Conversely, holes that climb uphill at a consistent grade are desirable because they reveal the entire golf hole to the player from the tee, creating attractive shadows on bunkers and landforms. On courses with many repeat players, visibility is less important. Most important, new courses should provide a variety of strategy. Long, linear holes provide little interest and create similar shots

GINN HAMMOCK BEACH RESORT

At Hammock Beach Resort on Florida’s Palm Coast, development is located away from the beach, with the golf course occupying this prime land. Dune grasses protect the beach from erosion.

Planning and Design 173

house that is too large for its membership and thus too expensive to operate for the income it generates.14 In a resort project where hotels cater to guests’ nongolf recreational needs, a relatively small clubhouse of approximately 4,000 square feet (370 sq m), primarily dedicated to a pro shop and lockers, may be adequate. Similarly, second-home communities in most markets usually feature relatively modest facilities compared to the heavily used, programmatically complex clubhouses often built in golf-oriented primary-home communities. But, depending on the number of members, clubhouses in second-home communities can be fairly large. They tend to include flexible, multifunction spaces that can be adapted to seasonal demands. Members of high-end clubs may still expect a large, opulent clubhouse.15 An effective strategy may be to phase development of the clubhouse to grow with the community. Clubhouses often are located on highly visible, centrally located sites. In general, they should be near the first and tenth tees, the ninth and 18th greens, the practice green, and the driving range. On hilly sites, a clubhouse may be best located roughly between the highest and lowest points to avoid grueling climbs up the back nine on continuous courses. Other factors to consider are pedestrian and vehicular circulation, outdoor function space, views, the location of maintenance and storage

COURTESY OF WATG (WIMBERLY ALLISON TONG & GOO)

over and over. Wider holes with various angles, unusual hazard placement, and interesting greens shapes offer players risk-reward opportunities and different challenges with each visit to the course. In resorts located on spectacular sites, the most desirable land may be given over to golf. To ensure a high-quality course, the plan might even preclude development along the course frontage. Such was the case at the Doonbeg Golf Club, where the course hugs the Atlantic coastline, while the resort’s residences are set back behind. Ginn Hammock Beach Resort in Palm Coast, Florida, also was designed with the golf course occupying the prime beachfront land. One advantage of pushing the real estate back from the beach is the lessened risk of flood damage. When high lot values or other site requirements dictate development close to the fairways, intermediate buffer zones and carefully devised architectural controls can encourage compatible development. Clubhouses. Clubhouses serve many needs beyond those of golfers. They can be central elements in project marketing. As multiple-function facilities, clubhouses can pose complicated programming and design problems. A developer should carefully balance the resources committed to a clubhouse against the expected returns— both direct and indirect. The biggest mistake commonly cited by golf course developers and owners is a club-

The 27,000-square foot (2,500-sq-m) clubhouse at Broken Top, Bend, Oregon.

174 Resort Development

facilities, and the relationship between the course and various real estate products. Developers should involve the clubhouse architect early in the planning process. One of the most complex issues in clubhouse design is separating or buffering various groups of users. A club that caters to homeowners, resort guests, and nonresident members is likely to face some conflicts, some of which can be addressed by careful planning and design. Even within broad groups of users, other users—tennis players, children using the pool, community groups, and so on—might have different needs. Mitch Hutchcraft, vice president of real estate for King Ranch and Consolidated Citrus, LP, in Fort Meyer, Florida, observes that it is important to address the differing desires of men and women: “They use the club differently and have different expectations. Because most home purchase decisions are made by women, if the club doesn’t address their needs for recreation, social interaction, connectivity, and variety of activities, you may lose that sale.” Two strategies can help mitigate conflicts between user groups. The first strategy is to isolate groups spatially by providing, for example, separate locker rooms for golfers and tennis players or a members-only dining room closed to resort guests. The second strategy is to manage access to the facilities. For example, some daily-fee courses associated with real estate projects give project residents preference for golf starting times and advance reservations. Phasing and expansion in accordance with changing needs are crucial to clubhouse planning. An active, bustling clubhouse can be a strong marketing tool, but it takes time to create the resident base that can make a facility viable. To generate clubhouse activity (and revenues), some developers open membership to outsiders in the early stages of development; then, as membership builds, the club becomes private. Other tactics are to design a clubhouse to grow along with the project’s population, or to start with a small (reusable) facility to be superseded by a more elaborate clubhouse as membership grows. As Hutchcraft notes, “Bad clubhouse design can be one of the biggest contributing factors to a member’s dissatisfaction, impacting the financial success of the whole operation. Managing early expectations, building what you need, and phasing in new components over time, after learning a great deal of what members actually want in the club, will pay off in the end.” Most new golf clubhouses include a set of practice facilities, and many include elaborate teaching facilities, often occupying anywhere from 10 to 40 acres (4 to 16

ha). “Practice ranges and facilities and short game practice areas have become a major part of golf courses,” reports Fazio. “Earlier golf courses could get by with a small range for people to warm up on, but now players are much more interested in improving their game. Dual-ended practice ranges, with tee space available at both ends, may be necessary to satisfy demand, and also allow the possibility of having one tee area for private use by schools and golf academies and the other for everyday use.” A typical practice area includes a driving range (which should not be oriented directly east/west), putting greens, target greens for practicing short shots, and practice bunkers. In general, practice areas should be located close to the pro shop and the starting holes. Some measure of buffering between the practice range and other clubhouse areas is advisable. Golf academies offer the potential to become major income streams. They are suited to sites ranging from 16 to 65 acres (6 to 26 ha). A 16-acre (6-ha) site can accommodate a double-ended driving range with target greens and chipping greens, a putting course, and a clubhouse with video teaching facilities. A larger site would allow the addition of a par-3, executive, or regulation nine-hole course. Night lighting and covered tee stations for the driving range can maximize an academy’s use. Other Recreational Amenities Today’s resort clientele are seeking highly customized and tailored experiences that offer both recreational and educational pursuits and an opportunity for family participation. Contemporary clients are more likely to be families wanting a variety of activities for different ages and interest levels, or busy professionals yearning for relaxation and individual pampering. A successful resort today must provide a diverse and flexible program, allowing guests to choose from a wide variety of activities that suit their particular needs. Passive open spaces and nature-based recreation offer natural forms of exercise and stress relief. Naturebased recreation also lends itself to multipurpose recreational facilities, which can encompass any combination of spas and fitness centers; golf courses; swimming, fitness, racquet, skating, or skiing facilities; equestrian amenities; and lawn/field sports. Facilities for tennis, swimming, fitness training, and personal body care often are sited in proximity to each other and positioned as a single multipurpose amenity. Such facilities have relatively modest land and site requirements, compared with boating, skiing, and golf amenities. A complex

Planning and Design 175

COURTESY OF JW MARRIOTT

Spas are the fastest-growing segment of the resort market and one of the largest revenue generators. Pictured: JW Marriott Phuket Mandara Spa in Thailand.

that includes tennis courts, swimming pools, a spa, and fitness facilities can be as small or as extensive as the market warrants; it may be associated with a club or a hotel or provided as an amenity for homeowners. Relatively economical to build and flexible in details, a tennis, swimming, or spa amenity can be an important aspect of the marketing program for a resort’s residential, lodging, and conference center elements. Such a facility can also help add balance to a recreational program. The trend toward four-season use and the new importance of residential communities mean that a ski resort in the winter may function as a spa or hiking center in the summer, or even as a site for an arts festival. Health Spas, Fitness Centers, and Wellness Centers.

Health spas and wellness centers, the fastest-growing segment of the resort market, have in many cases outstripped older amenities. They are one of the largest revenue generators a resort can add to its list of amenities. According to architect Robert Glazier, a principal of HKS Hill Glazier Studio, “the spa is one of the biggest drivers of room occupancy now—in some cases, it’s more important than golf.” Spas are now the primary draw at many resorts. The majority of the spa market is powered by baby boomers, who often seek a spa experience as part of their desire to stay healthy and fit and as a source of relief from daily pressures.

176 Resort Development

A spa is less commonly integrated with fitness components and may not even be in the same location. Within a spa, circulation and places for guests to lounge are important. “The space ratio of treatment rooms to the overall spa is now almost one to one,” observes Glazier. “Locker rooms have become more opulent, with larger waiting areas, indoor/outdoor wet experiences, heat experiences, outside showers, cold plunges, and many other treatment options. In addition to individual treatment rooms, larger treatment suites for couples are becoming more common, each with their own hydrotherapy tub, lockers, shower, and toilet. Some operators do not even have a main spa facility; they just have individual self-contained spa suites where guests might spend a day or a half-day.” Spas may offer everything from yoga rooms to aroma steam to cosmetic surgery. Canyon Ranch, with branches in the Berkshires in Lenox, Massachusetts, the Sonoran Desert near Tucson, Arizona, and Miami Beach, shows how recreational amenities, as much as building design, can create a particular experience by reflecting the history or surroundings of the resort. With no children allowed and an emphasis on fitness and treatments, the Canyon Ranch spas identify themselves as offering “integrative wellness and luxurious, healthy vacations.”

The Next Wave First, it was golf-based communities. Next came specialty recreation-based resort communities centered around activities such as skiing, water sports, or equestrian sports. Each venue appealed to its own somewhat limited recreational real estate market niche. Now, a growing trend is resort communities with spas and wellness centers as their main attraction. The intent is to appeal to a much wider audience than can single activity–based projects. These products, in addition to selling traditional recreation experiences, offer healthy lifestyles and wellness programs, enabling purchasers to pursue their goal of “living younger longer.” In 2007, there were well over 150 spa residential communities in various stages of development throughout North America. The spa industry has solidified as a major player in the hospitality and leisure sector. According to Spa Finder, a New York City–based spa travel and marketing company, the U.S. spa industry alone—excluding cruise ship spas—generated an estimated $15 billion in 2005, exceeding the revenue achieved by other leisure activities such as moviegoing, visiting amusement/ theme parks, shopping, golfing, or skiing. About one in four adults in North America has been to a spa, and participation by teenagers is increasing. Active spagoers represent 32.2 million consumers in the United States and 3.7 million in Canada. The Canadian Tourism Commission (CTC), in conjunction with the Lexington, Kentucky–based International Spa Association (ISPA), recently reported an 18 percent increase in spa industry revenues over a nine-year period and expects another 8 to 10 percent increase in the next few years. Rather than being offered as a resort amenity, spas are becoming the primary draw. Hotels with spas now represent the fastest-growing hospitality segment, with about 81 percent of U.S. travelers on a spa vacation choosing a resort/hotel spa as their destination. Further, the CTC/ISPA study found that a spa vacation ties in well with shopping, cultural attractions, and restaurant sampling. The bulk of the spa demand is being driven by baby boomers, many of whom seek a spa experience as a way to stay healthy and feel good. As the leading edge of the baby boomers begins to show interest in buying spa-lifestyle real estate, Pat Corbett, chairman of the CTC task force on spa and wellness tourism, predicts that this trend will continue for the next 15 to 20 years. This prediction is reinforced by a study by the market research firm American LIVES, which estimates that the current one-third of North Americans who are seeking a healthy lifestyle will increase to two-thirds by 2025. Similarly, the amount spent annually on health and wellness products, including vitamins, beauty items,

and spas, is predicted to rise to $1 trillion by 2025 from the $200 billion estimated for 2005. During vacations, and now increasingly as part of daily life, people are starting to see spa visits as a form of self-improvement and as providing relief from the pressures of daily life. In a 2005 survey of more than 1,200 Luxury Spa Finder magazine readers and users of Spafinder.com, 61 percent of the respondents indicated they would be interested in living in a community built around a spa facility that offered programs and services to community members. Fifty-three percent classified a spa as a “very important” residential amenity, while another 18 percent indicated that a spa was a “decisive” buying requirement. In contrast, only 9 percent indicated that golf was a “very important” amenity, and only 2 percent designated it as “decisive.” Overall, 48 percent of the respondents said they have considered the idea of purchasing a second home or vacation home, with about 10 percent indicating that they have already contacted a broker/owner, researched properties, or taken similar steps. According to ISPA, medical spas are the fastestgrowing segment, with an increasing number of spas now offering some form of integrative or complementary and alternative medicine program. This includes preventive health treatments and regimens and nutrition and fitness programs, as well as basic health and wellness education. Two pioneers in this field are Canyon Ranch, based in Tucson, Arizona, and the Hills Guest Ranch and Spa in British Columbia, which have been practicing “integrated wellness” since the early 1980s and early 1990s, respectively. Recognizing that spas are at the cutting edge of influencing healthy lifestyles, many spa operators have embraced the growing environmentally conscious consumer market, often referred to by the acronym LOHAS (lifestyles of health and sustainability), which was estimated at more than $540 billion globally in 2003. A survey conducted by Vancouver, British Columbia– based TREC International, Inc., at the October 2003 ISPA conference in Dallas revealed that 68 percent of respondents already were incorporating some form of green practices into their spa environment and the products and services they offer. According to Kevin Kelly, president of Canyon Ranch, 90 percent of the 9,500 respondents in the 2002 American LIVES survey rated environmental factors such as air quality, natural lighting, design, and integration within the natural surroundings as essential ingredients of a healthy lifestyle. Several well-known spa resorts, as well as many lower-profile facilities, have added residential components both at their resort and urban environments.

Planning and Design 177

The Next Wave

continued

Examples include Canyon Ranch, with its concept of “Canyon Ranch living.” The idea of living in a place where integrative wellness programs are available daily was an immediate success for the company’s first project in Florida, which achieved a 25 to 50 percent premium in sales prices over other real estate projects for its 430 traditional condominium and 150 condominium hotel units. Vista Clara Ranch Spa Resort, located outside Santa Fe, New Mexico, includes Native American–inspired buildings and adobe construction on a 140-acre (57-ha) site. The spa resort provides a healing/restorative environment in which visitors and casita owners are offered sweat-lodge ceremonies, cooking seminars, organic gardening, instruction in gourd art, astronomy classes, life coaching, nutritional counseling, stress reduction techniques, and more traditional activities like hiking, fly-fishing, horseback riding, cycling, archery, and rock climbing. Hills Guest Ranch and Spa, Canada’s first destination resort spa, is situated on 20,000 acres (8,100 ha) of ranchlands in British Columbia’s Cariboo region. Guests have access to extensive spa, health, nutrition, and fitness services, including yoga, Pilates, and aerobics, as well as AquaFit instructors, kinesiologists, nurses, personal trainers, a nutritionist, body therapists, and comprehensive lifestyle counseling. The resort also provides a wide array of recreational activities, including horseback riding, cross-country skiing, mountain biking, hiking, canoeing, and other activities on three lakes and more than 100 miles (160 km) of equestrian and cross-country ski trails. The number of spas being built indicates that some developers of master-planned communities believe such facilities can enhance the value of their properties. Operators of various types of resorts report that adding a spa both increases absorption and adds a sales premium. The most successful spa lifestyle projects share some key factors. They offer residents a well-rounded, healthy, and active lifestyle with facilities such as

clubhouses, lounges, restaurants, learning centers, and wine centers, as well as recreation programs. Avid spagoers typically are savvy and well-educated consumers. They demand a high-quality operation along with premises that reflect the surrounding natural environment and that make them feel as though they are truly getting in tune with nature and living a healthy lifestyle. A strong emphasis on ecological sustainability, resource renewal, and personal interaction with nature has become a key way for nonurban spa lifestyle communities to cater to the LOHAS market and differentiate themselves from others. This theme may be executed in a variety of ways—from sustainable, Native American–inspired architecture and body treatments at Vista Clara Ranch Spa Resort, to radiant-heated stone pathways at Sundara Spa Lifestyle Villas in Wisconsin Dells, Wisconsin. Both offer integrative physical and spiritual links to the natural environment, reinforcing the healing aspects of the spa experience. Finally, accessibility is not as much of an issue for spa communities as it is for other recreational resort types, because spagoers seek to escape to a secure, safe, and serene environment to receive health and stress reduction benefits. The traditional two- to fourhour travel time typically sought for resort destinations can be somewhat lengthened. As spa facilities and integrative wellness programs become entrenched in real estate, consumers are being offered a wider choice—not only in urban environments, but also in integrated resort communities or lifestyle-based projects. With aging baby boomers wanting to age gracefully, it will be pivotal for developers and investors to understand this savvy market group, which increasingly seeks to take care of its most important asset—its health.

Canyon Ranch Lenox, which features a historic mansion that houses a library, dining rooms, and medical, behavioral health, and movement therapy departments, reminds clients that the Berkshires was once “a haven for aristocrats.” Canyon Ranch Tucson emphasizes “the romance of the old West and the luxuries of the new” and “Native American healing traditions.” Canyon Ranch Miami Beach, in the restored art deco Carillon Hotel, offers an oceanfront setting and promises novelty services: “the first complete European thermal

suite of its kind in the U.S.” and fitness options that include a “Gyrotonic motion and flexibility class.” Given that a large portion of the homeowners and visitors in any resort are seniors—both retirees and preretirees—the availability of quality medical care is of interest. Baby boomers are particularly concerned about maintaining a healthy lifestyle. Many resorts market their proximity to high-quality health care facilities; some even include their own on-site clinics and other facilities. If a resort is large enough, it might identify an

178 Resort Development

Source: Adapted from Mick Matheusik, “The Next Wave,” Urban Land, August 2006, pp. 65–70.

treatment rooms (see case study, chapter 7). The Banyan Tree resort chain operates its own Banyan Tree Spa Academy to train all its spa therapists. Tennis and Racquet Facilities. A decline in the popularity of tennis since its rapid growth in the 1970s and 1980s has left many underused tennis courts in its wake; the National Sporting Goods Association found that 10.4 million people had played tennis in 2006, down from 11.5 million in 1996. Nonetheless, many resort projects still include tennis or, to a lesser degree, racquetball or squash. The capital costs and maintenance requirements for tennis facilities are relatively low. Moreover, tennis players tend to come from households with relatively high discretionary incomes, making them an attractive market. A few resorts focus as strongly on tennis as others focus on golf. These tend to be relatively small, highly service-oriented operations located in established markets such as Palm Springs, California, and the southeastern United States. First-class food and lodging, superb service, highly developed instructional programs, and a low player-to-court ratio are important

COURTESY OF WATG (WIMBERLY ALLISON TONG & GOO)

appropriate site for such a facility. Wellness center staff may include physicians, nurses, psychologists, nutritionists, and physical therapists. Programs in preventive health care and alternative medicine are most common. Some wellness centers offer cosmetic dentistry, minor plastic surgery, and dermatology services. The Four Seasons Hotel in Westlake, California, includes not only a 40,000-square-foot (3,700-sq-m) spa but also provides guests with access to the adjacent California Health and Longevity Institute. In this state-ofthe-art facility, a team of experts from every health and wellness discipline offers diagnostics, education, and inspiration in various packages and programs that are geared toward healthy living. Asian resorts often place a major emphasis on spa and wellness treatments. At Taj Green Cove in southern India, the spa is the major focus of the hotel (see case study, chapter 7). Treatments are based on 10,000-yearold Ayurvedic methods, which draw visitors from around the world. Banyan Tree Lijiang in Lijiang, China, features a spa with a fitness center, a yoga pavilion, and six luxury

The spa lounge at the Four Seasons Hotel in Westlake, California.

Planning and Design 179

COURTESY OF VILLA D’ESTE

The historic Villa d’Este on Italy’s Lake Como boasts eight tennis courts in a parklike setting.

elements. The Naples Tennis Club & Resort in Naples, Florida, entered into an exclusive licensing and partnership agreement with the Barcelona-based Academia Sánchez-Casal to open a tennis academy in 2007. The resort includes 37 Har-Tru clay courts and one hard court, a 33,000-square-foot (3,100-sq-m) clubhouse, a fitness center, a spa, a pro shop, 423 condominiums and townhouses, and 93 single-family homesites. For the most part, however, tennis is usually offered together with other amenities; indeed, it enjoys a strong complementary relationship with numerous other recreational activities, including golf and skiing. The Kiawah Island Golf Resort on Kiawah Island, South Carolina, complements its five golf courses with two tennis complexes, both directed by tennis pro Roy Barth: the Roy Barth Tennis Center, with nine Har-Tru courts and three hard courts a short walk from the resort’s hotel and spa, and the West Beach Tennis Club, with 14 Har-Tru courts and two hard courts. Many ski resorts have developed tennis and fitness complexes to bolster summer and off-season occupancy. The Gunterman Tennis School at Stratton Moun-

180 Resort Development

tain Resort in Stratton, Vermont, offers lessons for adults with a four-to-one student-teacher ratio, as well as the Stratton Junior Tennis Day Camp for youth in the summer. In addition to 17 hard and clay courts, Stratton’s summer offerings include hiking, mountain biking, golf, canoeing, and kayaking. In most cases a modest offering of tennis courts will satisfy a resort’s needs. In a large resort’s residential neighborhoods, tennis courts can be integrated into neighborhood parks, enabling parents to take their children to the park and still have a recreational option for themselves. Aquatic Facilities. Of the various resort facilities, swimming pools are almost mandatory and are often sited as freestanding amenities. In fact, resort hotels often are designed around swimming pools, which can provide an attractive visual amenity. “Especially at smaller hotels, the spaces surrounding the pool have in many cases become more of an extension of the hotel’s social spaces, creating a more integrated indoor/ outdoor space connection,” says architect Pablo SavidButeler of Sasaki Associates. According to resort archi-

large main pool, which features a signature mosaic tile sunburst pattern. Lap swimming is accommodated at a regulation 25-yard (230-m) lap pool outside the spa. A children’s wading pool is also located near the main pool. Both the main pool and the lap pool enjoy prime sites overlooking the ocean. “Lazy river” or lagoonlike pools are increasingly popular. These are long, meandering channels that can be used either for swimming or for floating on inner tubes. Zero-entry pools, which resemble gently sloping beaches, are also gaining favor for their easy access for young children and handicapped users. At the Radisson Aruba Resort in the Caribbean, a series of connected pools includes a zero-entry pool with sand at its edge. A drainage system keeps the sand from spreading to the rest of the pool. Saltwater pools are also gaining in popularity, introducing children to the ocean experience

MONTAGE LAGUNA BEACH

tect Howard Wolff, president of WATG, hotel spending on swimming pools is growing at double-digit rates.16 Multiple swimming pools may be required to cater to the various kinds of users. Disney’s Old Key West in Orlando, a vacation club resort designed to resemble turn-of-the-century Key West, offers four heated neighborhood pools and a kiddie pool to create a residential feel. Hualalai Resort on Hawaii’s Big Island features a variety of pools, including a 30-yard (28-m) heated oceanfront pool, a 27-yard (25-m) lagoon-shaped pool with an infinity edge and children’s pool, and an adultsonly 10-yard (9.1-m) pool. Another pool is a free-formed pond for snorkeling, carved out of natural lava rock and stocked with more than 3,500 fish. Some resorts are including separate pools for lap swimmers. Montage Laguna Beach in California (see case study, chapter 7) focused its site plan around its

Swimming pools are becoming more specialized, and some resorts include multiple pools for various activities. Montage Laguna Beach in California has a lap pool in addition to its large main pool.

Planning and Design 181

study, chapter 7) in Bluffton, South Carolina, decided on a water theme rather than a golf course. The resort community thus features a lake and a large pool with a lazyriver component. Championsgate, a 1,200-acre (485-ha) resort community in Orlando, provides tubes for floating down its 850-foot (260-m) meandering lagoon pool. Even in remote locales, swimming pools are a major focus. Pelican Eyes, a resort and second-home community on Nicaragua’s Pacific Coast, boasts of its infinityedge lap pool, an amenity that was added in 2006. The resort has two other pools for more passive use. “There’s a trend toward activity pools that offer a variety of water games and events,” reports Todd Lundgren, RTKL’s vice president and director of hospitality. “Especially for family-oriented resorts, the kids have to have something special—it can’t just be a pool, because they have those at home.” Many hotels now have water park–style pool complexes. David J. Sangree, president of Hotel & Leisure Advisors, reports that in the United States and Canada, 97 indoor water park resorts opened either as standalone facilities or as additions to hotels between 1994 and 2006.17

GINN HAMMOCK BEACH RESORT

without the risk of waves. Saltwater pools also can be naturally chlorinated by extracting the sodium from the water, which is a great benefit to a resort that is striving for a truly ecological operation. Many venerable older resorts are creating new pools of various types. The Hyatt Regency Cerromar Beach near San Juan, Puerto Rico, included a 500-foot (150-m) -long river pool in its latest renovation. The pool complex also includes waterslides, waterfalls, and a swim-up bar. The Scottsdale Princess in Arizona recently added an elaborate fourth pool with a waterslide. The Sheraton Bal Harbour in Miami Beach has added a $12 million water “fantasy complex” that includes waterslides for children and a lap pool for serious swimmers. Even newer resorts are adding specialty pools to increase their appeal. The JW Marriott Starr Pass Resort and Hotel in Tucson (see case study, chapter 7) added a lazy river pool in addition to its main pool and separate lap pool. The new pool features a waterslide and loops around an “island” with additional meeting space. Some residential resorts are also placing a greater emphasis on swimming pools. Hampton Lake (see case

Meandering “lazy river” pools create a place for adventure in a relatively small area. Pictured: Hammock Beach Resort, Palm Coast, Florida.

182 Resort Development

JULIE STERN

JULIE STERN

Atlantis Paradise Island in the Bahamas is a water-based theme park resort with pools for every kind of user.

The Point South Mountain Resort in Phoenix has a water park that includes an eight-story-high tower with three waterslides, a heated wave pool with a waterfall and separate sports area, a side-by-side active river for double inner tubing with water jets and misting, a children’s area with a heated pool and water jets, and a 25-person hot tub. Atlantis on Paradise Island in the Bahamas has built its reputation around its water park, a network of pools for every kind of user: a lazy-river ride, a 14-acre (6-ha) dolphin habitat, and a series of waterslides, including the world’s steepest.

The programming of a resort’s water amenities is a key element to their success. While children are becoming an even larger component of the resort environment, it is important to program the pool areas into active and passive recreational pools, providing a quiet and relaxing environment for those adults who wish to escape to a kid-free zone. Including multiple smaller plunge pools— typically under 200 square feet (19 sq m)—within a private garden amenity provides another popular amenity. These types of pools either can be heated to hot-tub temperature or kept ice-cold as a quick rejuvenation pool.

Planning and Design 183

Developers also should provide a variety of pool experiences, from sunny, open pool decks to shaded, covered areas where guests can escape the sun. Covered pool decks can be achieved through either a shade structure device such as a trellis or through the use of lush vegetation, but both are good options for health-conscious guests who wish to stay out of the sun’s rays. Mountain pools understandably take on a much less opulent and lush character, involving far less landscaping and often incorporating some type of indoor facility. The Park Hyatt at Beaver Creek, Colorado, includes a heated outdoor pool used throughout the year, while the Homestead, a historic mountain resort in Hot Springs, Virginia, offers a year-round indoor pool fed by naturally warm mineral spring waters, as well as an outdoor pool open seasonally. In second-home communities, swimming pools can be provided as part of club facilities or may simply be an amenity available to residents. Multipurpose Recreational Facilities. When tennis, swimming, fitness, and spa facilities are combined into a multipurpose facility, they can create a synergy that becomes a major draw for a resort. The Amelia Island (Florida) Plantation recreational package, for example, supplements the resort’s 45 holes of golf and four miles (6 km) of beaches with two dozen swimming pools and an eight-acre (3-ha) recreational complex called the Racquet Park, which features 23 Har-Tru tennis courts, two racquetball courts, a 60-foot (18-m) indoor-outdoor heated lap pool with whirlpools, a weight room, beauty services, locker rooms, a tennis pro shop, and a state-ofthe-art health and fitness center. Multipurpose recreational facilities are of major importance in large-scale second-home and retirement communities. The 7,800 homes in the 2,373-acre (960-ha) Sun City retirement community in Summerlin outside Las Vegas, for example, have access to two indoor and three outdoor pools, three golf courses, tennis courts, a racquetball court, three restaurants, four community centers, a miniature golf course, and hobby rooms. For those resorts that aspire to offer the best tennis or spa facilities and successfully attain a certain threshold of quality, their market appeal depends on programmatic aspects more than on physical characteristics. Fitness classes, swim-team programs, personal trainers, personal fitness diagnostic services, attractive and well-maintained locker facilities, high-quality food service, daycare services, and the like often spell the difference between a productive benefit to the collateral real estate and a drain on project resources.

184 Resort Development

When it comes to expressing a strong individual character or image, multipurpose recreational facilities do not offer a resort the same marketing opportunity as ski runs or golf courses. What makes the difference at any tennis, swimming, or spa facility, no matter its size or complexity, are the character and quality of the support facilities and buildings. Shade structures such as pavilions, pergolas, and gazebos; landscaping and walkways; viewing areas; and fixtures such as outdoor furniture, planters, and landscape lighting all can make recreational activities more pleasant. Landscape features—and the architecture of surrounding buildings—can provide the pool and other recreational areas with a dramatic or inviting setting that conveys a distinctive visual image. Equestrian Amenities. Resorts that provide equestrian amenities vary widely in their offerings. Some are fullservice equestrian communities that offer an equestrian center with horse-boarding facilities, horses to ride, trails, indoor arenas, and outdoor rings. Others simply permit owners to keep horses on their own lots and perhaps offer a trail network and modest central boarding/riding facilities. Some are vacation-oriented, with lodgings but no residences, such as the ranch resorts of the West. Still others may be horseback-riding facilities associated with major resort hotels that offer a variety of other amenities. An equestrian facility can offer important benefits to a resort developer. Certainly, the sight of horses grazing in a pasture is attractive, and offering riding opportunities to resort guests can give a resort a competitive advantage. But equestrian facilities present difficult development problems, too. They are management-intensive; they must be sited and carefully designed so that they do not conflict with other land uses; and they tend to serve a relatively small market. Equestrian facilities occupy a great deal of land, must be sited downwind from other amenities, and require either a full-time facility manager or must be subcontracted to a third party that will provide horses to guests on an on-call basis. Equestrian Residential Communities. Equestrianbased communities are generally a high-risk venture. Many equestrian communities launched in the 1980s—many of them primary-home communities— failed for one reason or another. Therefore, developers should carefully weigh the benefits of an equestrian facility against its costs and risks. Such a facility is most likely to succeed where a strong equestrian culture already exists. Most equestrian resort communities flourish only if they can attract a large percentage of homebuyers who are not horse owners.

VICTOR INTERNATIONAL

Residential communities with equestrian facilities must carefully assess the market for such amenities. The Bay Harbor Equestrian Club in Michigan is open to residents and the public, offering horse boarding, lessons, rentals, horse sales, and other services.

To operate profitably, equestrian facilities usually need to broaden their user base by marketing their horse-boarding facilities, lessons, and other services to nonresidents. In general, the best approach for the developer is to work with an equestrian owner/operator in a cooperative venture. The developer may be required to donate the land or even to fund part of the construction costs. Just as commissioning golf courses by signature designers has helped resorts raise their profiles, developers are turning to signature equestrian communities. The Oaks, a 1,220-acre (500-ha) resort in Lake City, Florida, includes a cross-country equestrian course designed by Olympic medal winner David O’Connor. The 236-home community includes a 33-stall barn, a competition-quality dressage arena, a hunter/jumper ring, and a covered round pen, as well as 15 miles (24 km) of riding trails. Guest-Oriented Equestrian Amenities. Ranch resorts—also known as dude ranches—are a special type of equestrian-oriented resort that are most commonly found in western states such as Colorado, Wyoming, Montana, and Idaho. They combine horseback riding with a slice of the Old West. Activities typically include cattle drives and calf roping. Ranch resorts tend to be fairly

small operations with modest lodging facilities and often are run by small businesses or families. Wit’s End Guest Ranch and Resort near Durango, Colorado, is one of the larger and more upscale ranch resorts. It can accommodate about 120 guests in wellappointed log cabins and can host conferences of up to 100 persons. In addition to horseback riding, Wit’s End offers swimming, boating, tennis, hiking, cross-country skiing, hunting, and fishing. Resort hotels and multiuse resorts also may offer horseback riding as an amenities for guests. The Grand Cypress Resort, a major resort hotel in Orlando, includes a 44-stall stable, covered ring, outdoor jumping ring, regulation dressage ring, exercise track, and paddock. The resort boards its own horses and provides space for horses transported by guests. Black Butte Ranch, an 1,830-acre (740-ha) four-season resort community in Sisters, Oregon, has its own stable of horses. Pony rides for children as well as hourly, half-day, and all-day rides are available, many of them traveling far into wilderness areas. In many cases, a resort’s horserelated amenity may simply be a horse-drawn carriage, sleigh, or hay wagon that offers a tour of the property or nearby areas. Such low-cost amenities can add considerable charm to a resort.

Planning and Design 185

Bicycling, Skating, and Lawn/Field Sports. Resorts

DESTINATION HOTELS & RESORTS

that offer one or more of the big draws—golf, skiing, and water-related activities—cover a lot of recreational ground. Such sports attract their own participants, and resorts that provide relatively modest programs and facilities for secondary sports can draw additional guests and extend stays. Ice-Skating Facilities. Ice skating can raise a resort’s profile, as at the Sun Valley Resort in Idaho, which has developed some of the most advanced ice-skating facilities and programs of any U.S. resort. The resort includes a 2,000-seat lighted outdoor arena that has featured performances by Olympic and other world-class skaters. There is also an indoor arena. The resort’s winter carnival is a major draw, as is the skating school, which attracts aspiring skaters from around the United States. Bicycling and In-Line Skating. In-line skating surged in popularity in the late 1980s and early 1990s, and although the National Sporting Goods Association found that the number of people participating dropped from 25.5 million in 1996 to 10.5 million in 2006, it is still a popular sport that is easily accommodated on existing paved bicycle trails. Resorts that include or are connected to paved bicycle trails are in a good position to tap the in-line skating market, as well as the much larger cycling market.

Sea Pines Plantation on Hilton Head Island, South Carolina, attracts bicyclists and in-line skaters with its 14-mile (23-km) trail system that skaters share with cyclists. Sun Valley in Idaho also offers paved trails that attract in-line skaters, and Sunriver, Oregon, maintains over 30 miles (48 km) of bicycle trails. Other trail-rich locations that draw in-line skaters and bicyclists alike include St. Petersburg, Florida; Santa Monica and San Diego, California; and Boulder, Colorado. Mont Tremblant in Quebec, Canada, allows in-line skating on its multifunctional trail during the summer for expert skaters only. Even as in-line skating has dropped in popularity, skateboarding has become twice as popular in recent years, increasing from 4.7 million participants in 1996 to 9.7 million in 2006, according to the National Sporting Goods Association. Some resorts are responding by creating facilities for skateboarding. The skate park at Massanutten Resort in McGaheysville, Virginia, accommodates in-line skating, skateboarding, and bicycling, with in-line skate and skateboard rentals available for children and adults. Wisp Resort at Deep Creek Lake in McHenry, Maryland, and Smugglers’ Notch in Vermont also offer skate parks for skateboarders. Mountain biking is among the activities offered at the JW Marriott Starr Pass Resort and Spa in Tucson (see

Biking is a popular sport for all ages. It is easily accommodated on rustic trails or paved paths.

186 Resort Development

Floating Lodge The small floatplane bringing visitors to King Pacific Lodge flies over miles of thickly forested islands, most uninhabited, to a spot 360 miles (580 km) north of Vancouver. When the plane lands on the waters of the Inside Passage, passengers emerge to find the lodge at the edge of a wilderness. Crafted from massive timbers and native stone, the facility includes slate floors, wrought-iron fixtures, and intricate carpentry throughout 17 oversized rooms and suites, a great room with a rock-clad fireplace, and a small fitness center with a steam room and a sauna. But the King Pacific Lodge was not built on land—it floats. Built on a barge, the lodge is towed every April to its host location near the shore of Princess Royal Island; when the weather starts to turn in October, it is towed back to Vancouver to be prepared for the next season. Since lodge owner Hideo Morita, son of Sony Corporation founder Akio Morita, decided to create a self-contained system, the barge stores and treats sewage for a whole season, has its own electrical generating plant, burns garbage, and stores fuel. There are good reasons to locate the lodge on a barge. The islands at this part of the Inside Passage have little to no flat areas: the land rises steeply almost from the water’s edge. Additionally, most of the land is government-owned, and regulations bar most types of development. The lodge’s sewage is chemically treated in a fourchamber process that offers both primary and secondary treatment and that is big enough to handle a full

season—400 to 500 guests. Fuel storage consists of a double containment system for gasoline (mostly for the 12 fishing and expedition boats) and for internal fuel capacity, such as diesel for generators. Because there are no power lines in this part of British Columbia, all the wiring is internal and connected to the generators. An incinerator burns the garbage, except for recyclables. Every five to six years, the barge is dry-docked and inspected to ensure that the underneath structure is sound, but because the barge rarely moves—and when it does, it is not at high speed—it sustains less damage than does a conventional boat. The coastal British Columbia waters are home to one of the world’s largest populations of humpback and killer whales, so guests are often treated to the sight of whales “bubble net feeding” and can listen on hydrophones to their underwater communication. The lodge runs a program each September that combines daily whale-watching trips with evening lectures and slide shows. The area around the lodge hosts a wide variety of wildlife, including Sitka deer, gray wolves, bald eagles, black bears, seals, sea lions, and the “white” black bear, known as the Kermode bear. For the past two years, the lodge has operated a guided hike to a bear-viewing platform, and it has created the Spirit Bear Conservancy to help ensure protection of the Kermode bear’s habitat.

case study, chapter 7). The resort provides bike rentals and escorted tours of rustic trails that run through the hilly desert terrain of the 50,000-acre (20,200-ha) Tucson Mountain Park located near the resort. Cycling is a major draw at Dancing Bear Lodge, a mountain retreat in Tennessee’s Smoky Mountains. Billing itself as “a perfect base camp for cycling enthusiasts,” Dancing Bear offers a series of paved and unpaved routes for bikers of all abilities and has guided rides and other biking events. The resort provides a range of rental bikes that are suitable for serious bikers. Lawn and Field Sports. Lawn and field sports can help to position a resort or can serve simply as diversions from other leisure pursuits. In addition to its polo fields, the Palm Beach Polo and Country Club in Wellington, Florida, provides four croquet lawns. The second-home community at Spring Island in Beaufort, South Carolina, incorporates a family sports garden, a

multiuse recreational area with lawns, fields, and open areas for croquet, ball fields, horseshoes, and picnic and family gatherings, and a pond, tennis courts, and a swimming pool. The Phoenician Resort in Scottsdale, Arizona, offers several lawn sports, including croquet and bocci. The nearby Wigwam Resort offers shuffleboard, soccer, and croquet. Some resorts offer other field sports, such as archery and trap shooting. The Equinox in Manchester Village, Vermont, provides skeet shooting and also has a falconry school, a shooting school, and an archery school. Spring Island has a hunt club that takes guests to Pleasant Hill Plantation, a 2,600-acre (1050-ha) leased property about 45 minutes away from the resort, for quail hunting on horseback with a mule-drawn wagon. Golf putting courses, while typically associated with a golf amenity, easily can be provided in a limited space, offering another fast-paced recreational option. Putting

Source: Steve Bergsman, “Floating Lodge,” Urban Land, August 2002, p. 43.

Planning and Design 187

WILSON ASSOCIATES

Golf putting courses offer fastpaced recreation in a limited space. Pictured: Arizona Biltmore.

Gardens can provide a place for

COURTESY OF VILLA D’ESTE

relaxing, educational experiences and can even provide produce for the resort’s restaurants.

188 Resort Development

courses can be located near the main resort buildings, enabling guests to enjoy a quick round of golf before or after dinner. Built and constructed like regular golf courses, they feature real grass, water features, and sand traps, and are landscaped in concert with their surroundings, desert or coastal. They often take on the look of a garden and provide an attractive view from other resort amenities. Hilton Waikoloa Village in Hawaii, Gaylord Palms Resort and Conference Center in Kissimmee, Florida, and Horseshoe Bay Resort near Marble Falls, Texas, all feature creatively designed putting courses. Open Space and Nature-Based Recreation. For many resort developments, the setting is the primary attraction. Preserving attractive open space—private, public, or common—is thus a key amenity planning principle. The type and amount of open space should relate to the expectations of the targeted markets. Open-space requirements can be reduced if a government agency or land trust maintains adjacent forests, mountainsides, or waterfronts as public open space. Compared to residents of primary-home communities, residents and guests in resort communities are likely to place a higher value on open space left in its natural state. Gardens and Programmed Open Space. Open space can serve simply as a visual amenity and environmental asset, or it can be programmed carefully for recreational uses. Programming can range from something as modest as a trail to extensive landscaped gardens. At the Phoenician Resort, a 250-acre (100-ha) desert resort in Scottsdale, Arizona, a cactus garden containing 350 varieties of cacti and succulents is located on the site’s northern two acres. The Felicita Resort in Harrisburg, Pennsylvania, occupies 810 acres (328 ha) filled with flowering trees and themed gardens, including an Italian garden, an English garden, a butterfly garden, and the Nature Trail Gardens, with 30 acres (12 ha) of trails through flowering trees, streams, ponds, and waterfalls. A circle of trees surrounding a small pavilion in the resort’s secret garden accommodates small weddings, while a spacious pavilion overlooking the Italian garden is suitable for larger ones. Guests and members of the public also can take two-hour escorted tours through the owners’ private gardens. The 13,000-acre (5,260-ha) Callaway Gardens in Pine Mountain, Georgia, is devoted to regional plant and flower species, following the wishes of the resort’s founder, who was a gardening enthusiast. The project includes a 40-acre (16-ha) azalea garden with more than 3,400 azaleas and a 7.5-acre (3-ha) vegetable garden and horticultural center. Numerous woodland trails are

devoted to particular plant groups, such as the Azalea Trail, the Rhododendron Trail, the Holly Trail, and the Wildflower Trail. The Cecil B. Day Butterfly Center, a glass-enclosed conservatory, hosts 1,000 live butterflies. The resort also includes two 18-hole golf courses and one nine-hole course that are carefully integrated within this garden setting. The health and wellness trend has seen the rise of hydroponic and organic gardens. Used as a source of produce for a resort’s kitchen, these gardens are typically overseen by a specialist and are closely coordinated with the chef’s menus. The CuisinArt Resort & Spa in Anguilla (one of the Lesser Antilles islands), a pioneer in this hydroponic horticultural technology, offers tours of the garden to its guests as an educational opportunity. Nature-Based Recreation. Some highly popular recreational pursuits require only the proper terrain, climate, and setting (and sometimes specialized equipment). Chief among these are hiking, backpacking, camping, wildlife observation, scuba diving, rock climbing, fishing, and hunting. Bonita Bay Group, a Florida-based resort community developer, uses the natural environment as a major marketing tool and primary amenity for all its communities. By preserving native mangrove forests, wetlands, beaches, and other habitats, the company creates outstanding natural settings for luxury resort living. In some cases, natural areas may require continual investment and management if they are to support recreational activities. For example, Broken Top in Bend, Oregon, and the Roaring Fork Club in Basalt, Colorado, must stock their fishing ponds. The manmade lake at Hampton Lake in Bluffton, South Carolina, also is stocked so that residents can enjoy fishing. Other recreational pursuits that simply require the great outdoors—along with a good launching site and the right climatic and wind conditions—include hang gliding and hot air ballooning. Various tourist destinations in France, such as the Loire Valley, Provence, and Burgundy, are popular hot air ballooning sites, as is the Napa Valley in California. With the proper setting, a resort can maximize its appeal to practitioners of these various pursuits by providing modest support services and facilities: equipment rental, sales, and repair; trail maps; guide services and organized outings; and transportation services to off-site venues. Trail systems are an effective way to enhance open space and offer nature-based recreational activities for a

Planning and Design 189

ropes course, climbing wall or tower, zip lines, star gazing observatories, or a tree canopy walk can be located within an education facility that focuses on teaching guests about the region’s flora and fauna. This type of multifunctional ecocenter can function as a base camp for outdoor activities and excursions. Retail, Cultural, and Entertainment Amenities Amenities need not always be sports-related. Many visitors and buyers are drawn to resorts in part because of their cultural, entertainment, and retail offerings, all of which can add a level of sophistication to a property. Such amenities also can fill leisure hours in the evenings, during rainy weather, or in the off-season. In the case of the Las Vegas casino resorts or Disney World, amusement, entertainment, or gaming activities are the primary draws, but shopping and secondary entertainment facilities help to round out activities and bring a sense of place that enhances the resort experience. Retail and Commercial Facilities. Shopping is one of the primary activities of vacationers, and retail villages long have been focal points of resorts around the

DALE A. HORCHNER/DESIGN WORKSHOP

wide range of users. Exercise walking and bicycling are two activities with significant participation. Running and cross-country skiing are similarly popular. Trail systems are a highly flexible amenity that can support all these pursuits and can help organize and unify a project’s site plan. Trails can buffer adjacent uses, link various elements to premium amenities, tie a project to adjacent regional amenities, and help reduce vehicular trips and parking requirements. Trails do not, however, necessarily impart much value to adjacent real estate and may provide only a slight marketing punch, as they have become a standard and expected offering at resorts and resort communities. Among the attributes of a well-planned trail are clear destinations, appropriate safety measures, a design that accommodates various likely uses, and adequate provision for maintenance needs. The ecotourism trend popular in many exotic locations is another example of natural amenities gaining importance. Adventure activities can provide an excellent complement to ecotourism and provide opportunities for family experience or team-building events. A

Trail systems are an expected amenity; they offer nature-based activity for a wide range of users. Pictured: Colony at White Pine Canyon in Park City, Utah.

190 Resort Development

LANDDESIGN/ PHOTO BY BETH CHOMAS

Shopping is one of the most popular activities for vacationers. Pictured: Snowshoe Mountain Resort town center in West Virginia.

world. Designing and planning for commercial facilities, especially retail and restaurant operations, is often an integral part of planning other resort-related uses. In small projects, retail uses can be incorporated into a hotel, as at the Little Nell Hotel in Aspen, Colorado, where ground-level shops are part of the downtown’s retail fabric. In a freestanding hotel, retail uses are likely to be integral to the lobby or a courtyard. At the Hyatt Huntington Beach in southern California, shops and restaurants are clustered in an outdoor village-like courtyard that links the hotel to the conference center. Such a plan creates an identity for the commercial space and ensures a steady stream of customers as people walk between the two facilities. In a larger resort community, entire shopping destinations may be incorporated that are accessible from major roads to provide services not only to resort visitors but to the larger community as well—especially now that resorts have taken on a significant role as second-home communities. “Resort villages today tend to have two kinds of retail: one at the core of the village that contains more traditionally resort-oriented retail— specialty boutiques, art galleries—and another commercial center that supports the community at large, where

residents can buy groceries and pharmaceuticals,” says architect Bill Gartz of Callison. This is especially true in resorts that are remote from large communities. Intrawest built the Village at Mammoth Lakes, a 525,000-square-foot (48,800-sq-m) town center in the Mammoth Mountain ski area of central California with 276 residential units and 80,000 square feet (7,400 sq m) of retail space. Shops and restaurants along winding paths serve the resort, while a more communityoriented retail component fronts the major arterial. Resort residents and guests anticipate a different experience from what they have at home, and this expectation should be reflected in the design and planning of retail facilities. Shopping is a social and recreational event at resorts. Pedestrian-only retail villages encourage casual strolling and exploring. Themed retail is a growing phenomenon. The Grand Canal Shoppes at the Venetian in Las Vegas offer an extreme example of themed retail in a resort environment. This 510,000-square-foot (47,400-sq-m) facility has become an internationally renowned destination in itself, featuring high-end specialty retailers, restaurants, and entertainment. Patrons can hire serenading gondoliers to row them along the canals that wind through

Planning and Design 191

COURTESY OF WATG (WIMBERLY ALLISON TONG & GOO)

Vacationers seek out interesting shopping experiences. At the Venetian Hotel in Las Vegas, a 510,000-square-foot (47,400-sq-m) indoor shopping complex re-creates the canals and sights of Venice.

this miniature city. The Grand Canal Shoppes are separately owned by General Growth Properties, a Chicagobased shopping center developer and manager. Grand Boulevard at Sandestin on Florida’s northwest coast brings a Mediterranean aesthetic to a 625,000-square-foot (58,000-sq-m) shopping district that replicates a traditional urban street. The pedestrianfriendly district is organized like city blocks, with parking at the rear and a streetscape accented with landscaping, fountains, and other amenities. Another themed retail center associated with a tourist attraction is Universal City Walk, an invented “street” adjacent to and operated by Universal Studios in Los Angeles. Retail is increasingly an important part of marinas, with retail districts and waterfront promenades becoming more prevalent. “Marinas are often an excellent opportunity to create interaction with the local culture,” observes Todd Hill of EDAW. “In the Bahamas, it’s

192 Resort Development

a requirement that you include local businesses and artisans, but it’s becoming more predominant elsewhere too. That’s why people go, they’re looking for something authentic.” Atlantis on Paradise Island in the Bahamas contains several shopping venues, including the Marina Village, right off the resort’s marina. The design of its restaurants and stores draws on the region’s brightly colored clapboard houses for inspiration. In addition to luxury boutiques, the shopping center includes a gallery featuring works by established Bahamian artists. The adjacent BahamaCraft Centre specializes in handmade Bahamian souvenirs and gifts. Casa de Campo in the Dominican Republic features Altos de Chavon, a replica of a 16th-century Spanish colonial village set on a cliff overlooking the Chavon River. With its cobblestone streets and wrought-iron balconies, the village is home to local and international artists and craftspeople who teach at the Altos de

THE CORDISH COMPANY

THE CORDISH COMPANY

The Seminole Hard Rock Hotel & Casino in Hollywood, Florida, includes a 6,000-seat performance venue and 350,000 square feet (32,500 sq m) of retail and entertainment tenants.

Chavon School of Design, sell their work in shops, and show their crafts in galleries. There are no hard rules regarding commercial building types and sizes, except that structures should be sensitive to the needs of the operation (addressing such variables as visibility, convenient parking, and so on) while conveying an image that reinforces the ambience of the larger resort. One of many issues to resolve is the tradeoff between encouraging off-site access to internal commercial facilities and preserving what may be an important sense of community exclusivity. Cultural and Entertainment Facilities. Many megaresorts turn to theme parks, entertainment centers, live stage shows, cinemas, performing arts facilities, and museum-like collections to attract and amuse visitors. Such facilities run the gamut from modest to quite

elaborate. Modest entertainment uses that may be incorporated into resorts include miniature golf courses and electronic game rooms. The Palms Casino Resort in Las Vegas features a 14-screen multiplex, including an IMAX theater. On a larger scale, many Las Vegas casino resorts long have been famous for spectacular entertainers and nightclub shows; the MGM Grand includes a 16,800-seat arena hosting concerts by high-profile performers, a 740-seat theater, a 300-seat cabaret, a nightclub modeled after Studio 54, and a lion habitat with a see-through walkway tunnel. Music and performing arts are important components in many renowned resorts. Branson, Missouri, for example, draws visitors from across the nation for its country music and other shows. Resort community developers have discovered that the inclusion of per-

Planning and Design 193

forming arts facilities can add considerable value to a project. Pelican Bay, a resort and retirement community in Naples, Florida, is home to the Naples Philharmonic Orchestra, which plays in a 1,425-seat concert hall. The facility also contains a 200-seat black box theater and a three-story, 30,000-square-foot (2,800-sq-m) museum. Most of the performing arts venues in resort areas are less elaborate, however. At Deer Valley Resort near Park City, Utah, music lovers can enjoy Utah Symphony Orchestra concerts in the resort’s outdoor amphitheater; the venue, located at Snow Park Lodge, provides a casual setting in which concertgoers can picnic and enjoy the cool mountain air. Sun Valley

Resort in Idaho offers both classical symphony concerts and a jazz festival during the summer, as well as ice-skating performances. At Callaway Gardens in Pine Mountain, Georgia, Florida State University’s Flying High Circus has been performing since 1960 as part of the summer recreational program. The performers also double as teachers, instructing children in simple circus acts and games. WaterColor, a resort community on Florida’s northwest coast, is one of the hosts of Mountainfilm on Tour, a traveling film festival begun in Telluride. The festival now travels to several resorts and other venues, including Telluride, Whistler, and the Catskill Mountains.

COURTESY OF WATG (WIMBERLY ALLISON TONG & GOO)

A 500-room Sheraton Hotel is part of the Wild Horse Pass Resort & Spa outside Phoenix, Arizona.

194 Resort Development

Casinos. The rapid growth of the gaming industry

represents a potentially significant opportunity for the resort industry, including casinos tied to revitalization efforts, riverboat gambling on the Mississippi River, gaming on Indian reservations, and casino megaresorts in Las Vegas. Moreover, gaming is an important draw for many Caribbean resorts, as well as for cruise lines serving Caribbean ports and other areas. Retail and entertainment in general have come to have play a much larger role in casino-based resorts. “The gaming consumer has evolved,” reports WATG’s Raj Chandnani. “It used to be that Vegas was primarily a gaming destination—now many people traveling with the gambler don’t gamble themselves, so we are adding restaurants, pools with water features, golf courses, entertainment. . . . The casino draws people to the market.” Tribal casinos, permitted in the United States by a 1988 federal law affecting reservations and other lands subject to tribe-state compacts, have tended to be located far from major population centers. Thus, the primary users have been locals rather than vacationers. Over the last several years, however, some tribal gaming has moved closer to urban areas; at the same time, the facilities have become much larger and more elaborate. In 1994, the Verona Band of Mission Indians began operating a casino in San Diego, a 30-minute drive from downtown. A major expansion completed in 2003 added a 400-room hotel, an 18-hole golf course, and a 70-seat wedding chapel, while expanding the casino to 315,000 square feet (29,300 sq m), with 2,000 slot machines and 70 game tables. The Gila River Indian Community owns the Wild Horse Pass Resort and Spa outside Phoenix. The resort includes a 500-room Sheraton hotel, a 36-hole golf course, an equestrian center, a 17,500-square-foot (1,625-sq-m) spa, and a 167,000-square-foot (15,500-sq-m) casino. Tribes have become adept at negotiating franchise and joint venture arrangements that guarantee them low risk, a substantial portion of revenue, and extensive opportunities for training and employment. “In the last few years, tribal groups have been bringing in people very knowledgeable in the gaming industry from the major gaming companies,” says RTKL’s Todd Lundgren. “Either they partner with companies like Harrah’s or hire people from those companies to work for the tribe.” The market for resort casinos also has exploded in Asia, particularly in Macao. In 1999, the region’s new leader, Edmund Ho Hau Wah, broke up the longstanding monopoly that the Sociedade de Jogos de Macau (SJM)

had held on the gaming economy, allowing Nevada’s Wynn Resorts and the Las Vegas Sands Corporation to share the market along with SJM. The Wynn Macau opened its first phase in 2006 with 600 hotel rooms and suites, 100,000 square feet (9,300 sq m) of casino gaming space, restaurants, a spa, retail, entertainment, and meeting facilities. The Venetian Macao, an even larger replica of the gambling resort in Las Vegas, opened in 2007 with a 550,000-square-foot (51,000-sq-m) casino offering 3,400 slot machines and 870 game tables. The project also includes 3,000 all-suite guest rooms; more than one million square feet (93,000 sq m) of retail space; a 15,000-seat arena; and 1.2 million square feet (111,500 sq m) of meeting, convention, and exhibit space. Singapore also is seeing major resort development, with two megaresorts in progress as of 2007: the Marina Bay Sands and Resorts World at Sentosa, both of which will include significant gaming components. Residential Products and Design Residential products can be defined in two ways: by physical unit type and by type of ownership. Unit types include single-family detached, single-family attached (also called townhouse or rowhouse), and an assortment of multifamily products. Ownership types include fee-simple, condominium, cooperative, fractional interval or timeshare ownership, and ownership clubs. A resort community may offer more than one type of ownership and an array of unit types. The physical characteristics of residential products must reflect a combination of factors: the market segment(s) to be served, the physical requirements of a particular site, and financial parameters. Ownership types also must target appropriate markets and must be suitable for the unit types and the overall resort concept. Resort homes frequently take on a different character than primary homes, generally reflecting a more casual lifestyle and a relaxed environment. They also place a greater emphasis on outdoor living areas; indeed, the home’s environment is usually a primary asset of the resort experience. At Roaring Fork Club (see case study, chapter 7) in Basalt, Colorado, the architecture is based on the great camps of the Adirondacks. While the homes provide all the luxuries, they employ log, pine board, and fieldstone construction for a rustic cabin aesthetic and to project the ideal of living in harmony with the environment. Another Colorado resort with a rustic aesthetic is Rendezvous, located in the Fraser Valley near Rocky Moun-

Planning and Design 195

ROBERT SHAFER VICTOR INTERNATIONAL

The cabins at Roaring Fork Club in Colorado use pine board and fieldstone for a rustic aesthetic.

Single-family homes at Bay Harbor, Michigan, a mixed-use resort on the shores of Lake Michigan.

196 Resort Development

tain National Park. Here the architecture was inspired by that of old mining towns, with steep corrugated metal roofs and rough-hewn wood siding painted in vibrant colors. Strict architectural guidelines have ensured cohesiveness and quality across the product lines that include townhomes, cottages, and custom homes. Because they often involve custom-designed homes, second-home communities usually include strict design guidelines to achieve a desired image or architectural style. The following discussion surveys the spectrum of housing designs available in resort settings, ranging from single-family housing to apartments in multifamily buildings. Single-Family Detached Housing. By definition, a single-family detached house is a freestanding structure that occupies its own lot. Such housing may encompass a wide range of densities and configurations. In recent years, the high cost of land and development and the shrinking supply of developable land have brought about major changes in the design of singlefamily units. Overall, lots have become smaller and more complicated in their configuration. With smaller lots, designers need to consider issues related to privacy, usable outdoor area, entrances, and streetscapes early in project planning. Developers must understand these issues and the potential pitfalls associated with them. In fact, the specific single-family product line should be based, in part, on a careful examination of the site’s capacity and configuration. Achieving the potentials of each landscape requires creative site solutions, particularly in the face of a shrinking supply of suitable sites and the need to use previously passed-over lands that may have significant physical impediments such as drainage issues, steep slopes, poor soil conditions, or environmental hazards that require mitigation. What was once an abandoned cement plant and limestone quarry on Lake Michigan’s shoreline has been reclaimed to become Bay Harbor, a 1,200-acre (485-ha) luxury residential resort community in northern Michigan. Designers created a linear version of a neotraditional plan to take advantage of the long, narrow site. Narrow, rectangular lots front most of the shoreline, maximizing the number of homes with lake frontage, thus maximizing land values. In response to the real estate values associated with an ocean beach, Sea Pines Plantation on Hilton Head Island, South Carolina, designed a network of “double-T” residential streets for its ocean frontage.

In contrast to the typical coastal road with strip development paralleling the beach, the double-T network creates a series of culs-de-sac that lead to the beach from a parallel road deep in the site’s interior. The culs-de-sac are crossed twice at the beach end by short intersecting streets to increase the capacity for lots—hence the term “double T.” A pattern of culsde-sac and paths creates a private residential environment, affords each resident a direct passageway to the beach, and dramatically increases the wedge of high-value real estate fronting on the ocean. Conventional lot size in resort and recreational communities varies widely by market, depending on land costs and the availability and physical attributes of developable land. The typical conventional lot is square or rectangular and ranges from 4,000 to 12,000 square feet (370 to 1,115 sq m), although lots of an acre (0.4 ha) or larger are common in rural areas where land is abundant, or where much of the land is not developable and cannot be subdivided into smaller building lots. Sometimes it is impossible or undesirable to maintain uniform lot shapes and sizes, especially when accommodating irregular site boundaries, natural features, amenity access needs, curvilinear streets, and culs-de-sac. Two variations of the conventional lot are pie-shaped lots and flag lots, which are also called pipestem lots. Pie-shaped lots are common around culsde-sac and curving streets; they are usually narrower at the street and wider at the rear of the lot. Flag lots provide access to what otherwise would be a landlocked parcel; only the driveway of a flag lot fronts the street. Similarly, flag lots also can be used to maximize the number of homes with direct beach access. The design places a row of lots along the beach and a second row directly behind the first row; the second row faces onto a street paralleling the beach. A narrow drive from the street provides access to the homes directly on the beach, while the homes on the street parallel to the beach have beach access via a narrow strip of land that runs between the beachfront homes. Increasingly, providing common access to beachfront and other amenities has gained favor over maximizing private access with unusual lot configurations. Zero-Lot-Line and Patio Houses. Zero-lot-line houses were fairly common in cities in the early 1900s and made a comeback during the 1960s, addressing the needs for higher density and greater affordability. These houses are characterized by narrow but deep lots. Instead of providing two side yards that might each be only five feet (1.5

Planning and Design 197

LOKAHI VENTURES, LLC

Wailea Beach Villas, on the island of Maui, are fourplex luxury units linked to amenities by a pedestrian path.

LOKAHI VENTURES, LLC

Interior plans.

198 Resort Development

door decks and gardens. These cottages range in size from 975 to 1,800 square feet (90 to 167 sq m). Other Lot Types. Many other lotting patterns can be used. By keeping lots at a more traditional width (55 to 70 feet, or 17 to 21 m) but reducing the depth to the same dimensions, developers can achieve a density of about seven to eight units per acre. On the other hand, a wide-shallow lot offers the image from the street of a traditional single-family neighborhood. It exposes more of the house’s front and orients the front door directly to the street. While wider lots add proportionately to the development costs for streets, utilities, and landscaping, many buyers willingly pay these additional costs in exchange for more street or shoreline frontage. Alternate-width lots (sometimes called odd lots) combine narrow and wide lots to offer a more varied streetscape and a wider range of product types. Generally, alternate-width projects do not achieve densities as high as those attainable by using one type of narrow lot, but the versatility of the approach allows for successful applications. Attached Residential Products. Townhouses are single-family attached units, normally two to three stories in height, sharing common (or party) walls with adjacent units. Narrow lots are the rule in townhouse developments; widths generally range from 22 to 38 feet (7 to

MOUNTAIN LODGE AT TELLURIDE

m) wide, for example, the house is located on a side property line to create a more usable ten-foot (3-m) -wide yard along the other side of the unit. Zero-lot-line houses are typically plotted on lots of 3,000 to 5,000 square feet (280 to 465 sq m) at densities of about five to seven units per acre. Patio lots are usually square and range from about 2,000 to 3,500 square feet (185 to 325 sq m), yielding up to seven units per acre. Patio houses are typically one-level homes, but they also may be two stories and may or may not have basements. Each patio house is attached to one or more others, yet each enjoys adequate privacy, with its outdoor areas consolidated into one or more garden courts either partially or completely enclosed by rooms or privacy walls. Patio homes have been used throughout the country but frequently are modified to meet regional housing preferences. At the Carneros Inn (see case study, chapter 7) in Napa, California, ownership units consist of 24 for-sale courtyard homes that comprise 2,400 square feet (223 sq m) of indoor living space with about 1,400 square feet (130 sq m) of outdoor living space. Throughout the homes, French doors open out to courtyards and decks, enabling an easy, outdoor lifestyle. The inn itself is made up of 86 individual single-level guest cottages, each with a bedroom, bath, and private, enclosed out-

Mountain Lodge at Telluride in Colorado includes a range of residential unit types from studio condos to luxury six-bedroom cabins.

Planning and Design 199

units’ requirement for a limited amount of developable land close to the slopes. With ski in/ski out units especially popular, townhouse development can maximize the number of available units. Attached products are also popular for resort rental programs, as the rentals can be priced affordably and thus appeal to the broad middle of the market. Okemo Mountain Resort (see case study, chapter 7) in Ludlow, Vermont, includes a mix of flats and townhouse-style units for its ski in/ski out homes. The units are sold as either quarter shares or full ownership. One of the buildings has combinable units so that buyers can purchase a single studio-sized module or combine units on multiple levels to create up to a three-level, five-bedroom townhouse. At the Glacier Club in Durango, Colorado, a townhouse configuration was used adjacent to the golf clubhouse. By varying the roofline with multiple angles, windows, and dormers, the townhouse buildings appear to be large, single-family cabins. Garage entrances are rotated 180 degrees around a central courtyard so that the garage doors are not visible from the street. Careful positioning minimized the impact of grading, and selective clearing enabled preservation of native vegetation within 15 feet (4.5 m) of the buildings. The residences at Doonbeg Golf Club in Ireland (see case study, chapter 7) consist of 80 townhouse-style one- and two-level homes (called cottages), clustered

PUENTE DEL MAR

12 m). The overall density achievable in a townhouse project varies with natural site conditions, the size of the units and building clusters, and parking requirements. Generally, six to 12 units per acre (0.4 ha) is the norm, but densities can range as high as 20 units per acre when building clusters are closely sited. The layout of townhouse units can be altered to fit a particular piece of land, its location, and the price range of the market. Townhouses can offer several advantages over single-family detached houses: lower construction and land development costs, conservation of land and preservation of open space by using less land for a given number of houses, lower maintenance requirements, enhanced energy efficiency, and increased security for both the house and the neighborhood. Resorts frequently incorporate townhouses and other attached products because of their affordability and ease of maintenance—both important considerations for second-home buyers. In many cases, attached units sell as condominiums, further reducing the need for individual maintenance, since outside areas are maintained by the condominium association. Attached products find application in a variety of settings, including waterfront locations and adjacent to ski slopes or in any other setting that requires a maximum number of housing units near an amenity. Ski resorts, for example, rely on attached products because of the

In Acapulco on Mexico’s Pacific coast, Puente del Mar is a resort community of 710 attached single-family homes and 848 multifamily units on a 25-hectare (62-ac) site.

200 Resort Development

GINN HAMMOCK BEACH RESORT

The Club at Hammock Beach, on Florida’s Palm Coast, is a 12-story condominium building offering units from one to four bedrooms.

around paved courtyards. The units include four bedrooms and occupy about 2,400 square feet (220 sq m). After purchase, they can be put into the resort’s rental program for use by short-term guests. Multifamily Residential Products. In multifamily housing, five or more units are contained within a single building. In most instances, single-level units (called apartments or flats) are stacked atop each other. Multifamily buildings can be categorized into three fundamental types based on building height: two- or threestory low-rise structures (sometimes called garden apartments), four- to eight-story mid-rise structures, and high-rise structures. Low-rise apartment buildings are typically two or three stories without an elevator and can achieve densities of ten to 25 units per acre (0.4 ha). Mid- and high-rise multifamily buildings are generally four stories or more and are equipped with elevators, the number of which is a function of the building’s height, number of units, and local building codes. As a rule, buildings over six floors are constructed of steel frame or reinforced concrete, while low-rise buildings are typically wood framed. In resorts, multifamily properties are invariably marketed initially as condominiums, although their buyers often place the units in rental programs. Some multifamily properties also are operated as condominium hotels, where each room is individually owned; some or all of the rooms can be placed in a rental program.

Mid- and high-rise buildings vary in shape as well as in height. Most common are the rectangular slab, the tower, and the multiwing building. A trend in the design of these buildings has been to shed the blocklike grid in favor of more articulated building forms. With the rising cost of land, contemporary buildings often incorporate underground parking. Alternatively, parking can be provided at grade but below a platform that provides space for landscaping or recreational features such as swimming pools or tennis courts. Mid- and high-rise multifamily housing is especially popular at oceanfront resorts. It allows the developer to site a large number of units in proximity to the beach and thereby take advantage of attractive views, as well as easy access. Such housing, however, must be integrated carefully into the beachfront environment, lest it detract from this invaluable asset. Creating a wall of high-rise buildings along the beach is not a useful strategy for most resorts. Further, regulators in most locations will not permit such a configuration. High-rise multifamily buildings along beachfronts often incorporate design schemes that place all units on the oceanfront side of the building. Such designs may involve “V” shapes, single-loaded corridors for unit access, and a high length-to-depth ratio. On Florida’s northeast coast, Hammock Beach is a 1,000-acre (400-ha) resort with a full complement of amenities and housing types. Among them is the Club

Planning and Design 201

Demystifying LEED for Hotels To date, the U.S. Green Building Council has awarded its LEED (Leadership in Energy and Environmental Design) certification to only five hotels, four of which are in the United States: the Gaia Napa Valley Hotel & Spa in American Canyon, California; the Orchard Garden Hotel in San Francisco; the Hilton Vancouver Washington Hotel in Vancouver, Washington; the Marriott Inn and Conference Center, University of Maryland University College (UMUC), in Adelphi, Maryland; and the Kandalama Hotel in Dambulla, Sri Lanka. Of these five, only one has achieved LEED Gold certification— the Gaia Napa Valley. Since the start of the LEED program in 2000, hundreds of other buildings had been certified before the first hotel qualified: the Inn and Conference Center at UMUC in October 2006. Built with public funds, 126 of its 237 rooms are LEED certified. The Hilton Vancouver is a full-service hotel with an upscale restaurant,

30,000 square feet (2,800 sq m) of meeting space, and 226 rooms. The Gaia Napa Valley Hotel & Spa (133 rooms) and the Orchard Garden Hotel (86 rooms) are smaller, independent luxury hotels. At one time, many observers thought that only such boutique hotels— where guests expect a more eclectic experience—could achieve LEED certification. There are four levels of LEED certification: Certified, Silver, Gold, and Platinum. Each level takes into consideration a project from conception to its operational phase— that is, from initial blueprint through internal and external management and to its environmentally conscious future. A structure must earn 26 to 32 points to achieve the basic certification, 33 to 38 points to earn Silver, 39 to 51 points for Gold, and 52 to 69 points for Platinum.

at Hammock Beach, a 12-story high-rise condominium building. Units range from one to four bedrooms and from 750 to over 3,000 square feet (70 to over 280 sq m). Owners can choose to rent their units through the resort’s rental program.

commercial hotels. As a result, a resort hotel’s facility requirements and sizing are significantly greater and more complex than those at other hotel product types. “Lobbies at resort hotels are more of a community gathering place, rather than just a place where people check in and leave,” observes RTKL’s Todd Lundgren. “They are almost more like living rooms.” They might include a lounge, bars, a restaurant, live entertainment, retail space, and other services, acting as a hub that provides access to other areas of the resort. Outdoor courtyards are also expansive, often including major water features and landscaping. Because guests tend to stay longer at resorts and often bring their family members, guest rooms are generally larger than standard hotel guest rooms, and suites make up a higher percentage of the overall number of rooms. In markets offering a minimal selection of nearby restaurants and bars, a resort hotel’s food and beverage operations must respond to increased demand. A variety of cuisines can accommodate higher guest retention levels. Swimming pool and deck areas as well as other recreational facilities should be expansive to satisfy the needs of both children and adults. Further, resort hotels generally offer an extensive range of recreational facilities, which may include a golf course, casino gaming, skiing, and water sports. In response to market demands and increasing development costs, many resort hotels have evolved into

Hotel Products and Design While an understanding of market dynamics is essential to the success of a hotel development, the attributes and quality of a property’s layout, design, and land plan are equally as important. A property’s physical attributes influence the overall guest experience as well as potential revenues. The increasing importance of residential components, material shifts in consumer demographics and value perception, increasing segmentation of the market, increasing environmental concerns, and rapid technological advances have redefined the fundamental nature and scope of resort hotel facilities. The typical resort hotel historically has been designed as a self-contained facility, with a range of on-premise facilities and recreational amenities. Its selfcontained nature distinguishes the resort hotel from other hotel product segments; it can readily satisfy most individual or group needs, thereby encouraging guests to remain on the premises. Because they orient themselves toward the vacation and leisure market, most resort hotels experience a much higher average length of stay than typical

202 Resort Development

Source: Jim Butler, “Demystifying LEED for Hotels,” Urban Land, February 2008, p. 142.

mixed-use resorts that encompass a range of additional land uses strategically located to yield synergistic relationships. Working with market and financial feasibility consultants, land planners and architects have played an integral role in identifying viable land use linkages and successfully implementing transitions in resort facility design. A significant number of the major resorts built since the 1980s are mixed-use developments in which the hotel structure serves as the center for social activities. At the same time, resort hotels are shrinking in size and often include a residential component. “Our firm is working on many, many resort projects worldwide, and I can count on one hand the number of resorts that rely on a hotel alone, with no other residential component,” reports John Hill of HKS Hill Glazier Studio. “Luxury hotels that might have been in the 250- to 400-room range ten years ago are now typically in the 120- to 250-room range. Some resort hotel projects we’re working on are even from 40 to 80 rooms, with a very balanced rental pool of for-sale residential products. Given the high cost of construction, the only way to recoup costs is to build residential product and sell it— the hotel is just adding value. It’s often a loss leader, but a very effective loss leader.” Environmental requirements, coupled with growing public concern over resorts’ ecological impacts, increasingly influence the design of resort hotels. Resort developers and architects are responding to these changes and concerns by specifying ecologically sound building materials and planning for high energy efficiency. For example, the Hotel Terra in Jackson Hole, Wyoming, relies on reclaimed, hand-hewn lumber and a steel structure using 80 percent recycled content. Extensive glazing and a streamlined profile maximize natural light. Energy-saving heating and cooling systems and highly efficient windows reduce energy use, while dual-flush toilets, low-flow water fixtures, waterless urinals, and low-water native landscaping help conserve water. Carpets, pads, sealants, paint, and adhesives emit low levels of volatile organic compounds. Resort properties are also more likely to incorporate the natural attributes of their given location. At many resort hotels, interior design choices reflect the culture of the surrounding area through the use of indigenous materials, local art, and native colors and styles. Rhonda Rasmussen, director of interiors at WATG, comments that “resorts are realizing that they need to differentiate themselves from their competitors in an increasingly crowded marketplace. One way they can do that is by

incorporating and celebrating in their design what is unique to their locale.” Siting and Exterior Design. Whether a resort hotel is freestanding on its own site or sited within a larger community, it must be situated in a superior location that provides attractive views and easy access to amenities. Placing a hotel in the very best location, however, may not be the right choice, depending on the market; in some cases, residential properties should be sited for the best views. Other considerations may influence siting as well. “Everything depends on who the customer is and what they want out of a resort trip,” says Todd Lundgren. “The design might take advantage of the site by giving individual units excellent views, or, in an effort to create a more exclusive, private place, the building may be sited to provide people with excellent views on their trip between their room and the restaurant or lobby, but the unit itself is much more private. Today, hotels are not necessarily trying to expose the entire experience all the time—if it unveils different aspects of the place in different places, people don’t have the same experience every time every day.” If a hotel is in an oceanfront community, it will likely benefit from being located as close to the ocean as possible. If it is in a mountain location, dramatic mountain views are essential. If it is located in a golf course community, it should be sited to provide attractive views of the golf course. At Hammock Beach, the hotel offers attractive views in every direction: the ocean and golf course on one side, and the intercoastal waterway, lakes, and golf courses on the other. Clearly, though, practical constraints must enter into siting decisions. Large hotel facilities must be set back from oceanfronts and cannot be easily placed at the top or on the side of a mountain. And they cannot always be surrounded by a golf course. Moreover, a hotel must not intrude on sensitive areas or detract from its natural setting. Ultimately, the principal guideline in siting is to provide an impressive visitor experience and to display the setting to best advantage. Water features and other landscape elements can help establish an attractive outdoor setting, especially in beach and desert areas. For example, the Maui Prince Hotel at Makena Resort in Hawaii surrounds an Asian meditation garden with waterfalls, carp-filled streams, and stone paths. Every window and private lanai has ocean views. Many resort hotels, such as southern California’s Montage Laguna Beach, are designed around a swimming pool or other attractive central space.

Planning and Design 203

FIDDLER’S CREEK, A GULF BAY COMMUNITY

Water features such as swimming pools can be the focal point of a resort. Pictured: Fiddler’s Creek in Naples, Florida.

The quality of the hotel facility itself can establish an image for the project. Positioning hotels as the finest of their kind—whether through their franchise affiliation, distinctive architecture and design, or superior service— reinforces a similarly prestigious image for the resort community as a whole. The Boca Raton Resort & Club on Florida’s Gold Coast, for example, began with a premier hotel facility in the 1920s. Subsequent owners have built a large and exclusive resort community around the facility, drawing successfully on the hotel’s high-tone image. Resort guests, especially at upper income levels, have clear expectations, and a large part of those expectations revolve around architecture. A resort hotel’s architectural style should be sensitive to its setting. Hotels in ski resorts, for example, generally reflect a mountain setting, perhaps by incorporating a rustic quality. The Sun Valley Lodge and the Sun Valley Inn in Idaho set important design precedents. The 148-room lodge, built in 1936 by Averell Harriman, is still promoted as a place where a guest can “rough it in style.” The 106-room inn was built in 1937 and conveys the look and feel of a comfortable chalet; both hotels incorporate rustic design elements amid elegant country French decor. The two hotels recently underwent a $20 million renovation to provide central heat and air conditioning, wireless Internet, and plasma TVs, keeping pace with current guests’ expectations.

204 Resort Development

Oceanfront hotels should include balconies that take advantage of ocean views and breezes. Four Seasons Resort Hualalai in Ka’upulehu-Kona, Hawaii, not only offers ocean views but also capitalizes on the site’s other natural resources; its construction involved preserving existing anchialine ponds and restoring native vegetation. Its two golf courses are surrounded by ancient black lava. To minimize the intrusion into the treeless desert landscape, a hotel in a desert setting might feature a low-profile structure and an organic design. Such a lodging can be spectacular without overstated architecture. At the JW Marriott Starr Pass Resort and Spa in Tucson, Arizona, low-profile buildings are sited with mountains in the background; the architecture is dominated by the desert setting, and the built elements take second place to the natural wonders. At the Loews Ventana Canyon Resort, also in Tucson, a 400-room hotel was designed as a low-rise structure to maintain the continuous view of the surrounding mountains and saguaro cactus forest. On the other hand, a hotel in a resort that features a created amenity such as a theme park need not be as restrained, and in fact may be designed with an image that is distinctive and playful. Disney Development Company has created a variety of themed hotels within its Disney World resort near Orlando. These hotels have been inspired by national parks lodges, Polynesian set-

RNM DESIGN

Disney’s Old Key West Resort in Orlando, Florida, is a themed hotel based on the aesthetics of Victorian Key West.

tings, and the grand turn-of-the-century Hotel del Coronado. The Walt Disney World Swan and Dolphin hotels, designed by Michael Graves, were pioneering examples of “entertainment architecture”; these two hotels on adjacent sites incorporate large dolphin and swan sculptures into the buildings’ architectural profiles. Whatever the style, resort hotel architecture should be distinctively different from that of commercial hotels. Visitors make a discretionary purchase when they stay at a resort hotel, and they will be less likely to do so if they find a facility ordinary or mundane. Guest Rooms. Resort hotel rooms should make guests feel comfortable, secure, and pampered. No longer viewed as merely places to sleep, resort guest rooms have evolved from the standard hotel accommodation of one or two beds, a dresser, a television, a telephone, a bathroom, and a vanity area. Instead, a more residential approach is being taken toward a room’s spaciousness and the selection of lighting, fixtures, and furnishings. Today’s resort guests demand many of the comforts they enjoy at home, which may include ; an expanded or oversized guest room or suite; ; smoke-free rooms; ; an expanded, luxurious bathroom, with fixtures that may include two sinks, a separate tub and shower, and an enclosure with toilet and bidet; ; an outdoor shower; ; a writing desk with electrical outlets and wireless Internet;

; a sophisticated telephone system (e.g., two lines, voice mail, and in-house autodialing); ; satellite television and video on demand; ; an honor bar with a refrigerator; ; an in-room coffee maker; and ; a large outdoor balcony or patio, including large retractable glass doors that provide views and an easy flow from room to balcony. A particularly important element is the bathroom, which is growing in size and luxury. In some upscale markets, bathrooms occupy nearly half of the guest rooms’ square footage and include a TV, soaking tub, and separate shower. At Le Touessrok in Mauritius, guest rooms measure nearly 700 square feet (65 sq m), and the bathrooms include freestanding stone tubs, sandblasted glass shower partitions, dual granite vanities, and his-and-hers closets. CD and DVD players and video games equipment have joined the TV for in-room entertainment. Suitable soundproofing and energy conservation measures are increasingly important in guest room design and materials selection. Wireless technology is not only a selling point but also can be a cost saver. Wireless thermostats are cheaper to install, and wireless Internet access is easier to retrofit in an existing property than running cable. Wireless motion sensors can detect whether guest rooms are occupied and can turn off lights and lower temperatures without sacrificing guests’ comfort. At St. Martins Lane Hotel in London, designed by

Planning and Design 205

INTERIOR DESIGN BY WILSON ASSOCIATES

INTERIOR DESIGN BY WILSON ASSOCIATES

Guest room and bath at Las Ventanas al Paraiso, a Rosewood Resort in Los Cabos, Mexico.

Philippe Starck, guests can manipulate the ambience of their rooms using their iPods. Interactive light displays in every guest room encourage guests to personalize their space, turning this Covent Garden hotel into an ever-changing mosaic of color. The hotel’s exterior takes on the visual expression of its guests by displaying the brightly colored rooms through its glass facade. U.S. hotels must comply with the Americans with Disabilities Act (ADA) regulations, which mandate numerous previously optional improvements, including wheelchair access and a minimum number of rooms designed to accommodate guests with disabilities. The emergence of the family market as a significant leisure submarket places additional demands on resort guest rooms. Families generally prefer oversized guest rooms and suites and, in many cases, require a variety of special features. In particular, families with small children expect rooms equipped with safety latches on doors, child-proof safety plugs, and a high chair. In some hotels, a “lending desk” offers games and toys. The commercial travel and corporate group submarkets also exhibit needs that influence the design of guest

206 Resort Development

rooms in resort hotels. To conduct business from their guest rooms, today’s business travelers require functional, well-lighted work areas, telephones with multiple lines and voice mail, data ports, and wireless Internet access. Food and Meeting Facilities. Resort hotels should provide high-quality, diverse food and beverage offerings in attractive settings to attract discretionary guests. With hotels becoming smaller, however, dining venues must become more flexible. “It used to be you would have several restaurants in the hotel to keep your clientele on the property as long as possible,” comments John Hill of HKS Hill Glazier Studio. “A hotel might have had a three-meal restaurant, a fine-dining restaurant, a pool bar and grill, and a ‘19th hole’ in the golf clubhouse. With today’s smaller hotels, however, there might be just one restaurant offering three meals, designed in such a way that it can change its character from day to night, from informal to formal— supplemented with a pool bar and grill, and perhaps a specialty restaurant in the golf clubhouse.” Larger family resorts might affiliate with a well-recognized franchise. Fast-food giants such as Pizza Hut have

JW MARRIOTT

JW MARRIOTT

Ginga Taste, located in a freestanding building, is one of several restaurants at the JW Marriott, Phuket, Thailand.

established franchise outlets in many U.S. hotels and resorts. High-end resorts increasingly are leasing food and beverage operations to a third-party restaurateur recognized for a signature menu theme or celebrity affiliation. Montage Laguna Beach brought in celebrity chef James Boyce to serve as executive chef of its signature restaurant, Studio. Chef Michael Mina has established restaurants at a number of resorts, including the MGM Grand and the Mandalay Bay Resort and Casino in Las Vegas and the Borgata Hotel and Casino in Atlantic City. Such outside operators enable the resort to enhance the quality and diversity of its food and beverage service while enabling its management to focus attention on other aspects of the resort. Relinquishing control of food services can, however, pose a major risk for some resort hotels. Accordingly, any agreement with a third party should be carefully structured to minimize potential problems. The group market segment, expected to continue as an important source of demand for resort hotels, also is influencing food service operations, as well as the design of conference facilities. As a result, improvements and renovations to many existing resorts have included expansions of or upgrades to banquet and meeting facilities. New resorts also are incorporating a greater range

of and larger public facilities as part of their overall development programs. Further, to satisfy the growing needs of meeting planners, conference spaces must be sufficiently flexible and capable of subdivision into a range of configurations. Meeting facilities should include attractive outdoor areas for receptions, dinners, and other special events; these spaces can be especially effective in differentiating a resort’s conference facilities from more mundane nonresort conference spaces. Timeshare and Vacation Ownership Products Both physically and strategically, vacation ownership products have evolved dramatically over the past several decades. Most timeshares during the 1970s began as conversions of hotels, apartments, and especially condominiums that could not sell their full ownership. Although some vacation ownership products are still conversions, roughly 90 percent of all projects today are purposebuilt.18 Moreover, vacation ownership products are now much more flexible. Developers can offer buyers the option of designing a vacation annually, depending on length of stay, location, size of unit, and season. Timeshare and vacation ownership products are characterized as much by their ownership structure as by their physical design. Unlike other resort housing

Planning and Design 207

HILTON GRAND VACATION CLUB

Hilton Grand Vacations Club on the Las Vegas Strip is one of the largest time-share properties in the world: four high-rise towers totaling 1,514 units.

products, the nature of the ownership structure—and the flexibility and benefits that go with it—is now the major selling point in the timeshare sector. Hotels that include timesharing, fractional units, condo hotels, or club ownership require designs that balance the needs of owners with those of short-term guests. Owners are likely to prefer a greater level of privacy and security beyond that typically afforded by a hotel, and so may want their own separate fitness facility, deck, elevator, or lobby, or owners-only access to shared spaces. Such is the case at Doonbeg Golf Club, where owners have access to members-only dining rooms, lounges, and locker rooms. Owners also generally have access to the hotel’s housekeeping services, maintenance services, and room service, which requires the hotel to maintain larger support spaces. For-sale units typically require higher-quality finishes and furnishings than hotel rooms. The Ritz-Carlton Club at Aspen Highlands, Colorado, a fractional club ownership property, offers two- and three-bedroom units

208 Resort Development

with balconies and deluxe finishes such as fieldstone fireplaces and marble baths. Designed by Robert A.M. Stern, the property exudes style and comfort within a mountain ambience. Units come fully furnished with every luxury, from original western-themed art to kingsized beds outfitted with Frette linens. Similarly, innovative contemporary design and luxurious finishes are hallmarks at Setai Resort & Residences in Miami Beach. The property comprises two buildings: a 40-story building with 163 condominium units, and a refurbished eight-story art deco building housing 75 condo hotel units—a mix of studio suites and junior suites that include a living room and bedroom. The condo hotel units feature teak and granite floors, built-in teak cabinetry, flat-screen LCD TVs, Bose sound systems, and Asian-influenced furnishings in a subdued color palette. Studio suites average 582 square feet (54 sq m), and the one-bedroom units average 610 square feet (57 sq m). If owners allow their units to be rented when they are not at the resort, they need additional storage space.

In some cases, the design of the units allows part of the unit to be secured solely for the owners’ use. For purpose-built timeshares, this “lock-off” unit has become an industry standard, offering greater flexibility and a perceived increase in value. The Disney Vacation Club in Orlando was among the first to adopt lock-off units as its core product. At 1,395 square feet (130 sq m), the Disney two-bedroom units can be divided into a one-bedroom unit and a separate studio unit. A timeshare owner can use the one-bedroom portion of the timeshare unit at a given time in the year and still have the opportunity to use the studio section at other times. Owners can “bank” the points saved by not occupying the lock-off unit and use it at another time. A member also can apply saved points toward another vacation. Without proper attention, interior design treatments can become a financial burden to both the developer and owner. Units in continual need of interior repair and attention are difficult and expensive to maintain and will lower the perceived quality of both the unit and the vacation experience. Therefore, developers must commit themselves to supplying high-quality, durable products and finishes that do not become quickly worn or dated and that will stand up to the particular climate. To be successful, resort developers must understand the importance of the resort experience from their visitors’ perspective. Attention must be paid to the interplay of the natural environment, history, culture, art, food, architecture, and recreation, as well as the group and family experience. Developers should address changing demographics and emphasize the sustainability of their projects. Resort communities will succeed if they create memorable places that can be lived in and visited for years on end by future generations.19

7. Leslie Hoffman, “Rebuilding after Disaster,” Urban Land, October 2007. 8. Jeff Mongan, John G. Mansour, John C. Hill, Jr., and Robert C. Glazier, “Redefining Resorts,” Urban Land, February 2007, p. 74. 9. National Sporting Goods Association, “Ten-Year History of Sports Participation,” www.nsga.org/files/public/Ten-YearHistoryofSportsParticipation4web080313.pdf. 10. Peter Blais, “A Mountain of an Amenity,” Urban Land, August 2002, pp. 98–99, 104–6. 11. David A. Mulvihill et al. Golf Course Development in Residential Communities (Washington, D.C.: ULI–the Urban Land Institute, 2001), p. 99. 12. Michael J. Hurdzan, Golf Course Architecture: Evolutions in Design, Construction, and Restoration Technology (Hoboken, N.J.: John Wiley, 2006), p. 37. 13. Desmond Muirhead and Guy L. Rando, Golf Course Development and Real Estate (Washington, D.C.: ULI–the Urban Land Institute, 1994), pp. 44–47. 14. Ibid., p. 108. 15. Mulvihill et al., Golf Course Development, p. 149. 16. Howard J. Wolff, “The Room Morphs,” Urban Land, November/ December 2003, pp. 89–94. 17. David Sangree, “Indoor Waterparks Supply and Demand Growth in ’07,” Lodging Hospitality, September 1, 2007, p. 39. 18. Gary A. Terry, “Resort Timesharing and Multiple Ownership Products and Their Benefits to Resort Hotels and the Community” (unpublished paper, Jones, Waldo, Holbrook & McDonough, PC, Washington, D.C.). 19. Rebecca Zimmermann, “Resort Survival,” Urban Land, August 2002, p. 52.

Notes 1. Charles Fraser, presentation at ULI seminar, “Trends and Issues in Resort Development,” Pebble Beach, Calif., June 21–22, 1993. 2. Ibid. 3. International Ecotourism Society, “Definitions & Principles,” www.ecotourism.org/webmodules/webarticlesnet/templates/ eco_template.aspx?articleid=95&zoneid=2. 4. Edward T. McMahon: “Sustainable Destinations,” Urban Land, August 2005, pp. 60–64. 5. “About Ecotel Certification,” www.concepthospitality.com/ecotel/ECOTELAbout.htm. 6. Hitesh Mehta, Ana Baez, and Paul O’Loughlin, eds., International Ecolodge Guidelines (Burlington, Vt.: International Ecotourism Society, 2002), p. 5.

Planning and Design 209

210 Resort Development

5. Operations and Management

The developer’s role in the operations and management of a resort or second-home community varies greatly depending on the type and scale of the development and the stage in the development process. In small, strictly second-home communities, a developer’s involvement in ongoing management may be limited and simply terminate with the sale of the last lot; the management system required for such a property could involve merely setting up a community association and planning for its transfer to the homeowners. In contrast, large-scale resort communities might have a variety of housing types, from hotels in various forms and for-sale single-family housing to timeshare condos, fractionals, and rentals for employees. Depending on a resort’s location and market focus, it might have a variety of major amenities such as golf courses, ski lifts, a spa, a casino, a water park, or a marina that require specialized operations, management, and marketing skills. In some large and diverse multiuse resort communities, the management effort is akin to running a small city, and even includes political considerations.

Las Ventanas al Paraiso, a Rosewood Resort, Los Cabos, Mexico.

WILSON ASSOCIATES, INTERIOR DESIGN

This chapter summarizes the issues related to resort operations and management. An understanding of these factors will help developers find and choose appropriate third parties to handle day-to-day management functions. Resort owners often hire outside firms with expertise in operations and management, rather than trying to gain such skills in house.

General Issues The operation and management of a multiuse resort property can be an extremely complex and challenging undertaking for several reasons. First, the recreational amenities and products offered by such a resort are usually diverse, frequently requiring a wide variety of management expertise and operational skills. Second, the seasonality of many resorts also means that management efforts are constantly either gearing up or gearing down. They must be able to deal with peakseason traffic and find ways to market the low seasons, as well as have cost- effective operations in all seasons. Third, most resorts’ locations some distance from major urban areas limit access to both municipal services and the large and diverse employment base from which to draw skilled employees. As a result, property man-

Operations and Management 211

SEA ISLAND RESORT

The historic Sea Island Resort on Georgia’s coast was redeveloped in the 1990s. The lodge is one of several guest accommodations at the resort.

agement for a resort is distinctly different from that required for most other types of real estate. As with any development type, resorts must stay attuned to the changing attitudes and lifestyles of their customers. In order for a resort to prolong its top-of-themarket status, the operations and management functions need to continually ask and effectively respond to the following questions: ; Do visitors get their money’s worth? How can a resort make sure they do? ; Do the resort and the community enhance the visitors’ experience? Do they work together for the same goals? ; Is there a high quality of life for the people who live there? The answers to these questions should illuminate the underlying attitudes, behaviors, and practices that can determine whether a resort succeeds or fails.1

Resort Hotel Operations and Management This section addresses just a few of the basic operations issues that distinguish resort hotels from other types of hotels. In particular, resort hotels generally achieve substantially higher revenue levels than other hotel product segments, yet the extensive range of

212 Resort Development

facilities and related services that typify resort hotels contributes to increased operating expenses. In general, resort hotels are complex operations that are labor- and management-intensive. They are service businesses as much as real estate. Resort developers who wish to manage their own hotels should be prepared for a challenge. In multiuse resorts where the hotel is only one element within the larger resort, an experienced hotel operator—either independent or chain-affiliated—is essential. Further, an owner may need to hire more than one management company to operate the various components: the hotel, the spa, the residences, and so on. A recent trend has been the creation of timeshare/vacation ownership divisions by the major hotel brands, beginning with Marriott and now including all major brands. In many instances, a variety of residential products have been placed near or adjacent to the parent hotel and feed off the hotel for sales. In return, the parent hotel provides services. Whatever the management approach, the multiuse resort developer should ensure the development of a strong relationship between hotel operations and the operations of other resort components, especially the residential sales effort. Given that each hotel guest represents a prospective buyer of resort property, access to hotel guest information is critical to the sales effort. Moreover, hotel operations increasingly are involved in

timeshare management and marketing, further complicating the management scenario. Selecting the Brand and Management The process of selecting a brand or management company and negotiating a fair contract is as complex as it is important, and it usually requires specialized expertise. It generally can be broken down into to two key areas: (1) selection, and (2) deal structuring and contract negotiation. The following discussion focuses on branded operating companies because they represent by far the most likely pool of possibilities from which a developer can select a manager. Also, most luxury brands do not permit third-party management. Choosing to be unbranded creates an additional set of issues too specialized to be covered in this text. Management companies are often selected for the wrong reasons, such as favoring a brand because of

personal experiences; recommendations of colleagues, architects, or builders who may lack sufficient knowledge in a field outside their own expertise; or aggressive pursuit of a project by a particular company’s executives. Even when it seems readily apparent that a particular company is an appropriate choice, there may be sound reasons to consider other options. If nothing else, competition among management companies typically leads to a better contract for the owner/developer. Following are some of the key considerations in the selection process. Strategic Fit. Perhaps chief among all considerations is the strategic fit. This pertains to the image of the resort, as well as the buyers the owner intends to attract. Will the selected brand be supportive of and synergistic with the master plan? It is not enough, for instance, simply to seek a “luxury” brand, because in today’s marketplace luxury can be sliced and diced

WILSON ASSOCIATES INTERIOR DESIGN

Lobby of the Sheraton Sanya Resort in China’s Yalong Bay National Resort District.

Operations and Management 213

deal terms. Second, the deal documentation process will increase considerably in time, complexity, and expense. Those issues notwithstanding, there are circumstances in which investment, loans, or credit support from a management company may be desirable or necessary. Matching Skill Sets. Being a good hotel operator does not necessarily mean that a particular management company is the best option for other key assets in a project, such as a spa, golf course, or marina. Brand Saturation. It is often the case that branded management companies, particularly those that are publicly traded, put growth imperatives ahead of exclusivity within an given market. Developers must decide to what extent they want to compete with an existing product under the same flag within their market or, alternatively, to what extent they are prepared to allow another project to use the same brand that they are relying on. Exit Strategy. A key consideration in the selection process is the developer’s end game. This is particularly important in determining what kind of deal terms one can accept.

THE SAROJIN

in a number of ways. The Four Seasons and RitzCarlton brands, for example, have been established first choices for many developers; but now that these brands have grown so large, they may not provide the distinctiveness and exclusivity they once did. Financeability. Some companies are simply more financeable than others. The popularity of brands varies among different lenders, but, generally speaking, name recognition within a particular segment will have a significant influence on financeability. Risk Tolerance. Because most resort projects have a long life span, certain management companies—particularly smaller, lesser-known ones—are a riskier bet for a developer. This is especially true when less established brands are not well capitalized and may be at risk of failing or changing direction over time. Ability/Willingness to Invest. Most experts would urge caution when considering an investment or other forms of credit support from a management company for two good reasons. First, a management company’s money (or balance sheet) is almost always tied to more onerous

Resort hotels are more costly to build than other hotels due to their extensive amenities. Pictured: the Sarojin near Phuket, Thailand.

214 Resort Development

Deal Structuring/Contract Negotiation. Because of

the operational aspects of hotels, a hotel management contract is unique in the world of real estate. Even the best real estate lawyers will flounder if they do not have extensive experience in this highly specialized area of commerce. Moreover, unless a developer has negotiated multiple hotel contracts, a specialized business adviser is strongly recommended. The state of the art in this field is constantly changing; what was appropriate five years ago is not necessarily in one’s best interest today. Resort Hotel Operations Characteristics While resort hotels cost more to build than traditional hotels, they generate greater revenues from longer guest stays, higher occupancy and room rates, and other on-site services. PKF Consulting notes that resort hotels achieve the highest average daily rate (ADR) among all the hospitality properties they survey, which include limited-service hotels, full-service hotels, suite hotels, convention hotels, and resort hotels. PKF further notes that sacrificing occupancy for ADR is not always the most profitable strategy for resorts. Given the extensive recreation, food and beverage, and retail operations typically found at resort hotels, these properties depend on high guest counts to drive the income from these other revenue sources.2 Resorts generate higher revenues per room than urban hotels because they offer additional revenue-generating services such as spas and recreational facilities, as well as serving more on-site meals. It’s not uncommon for resort room revenues to be 50 percent or less of total revenues, while at urban hotels, room revenues may account for 70 to 80 percent of revenues. Factors that distinguish resort hotel operations from other hotel operations include the following variables. Occupancy. Traditional hotels typically cater to weekday/ business travelers and thus face an occupancy threshold they cannot surpass without penetrating the weekend meeting or free independent traveler (FIT) getaway markets. Resort hotels, on the other hand, typically face strong seasonal fluctuations in occupancy. Reputable resort hotel properties can achieve occupancies of 80 percent or higher during most of their peak operating seasons, but this is tempered by much lower occupancies during off-seasons. Rates. Traditional hotels provide deep discounts on the weekends, whereas resort hotels are inclined to do just the opposite. During off-seasons and shoulder seasons, resort hotels may offer rates well below those of the peak season, often with inducements that traditional hotels typically cannot provide.

Food and Drink. As a result of menu pricing, the

greater number of meals captured on site, and higher occupancy per room, resort hotels can achieve much higher per capita food and beverage revenues than urban or suburban commercial hotels. Other Revenue Centers. Traditional hotels typically achieve only limited retail sales, mainly of convenience items. Resort hotels, however, have been expanding their on-site shopping opportunities to include a wide range of souvenirs, local crafts and fine art, designer resort wear, logo items, and other gift merchandise, all of which help their retail departments contribute to the bottom line. They also benefit from the operation of a variety of other revenue centers, including golf and tennis facilities, spas, salon services, and equipment rentals. Operating Expenses. While revenues are often higher in a resort hotel, expenses tend to be higher as well. Higher operating expenses result not only from greater department operating expenses associated with more extensive operations—such as food, beverage, and minor operations—but also from undistributed operating expenses such as general and administrative, marketing, and property operations and maintenance. Further, the physical layout of resorts, which are distributed over large land areas, also contributes to higher expenses than those at more compact, “vertical” urban hotels. Managing Resort Hotel Services The management of resort hotels can differ significantly from the management of commercial hotels in two primary ways. Resort hotels generally offer a wider variety of services to their guests than typical commercial hotels; many of these services are related to recreational pursuits. For example, a resort hotel is likely to provide reservations or access to all the amenities in the community, from spa services and tee times at golf courses to deep-sea fishing trips and extensive day camp programs for children. Resort hotel operations also may differ in the ways they offer, market, and price services. For example, all-inclusive resort hotels, whose fee structure typically includes accommodations, food and drink, recreational activities, airport transfers, service charges, and gratuities at a single predetermined price, are popular in certain destination resort areas. Tour operators and travel agents like to promote all-inclusive resort vacations because they can be easy to sell. More important, the total travel package generally yields a higher commission. Some types of vacationers are drawn to the all-inclusive model

Operations and Management 215

SAWGRASS MARRIOTT RESORT & SPA

The Sawgrass Marriott, with 508 guest rooms, a spa, conference facilities, and eight golf courses, was built in 1986 and renovated in 1998.

because it is relatively hassle-free, and they perceive it to be a bargain. Besides finding favor with the market, allinclusives tend to attract guests for longer-than-average stays. Further, with minimal cash transactions occurring on site, the requirements for internal cash and accounting controls are lower. So far, the all-inclusive concept has failed to gain a foothold on the U.S. mainland. Its most significant venue is the Caribbean and parts of Mexico, where concern for off-premises safety originally led operators to create self-contained resorts that provided for virtually all guest needs.

Community Operations and Management The development of a successful resort community involves more than just a good master plan, an attractive amenity package, and desirable real estate products. The developer must recognize the need for a unifying management structure and the synergy that it can create. That structure may include one or more governmental or quasigovernmental bodies, tax-exempt organizations, or community associations, or a combination of such entities designed to meet the needs and goals of a particular community. A structure and program for community management are essential to the implementation and protection of the developer’s master plan for a community. A carefully designed community management structure provides a mechanism for ; ensuring the preservation of common areas, including those that buffer the community and set it apart from surrounding areas;

216 Resort Development

; long-term ownership, maintenance, and operation of amenities that benefit property owners and increase the community’s attractiveness to visitors and prospective property purchasers; ; fulfilling long-term and continuing obligations undertaken by the developer as a condition of obtaining development approval; and ; establishing and enforcing community-wide standards of maintenance and design. A variety of community management structures may accomplish the above objectives; indeed, no single structure works best for all communities. In determining which option or combination of options is most appropriate for a given community, a developer should consider a community’s particular characteristics, goals, and constraints, including the following: ; product design; ; size and complexity of the project; ; types of uses planned and approximate area and acreage to be devoted to each; ; proposed location of different land uses in relation to each other; ; types of amenities proposed and the extent to which they benefit each of the various land uses; ; development timetable and phasing plan; ; the extent to which the developer intends to retain long-term ownership or control of one or more components of the community; ; the nature and scope of responsibilities to be fulfilled by the governing entity or entities; ; the nature and scope of services to be provided to the various land uses that make up the community; ; the legal foundation and tools made available by the jurisdiction in which the community is located; ; the relationship with local government; and ; the target market. The basic organizational options fall into three major categories: governmental and quasi-governmental bodies, nonprofit tax-exempt corporations, and community associations. These options may be combined to maximize control and flexibility for the developer during the development process and to enhance property marketability. Governmental Bodies Municipal corporations and community improvement districts both can play a valuable role in the development and

ADRIENNE SCHMITZ

ADRIENNE SCHMITZ

At WaterColor, on Florida’s Gulf Coast, the homeowners association owns and manages common areas and amenities.

operation of a resort community. As standalone entities, however, they have disadvantages that generally make them inadequate for addressing all the needs of any type of master-planned community. Therefore, they are most helpful when used in combination with other options. Municipalities and special taxing districts generally have the power to tax and the power of eminent domain. They usually have access to public funds for various projects and services and may issue debt to finance certain activities, thereby offering a lower-cost method of financing public infrastructure and facilities

than traditional, tax revenue–based means. The Lumbermen’s Investment Corporation obtained approval in 2005 for a 2,856-acre (1,156-ha) project adjacent to San Antonio that will include a 36-hole PGA Tour golf course, an 800-room JW Marriott resort hotel, and 1,500 to 1,800 single-family homes, condominiums, and timeshares. The project will be developed under a Texas legislature–created special taxing district that allows the developer to collect sales, property, and lodging taxes and even permits the use of eminent domain. The special district is tied to a 29-year nonan-

Operations and Management 217

nexation agreement with the city of San Antonio. The city will annex the project at the end of the 29-year period, at which time the project is expected to generate an estimated $8.1 million in annual tax revenues.3 Governmental bodies are, however, subject to various limitations that make them less flexible and useful to a developer than some other vehicles for community management. For example, governments cannot restrict public access to their parks, streets, and other property, and thus do not have the flexibility to own or operate private amenities for the exclusive use of a resort’s property owners and their tenants and guests; such amenities must be accessible to the general public. Governments are also subject to constitutional restraints on enforcement of rules that might restrict soliciting, canvassing, signs, and other forms of free speech that generally would be considered undesirable within the resort. They also must operate in accordance with the demands of state and federal law, which often generate additional costs for property owners, making it more expensive to perform certain functions through a governmental body than through a private entity. Perhaps the most significant constraint associated with using a governmental body as a vehicle for community management and maintenance is the lack of developer control. With a municipality or a community improvement district, most decisions rest with an elected body, and the resort developer has no mechanism for retaining a veto power over those decisions. Few if any decisions require a vote of the property owners. Rather, the governing body is typically elected by those residents who are registered and eligible to vote,

disenfranchising those property owners who do not reside in the municipality or district, including the developer. In a resort or second-home recreational community with few permanent residents, the vast majority of property owners might not be represented at all. Moreover, voting follows a one-person, one-vote protocol, so even if the developer is a resident, his or her vote is equal to that of a resident who does not own property, notwithstanding that the developer may be the largest landowner in the resort and pay a substantial portion of the expenses of operating the resort. From a developer’s perspective, this lack of control means that there is no assurance that a municipality will accept ownership of or maintenance responsibility for the open spaces, parks, and other amenities created for the community or, if accepted, that the municipality will maintain and operate them at a level and in a manner that supports, rather than detracts from, the developer’s efforts to market the community. Nonprofit Tax-Exempt Organizations A nonprofit corporation structured to meet the requirements of a civic league under Section 501(c)(4) of the Internal Revenue Code can be a useful tool for maintaining amenities of a public nature, such as roads, open space, wetlands, and conservation easements, while preserving greater control than would be afforded by a governmental body. A 501(c)(4) corporation may engage in a wide variety of activities including maintenance of roadways, parkways, sidewalks, street lights, and similar infrastructure. A declaration of covenants also may give such a corporation the authority to exercise architectural

ROBERT SHAFER, POSS ARCHITECTURE

At Roaring Fork Club, 22 units of staff housing were built. To maintain the scale of the project, the units were spread out over six buildings.

218 Resort Development

Providing Affordable Housing in Unaffordable Places Resort development at high-cost locations often must deal with a shortage of affordable housing, which poses a challenge for the resort staff. While resort developers and local authorities are equally aware of the necessity to bridge the live/work gap, to date most initiatives have come from the public sector, which has addressed the problem with a mix of incentives and restrictions. Common solutions include the offer of density bonuses to developers, the sale of public land at attractive prices, or the requirement that new developments incorporate a minimum percentage of affordable housing. Among other initiatives are the development of land trusts, public grants, tax bonds and credits, zoning ordinances, deed restrictions, growth caps, and partnerships with developers and housing associations. For example, the South Lake Tahoe, California, redevelopment agency created a planning partnership with Lake Tahoe Development Company, LLC, for the development of Chateau at Heavenly Village. The project is expected to generate $800,000 in city revenue per year from 20 percent of the tax increment, to be used for provision of affordable/workforce housing. Also in California, the town of Mammoth Lakes has designed a roadmap to house 80 percent of the community’s workforce in town by requiring that all new projects provide housing for 100 percent of their employees, and by setting up public/private partnerships to create additional housing opportunities with public funds, grants, and other financial tools. The resort town of Vail, Colorado, has used taxable bonds, zoning tools, and regulations to pressure

control over a property subject to the declaration, as well as the power to assess such property for a share of the corporation’s expenses, among other things. To qualify for tax-exempt status, a civic league must serve “the common good and general welfare of the people of a community” that bears a reasonable relationship to an area ordinarily identified as a government area. Thus, like a governmental body, the corporation’s property must benefit the general public, not just the property owners and residents of a resort community. However, the Internal Revenue Code grants wide discretion in determining the mechanism for establishing the corporation’s board, allowing a developer to control the appointment of the board indefinitely and thereby assure that the amenities conveyed to the corporation are maintained and operated at an acceptable level.

employers and developers into adding to the workforce housing stock. It revised its zoning code in 1992 to allow property owners to build employee housing on already developed sites. Most of the seasonal workers live in company-owned housing, and permanent employees can obtain downpayment assistance from the company to buy a home. In Hawaii, workforce housing development specialist UniDev, LLC, plans to build 1,200 units of affordable housing for West Hawaii resort employees on land owned by Hawaii County, using a financial model that enables public authorities to pay developers with federal tax-exempt bonds typically designated for nonprofit organizations. Honolulu’s city council recently proposed an affordable housing bill that would require private developers seeking zone changes to allow development of ten or more dwelling units to make 30 percent of that housing affordable. The bill comes with incentives such as exemption from plan review fees, deferral of wastewater system facility charges, density bonuses, reduced off-street parking requirements, priority processing, and credits for excess units. These examples illustrate that there is no best strategy for providing affordable housing in resort locations. The need is ubiquitous, but every situation calls for its own solutions. The key to success is a balanced mix of incentives and restrictions, and the willingness to develop partnerships with all parties involved. Source: Marianne O’Donnell, “Providing Affordable Housing in Unaffordable Places,” Urban Land, February 2008, p. 69.

Although a 501(c)(4) organization does not pay taxes on its income, contributions to it are not tax-deductible. Therefore, it also may be desirable to establish one or more 501(c)(3) organizations to solicit and accept taxdeductible contributions for such purposes as environmental and conservation activities, provision of low-income housing for resort employees, and educational and cultural activities such as art festivals, museums, and concerts. Neither 501(c)(4) nor 501(c)(3) organizations can maintain individually owned lots or homes. As a result, both entities lack the flexibility to provide certain services to property owners, as well as the authority to enforce maintenance covenants by entering onto the property and performing necessary maintenance, both of which may be desirable in a resort or recreational community. Therefore, the tax-exempt organization is best used in

Operations and Management 219

FIGURE

5-1

Comparison of Community Association Structures Type of Association

Advantages

Disadvantages

Single community association with parcel

; Simplicity; minimizes administrative bur-

; May be perception that separately incor-

structure

den of managing multiple associations. ; Provides unifying body to maintain a community-wide standard.

porated parcel associations would have greater autonomy. ; Subjects nonresidential owners to control of residential owners or vice versa, which can affect marketing of properties. ; Can be cumbersome in projects character-

Single residential association with neighbor-

; Provides autonomy to owners of nonresi-

hood structure and covenant to share costs

dential properties by not involving them

ized by multiple nonresidential parcels

on nonresidential properties

in administration of primarily residential

and nonresidential uses geographically interspersed with residential properties.

community.

; Provides little protection for residential owners concerned about use and appearance of nonresidential properties. Dual associations (one residential, one nonresidential) with joint committee

; Provides desired level of autonomy to

; Joint committee may be perceived as an

residential and nonresidential owners

additional administrative layer, although

while maintaining community-wide stan-

perception can be addressed by minimizing

dards and common areas through joint

or eliminating membership in entity and

committee composed of representatives

limiting the scope of committee powers.

of each association. ; Provides for long-term developer control over community-wide standards and properties without interfering in or unnecessarily delaying the transition to owner control within each association. ; Joint committee can serve as mediator or arbiter of disputes between associations; may act as managing agent on behalf of associations to reduce administrative costs for each. Dual associations (residential and nonresidential) with covenant to share costs

; Provides desired level of autonomy to residential and nonresidential owners. ; Minimizes number of entities involved in

; No single entity to establish and enforce a community-wide standard. ; Provides little protection for residential

community governance as well as percep-

owners concerned about use and appear-

tion of layering.

ance of nonresidential properties and vice versa.

Source: Hyatt & Stubblefield, Atlanta

combination with other options that can address the long-term needs of the community and assure maximum flexibility in the its development and operations. Community Associations A community association, either alone or in conjunction with the options previously discussed, may provide the greatest flexibility for long-term management and operation of a resort community. Although membership in a community association extends to all property

220 Resort Development

owners, it may have multiple classes of membership to protect the interests of different types of property owners, from the hotel or golf course operator and other commercial owners to residential owners, whether investors or full-time residents. The structure enables a developer to retain control for an extended development and sale period while providing for transition of control to the property owners at a future date. A community association structure also can provide broad flexibility in allocating economic burdens among

The Roles and Responsibilities of the Community Association A community association is a mandatory membership association responsible for performing various functions within a planned real estate development. Each property owner automatically becomes a member of the community association upon acceptance of a deed to property in the project. The mandatory membership aspect of the community association sets it apart from a civic association, social or business club, or other volunteer organization. Community associations long have been used in purely residential developments, but increasingly they are becoming the norm in mixed-use projects as well. A community association is an appropriate mechanism for any development characterized by ; individually owned parcels or units and common features and facilities benefiting all individual owners; ; common services such as maintenance or security provided to two or more parcels within the development; or ; a need or desire for regulation and enforcement of community-wide standards of maintenance, architecture, use, and conduct for the enhancement and protection of property values. A community association, like a corporation, has a perpetual existence separate from any individual or group of individuals. Like a corporation or municipal government, it acts on behalf of its members/owners. It is a separate entity from the developer, governed by a set of legal documents and applicable law. The basic governing documents of any community association are the declaration, which contains various covenants, conditions, restrictions, and easements applicable to the development, and the association’s bylaws. The declaration sets forth the plan of development and ownership, the proposed method of operation, and the relative responsibilities and rights of the association and the owners of individual parcels. It is a “covenant running with the land” insofar as it is included within the land records and, like the provisions of a deed, continues to govern the ownership of the property even when the title changes hands. The bylaws set out the administrative procedures for the internal government and operation of the association. A community association can own or maintain various property and improvements that benefit the entire community, such as stormwater drainage facilities, open space, community signage, parks and recreational facilities, and landscaping within public rights-of-way. The community association is also an ideal entity to take on any continuing obligations that the developer

may have assumed as a condition of development approval, such as maintenance of conservation areas or parks and monitoring of traffic patterns. Community associations have a dual role in managing and maintaining private property and also in delivering services and enforcing covenants and rules. In many developments, the association exercises architectural control over and may provide some level of maintenance for individually owned property. It often provides all or some of the utility services, common area maintenance, street lighting, refuse removal, security services, and other related “municipal” services. It may sponsor various forms of communication within the community, such as newsletters or electronic bulletin boards. It also may offer cultural, educational, and recreational programs and activities and sponsor special events such as festivals, parades, and concerts to create synergy and a sense of community. Acting through its board of directors, an association is charged with enforcing any specific covenants and restrictions set forth in the declaration and typically is authorized to make and to enforce additional rules and regulations as well. Such restrictions and rules may include limits on land use, prohibitions on certain types of activities, restrictions designed to control architecture and aesthetics within the development, and regulations regarding use of common areas and individually owned properties. Two powers granted to an association—the power to levy assessments and the power to control property— reinforce the governance aspect of the association’s role. These powers usually are created in the declaration or, in some cases, by statute and are enforceable through state courts. The power to levy includes the obligations of the association or its board to develop a fiscal plan, to assign a share of the cost of that plan to the property owners as a charge against their individual properties, and to collect assessments through lien rights and state court action in the event that they are not paid as scheduled. Assessments are not equivalent to membership dues or other discretionary charges; instead they represent a proportionate share of the expenses incurred to fund the association’s business and governance services. The power to control the use and enjoyment of property through the exercise of architectural and environmental controls, use restrictions, and rule-making authority enables an association to exert tremendous influence over the bundle of rights normally enjoyed as a concomitant part of fee-simple property ownership. This relatively high degree of control is vested through and must be exercised in accordance with the recorded declaration and applicable law.

Operations and Management 221

The Roles and Responsibilities of the Community Association From a legal standpoint, a community association exists from the time a developer records a declaration in the land records of the jurisdiction in which the property is located. For a period after the sale of the first unit in the community until a large proportion (typically about 75 percent) of the property is sold, the developer usually appoints a majority of the members of the association’s board of directors, thereby retaining control of the operation and management of the association. In this capacity, the developer must consider a number of important issues involving cooperation, control, and management. Rather than “being the association,” the developer is thus in the position of either a majority stockholder in a corporation or the managing partner in an unincorporated organization. The developer in control of a community association must be concerned with the

property owners, allowing for the assessment of property owners in accordance with benefits received rather than strictly on the basis of property value. Moreover, a community association may own and maintain property not intended for public use. Thus, a community association is able to provide varying levels of service to property owners, maintain private amenities for the primary use and benefit of particular areas within the community, and exercise self-help to maintain private property if not maintained to an acceptable level by its owner. In determining which management structure is the most appropriate, a developer must consider the needs and goals of the particular community—especially those aspects of community management that are unique to resorts. How should the interests of residents be balanced against the interests of hotels and other resort operators? How will the anticipated level of absentee ownership in the resort affect the functioning of a management structure? Will the governing body be asked or want to provide special services or a menu of services to assist in the management of individual properties? What level of control will the governing body assert over traditionally public areas such as beaches? What types of public services such as transportation, maintenance, and security will the governing body need or wish to provide? What is the most appropriate method of paying for such services? Once these questions are answered, the developer must determine whether all land uses should fall under the jurisdiction of a single association or whether resi222 Resort Development

continued

fact that he or she is a fiduciary whose duty runs to both the association and its members. Therefore, in the exercise of the right to control, the developer must at all times be sensitive to the needs of the association as well as to the interests and needs of the development entity. Failure to maintain a sense of balance or to conduct the association’s affairs with fairness and in good faith can subject the developer to substantial liability. It is advisable that a community association begin to operate as soon as the developer sells the first parcel of property, if not before. Doing so will permit the developer and other association members to work together from the outset for the common good within the framework of the association’s governing documents. Source: Jo Anne P. Stubblefield, partner, Hyatt & Stubblefield, Atlanta

dential and nonresidential uses should be handled separately. It generally is preferable to handle the various uses separately; however, some mechanism should link them to ensure that community-wide standards are met and maintained, that all land uses pay their fair share of expenses incurred for the maintenance of property that benefits all, and that a communication system is in place to resolve conflicts and address common issues. While a structure that relies on a single community association with jurisdiction over the entire community can provide unity and simplicity, such an arrangement should provide various parcels or land uses with some degree of autonomy. That is, the structure should allow for the provision of varying levels of service to different parcels without the need for separately incorporated subassociations. If treating residential and nonresidential uses separately, the developer should consider whether each needs its own association or whether a single residential association with a covenant obligating the nonresidential property owners to share certain costs incurred by the residential association might suffice. If both require an association, it may be desirable to rely on a covenant to share cost or a simple joint committee to establish the relationship between the associations, thereby eliminating the need to create a master association encumbering the property with another level of government. The ultimate goal in determining the management structure for any resort community is to maximize the developer’s flexibility while providing for the smooth operation of the community during and after the devel-

opment period. Whether or not the developer intends to retain ownership of major resort components for an extended period, a flexible structure that addresses the short- and long-term needs of the community is critical to the success of the development plan. A well-run community association can be more than simply a management structure; it often can take on a life of its own and become an important social and civic amenity, especially in resort communities that include a substantial retired population.

Organizational Options for Recreational Amenities In any resort community, the recreational amenities are the principal defining element. Since the 1970s, organizational structures for managing and operating recreational amenities in resort and recreational communities have evolved from community associations and traditional country clubs to sophisticated entities that offer a wide range of facilities and services in a variety of packages that appeal to specific market segments. A developer has three basic options: ; establish a special district to construct, operate, and maintain the amenities; ; develop the amenities and then convey them to a property owners association; or ; develop the amenities and either retain ownership or convey them to a separate entity to operate on a nonprofit or commercial basis.

In any scenario, the owner of the recreational amenities may choose to contract with a professional management company for day-to-day operations. A number of national, regional, and local companies can provide management services to developers, clubs, and community associations. A developer may choose to use any one or a combination of these options for various recreational amenities within the community. Each option has its benefits and drawbacks, depending on the circumstances of the particular developer and community. The best option will depend on the developer’s initial and long-term goals and interests, as well as market factors. At the outset, the development firm must address the fundamental question of whether it is in the business of selling real estate, operating recreational facilities, or both. If its primary business is selling real estate and the amenity package is merely a means of enhancing the value and marketability of that real estate, then it needs an amenity strategy that will allow it to transfer the amenities and exit the community upon completion of development and sale of its real estate inventory, or as soon as possible thereafter. The goal, in other words, is to select the option or combination of options that will enable the developer to best capitalize on its investment in the amenities in a manner that respects and protects, to the extent possible, the interests of the property owners who purchase lots or homes. Special Districts Special districts are creatures of statute and, depending on the authority granted, may be used to finance, own, and

©RICHARD SEXTON, 2008

Amenities at Rosemary Beach, Florida, include four swimming pools, a tennis club, and many pocket parks.

Operations and Management 223

operate a variety of public infrastructure improvements, which often include such things as stormwater ponds, landscaping, pedestrian and bicycle paths and trails, parks, lakes, gardens, open space, and even recreational amenities. The use of a special district allows a developer to finance the cost of acquisition and construction of community amenities through the issuance of municipal bonds that are repaid by special assessments the district levies against the properties within its boundaries. The resulting cost to the developer of providing the amenities may be significantly less than if financed through a traditional development loan at market-rate interest. Walt Disney World is a prime example of the use of special districts. The resort made use of tax-free bonds first issued in 1967 by the Reedy Creek Improvement District formed by the cities of Bay Lake and Reedy Creek, Florida. Although the benefits of using a special district can be significant, the costs of establishing the district and issuing the bonds also may be substantial and, depending on the amount and cost of capital that the developer needs, could reduce or completely offset the benefits. Even if it makes economic sense, the facts that, as a quasi-governmental entity, its improvements must benefit the larger community and its governing body must be elected by the residents of the district limit its attractiveness as a vehicle for long-term maintenance and operation of significant recreational amenities such as golf courses and pool complexes. Property Owners Associations A common approach for addressing the long-term ownership and operation of recreational amenities is for the developer to construct the facilities and then convey them to the owners association. Although in some cases the conveyance may be made subject to a mortgage to be repaid by the property owners association over time, it is customary and generally expected that the promised amenities will be conveyed to the association at no charge, on the theory that the value of the amenities was reflected in the purchase price of the lots or homes and paid by the property owners at the time they bought into the community. As a result, this approach tends to be used most often in situations where the developer’s capital investment in the amenities is small relative to the number of lots in the community and easily can be recouped by adjusting lot prices to reflect the added value of the amenity package. In some cases, an association may hold the amenities as common area, extending the privilege of using

224 Resort Development

the amenities to all residents of the community and funding the costs of ownership, operation, and maintenance through assessments against all the property owners. Alternatively, the association may operate the amenities as a limited common area for the benefit of only those property owners and residents, and perhaps persons outside the community, who elect to pay separate fees for the privilege of using them. Among the benefits of this approach is that a property owners association can be created with relative ease and little expense compared to a special district. The developer also is able to control the level of maintenance and operation of the facilities until substantially all of the real estate is developed and sold. Once the developer has sold all of the real estate, it can be assured that there is a mechanism in place with a guaranteed level of support for the long-term maintenance and operation of the amenities. If the developer has appropriately considered market demand, the size of the community, and affordability factors in developing the amenity plan, the availability of the amenities should enhance the value and marketability of the real estate. However, if the amenities are expensive to own and operate and do not have widespread appeal, as is often the case with equestrian facilities and even golf courses, the assessment burden to operate and maintain them can have an adverse impact on real estate sales. Perhaps the primary drawback to using a property owners association as the vehicle for long-term amenity ownership and maintenance is that the developer may not be able to realize the same value from the amenities that it might if they were “sold” separate and apart from the real estate. It is also important to recognize that ultimate control of the association will be totally in the hands of the members, who may not have the same objectives or preferences as the owners of other elements of the resort. Independent Operations. If the developer’s capital investment in amenities is great relative to the number of lots in the community, and the price and product mix in the community makes it difficult to recoup that investment through lot prices, it may be preferable to form a separate entity to own and operate the amenities on either a nonprofit or commercial basis. With amenities such as golf courses, swim and tennis facilities, and clubhouses, this operation typically takes the form of a private or semiprivate

CURRITUCK CLUB

At the Currituck Club in North Carolina, common areas are owned by the homeowners association.

club. With amenities such as marinas and equestrian facilities that have more limited appeal and lend themselves to rental of space, it may simply be a commercial operation with contractual agreements regarding use or rental of defined space. At the Currituck Club, a second-home resort development on the Outer Banks of North Carolina, the common areas are owned and managed under a traditional homeowners association. Each homeowner has one vote, but the developer-controlled homesites have six votes so that the developer has maintained control in the early years of development. Sales started in 1996 and the developer transferred control in 2007. Club Corporation of America manages the separate semiprivate golf course, and Lighthouse Services, a local firm, manages all the project’s common areas and recreational amenities, including a swimming pool, fitness center, and valet service to the beach.4 Creating a club entity, whether nonprofit or a commercial operation, has the advantage of giving the developer two types of inventory to sell: real estate (often with enhanced value owing to the availability of the amenities) and club memberships. If there is a strong market for the club memberships, this approach can maximize the developer’s return on investment on the theory that the separate pieces are worth more than the whole. If the market is weak, however, and membership sales do not keep pace with real estate sales, the developer may end up holding excess memberships and funding the club’s operating deficits for an extended period.

Nonprofit Equity Clubs. The creation of a nonprofit

entity to operate as a club separate from the property owners association provides an exit strategy with the potential for realizing greater value from the amenity through the sale of separate memberships. Typically, the developer constructs the facilities and conveys them to the nonprofit entity in exchange for all the memberships in the nonprofit entity. The developer then sells the memberships to recoup costs and, ideally, realize a reasonable return on investment, while retaining the right to control the nonprofit entity and manage the club until all the memberships have been sold. Ultimately, the members will elect the directors of the nonprofit entity and assume management of the club, enabling the developer to exit the community. Commercial Operations. If the depth of the market for club memberships is uncertain or the amenities have the potential to generate a significant profit from operations, the developer may wish to retain ownership of some or all of the amenities and operate them on a commercial basis, perhaps transferring them to a third-party commercial operator when there is a sufficient level of support from the community to operate them profitably. Under this scenario, the developer or other operator typically will grant licenses or similar rights to use the amenities for a fee. In the case of an amenity such as a golf course, it might operate the facility as a private or semiprivate “right-to-use” club, maximizing the value of the memberships or other rights to use the facility. Alternatively, it might make the facility available to the general

Operations and Management 225

TUCKER’S POINT CLUB, BERMUDA

Interior of the golf clubhouse at Tucker’s Point, a residence club in Bermuda with fractional- and full-ownership residences.

public on a daily fee basis, thereby preserving the flexibility to adjust operations as needed to maximize profitability. In either case, those granted use privileges have no proprietary interest in the facility nor right to participate in its management as they would if it were owned by a property owners association or a nonprofit club. If there is strong demand in the local market for the particular type of amenity, this approach has the potential of maximizing the developer’s return on investment over the long term, either through profits generated from operations or from gain realized on sale of the facilities once the community is sufficiently built out to allow it to operate profitably, making it an attractive acquisition for a commercial operator or club members.

Vacation Ownership Operations and Property Management Property management is the key to success for vacation ownership properties. To succeed at the point of sales, it must be clear to buyers that the property is operated at the highest level of proficiency. Resorts that are not well managed and maintained soon succumb to high rescission rates, maintenance fee delinquencies, lowered owner satisfaction ratings, and stiff competition from developers who are more in tune with quality property and hospitality management.5 Because vacation property owners are not on site for much of

226 Resort Development

the time, they must rely on the resort’s property management team for all aspects of maintenance, and their expectations are high. In a traditional timeshare, property management remains under the developer’s control during the sales period but later passes to the owners association and becomes an association function, which generally is contracted with a professional management company. In a right-to-use setting without an association, however, the developer retains control indefinitely. Property management comes in three basic forms: first, the developer can manage the resort site through a contractual agreement with the homeowners association; second, the homeowners association can decide to contract with an outside management firm; or third, the association can decide to manage the resort internally. The growth of the vacation ownership industry has created opportunities for a range of professional property management firms. Some began as managers of whole-ownership condominium communities or hotels; others have emerged to work specifically in the vacation ownership field. By managing multiple resorts, these firms generate a pool of trained personnel whom they may transfer from property to property to meet staffing needs. Such firms also enjoy economies of scale in centralized services such as reservations, administration, accounting, human resources, information systems, association management, and purchasing,

TRISARA

Trisara, a small, luxury resort on a private bay near Phuket, features pool villas, each with a live-in maid and cook.

which gives them a competitive advantage in soliciting still more business. They also may offer direct exchanges among the properties they manage. In-House or Contract. In making the decision to manage in house or contract, the following factors need consideration: cost of services, quality control, security and confidentiality, and hospitality. In each case the developer needs to determine under which management structure these factors can best be met in achieving the overall objectives for the resort. Operations. To manage a vacation ownership resort, the property management entity must supervise and carry out the resort’s operational service functions, which may include accounting, bookkeeping, groundskeeping, guest services, hospitality, recreational and leisure activities, housekeeping, interior and exterior maintenance, purchasing, and in some cases recreational facilities and food-and-beverage functions. Even if some of these functions are contracted out, the resort’s onsite management personnel still must oversee activities and provide guidance, whether directly or through the contractor’s supervisory personnel. Management is also responsible for developing and enforcing preventive and perpetual property maintenance programs for the resort. A preventive maintenance

program entails a daily, weekly, and monthly system of inspecting and fixing furniture, fixtures, equipment, and physical aspects of the resort’s interiors and exteriors. A perpetual maintenance program entails routine activities such as pool cleaning, carpet cleaning, mattress rotation, checking fire extinguishers, and so forth on a monthly, quarterly, and annual basis. Where there is a homeowners association, management is responsible for developing the annual budget and operating within that budget. Rules. With either an association or a right-to-use situation, there is a need to establish and enforce rules of use and behavior for the property that is jointly owned or of privileged use. These rules can be likened to those that are a part of membership in a private club. Communications. While there may be legal requirements for management to provide certain communications to fee or right-to-use owners, management must establish a reliable system of regular and innovative communication about resort activities. This might be done through correspondence, through e-mails or via a well-maintained Web site. The Front Desk. When vacation ownership began, the front desk at most resorts was simply an office where owners and guests would announce their arrival, pick up the keys to their unit, and receive whatever informa-

Operations and Management 227

WILD DUNES RESORT

A rental program can be a marketing tool to boost home sales. Pictured: Wild Dunes, South Carolina.

tion packet the resort had put together for them. As the industry has grown, so has the scale and scope of frontdesk operations, especially at resorts that offer vacation ownership as one component in a mixed-use development. Such resorts typically maintain a hotel-style front desk serving the resort’s owners as well as transient and vacation ownership guests, offering the same services as the front desk at a major hotel: checking people in and out, providing keys, handling messages and mail, bellhop services (including luggage storage), and answering questions. Some resorts also offer valet parking.

Managing Rental Programs Rental programs in resort residential properties serve two primary purposes. First, a rental program can be an important tool in boosting sales to second-home investors who wish to create an income stream to offset the property’s debt service. Further, a rental program can be an effective marketing tool, even when it turns out that buyers do not rent their units or that developers

228 Resort Development

place limited emphasis on rental programs. Second, residential units placed in rental programs tend to be used more, increasing the resort’s visitor base and occupancy level and thereby boosting revenues from income-producing amenities and other services. The operation of rental programs, however, generally requires the long-term involvement of the resort developer/manager. Rental programs work best when they are planned from the outset. They do not perform well when the residential community or the individual units have been designed without rental use in mind (for example, without provision for owner closets and a central laundry). In addition, a rental program must be structured to pay for the high marketing and management costs it generates. Using a rental program as a sales incentive without charging fees substantial enough to offset costs is a serious mistake. As much as 50 percent of rental receipts may have to be retained to cover management costs. Moreover, the legalities of rental programs suggest that caution is in order. One caveat relates to the Securities and Exchange Commission’s requirement that

POSS ARCHITECTURE, ROBERT SHAFER

Maroon Greens townhomes are within the Maroon Creek Club, a private golf resort at the base of the Tiehack ski area in Aspen, Colorado.

rental programs must be voluntary and kept completely separate from real estate sales activities. In most cases, it is in the developer’s best interest to control a rental program rather than to assign it to local brokers. As many projects have demonstrated, resort guests can be a productive source of prospective buyers. If more than one entity is handling rentals, however, resort guests might receive different benefits and services, which can create dissension among renters and undermine their desire to purchase property. Another benefit of in-house management is that it permits continuity in the management of various resort facilities, an important consideration for providing efficient and effective customer service. In fact, resorts with hotels often operate their rental programs through the hotel management. Even if a developer is interested in engaging outside brokers to manage rentals, it may be difficult to find a broker willing to spend enough time to do an effective job, especially during the early stages of a project. When a program is refined and has proven successful, a developer can consider the use of a local broker under appropriate terms and controls. How does a rental program manager ensure that units are properly maintained and updated to remain marketable? Since the condition of rental units is an indication of overall resort quality, units must meet certain standards to sustain and enhance the resort’s

reputation. The best way to accomplish this is to set up a reserve for capital replacement, which typically is done in two stages. The first is through the homeowners association; these reserves typically are allocated to exterior maintenance and the residential component’s pro rata share of common areas. The second is through a reserve fund for the furniture, fixtures, and interior equipment for each individual unit. (Under current laws, these funds cannot be pooled, and separate accounts must be established and maintained for each unit owner.) This fund is generally established in the rental management agreement and requires that a certain percentage on the gross revenue from the rental of the unit (generally 3 to 5 percent) be set aside for capital improvements. These funds are under the control of the hotel operator.

Managing Major Amenities Many resorts manage and operate their amenities as income-producing properties either apart from or in conjunction with an association or club structure. This is particularly true of amenities associated with resort hotels and destination resorts that cater to a large number of hotel guests. In these situations, it is important for the resort operator to maintain access to or control of the amenity to ensure that it remains available for

Operations and Management 229

guest use and is properly managed to preserve the resort’s overall attractiveness. In some cases, such as with golf courses and tennis facilities, the amenity may be operated as both a private membership and a publicly accessible amenity. In others, such as with ski facilities, the amenity is more likely to be operated strictly as an income-producing activity with minimal club or association involvement. A marina, depending on its size and scope of operations, could be operated independently, under contract management, or in-house.

GARDEN OF THE GODS CLUB

General Operations Issues Managing and maintaining income-producing amenities requires special expertise. Depending on the business plan and strategy, the task can be approached from several perspectives. For example, amenities owned either by private developers or other commercial interests must generate a profit, except when potential profits in interrelated areas justify subsidizing certain operations. While generating profit from an amenity is usually the objective, the amenity may in some cases operate at break-even or even at a loss as a way to add

value to other resort elements. Such a strategy can be risky, however, and should be considered carefully. In evaluating the potential for a commercial operation, a developer must undertake a thorough economic analysis of the business prospects for the amenity. Where a loss strategy is seen as acceptable to support other real estate operations, the economic analysis always should seek to reach break-even as the resort’s development progresses and preferably reach profitability at some point. An ongoing loss leader will make for a difficult exit strategy when the resort is fully developed. One problem with developer-owned amenities is that users tend to expect more than the developer can afford and therefore often pressure the developer to provide a greater array and higher level of services. An independent owner/operator, however, can deflect such pressure. Specialized contracted management can be particularly useful when commercial ownership or developer expertise is either unavailable or uneconomical. This strategy demands careful negotiation of a management services contract that specifies both the level of involvement and financial objectives. Good communi-

Maintenance budgets for amenities must be prepared carefully, with reserves established for major repairs or rebuilding programs. Pictured: Garden of the Gods Club, Colorado Springs.

230 Resort Development

PGA NATIONAL

PGA National in Palm Beach Gardens, Florida, offers 90 holes of championship golf and a host of other amenities. Management works to minimize conflicts between residents and guests using the facilities.

cation between owners and operators is important to ensure the proper level of management. Maintenance budgets for amenities and natural resources must be prepared carefully, with reserves established for major repairs or rebuilding programs. A good technique is to account for costs by type of activity or facility and then to review the costs periodically against the budget. Even so, objectives and operations must be kept flexible to adapt to various levels of service demand and income streams. While resorts incorporate a broad array of amenities, four amenity types are particularly common and important as income-producing operations and thus require specialized management: golf, skiing, marinas, and spas. Shared Amenities In resort communities, property owners and hotel guests often share recreational amenities. Creating a club for residential property owners and providing hotel guests with some opportunity to use the club’s facilities offers several advantages. First, the developer is able to offer higher-quality amenities to both hotel guests and club members than if separate facilities are provided for each group. Second, the developer is able to offer club members many special hotel amenities, such as concierge service, room service, and other enhancements.

Third, hotel guests can add to the vibrancy of a club in its initial stages of development by ensuring steady use of the facilities. Finally, hotel guests are often potential purchasers of residential property. Developers even can offer purchasers of custom lots discounts on hotel accommodations so they can supervise the construction of their homes. Developers who combine traditional clubs with hotels must, however, remain mindful of the different and sometimes conflicting needs of club members and hotel guests. Club members expect exclusivity and want to feel that they are receiving special privileges. Hotel guests want assurances that the desired facilities will be available during their stay. The biggest problems are caused by group travelers staying at a hotel and using shared facilities. Developers can minimize the conflicts between club members and hotel guests by creating distinct use rights, reservation privileges, and programs that balance the needs of each group. For example, at PGA National in Palm Beach Gardens, Florida, a continuing dilemma is how to provide for the needs of the hotel guests cost effectively, how to maintain exclusivity for the residential owners, and how to meet the needs of PGA members. One strategy lies in the project’s physical plan, which is organized around a relatively self-contained resort core. By locat-

Operations and Management 231

ing the pro shop and the golf clubhouse in the resort hotel, for example, the developer avoided an expensive duplication of facilities. This arrangement meant, however, that two conflicting user groups often concentrate in the same area. To resolve the conflict, the resort provides a members-only lounge and other private areas. Other strategies at PGA National include management techniques, rules, and regulations intended to minimize conflict. Golf managers attempt to concentrate guests, owners, and PGA members on different courses. A rotating course is reserved each day for members. Starting times can be allocated differently to each group. Members can book slots up to a few days in advance, while guests are limited to a shorter advance booking period. Memberships and greens fees are priced differentially in favor of residential members. PGA National also adopted a computerized system of controlling tee times for residential members, guests, and PGA members. The bottom line for PGA National is that it serves the needs of all its communities—residential owners, resort guests, and PGA and other organization members—by taking a hands-on approach toward meeting their diverse and ever-changing needs. Managing Golf Amenities For years, the benefits of a golf course to a real estate project so far outweighed its costs that management issues often went neglected. As both capital and operating costs have risen, however, course and club management have taken on additional importance. This trend has led to an increasingly wide range of organizational arrangements for management, as well as to new techniques for operations and maintenance practices that are designed to control costs and increase the number of rounds played. Many developers now expect golf courses to stand on their own as independent profit centers. Others, however, continue to view golf as a necessary infrastructure that is needed to sell real estate but that generates negative cash flow in the early years. While controlling costs can help the bottom line, the key determining factor is revenues—whether they are greens fees or dues from members. Management Approaches. Whether managed directly by the developer or by a management company, a golf course should be structured for accounting purposes as a separate cost or profit center, usually with procedures to accommodate both direct and indirect expenditures. This enables the developer to provide financial statements if the golf course is later sold.

232 Resort Development

Operational responsibility should rest with a club manager, a staff of golf professionals responsible for the pro shop as well as for instruction and programs, and a course superintendent. Other management responsibilities include accounting, food and beverage services, and human resources. Contracting with a full-service golf course management firm can enable a club to enjoy access to a wide variety of skilled personnel and free the development team to concentrate on real estate. Most of the larger course management organizations operate nationwide, with coordination at a regional level and particular managers and staff assigned to each club. Individual managers are responsible both for their own clubs and for regional cooperation. This arrangement could provide an individual club, for example, with access to skilled professionals ranging from accountants and personnel managers to agronomists and turfgrass experts. The developer maintains operational control through budget and business plan approval but is freed from the day-to-day details. KemperSports, headquartered in Northbrook, Illinois, is one golf management company that has developed a series of proprietary operating manuals representing the collective knowledge and expertise of its 30 years of managing golf courses for third-party owners. The manuals guide their field professionals in handling all facets of their operations. Using a well-defined set of metrics designed to measure facility performance across a broad spectrum, KemperSports continually monitors achievement of goals, establishes new profitability and cost-savings benchmarks, and develops new operational methods aimed to optimize performance at each facility it manages. Operations. No matter how successful a golf course may be in design, development, financing, and general management, its final success will depend on how efficiently it operates. Every golf course should develop an operations policy manual regardless of whether it is a public, private, semiprivate, or adjunct facility. Even if the course is to be managed by a management firm, the resort developer/manager should be interested in the specifics of operations policy. For example, what activities should or should not be allowed on the golf course? What are the duties and responsibilities of the golf course manager, golf professional, golf course superintendent, and others? How are reservations and starting times to be handled? Are there priority use privileges for resort hotel guests or homeowners? What are the limits on food and bever-

Captured Value on the Links In the late 1990s, the rallying cry in the U.S. golf industry was a “new course every day,” buoyed by what many called the “Tiger effect”—the rising popularity of golf triggered by the success and fame of Tiger Woods. Between 1995 and 1999, 1,500 courses opened, ranging from municipal and daily-fee courses to private clubs. In 2000, 398 new courses opened, according to the National Golf Foundation (NGF)—more than one a day. Overbuilding comes at a cost in all product types, and golf courses are no exception. Even when golf’s popularity was at an all-time high, this extraordinary increase in the number of courses inevitably resulted in a decrease in rounds per course. According to the National Golf Course Owners Association, since the record-setting year of course openings in 2000, the number of rounds played per facility has been flat or has declined for six straight years. In a capital-intensive industry that relies heavily on its fee structure as its primary revenue source, fewer rounds correlates directly to reduced money for maintenance and improvements. Since 2000, the number of golf course openings has fallen dramatically each year, plummeting to 124 in 2005, the fewest since the 1980s. The number of closures also has increased, with courses succumbing to the oversupply or falling victim to the economics of land development. The majority involved older tracts lacking the amenities of newer facilities. According to the NGF, 93 courses closed in 2005—the highest number since the NGF began tracking closures 20 years ago—resulting in a net addition to supply of only 31 18-hole courses. Still, there are currently more than 16,000 courses throughout the United States, most of which are thriving, although some are not. Golf course operators want to generate cash for capital improvements without overleveraging the properties or raising green fees, cart rental rates, membership dues, or other fees. One strategy growing in popularity, especially among owners of less efficient courses, is redevelopment—enabling the owner to capture value already present to improve the facility and make money in the process. This approach has a parallel in the broader U.S. real estate market: infill expansion of existing facilities in office, industrial, and retail areas. In May 2006, the New Orleans City Council approved a rezoning petition by the owners of Lakewood Golf Club in the Algiers community for a $200 million redevelopment. An integral component of the Lakewood Resort and Golf Community will be a major upgrade and renovation of its revered 45-year-old golf course. Lakewood Golf Club, home to the Professional Golf Association’s New Orleans Open from its opening in 1962 until 1985, had fallen into disrepair and was fac-

ing closure. The deteriorating 159-acre (15-ha) site was acquired by the New Orleans Firefighters Pension Fund in 2003. “We saw an opportunity to acquire a course with a great history on a valuable piece of land only ten minutes from downtown New Orleans,” explains Cynthia Rico, project manager for Lakewood Resort. “The last thing we wanted to do was close the course.” The pension fund also realized the financial benefit of subdividing 39 acres (16 ha) of excess land, half of which was created through the redesign of the golf course, for redevelopment as a mixed-use community that will include a hotel, 518 condominium units, 16 golf villas, specialty retail space, an assisted living facility, and a new maintenance facility. The pension fund also acquired three adjacent parcels and reconfigured the course to gain additional development sites. “The course was very old and needed a lot of attention,” reports Rico. “Now, instead of closing an outdated, standalone golf course, which would have been a black eye on the community, we are going to return to New Orleans a Class A, 6,800-yard [6,200-m], public-access course with a first-class practice facility designed by golf course architect Ron Garl as part of an exciting golf course community. The value of the properties will be enhanced because of the golf course, and the golf course itself will be enhanced by the upgrades we were able to make to it because of the surrounding development.” Owners of most older courses do not have the amount of excess capacity available to the New Orleans Firefighters Pension Fund. Some courses, however, especially those not integrated into a residential development, have excess land because they were designed only for golf, with little sensitivity to the amount of land strictly needed for the course. Finding and using this excess land often takes some creativity. In some instances, land can be provided by moving a maintenance facility or repositioning a driving range. A more drastic measure would be to reconfigure one or more holes. In either case, the additional land can serve as the economic driver to make improvements and ensure the survival of a golf course. “We look for courses within an existing development envelope with 10 percent inefficiencies,” says Will Gustafson, managing principal of the Santa Barbara, California–based Synergy Golf Partners, which has renovated one course in California and one in Nevada. “That usually translates to about 15 acres [6 ha] on a 150-acre [60-ha] course. It’s a model that allows us to put capital back into the facility and fix the problems that may exist with the course. Even though

Operations and Management 233

Captured Value on the Links

continued

we make money on the development, bottom line, I want to enhance the golf experience, as I like the operating side of the business for the long term once we overlay our operating strategies.” Other golf facilities have excess capacity on the back nine holes, and even entire courses have come to be viewed as excessive. For example, the Wild Wing Plantation near Myrtle Beach, South Carolina, is downsizing from 72 holes to 36 to free up space for residential development, and Bay Tree in Myrtle Beach has closed 36 of its 54 holes. Though some may question the wisdom of golf course redevelopment, especially in light of a softening housing market nationwide, evidence so far supports the approach. According to an NGF report, 61 percent of the courses that opened in 2005 were built in conjunction with a real estate development, continuing the recent trend in which the majority of new courses are built in golf course communities. The popularity of such golf communities does not necessarily correspond with the popularity of the sport. Nationally, an average of only 40 percent of residents who live in a year-round golf community actually play golf, with the figure as low as 20 to 30 percent in some communities, according to the Golf Research Group in Dallas. Most residents are drawn to a golf community’s controlled environment and open space and are willing to pay a premium for their homes. It is this premium that often results in golf course development’s making economic sense, even if the cost of developing the course exceeds its value as a standalone operation. Excess land on a golf course can be used not only for residential development but also for development of other product types. A number of developers of assisted-living housing, drawn by suburban locations, open space, and available parking, are considering

age functions and retail sales for the golf course as they relate to the larger resort? What is to be the level of physical condition of the course? Sources of Income. Golf income varies in source and magnitude based on type of course (private, public, or daily fee), location, market, and length of season. Daily fee courses rely heavily on greens fees and, in some cases, on annual memberships. The breakdown of memberrelated income depends on the membership structure. All types of courses also count on merchandise sales, lessons, rentals, and fees for lockers, golf carts, and other equipment as important sources of income. Food and beverage operations may bring in a large

234 Resort Development

locating new facilities on or near a golf course. Some cities lacking land for schools or parks also are looking to golf course operators to swap excess property to be used for such public facilities in exchange for development rights in other areas. All the challenges that come with the infill development process also apply to golf course development, including zoning and general plan changes, homeowner issues, and political considerations. Complications specific to golf-related development also exist— for example, in many instances land used for golf courses is an assemblage of different parcels that have a variety of zoning designations. Changing zoning is especially challenging with golf course redevelopment because municipalities favor golf courses as recreational open space that is maintained privately at no cost to the city. The loss of such open space is one of the major obstacles in converting golf course land to residential use. While many city officials will not oppose low-density housing around a course, the idea of dense development on what once was an open fairway is a tough sell. It is also much easier to change a parcel’s designation from open space to residential if the excess land is adjacent to an existing residential development. Conflicts with existing homeowners over traffic and views may also arise with redesignation of open space. It is likely that many older golf courses not anchored by some sort of development will continue to struggle. Reinvention of these clubs and courses through redevelopment is proving to be a viable option for salvaging them, while also improving the overall quality of the nation’s golf course supply. Source: Steven J. Lurie and Scott Thompson, “Captured Value on the Links,” Urban Land, February 2007, pp. 79–83.

proportion of a club’s revenue, but they typically also account for its principal expenses. Maintenance. By far the largest single expense items for a course—those that constantly challenge developers, club managers, and superintendents—are maintenance and payroll. Maintenance costs depend on a wide variety of factors, including the course’s location, length of season, weather, type, market, size, and purpose. The last factor is particularly important. Nearly an unlimited sum of money theoretically could be spent on a high-quality course every year. Beyond some point, of course, every additional dollar spent would bring an ever smaller increase in the course’s quality. The

At San Roque Club, a golf resort on Spain’s Costa del Sol, a historic mansion has been converted to a clubhouse with 100 guest rooms and suites. For-sale residential units include singlefamily and multifamily homes.

challenge for the developer is to determine the point of diminishing returns and to structure a maintenance program that makes appropriate tradeoffs and adjustments. If a course is intended to help sell real estate that carries the imprimatur of cost-is-no-object luxury, it is likely to be maintained at extremely high standards. Maintenance costs clearly depend on region. Numerous surveys consistently have found, for example, that courses in the western states, where they may be required to purchase their irrigation water, are more expensive to maintain than those in other regions. A good deal of the variation can be linked to a region’s volume of natural precipitation and the length of the playing

season. Courses in the South and the upper Midwest tend to report the lowest average maintenance costs. Programming. As the recreational and often social focus of a residential or resort community, a course can fulfill a variety of purposes that extend beyond golf itself. New residents can be introduced to the game and to a new set of friends. Juniors programs, leagues, club tournaments, and clinics all play important roles in creating a sense of community while ensuring efficient use of the course. Even though individual programs and activities focus on golf, they also reach into other parts of the resort and for many residents constitute a core of activity that separates their community from any other.

Operations and Management 235

RON JOHNSON FOR OZ ARCHITECTURE

Main Street Station, a pedestrian-oriented, mixed-use village in Breckenridge, Colorado, adds to the resort’s four-season appeal.

Some developers, intrigued by the visibility certain courses achieve, host professional tournaments. While PGA tournaments, especially if nationally televised, can lend a project tremendous exposure and pay big public relations and marketing dividends, the costs to mount such an event can be extremely high and may lead to frustration from residents and members. Moreover, some projects are clearly better suited than others for tournament play. Given the high expense, additional infrastructure, different course requirements, and uncertain benefits to the real estate operation, most developers should take a hard look at the economics of competitive professional sports events before committing their resources. One approach that may be particularly suitable for resorts with multiple courses is to have one designed for tournament play and others for more typical golfers. Another strategy is to have as many as five tees, allowing for a full range of golfers: professionals, average men, women, youth, and seniors who can play the course at their own level of skill. However, nearly all play at most courses will be day-to-day average players, not professionals. Therefore, the course should be designed primarily for this target audience, not for tournaments. Ski Area Management Ski area operations and management may well be the most complex of any of the major resort amenities. In remote locations, for example, the limited availability of affordable housing for seasonal employees is often a challenging issue. Similarly, ski area managers experience difficulty predicting accurate expenses and

236 Resort Development

revenues in the face of uncertain weather conditions. The risks inherent in the sport also pose a management challenge in the form of liability insurance issues. Moreover, ski areas must establish significant budgets for extensive marketing and promotion efforts, as they need to attract a large volume of skiers during peak seasons in order to remain profitable. Many major ski areas have found that moving from a single amenity to a multiuse four-season resort is good business. For the developer, this metamorphosis requires assembling an experienced team not just of ski area managers but of managers who can manage and operate a two-, three-, or four-season resort. The discussion that follows focuses, however, on those management and operating skills that are specific to ski resorts. Understanding the demographics of the skiing population always has been critical to making sound marketing and management decisions for ski areas. The National Ski Areas Association (NSAA) conducts an annual demographic study detailing gender mix, age cohorts, and other characteristics. In recent years, the popularity of skiing has declined while snowboarding has increased, particularly among younger vacationers. The aging of the visitor base underscores the need for management to find ways to attract new and younger entrants into snow sports while retaining older participants. Revenues. Most ski areas are organized fiscally into a variety of departments or profit/cost centers. At the typical facility, about 80 percent of gross revenues are generated by eight major departments: lift tickets; food and beverage; ski school/lessons; accommodations and lodging; real estate; ski equipment/clothing and other retailing; rental of equipment; and miscellaneous, in

Ten Trends Affecting Mountain Resorts As the overall skiing and snowboarding population remains relatively stagnant, mountain resorts constantly must fine-tune their images and adjust their offerings to appeal to a broader customer base. To compete in the mountain resort business, resort owners, operators, and municipalities must remain agile and dynamic. Here are ten trends that are driving the changes occurring in mountain resorts today. 1. Redeveloping Older Resorts With the numbers of skiers relatively stagnant and human nature often gravitating toward the shiny and new, older resorts are faced with the need to reinvent themselves to compete not only with the likes of the Aspens and Vails, but also with other family vacation offerings. Many older resorts can no longer rely on their traditional image as a small homey local mountain getaways. Without high-speed chairlifts, off-slope dining, lodging, retail amenities, and family entertainment options, these older resorts will flounder. To make themselves more competitive with each other and with other vacation and entertainment destinations, mountain resorts such as Brian Head in southern Utah and Mammoth Mountain in east central California are undertaking large-scale redevelopments to upgrade and expand their facilities. 2. Going Upscale Although lift ticket prices are surpassing $70 per day in some locales, real estate remains a resort’s largest revenue generator. With supply tightly constrained owing to existing development and, in most cases, extensive public landholdings, resorts are apt to draw as much value as possible from their remaining parcels. As such, resorts must continue to offer higher levels of service and amenities to keep attracting real estate investment, whether hotels, condominiums, homes, or other products. Upscale hotel chains that have found success at mountain resorts include such well-known brands as the Ritz-Carlton Hotel Company, Four Seasons, and Amanresorts. The presence of these luxury chains at mountain resorts signals the start of a trend and puts added pressure on other resorts to include high-end offerings. 3. Keeping Beds Warm In order to maximize revenue and maintain a constant flow of new guests to the resort, many mountain resort operators are selling residential units through fractional ownership. Also called private residence clubs, fractional ownership enables the buyer to purchase a deeded share (anywhere from one-quarter to one-thirteenth) in a residence. This share provides a set number of weeks during

which the buyer may use the property and those amenities included with the development. According to Condo Hotel Center, fractional prices can range from about $40,000 to over $1 million, depending on location, number of weeks, size, and level of luxury (most, however, range from $100,000 to $500,000). The benefits to buyers are that they acquire ownership of a second home at a lower price point without the hassles of upkeep and with the ability to capture appreciation upon resale. The benefit to sellers or operators is that they are able to capture more revenue from sales of fractional units than from selling a single unit to a single buyer. For example, selling four four-week packages yields more revenue than selling that same unit to a single buyer as a condominium. Since all 52 weeks are not accounted for with any single fractional unit, these units also can be rented out on a weekly or nightly basis when the owners are not present, thereby presenting further revenue opportunities. 4. Events and Venues for Younger Guests With skiing numbers currently stagnant, mountain resorts have been reinventing themselves and adjusting their offerings to attract more families and young visitors. Most major mountain resorts in the United States have added terrain parks or half-pipes specifically designed for snowboarders. Increased ski school offerings, snow-tubing parks, ice skating, expanded terrain for beginners, more diverse restaurants and retail shops, and other amenities are all now part of the efforts to make mountain resorts fullfamily destinations. Even traditional ski resort stalwarts such as Jackson Hole, Wyoming, and Crested Butte, Colorado, have added such amenities in attempts to modify their reputations as havens for experts only. 5. Maintaining Community Identity The once tiny airport at Jackson Hole used to welcome ranchers carrying nothing more than a saddle with saddle bags, as well as the occasional skier toting bags of gear. The town’s formerly sleepy central square remains framed by elk antler arches and wooden sidewalks, but today this distinctive identity has been diluted by the presence of corporate chains. In an age of globalization, resorts must maintain their identities both to meet the desires of their visitors and to differentiate themselves from other resorts. Communities must be vigilant and balance the need to preserve their identities with the need to develop their economies. 6. Providing Affordable Housing Much like many large cities, mountain resort communities face a growing affordable housing crisis. Housing

Operations and Management 237

Ten Trends Affecting Mountain Resorts options are scarce for the workforces of most resort communities—primarily low-wage seasonal workers working in retail, restaurant, and mountain operations and in construction. Similarly, full-time residents who provide city services—teachers, police, municipal workers—make less than what is needed to purchase a home. In places like Crested Butte, Colorado, recent transfers of ownership have led to skyrocketing property prices. Without an inclusionary zoning policy in place, locals have been forced to find housing farther away from the resort, compounding traffic problems, among other factors. To keep such small resort towns functioning for both residents and visitors, housing options must be available for all. Some municipalities have tackled affordable housing development aggressively. In Aspen, Colorado, a 60 percent inclusionary zoning ordinance has produced tangible results both in the city of Aspen and throughout Pitkin County; over 2,000 deed-restricted affordable housing units exist today. In Park City, Utah, the mountain resort rents some properties at market rates and leases them to seasonal workers at below-market rates, thereby subsidizing some, but not all, employee housing.

continued

around town can ease congestion and reduce parking pressures. Park City now provides free in-town shuttles that connect to places farther outside of town and provide a relatively substantial transportation network. Likewise, Aspen and Pitkin County, through the Roaring Fork Transit Agency (RFTA), maintain a commuter bus service that serves park-and-ride lots along the length of the highway leading in and out of the city. RFTA’s ridership numbers rival those of major U.S. cities.

7. Public Transit Options At many resorts, automobile congestion has made transit options a necessity. Transit systems designed for both visitors and workers to get to and from the mountain and

8. Open Space/Parks Although many are drawn to mountain resort communities because of the feeling of openness, this open space is now threatened in some locations. Increasingly, development consumes available land, chain stores and fast-food restaurants line roads and block views, and community parks are nonexistent. In Sun Valley, Idaho, a hillside ordinance limits development above certain points on mountains and along most ridgelines to preserve vistas. In Aspen, developing local parks is part of the city’s economic development strategy; the parks are programmed with events during the shoulder seasons to provide attractions. Even in Jackson Hole, where 97 percent of the land is publicly owned, a nonprofit land trust is active in purchasing land and conservation easements to curtail development on privately held real estate such as scenic ranches, river-adjacent properties, and mountain roads.

order of importance. By far the greatest revenue source at the typical ski area (not counting sales of associated resort real estate) is the sale of lift tickets. Most ski areas offer a variety of lift ticket prices for weekdays versus weekends, adults versus juniors, seniors, and so on. However, lift ticket revenue has been gradually dropping as resorts have increased revenues from nonticket sources. Food service and bar operations produce the next greatest amount of revenue at the average ski area. Snow tubing has become a newer and profitable source of income.6 Expenses. Inefficient property operations are the greatest potential drain on profitability. The key cost centers requiring substantial management expertise and extensive staffing include operation of the ski lift, ski school, food and bar service, retail stores, rental shops, snowmaking, snow removal, and safety patrols. A substantial amount of equipment and facilities must be properly maintained to run these operations. One of the fundamental challenges in managing ski areas is

that they have high fixed operating expenses that make them vulnerable to significant losses when attendance declines because of weather or other problems. The most costly common expenses for a ski area are general and administrative, marketing, snowmaking, and insurance, in that order.7 Insurance and Risk Management. Insurance costs for ski operations are significant and highlight the importance of risk management. Today, most ski areas maintain fairly comprehensive programs designed to mitigate the risks inherent in both the sport itself and facility operations. A successful risk management program should include several elements: suitable training for lift operators and ski patrol members; timely and thorough maintenance and repairs, with suitable markings and warnings on nonskiable areas; ongoing safety programs with strict enforcement of rules and regulations; and careful monitoring of hazardous snow conditions, ice, avalanche potential, and so on. NSAA and other organizations issue a variety of publications, films,

238 Resort Development

Ten Trends Affecting Mountain Resorts 9. Regional Resort Planning Much like any metropolitan area, larger mountain resort communities must consider the larger picture of regional growth and development. Governmental cooperation across jurisdictions and the sharing of general information will help preserve the quality and value of the region. In Colorado, Pitkin County and the city of Aspen jointly address housing, transportation, and open-space issues. Park City has enacted far-reaching transportation and open-space strategies that extend beyond its borders into neighboring Wasatch County. In the Lake Tahoe area, the Tahoe Regional Planning Agency (TRPA) focuses on the environmental health and sustainability of a region bordered by numerous municipalities and counties within two states. TRPA has engaged these communities in discussions of growth-management strategies that aim to preserve Lake Tahoe as a regional draw. 10. Intermountain Connections Eyeing the well-established trend in Europe of connecting numerous mountains into one megaresort, such as in the Alps resorts of Italy, France, and Austria, U.S. resorts are studying the notion of linking separate resorts. Some resorts already are linked in pairs: Aspen and Snowmass share the same ownership (along with Aspen Highlands and Buttermilk) and are linked by shuttle, as are Vail and Beaver Creek, also owned by a single entity.

and other materials that are useful in organizing a risk management program. The nature of the sport is such that risks cannot be eliminated. Given the institutional pressures on the industry, however, ski area operators must assign a high priority to reducing risk. Digital Mapping for Operations and Management.

Digitally mapping ski resorts is both practical and cost-effective. Peter Brill at Vail Resorts’ Keystone in Colorado has gathered GPS (global positioning system) data on Keystone trails by skiing and snowmobiling the terrain with a handheld GPS computer, collecting data points that define trail boundaries, snowmaking fixtures, patrol phones, electrical junctions, utility lines, and signs. These date all were fed into GIS (geographic information system) software. The data, plotted on high-resolution satellite photos, have resulted in a detailed three-dimensional map of the entire resort. The potential for time savings in operations is significant. The data also can be used in risk management to reconstruct a ski accident scene from the viewpoint

continued

Recently, separate owners have come together to link resorts. In Utah, the neighboring Alta and Snowbird resorts now offer a combination lift ticket that provides access to both mountains, made possible by Snowbird’s opening of Mineral Basin. In Montana, Big Sky Resort and Moonlight Basin offer a joint ski pass. Physical links among multiple resorts, not just two immediately adjacent neighbors, may well be the next big trend in U.S. skiing as a marketing ploy to provide seemingly endless terrain. This may help alleviate some transportation concerns as well, since skiers would be able to arrive at one mountain and ski a number of others without ever getting in a car or boarding a shuttle. Preliminary studies have suggested that it is physically possible to link Park City, Deer Valley, and the Canyons in Utah, and perhaps even more. Similarly, links among the resorts in Summit County, Colorado may be a possibility. While such connections would require extensive networks of chairlifts, trams, and gondolas, the possibility of achieving the differentiation of a megaresort may be worth the complicated physical and business logistics. Source: Howard Kozloff, “Ten Trends Affecting Mountain Resorts,” Urban Land, April 2006, pp. 46–51.

of the injured party. With the help of digital mapping, Keystone also is planning its snow tubing hill from a guest’s point of view.8 Marina Operations and Management The operations and management of marinas present a range of options. One basic requirement, however, calls for a management structure and level of service that is consistent with both the physical facilities and the marina’s overall purpose within the resort. An overcapitalized but undermanaged facility can quickly become a serious cost burden; maintenance costs will mount as customer satisfaction and slip occupancy rents fall. Conversely, a relatively simple facility can be inefficiently overmanaged, particularly in the case of marinas intended to function primarily as loss leaders for real estate operations. As long as real estate sales remain strong, wasteful expenditures on operating costs and overhead may be overlooked or ignored. Ultimately, however, a badly planned and managed marina will

Operations and Management 239

LANDCORP

Luxury apartments at Mandurah Ocean Marina, near Perth in Western Australia.

; assist marina management in day-to-day operations; ; define the roles of various employees within a marina; ; develop safe operations and practices; and ; create a system of checks and balances for efficient operations. While this manual is designed for large marinas, it can be adapted for use at smaller facilities such as those that are an integral part of a resort complex. This manual covers boat slips, environmental concerns, boat

240 Resort Development

LANDCORP

become a drain on its owner’s resources, and retrenchment measures will be more traumatic than if the problem had been addressed earlier. A full-service facility generally offers comprehensive boat services, including sales, cleaning, repair, and storage. Many marinas also maintain a fleet of boats for rental or lessons. In addition, special party boats may be available for rent. Generally all marina services are provided on a contract basis. The Association of Marina Industries has developed its Marina Operations Manual with four goals: Mandurah Ocean Marina is a mixed-use resort community with worldclass marina facilities

sewage management, litter control, oil pollution prevention, and so on. It also provides job descriptions for the 22 most common jobs found in most marinas, along with forms for employees as well as employment rules, regulations, violations and performance standards, all of which can be modified and adapted to circumstances.9

One new management and operations concern for marinas relates to the role of the U.S. Department of Homeland Security. Marinas on the coast, along major rivers, and on the Great Lakes could be points of entry for terrorists. The U.S. Coast Guard has requested that marina owners and managers increase their vigilance for suspicious activities. While is has not been defined as a required responsibility, the normal attentive behavior of marina personnel in policing inappropriate or illicit activities might include reporting to Homeland Security. For many marinas, the greatest single management challenge is keeping their slip occupancy levels high. Slip rentals, usually handled through a dock master’s department, represent the greatest single source of marina revenues. A well-managed marina not only sets slip rental rates carefully, based on an analysis of comparable nearby facilities, but also maintains clearly defined procedures for filling slip vacancies. These procedures may include waiting lists, slip “inheritance” rules that apply when a boat is sold, or other measures. If a marina owner is not fortunate enough to face unlimited demand for slips—as is often the case in a new facility—slip management can serve an important marketing role. Transient slips can be valuable ways to introduce newcomers to a marina. An added benefit for marinas with lodging, restaurants, fuel docks, or other amenities is that visitors tend to spend more money than full-time slip occupants; transient slips thus can provide significant revenue for other marina operations. Waterfront consultant Jim Corrough suggests that resorts expand their thinking about other activities that will add value and income: water-based ecotourism, deep-sea fishing, scuba diving, parasailing, waterskiing, and marina special events. Customer satisfaction and profitability largely depend on the quality of marina maintenance. Adequate levels of property and equipment maintenance are essential to smooth operations. Because of their location, use, and materials, marina structures can deteriorate at a rate that will accelerate with time. The consequences of major equipment failure can be severe. Even relatively minor maintenance items, if deferred, can make a marina unpleasant or dangerous. For these reasons, even the most modest marina should implement a formal maintenance program that includes regular inspections and identifies and ensures completion of routine maintenance items, repairs, and overhauls. Developers traditionally have used waterfront amenities to enhance land values and improve marketing

appeal. Few developers have pursued the profitability inherent in the use of the water amenity itself. Therefore, many marinas are not designed, built, or operated to generate a profit. Nonetheless, specialized amenity management firms are convincing developers to reconsider the traditional relationship between marinas and real estate. As with any business, a profitable marina requires a clear articulation of goals and objectives, along with the systems and tools to measure performance. One of the most important management tools is the budget, which can serve as a benchmark for evaluating an operation’s anticipated versus actual performance. Careful budget analysis can enable marina managers to make adjustments as necessary to narrow gaps between objectives and actual performance, even when a marina’s budget is subordinate to an overall resort budget and phasing and capital investment plans. Developing and implementing a marina budget requires a well-developed system for tracking the sources and flows of costs and revenues. Given the wide range of potential costs in marina operations, it is essential to match costs as closely as possible to corresponding revenues. The correspondence between costs and revenues should directly reflect the marina’s organization. A marina that offers a full range of services is generally organized around those aspects of the operation that generate identifiable categories of revenues and that can be specifically assigned to corresponding costs. These profit centers typically are isolated by function: marina management, dock master or harbor master, service, boat sales, retail sales, and food and beverage. Managing Spas Once a niche item, spas are becoming a necessity for resorts, as a growing number of today’s travelers have come to expect them as part of the resort experience. Once considered a marketing tool, many of today’s spas have become viable businesses in and of themselves. Many of these spas have become “signatures” for the property and make a statement both in terms of the facility and the services offered. Some properties even have become notable because of their spas and feature them prominently in their marketing and public relations. A growing trend is medical facilities as part of the spa. Services might include analyzing health through blood work and body scans, and developing regimens that include fitness, diet, and spa treatments. Spa management has become a discipline of its own, with several colleges offering educational programs for

Operations and Management 241

ROYAL PALMS RESORT & SPA

Spa guests expect high-quality facilities and atmosphere, and a welltrained staff. Pictured: Royal Palms Resort & Spa, Scottsdale, Arizona.

spa managers. The University of California, Irvine, for example, offers a certificate program in spa and hospitality management that includes business planning, marketing, and customer relations coursework. Spa guests expect a high-quality experience, which depends on having the proper atmosphere, facilities, and, above all, a well-trained staff. A successful spa concept will address guests’ expectations while also being efficient from an operational perspective. No matter how small, a spa must create an experience for its guests. It is not uncommon for a turnkey, four-star spa to cost $450 to $500 per square foot (0.09 sq m), a figure that includes construction (but not land) and built-in

242 Resort Development

equipment such as lockers, sauna, and music system; spa-specific furniture, fixtures, equipment, and startup operational supplies; general furnishings and interior upgrades; and soft costs such as training, preopening payroll, and marketing. Most luxury spas cost upward of $500 per square foot. Management Options. Most resorts want to create and maintain control of the guest experience as well as extend the resort’s brand value and integrity, and so they tend to manage their spas in house. According to the International Spa Association, 94 percent of resort and hotels with spas manage their own amenities. Some branded hotel companies even have created their

own spa brands. Alternatively, a developer may choose to enter into a franchise or license agreement with an outside spa management company. The three primary options for outside spa management are: ; A branded product company will provide the resort with a brand name, products, and a branded spa. In return, the resort offers a distribution channel for the company’s products. The spa is typically named for the product company. ; A branded spa, seeking to expand its brand awareness and name, will offer its name, identity, and guest experience based on the brand standards of the spa company. ; A local spa or a nonbranded company will manage the spa.

MARRIOTT PHUKET

Labor is a challenge for many spas. The staff are a spa’s heart and soul, and they are often the primary reason that guests will return. But labor is the most expensive operating cost, so planning less labor-intensive facilities that don’t sacrifice the guest experience can result in significant savings.

Creating a realistic salary and incentive package for the spa staff is of critical importance for attracting and retaining staff and ensuring profitability. Identifying and retaining a good, affordable, and loyal spa director can be a challenge. Patty Monteson, cofounder of Health Fitness Dynamics, Inc., a firm that specializes in the design, development, and marketing of health spas, recommends hiring from within a resort and then developing a training program for that person. This strategy has several advantages: the person will have the stability of already being employed by the resort, sometimes for years; he or she will understand and be part of the resort’s culture; and the promotion will show all employees that they have the possibility of moving to different areas in the resort, thus enhancing their job satisfaction. The hiring and training time frame will depend on the size of the spa, but following are some general guidelines. The spa director can be hired six to 18 months prior to opening, depending on whether there is a startup team to assist with all preopening responsibilities. This startup team could be staffed by the corporate spa department that may exist within a resort chain or by spa consultants. The spa sales person, if

A top-notch spa staff is key to guest satisfaction. Pictured: spa treatment room at the J.W. Marriott Phuket, in Thailand.

Operations and Management 243

ROY QUESADA

Spas offer opportunities for cross-marketing. The spa shop at Marriott Harbor Beach, in Fort Lauderdale, Florida, sells a wide range of products used by the spa.

applicable, should start about six to nine months before opening. Supervisors can be on board about two to four months prior to opening, and receptionists should start shortly afterward. The rest of the team will need about three to four weeks of training, which includes not only the technical aspects of their jobs but also the hospitality component. Monteson suggests the following schedule for preopening training: Week 4: Hotel orientation; uniforms; spa operating procedures; Week 3: Departmental training; Week 2: Continue departmental training; room setups; and simulations with spa team; Week 1: Simulations with hotel staff and “friends”; Go live.

244 Resort Development

In addition to training the spa team, it is imperative to orient the rest of the resort staff regarding the spa’s services. A training manual for each department is essential. It should include standards and information regarding general, as well as departmental, operating procedures plus guest services, product company overviews, brochures, and so on. Hotel departments with direct guest contact should also receive a fact book that includes information and frequently asked questions so they will be able to respond to guests’ questions and market the spa. Operations: Monitoring and Measuring. Once spa operation begins, the key to profitability is to drive the top line by getting people in the door, giving them a great experience, and getting them to return. Periodic reviews should be conducted to ensure the high-

est quality and consistency of the service and spa treatments and to control payroll and other operating expenses. Following are recommended metrics for evaluating a spa operation: Baseline Metrics Market segments Capture rate by market segment Number of treatments per guest Treatment room use Revenue Revenue Revenue Revenue Revenue Revenue Revenue

Metrics by guest type by treatment by department per occupied treatment room per available treatment room per visit

Payroll Metrics Payroll as a percentage of gross revenues Payroll as a percentage of treatment revenues Payroll cost per treatment Productivity per employee Revenue generated per employee Expense Metrics Operating expenses as a percentage of gross revenues Product/supply cost per treatment Operating cost per guest Laundry use and cost per guest Source: Health Fitness Dynamics, Inc.

Constant monitoring will enable management to refine the guest experience as necessary. Adjustments should be market-driven, so it is important to speak with guests, review comment cards, and follow up with guests after their visits. Management should commit to ensuring the seamless integration of the spa with the rest of the resort, and to continue training, educating, and motivating the team. Operating expenses vary, based on whether the spa is a department, a semi-independent business unit or a fully independent business unit. Most resort-based spas are not independent business units. They receive some subsidy from the resort and few, if any, pay rent to the resort. Spa gross revenues come primarily from à la carte spa services, followed by spa packages (services only),

facility fees, retail sales, and memberships, if applicable. It is important to add revenue sources that can reach beyond the spa’s four walls—even when guests are not on-property. For example, spa products can be sold in gift shops, and products and services can be promoted in guest rooms, on the resort Web site, and via other promotional media. A well-planned, marketed, and operated spa should be a resort profit center, plus an intangible asset that provides a marketing advantage. Tennis Facility Management As with all recreational amenities, ownership of tennis facilities can vary, and each type carries broad implications for operations and management. One clear trend in tennis club management, similar to that evidenced in golf course and marina management, is for developers to contract with a specialized tennis management firm. Burwash International, one such tennis management specialist, manages the tennis facilities at various Four Seasons, Hyatt, Westin, Hilton, and Ritz-Carlton resorts. The firm provides each project with a resident tennis professional responsible for all court scheduling and maintenance, instructional programs, tournaments, and pro shop operations. Revenues and Expenses. Tennis club operating and overhead costs, like those of a golf course, are largely fixed. Therefore, one of the key management objectives is to maximize revenues from various membership dues and fees, which constitute the largest category of club income. Many tennis facilities may be open to both residents and outsiders and may rely on a dues and fee structure similar to that of a commercial club. Whatever the arrangement, dues and fees produce, on average, between 40 and 70 percent of total revenues. Other significant sources of revenue derive from the pro shop, food and beverage services, equipment rentals, lessons and clinics, and, in some cases, tournaments. The aim of any dues and fee structure is to maximize the use of the courts by setting up appropriate incentives geared to demand. A prospective club developer must examine the market’s characteristics to establish a membership structure. What are the established patterns of play? Does stronger demand exist for evening, midday, or morning play? At what time of day is demand weakest (when hourly rates should be dropped)? Operations. Tennis facilities are far less complex to maintain than golf courses. Capital costs and maintenance needs are lower. Courts require resurfacing and restriping on a regular schedule, nets need to be

Operations and Management 245

DALE A. HORCHNER/DESIGN WORKSHOP

The most management-intensive resorts are large-scale, four-season resorts such as Northstar, in Lake Tahoe, California.

replaced, fencing and windscreening must be maintained, and, if courts are lighted, fixtures need to be relamped periodically. Maintenance needs include that of equipment to clean the playing surfaces and ballthrowing machines. The court reservation program needs to be coordinated with other resort facilities and with the resort hotels. A successful operation will have a variety of programs, including lessons, free clinics for adult and juniors, minitournaments, and round robins. Providing adequate access to courts and matching players by ability level are two important management considerations. One of the principal customer services of an effective operation will be finding opponents for resort visitors who do not have a tennis player of their skill level in their party. At the Boulders Resort and Golden Door Spa in Carefree, Arizona, the staff works diligently to find opponents and draws on a stable of strong local players when neither members nor other guests pan out.

Managing Multiuse Resorts Large multiuse resorts usually offer a broad selection of on-site recreational amenities such as golf courses, ski

246 Resort Development

slopes, beaches, or a marina, along with additional facilities such as swimming pools, tennis courts, hiking/biking trails, exercise rooms, and spas. Housing might be provided by one or more hotels at various price points and a range of residential types, such as timeshares, fractionals, vacation clubs, condominiums, or fee-simple single-family residences. As a result, multiuse resorts must target a variety of market segments: singles, couples, families with children of all ages, retirees, and business and social groups. There are many opportunities for synergistic relationships but, at the same time, these different market segments may not be entirely compatible, which must be considered in the resort’s design and programming. A combination of hotels, timeshares, fractionals, and second homes will increase the number of potential amenity users over a more substantial portion of the year than is common among single-use resorts. As always, hotel guests represent potential buyers of residential real estate. From an operations and management standpoint, fractional owners are seeking a luxury product, a high level of services and amenities, and flexibility of use. They also expect hotel-style reservations systems and maintenance standards and some form of rental management, which is fraught with legal risks for the developer.

Betting on Atlantic City With a declining population, high unemployment, and decaying housing stock, Atlantic City long exuded urban blight. Then, in 1976, the New Jersey gaming referendum legalized gaming in Atlantic City. The success of the legislation and the Casino Reinvestment Development Authority (CRDA) can be seen throughout the revitalized city. With the opening of the Borgata Hotel Casino in 2003, Atlantic City began a new chapter of resort development. The $1.3 billion hotel, casino, and spa project has 13 restaurants, a 1,000-seat theater, 11 retail boutiques, and a 54,000-square-foot (5,016-sq-m) spa, Toccare. Construction of the Borgata served as the impetus behind the major expansion of Harrah’s and the Trump Taj Mahal Hotel Casino, and other projects added thousands of new residential units to the city. The first 12 casinos in the city were constructed with a strong internal orientation. As a result, street life declined, and visitors rarely left the hotels except to travel to other casinos. This pattern changed with the opening in 2004 of the Walk’s outlet stores, located between the convention center and the boardwalk. Comprising 60 stores and 11 restaurants, the 320,000-square-foot (30,000-sq-m) project was an immediate success, and its 40/40 Club, co-owned by rap artist Jay-Z, helps activate the streets on evenings and weekends. Although the legislation that originally allowed gambling led to the construction of a series of casinos and hotels, it did not result in redevelopment of the adjacent neighborhoods. Instead, the city’s population declined from 47,900 in 1970 to 40,200 in 1980. To respond to the changing economic and social needs of the community, in 1984 the New Jersey legislature established the CRDA with the mission of providing capital investment funds for economic development, including housing and community development projects. State law requires the casinos to reinvest 1.25 percent of its gaming revenue through the CRDA in community and economic development projects. Under the terms of the reinvestment agreement, each casino pays the CRDA 1.25 percent of its annual gaming revenues for 50 years, and the CRDA invests the money in projects in Atlantic City, south New Jersey, or north New Jersey, according to a schedule set by law, with the casinos entitled to a return on their investments through the CRDA. The CRDA is governed by a board of 17 voting public and casino representatives, including the mayor of Atlantic City, the state treasurer, and the state attorney general. It makes its capital investments through bonds, loans, and occasionally grants to projects that

would not attract capital in normal market conditions. Projects that can qualify for CRDA financial assistance range from improving blighted areas to expanding public recreation and public transportation. Efforts during the CRDA’s early years focused on rebuilding blighted areas, starting with the Northeast Inlet area. Many people residing in the city before 1978 lived in substandard homes. With acquisition, demolition, and site preparation subsidized by the agency, private developers and the CRDA were able to provide affordable housing to relocate families and new casino employees. Land was assembled for redevelopment, including the purchase of occupied homes for the assessed value and sale of new homes for the same price. To avoid the appearance of impropriety, a program called the “shared appreciation mortgage” required the purchasers to remain in their new homes for five years and share with the CRDA any appreciation in property value when the home was resold. More than 1,300 housing units were built in the 1980s and 1990s. Overall, the CRDA has invested $225 million in the construction of new housing. The CRDA also has channeled funds into community development projects such as the $3 million Boys and Girls Club, sponsored by Bally’s Park Place casino. Even though major new housing and community development investment had been made in the 1980s and 1990s, Atlantic City still lacked the vibrant street life and tourist lure of Las Vegas. For instance, the new 2 million-square-foot (186,000-sq-m) Atlantic City Convention Center and the adjacent Sheraton Hotel had opened in 1997, but visitors faced a four-block walk through vacant lots to reach the boardwalk/casino/hotel district. This changed with the construction of the Walk, a project developed through the CRDA Urban Revitalization Program, a tax incentive program established in 2001 and focused on new entertainment and retail venues. The incentives provided under this program included a sales tax rebate on construction materials, an annual rebate of up to $2.5 million in retail sales taxes, and an annual grant based on an incremental luxury tax. Land in the Walk’s corridor area was assembled by the CRDA, and major infrastructure improvements were in place when the land was leased to the Cordish Company. A preliminary study by the developer revealed that about half the potential shoppers were hotel and casino visitors, but the rest could come from Atlantic City neighborhoods. Besides the Walk, two other entertainment districts were established: the Quarter, 194,000 square feet (18,000 sq m) of retail, restaurant, and entertainment space in the Tropicana Hotel and Casino; and the Pier Shops at Caesars, 575,000 square

Operations and Management 247

Betting on Atlantic City

continued

feet (53,419 sq m) of retail, restaurant, and entertainment space on the site of the boardwalk’s former Ocean One Mall. In response to the approval of slot machines in Pennsylvania and New York, the New Jersey legislature in 2003–2004 directed the CRDA to create the $34 million Casino Capital Construction Fund and the $62 million Atlantic City Expansion Fund, granting assistance for nongaming capital expansion projects at casinos. Funding comes from bonds to be paid off in part with a doubled casino parking fee of $3 and a new $3 fee on casino hotel stays in Atlantic City. Although the tax burden on Pennsylvania slots is significantly higher than that in Atlantic City, many Pennsylvania gamblers are expected to stay in state. In response, Atlantic City took a page from the Las Vegas playbook—building new shopping and entertainment areas outside the walls of the casinos. At the same time, major casino investment occurred with expan-

sions in the number of guest rooms, the addition of Harrah’s 17,000-square-foot (1,600-sq-m) entertainment complex, and the building of a 40-story, $250 million tower at the Trump Taj Mahal. New casinos, new housing, and new shopping venues have restored Atlantic City as a year-round resort that accommodates both permanent residents and owners of second homes. The Atlantic City Convention Center experiences steady bookings throughout the year. Streets are busy and safe, and the famous boardwalk is undergoing a major renovation. The CRDA will continue to assist with economic development projects in surrounding Atlantic County and throughout the state. While many of the famous old hotels are gone, the new Atlantic City offers the promise of major real estate investment for many years to come.

Multiuse resorts often offer a rental program in which the owner of various categories of residential units can elect to enter into an agreement with the hotel operator to market the unit to transient guests. Under such an agreement, the unit owner and the hotel operation split the room revenue generated under a formula agreed to in a prenegotiated rental management agreement. Under such an arrangement, the unit owner has the opportunity to own a second home while offsetting some portion of the carrying cost during periods when the owner is not using the unit. The hotel owner and operator benefit from having additional inventory—often superior in size and quality to actual hotel rooms. While beneficial to both the buyer and seller of the units, federal and state laws regulating the sale of units intended for rental programs make it necessary for developers to structure and administer the offering carefully, as the penalties for not doing so are quite severe (including lawsuits, fines, and buyer rescission rights). Residents and guests of residents within a resort community represent a potential source of demand for food and beverage operations, for retailers, and for the various recreational facilities if they are independent operations Golf courses in particular can be structured as equity or nonequity clubs and marketed to residential unit owners and renters to yield a significant additional

source of revenue. A golf course also can be semiprivate, with the club agreeing to permit hotel guests to use the course under certain terms, usually documented in an access agreement. These kinds of synergies can provide multiuse resorts with significant management and marketing advantages and thereby enhance the revenue stream. They also require sophisticated management and operating practices that will keep all patron groups equally pleased. Fortunately, it is possible to ease the tensions between different user groups through sensitive programming and design. Because multiuse resorts by definition include a range of owners, multiuse developments create their own universe of divergent legal requirements, property management needs, operating procedures and marketing, and resale and rental programs. For example, resorts that cater to both professional meeting and family vacation markets should take care to ensure that the facilities for the two groups are segregated. When they must come together, they often will require overlapping facilities and services, and meeting both sets of needs will require creative solutions. Perhaps the most management-intensive resort type is a large-scale, four-season ski/golf/wilderness resort. Such a development requires all the various specialized tasks involved in a ski resort, including a lift operation

248 Resort Development

Source: Richard Huffman, “Betting on Atlantic City,” Urban Land, February 2007, pp. 75–79.

and snowmaking; golf course management; tennis and swimming facility management; lot/home sales management; community association management; club management; a seasonal ski shop and rentals in the winter; a golf pro shop in the spring though the fall; water and other outdoor sports in the summer; and management of guest accommodations and various other support facilities and amenities throughout the year. The seasonal as well as full-time acquisition, training, and housing of all the various operating personnel—ski instructors and lift operators, golf pros and greens keepers, tennis pros, dive masters, boat repair personnel, and naturalists, to name but a few, are major challenges in themselves. This can be made even more difficult if the resort is located in a somewhat remote location where access to potential employees is limited. Given the different needs and expectations of the various property owner categories in a multiuse resort, it is not unusual for conflicts to arise over service levels and access to amenities. A timeshare owner visiting the resort for just one week every year will have needs and expectations that differ sharply from those of a yearround homeowner resident. The more types of ownership that are involved, the more difficult it will be to manage these expectations. Yet, each owner category has legitimate rights that demand the appreciation and respect of developers and resort managers. The first step, notes architect/planner Richard Hulbert of the Hulbert Group International in Vancouver, British Columbia, is to make sure the needs of each owner are addressed individually in exactly the same way they would be in a single-purpose development. “First you have to look at the needs of each component and address those. That’s critical,” he says. “Once you’ve done that, then you have to look at ways their needs overlap and combine. But you can’t do that first, or you run the risk of overlooking the fact that each consumer needs something different.” “Management concerns can range from discounting prices in the hotel restaurant for other resort residents to extending maid service and club membership privileges to various property owners and their guests. For any such system to work, however, it must respect each owner’s rights and avoid attaching any sort of stigma to any one use,” Hulbert recommends. In some instances, resorts may have to offer “separate but equal” facilities: one set for permanent residents and their guests and another for hotel guests and timeshare and fractional owners. Careful planning can avoid most

owners’ rights issues, but a crucial element is proper staff training and communication. Keeping all employees informed through staff meetings and frequent written communications helps them better market and manage a resort. As most experts agree, anticipating and managing every detail of complex resort operations can tax even the most generously funded, most professionally managed operation. The potential rewards, however, can more than offset the difficulties.

Activity Programming One of the most important resort management functions involves “soft programming,” or the planning and management of supplemental activities for resort residents and guests. These can be as simple as a poolside games for children or as elaborate as a star-studded concert series. Usually, a dedicated staff manages these programs, which may extend to such on- and off-site activities as welcome receptions; holiday events; children’s camps; fitness and wellness programs; cooking classes; arts and crafts classes; tours of nearby cultural sites; adventure excursions; concert, film, or theater festivals; golf tournaments; food and wine festivals; and other forms of entertainment, amusement, and education. Most major resorts include an up-to-date listing of special events on their Web sites. Entertainment and cultural events are increasingly popular ways to attract resort visitors. Many such events can be useful as special attractions in shoulder seasons. Some East Coast beach resorts sponsor music festivals in the fall to attract visitors following the peak summer season. For example, WaterColor Inn and Resort on the Florida Panhandle hosts an annual film festival in early November, when travel is typically at a lull. The “Stars on the Lake” concert series that runs through the summer at the Lake Las Vegas Resort has become a major marketing tool for the resort, bringing a great deal of publicity and drawing visitors and homebuyers during the hot summer months. Each year, world-renowned musicians perform on a floating stage on the lake, with ticket prices running as high as $250 for those including a stageside gourmet dinner prepared by a celebrity chef. Activities also can be profit centers, since many involve additional fees for participation. Children’s camps are a favorite, offering supervised entertainment for children and a welcome break for parents. At the

Operations and Management 249

ARIZONA BILTMORE RESORT & SPA

At the Arizona Biltmore, soft programming for children includes evening dive-in movies.

Phoenician Resort in Scottsdale, Arizona, the “Funicians Kids Club” has a full schedule of events centered around a daily theme. Children can sign up for a full or half day of activities, with lunch included. Weekend evening events also are offered. Marriott Golf properties offer “Kids Golf-4-Free” programs designed to cultivate new young players, while bringing families to the resorts and out on the courses. Children under the age of 15 may play for free after 3 p.m. (typically an off-peak time), when accompanied by an adult paying full price. A child is even eligible for free lessons if accompanied by an adult who is taking lessons for a fee. The Hilton Waikoloa on the Big Island of Hawaii offers a wide variety of cultural and sports events and other soft programming. Ballroom dance lessons, movies by the pool, and “fun runs” make up frequent activities. Each October, the resort is among the sponsors of the Ironman Triathlon, the world’s most prestigious and well-known endurance race. Thousands of spectators are drawn to the event, while millions more watch on

250 Resort Development

television. The resort also sponsors the annual Waikoloa Women’s Golf Challenge, drawing competitors from across the country. Exploration and adventure programs and excursions are other popular offerings. Some larger resorts have begun to provide a variety of off-site excursions for guests seeking adventure. These “soft” adventures— whitewater rafting, overnight hikes, wild game hunting—typically require guides and provisions. Soft adventures are particularly appealing to the 25- to 45-year-old age group and represent a reaction against the sedentary urban lifestyles experienced by many. Today, many young people want their vacations to be more than just a trip to the beach or mountains. The soft adventures scheduled by a resort add considerable opportunity for publicity and recognition, often without substantial investment. For the most part, developing partnerships with concessionaires and other service providers eager to organize soft adventures can greatly enhance a resort’s amenity offerings. For example, in its marketing materials, the Kauai Marriott Resort

GRECOTEL

Kids’ Clubs, like this one at Grecotel Club Creta Sun in Crete, provide parents with time to relax.

& Beach Club in Hawaii promotes scenic helicopter tours of the island provided by a separate company; the club also promotes catamaran sailing tours. Particularly for repeat guests, it makes sense to add new places to go and things to see that have a different twist. Base camping is a related and growing resort activity trend. In simple terms, a resort can serve as a base point for a variety of adventures away from the resort, including soft adventures, more rugged adventures, and ecotourism. Base camping is particularly well suited to a resort location that is not characterized by either beach access or proximity to a major tourist attraction but is relatively close to a wide variety of activities to which guests can be transported. Many resorts offer instruction in various sports, including not only the standards such as golf, skiing, and tennis but also up-and-coming sports such as mountain biking and in-line skating. These programs can be offered both as an ongoing service provided on a daily basis and as part of one- or two-week instructional sessions.

Wellness and health programs are also exceedingly popular. While such programs depend on physical amenities, they also are as much about the services they offer as the facilities. Thus, management is a critical element in establishing and maintaining the quality of the programs. Joan Whaley Gallup, director of health care design and planning for Ellerbe Becket, a global architecture, engineering, and construction firm, suggests that more resorts will be providing the following facilities and services: ; enhanced spa facilities with new alternative treatment options; ; expanded fitness facilities with state-of-the-art equipment; ; medical treatments that overlap beauty treatments, such as hydrotherapy; all forms of massage from sports and Swedish to lymphatic drainage; dermabrasion; and laser skin resurfacing; ; medical treatments that traditionally are preformed in a clinical setting, such as minor plastic surgery,

Operations and Management 251

WALSHE

Guests enjoy wellness-related activities at resorts. At Fiji Island Resort, yoga is among the daily activities

physical therapy, traditional medical diagnostic tests, cardiology testing, weight management, pain management, behavioral medicine, cosmetic dentistry, and antiaging treatments; ; alternative regimens such as chiropractic, homeopathic, and herbal medicine and nutritional testing; and ; spiritual exercises, including yoga, tai chi, meditation, and other mind/body practices.10 Educational programs are also popular in all types of resorts, including many second-home communities. The

252 Resort Development

Disney Institute in Orlando has been a leader in providing educational programming in a resort environment. The institute currently offers more than 80 hands-on programs, ranging from animation and topiary gardening to rock climbing and wilderness exploration. Guests customize their vacation experiences as they pursue current interests and explore new ones. At any given time, musicians, dancers, chefs, writers, filmmakers, and other creative individuals are present at the Disney Institute, taking part in programs, holding workshops, and creating new works of art. Guests interact with

these individuals, observe the creative process, and see new works presented in the resort’s performance areas. A dance troupe visiting the institute, for example, might invite guests to take part in rehearsals, assist in staging performances, and provide input on choreography and design. Evenings are highlighted by live performances and lectures on a broad spectrum of topics. There are two ways to choose programs at Disney. First, preselected program packages are grouped by area of interest and include a range of programs that might relate to nature, animation, or culinary arts. “Dabbler” packages enable guests to sample activities from many areas of interest. Second, guests may customize packages by adding or subtracting programs. With the customized itineraries, guests choose programs from the individual program list. The Disney Institute’s educational facilities include 28 program studios, a broadcast-quality performance center, an outdoor amphitheater, a state-of-the-art cinema, a closed-circuit television station, and a closedcircuit radio station. Guest accommodations comprise a selection of light, airy townhouses and bungalows configured as suites and set among pine woods, canals, and lakes. The lightly wooded, 250-acre (100ha) site betrays little of its theme park connections despite its location near the Disney Village Marketplace and Pleasure Island. Other resorts offer more low-key educational programs. At Dewees Island, a 1,205-acre (488-ha) second-home community in South Carolina, extensive environmental education and research initiatives have provided residents with the opportunity to learn more about and play an active role in the island’s environmental stewardship. Whatever the resort type, the kinds of programmed activities must be targeted to the market. Some can follow a singular special focus; others are of great variety and depth. Since developing and managing these activities is both energy- and time-consuming, a resort management team needs to conduct an ongoing analysis of the effectiveness of the activities they provide and their contribution to the reputation of the resort and the satisfaction of visitors and residents, so that their value can be measured against their cost.

will positively or negatively affect the resort’s initial and long-term success. That success needs to be defined in both economic terms and that of user satisfaction. Developers should be cognizant of the number and complexity of issues involved in resort operations and management. Such awareness is key when making the decision to hire a third party to oversee on-site management. Thirdparty companies can provide the expertise needed to run a resort and manage its day-to-day issues effectively.

Notes 1. Rebecca R. Zimmerman, “Resort Survival,” Urban Land, August 2003, pp. 46–51. 2. Trends in the Hotel Industry, US Edition 2004: Perspectives on the Road to Recovery, CD (Atlanta: Hospitality Research Group, PKF Consulting, 2004). 3. “Up to Par,” Urban Land, April 2005, p. 80. 4. ULI Development Case Studies, case no. C030017, October– December 2000. 5. Timeshare Industry Resource Manual (Washington, D.C.: American Resort Development Association, 2002), p. 111. 6. Rick Kahl, “Economic Analysis: Profits Still Strong,” Ski Area Management, May 2005. 7. Ibid. 8. Seth Masia, “The Digital Mountain,” Ski Area Management, May 2005. 9. www.marinaassociation.org/publications.php?i=14&c=5 (accessed June 18, 2008). 10. Joan Whaley Gallap, “Staying Well,” Urban Land, August 2000, pp. 48–49.

Conclusions Operations and management begin with the initial conceptualization of a resort development. The process should be an iterative one. The design of the functions

Operations and Management 253

254 Resort Development

6. Marketing and Repositioning

Marketing must be considered a part of the first stages of resort development and must continue throughout the life of the project. It begins with understanding the potential market for the resort, then creating a product to satisfy that market, promoting and selling the product to target markets, and satisfying guests and owners in continued operations. While involving virtually all phases of development, the central elements of marketing include: ; market research to define potential markets; ; advertising and promotion to make the product known; ; presales planning and sales management; and ; ongoing strategies to refocus marketing or restructure the product itself to meet the demands of the market. Marketing a resort is an iterative process. It involves creating and fine-tuning the marketing strategy, implementing sales management, and monitoring and measuring market response. Information obtained through this process is not only important to refining the marketing process itself but also crucial to product programming and managing the resort.

Northstar at Tahoe, California.

NICOLE BELT, NORTHSTAR AT TAHOE

Resort Marketing Tools The first step in marketing is product development or positioning. It is important to match a hotel project with market demand. Ultimately, the primary marketing task is to develop the right product at the right place at the right price and time. Toni Alexander, principal and creative director of InterCommunicationsInc., advises that “One of the most critical steps in the development process is to validate the initial vision and refine it as needed, based on the expectations of the target market. The right outside resource who understands what buyers will want in a resort experience will help the developer build in greater value to the project and accelerate sales absorption.” Thus, the first and most important element of marketing strategy is to create an income-producing property that will have long-term value. The development of a high-quality resort and amenity program can be well worth the investment. First-rate amenities satisfy visitors and greatly facilitate land and housing sales objectives. In resort marketing, good public relations and word-ofmouth communication are critical. In fact, a high-quality resort often does not need to devote a lot of its budget to advertising and promotion dollars because its reputation will speak for itself. Direct selling is only a small part

Marketing and Repositioning 255

ROBERT SHAFER

The marketing effort for Roaring Fork Club was exclusively by invitation. The development partners created a list of founding members who in turn proposed five members each.

of the overall marketing effort. Accordingly, it is critical that the marketing professionals become and remain an integral part of the development planning team. Preparing a Strategy Marketing is an enormous upfront budget item that can substantially increase the cost of the product. Indeed, preparation for specific promotional and sales activities should begin well in advance of the release of the product. If a major presales effort is programmed, direct selling can begin almost at project conception. Postconstruction sales require constant monitoring throughout the development phase, although the specific tools may vary when selling commences. Concept development is crucial, so that a project’s entire image can be carefully presented as a reflection of the interests of the target markets. Targets provide a standard by which to maintain and evaluate the project’s success and direction. They require the marketing group to maintain the appropriate reputation for the project. Reassessing the target markets should be an ongoing activity of the marketing group. A specific project’s marketing strategy depends on the circumstances of each situation. Regardless of circumstances, however, the strategy must always relate to the identified markets. It should be comprehensive and flexible and generally encompass a variety of activi-

256 Resort Development

ties, including merchandising, promotion, and advertising. It is imperative to evaluate each marketing program for its cost-to-sales effectiveness. Such an evaluation requires a systematic and rigorous analysis of customer characteristics and responses. Significant benefits can be realized by scrapping high-cost/low-return programs and reallocating expenditures to more productive approaches. By using market research compiled early in the development process, the marketing team should be able to develop a comprehensive strategy for promoting and advertising the proposed resort. The strategy should carefully spell out the resort’s overall concept, identify the appropriate targeted markets and the best strategies for reaching them, provide for advertising and promotion, and determine the budget and timetable for implementation. The strategy also should delineate the timing of the various marketing programs in coordination with the development program, allowing for a reasonable presales period. Timing considerations also should extend to the marketing of prime sites. Promotion Designing the promotional material and public relations program are critical elements in marketing a resort property. It is rare for developers to be directly involved in this aspect of marketing, but they must be able to guide their consultants in the efforts to create an awareness

Marketing to Hotel Guests The role of a resort hotel in the successful marketing and sales of affiliated real estate products is extremely important and may even be termed critical. Yet, the successful sale of a resort hotel’s affiliated real estate requires the clear understanding and agreement of the hotel operators regarding the use of the hotel as a magnet for real estate prospects. Some key points and programs that should be considered in the marketing effort are outlined below.

; The subtle exposure of resort guests to the surrounding community and its real estate offerings is the single most important sales program to be undertaken. ; Two factors are critical to the sales process. First, the sales process should in no way compromise the resort guests’ sense of privacy and relaxation. Second, the surrounding club community and its real estate should be shown to resort guests in a noncommercial, nonthreatening, and entertaining fashion.

Integration and Support of Hotel Marketing Efforts ; Establish the philosophy that a hotel guest is a resort guest. ; Request that the hotel prepare a preopening marketing plan for endorsement by the resort developer/operator. ; Ensure that the resort and hotel marketing programs are coordinated and integrated wherever possible, so that the combined efforts lead to success for both interests. ; Require the hotel operations to preapprove all collateral material and all preopening advertising to ensure that the materials present the hotel within the context of the entire resort community. ; Incorporate the name of the hotel into the name of the resort community, with the hotel operator’s name as the prefix or suffix. ; Assign a resort sales or marketing staff member to the hotel’s preopening sales offices to foster team building, close communication, and collaboration. ; Establish a budget item and process for room revenue credit subsidies to help the hotel compete for and book groups that promise to bring desirable, qualified prospects. ; Establish a resort database that allows the hotel to compile data on past hotel guests; permit the hotel to use the database at no cost. ; Establish a concierge service that contacts hotel guests before their arrival and offers to arrange for the use of resort amenities. ; Operate a resort (not hotel) transportation service to facilitate airport transfers; the service should continue after residences are occupied and cover the residential units as well. ; Provide resort information to professional associations and corporate meeting planners.

On-Site Marketing ; Use registration packets and bell staff pitches to market the overall resort and its many offerings. ; Program a button on the in-room telephones for a direct connection to the interpretive center. ; Offer incentives to concierges who make reservations for guests to take the interpretive tour. ; Collect all guest history information and home addresses for input into the resort database. ; Develop a guest card with a place for the referring member. ; Use freestanding, tasteful signage or displays that refer interested persons to the main sales office. Place the signs in high-traffic areas such as the golf club, the beach club, and the tennis center. ; Make certain that a bottle of wine or a fruit basket is in the guests’ room upon the guests’ arrival. Insert a card from the resort’s assigned sales representative. ; Arrange for the resort’s sales representative to take a party of guests on a special jeep tour of the property’s special features, including the golf course. The tour may incorporate a picnic and historic site interpretation and should include a complete description of the resort’s concept and amenities. ; Enter each guest’s name on a mailing list for periodic updates on the resort. ; Encourage the inclusion of interpretive center activities in corporate and association meeting programs. ; Use resort vans or limousines for group arrivals. ; Require real estate representatives to attend preconference meetings.

The Conversion Process of On-Site Guests ; Even though resort guests may enjoy some familiarity with the club community or its real estate offerings before their arrival, they rarely begin a visit thinking about the prospect of a real estate purchase.

Interpretive Center ; A section of the hotel can be designed as an interpretive center that also functions as a sales center. It should be designed as a salon or living room—a friendly, beckoning space that will attract guests. ; The center should mirror the tone, texture, personality, and ambience of the larger community and the region in which it is located. It should be tasteful, welcoming, and hospitable. A suitable interior may have rugs and hardwood floors, residential-style fur-

Marketing and Repositioning 257

Marketing to Hotel Guests

continued

niture, shelves for displaying books and pottery, and storage areas for literature and sales materials. ; The center also may serve as a library for guests. It can offer historical, cultural, environmental, and anthropological exhibits and displays as well as low-key information about the club and community (mostly on easels, as in an art gallery, or out of sight in desk drawers), thereby allowing visitors to browse in a nonthreatening atmosphere. It might include a scale model of the community and a small facility for serving refreshments. The center should be considered another of the hotel’s amenities. ; Part of the center, not readily evident to visitors, should be devoted to the sales staff’s administrative office. Another part of the center should be designed as a small theater for viewing a video on the club and community. ; Well-trained, intelligent sales reception personnel should greet and welcome guests. They should qualify each entering guest and visitor to determine whether a sales representative should be called in. The Interpretive Tour The tour can be the most important part of the entire conversion process. ; A typical tour might be a 45-minute drive through the immediate and surrounding areas. It should orient newly arrived guests to the amenities of the resort and provide an enlightening description of the club, the community, and its sense of place. The tour should feature both the golf course and residential areas in a noncommercial fashion. ; Key staff of the resort, the hotel, and the amenities should recognize the tour’s role in the success of the

of the development and a favorable public image. For resorts that draw primarily from a single metropolitan area or several nearby markets, public relations and promotional efforts must be continual and include community involvement such as working with civic groups and maintaining a positive relationship with the press. Where projects are part of larger resort areas, participation in joint promotional programs can be cost-effective. For destination resorts that draw from much broader markets, promotion is more difficult and may in fact involve both a good deal of promotion to intermediary groups and joint promotional programs. Promoting the resort to travel agents or agencies, for example, is one

258 Resort Development

sales effort. Early on, staff should ask guests whether they have taken the tour. If guests have not toured the property, staff should urge them to do so. Other suggestions for promoting the tour call for ; including tour information with the reservation confirmation material mailed to guests before arrival; ; including tour information in the printed material given to guests at check-in; ; requiring the hospitality staff to mention the tour at check-in; ; providing in-room material such as a small, attractive booklet outlining the principles of the resort community and including a map and interpretive site plan; ; placing in each hotel room a card inviting guests to take the tour the day after check-in; and ; using the hotel’s in-room channel to promote the tour and provide a brief description of the community. Hotel Staff Training The key to successful hotel staff cooperation is establishing as early as possible a clear relationship with the hotel’s general manager. The general manager must understand not only the importance of the hotel to the overall real estate sales effort but also the significance of the low-key style that should govern the marketing effort. In addition to receiving training in the style and aspirations of the resort and community, staff who interact with the guests should be fully conversant with the community plan. Staff also should recognize the role of the guests’ hotel experience in the overall marketing plan and should be trained to assist in the marketing effort. Source: David Pearson, president, Pearson Associates, Coral Gables, Florida.

strategy. Another strategy is to create joint package deals with airlines. Resorts also must ensure that they are listed or discussed favorably in the various travel and vacation newsletters, magazines, and guidebooks that are released annually by a variety of publishers, including Mobil, Fodor’s, Frommer’s, and so on. These publications are of major importance in the promotion of vacation destinations. High-quality brochures and other promotional media should be created from the outset, beginning at the presales or preleasing period. All promotional materials should incorporate the resort’s logo and feature the design theme that characterizes the resort. Developers

pioneering a new concept should include appropriate explanations in all promotional materials. Of primary importance is the creation of a top-notch Web site at the earliest time, so that potential buyers and guests will find it when searching for resort vacations or purchase opportunities. The importance of this effort cannot be overemphasized. While print materials and travel publications are still valuable marketing tools, the Web, DVDs, and CDs are rapidly replacing such media. Specific material and programs should include the following: ; Collateral materials required for resort operation. Electronic media have become the mainstays for advertising, often replacing printed brochures and newspaper or magazine advertisements. A resort’s Web site must be informative, attractive, interactive, and user-friendly. In addition, the marketing effort should include DVDs, CDs, and whatever cutting-edge media come next. Promotional materials should be targeted to consumers as well as to travel agents, meeting planners, and tour operators. Other materials include package brochures and rates for tour operators and airlines, folders with maps for guests, service directories, lists of onand off-site activities, questionnaires (either electronic or printed) for evaluating services, direct-mail and e-mail pieces to previous guests, responses to e-mail queries from the resort’s Web page, and other items needed to maintain amenities such as menus, room cards that promote facilities, golf course scorecards, napkins, place mats, matchbooks, and so forth. ; News releases concurrent with the advertising program—ideally accompanied by a CD of high-resolution digital photographs—for distribution to editors of magazines and various sections of newspapers in all market areas. First-hand stories are preferable and should relate to all facets of the resort and the developers themselves. Travel and lifestyle editors should be invited to visit the project. ; Special programs or events for individuals and groups to enhance the resort’s activity level. Various types of ongoing promotions such as on-site parties should be planned to attract different groups. Other possibilities include arranging major on-site events (perhaps for charity) such as golf and tennis tournaments and outings that provide maximum exposure via the media and spectators; engaging a celebrity to host an event; and inviting residents, local officials, prospective purchasers, and others to appropriate social and promotional activities.

Advertising Because resort community developments typically sell a particular lifestyle, advertising media must clearly and accurately convey a project’s strengths and appeal. The advertising campaign should focus on a central theme that is established early and extends throughout the various stages of development. The developer’s in-house staff should have a general working knowledge of the fundamentals of advertising, although common practice calls for hiring an experienced advertising agency to develop a fresh approach for each new project. An agency typically develops a long-range strategy, plans individual programs, selects the best media outlets for various presentations, prepares copy and designs layouts, and evaluates the results of the promotional campaign. The advertising budget varies with project size, proximity to primary markets, the number of targeted markets, and the degree to which the project introduces new concepts. Advertising is an expense incurred during all stages of development: during presales or preleasing, before the project’s grand opening, and after operations begin. The expense, however, is proportionately higher during the earlier phases.

Resort Hotel Marketing While resort hotel marketing encompasses many of the same strategies used to market an overall resort, two additional factors are critical in marketing resort hotels. The first is the benefit of brand affiliation or some other type of network that provides advantages similar to those offered by a chain operation. The second is the growing importance of conference facilities as a draw for resort hotels. It is, however, important to keep in mind the distinct demands of conference travelers versus leisure travelers, and to market appropriately to them. For example, at the Taj Green Cove in Trivandrum, India (see case study, chapter 7), management is keenly aware of the need to separate the two kinds of guests. They therefore market their conference facilities for the time of year when leisure tourism is at a low point. Although the major national and international hotel chains were slow to enter the resort market, they are now the dominant players in large resort hotels. Such chains recognized that, with proper facility planning, they could effectively accommodate both the individual tourist and group segments of the market and, at the same time, reduce severe seasonal fluctuations in demand and improve overall annual occupancy. These

Marketing and Repositioning 259

MUTHOOT HOTELS AND TOURISM VENTURES, LTD.

MUTHOOT HOTELS AND TOURISM VENTURES, LTD.

At Taj Green Cove in southern India, conference facilities are marketed for times when leisure travel is at a low.

major chains bring to resorts their traditional strategic advantages, including their extensive referral networks, their marketing expertise and seasoned experience in handling groups, and their well-established Image and mass appeal. In many cases, a hotel chain may not actually manage a resort hotel, but the brand affiliation still provides a critical marketing and positioning benefit. While chain affiliation is an important factor in marketing resort hotels, there are niches for unaffiliated hotels as well. For example, Destination Hotels and

260 Resort Development

Resorts is a collection of hotels and resorts that, while not commonly owned, are marketed under this “soft brand.” Leading Hotels of the World is a similar type of branding and marketing organization. A smaller regional resort like Eagle Crest, located in central Oregon, has the Inn at Eagle Crest, which serves as a marketing vehicle for the real estate sales program and runs the rental program for condominiums and second homes. The Little Nell Hotel developed and owned by the Aspen Ski Company thrives on its own exclusivity.

WILSON ASSOCIATES INTERIOR DESIGN

The Inn at Palmetto Bluffs in South Carolina is a member of Leading Hotels of the World, which offers a brand without common ownership.

Residential Marketing and Sales Management Marketing the residential portion of a resort is more complex than the marketing of first-home communities. A second home is not a necessity but a luxury purchase. The buyer first must be convinced to make any purchase at all, then to agree to the specific property being offered. More than square footage or bricks and mortar, lifestyle is the commodity being sold at resorts. It is thus imperative to project the kind of lifestyle that will be irresistible to the target market. Identifying the target market is also more complex than it is in a primary-home community, because buyers can come from the region, the nation, or even the world. One of the easiest and most cost-effective markets to tap for residential resort property sales is those prospects closest at hand: hotel and resort guests, existing property owners, and their acquaintances. Because a resort guest is a prospective buyer, an ongoing program geared toward a sale should be incorporated into the guest’s stay. Referrals and word-of-mouth advertising, which play important roles in marketing in any kind of residential development, apply equally in the marketing program for a resort. In fact, some second-home projects have

relied almost exclusively on referrals. Spring Island, a high-end second-home community on the South Carolina coast, uses no direct advertising. Sales result entirely from word-of-mouth communication, personal letters of introduction, and periodic feature articles about the community. The project maintains four guest cottages for its owner/members to bring prospects to the property. In many cases, a marketing strategy evolves over time and must operate within limitations set by state laws, which regulate many facets of the sale of vacation ownerships. At the Currituck Club on North Carolina’s Outer Banks, state law prohibits lot sales without a recorded final plat. The developer needed to test the market in advance of creating final platted lots and so designed a reservation system with a fully refundable deposit of $2,000. This arrangement resulted in 323 reservations, of which about one-third were converted to sales when the plats were recorded. Sales Management With few exceptions (generally large, established organizations with extensive experience in the marketing and sales of residential property), developers should enlist an independent marketing firm with strong resort expertise to manage the marketing and sales program.

Marketing and Repositioning 261

GINN RESORTS

Furnished models are important sales tools in resort communities.

The marketing team must thoroughly understand the development concept to be able to accurately interpret and convey a project’s strengths and appeals. The firm should be experienced in selling the particular product type to be marketed. To ensure that the sales staff performs responsibly, the marketing director must provide appropriate incentives, commissions, and strong sales management. If a resort is situated in a remote location, some on-site salespeople are generally required. Even with an on-site sales staff, a developer often establishes cobrokerage arrangements with outside sales organizations that maintain contacts with likely sales prospects. Under a cobrokerage agreement, a cooperating broker who makes a sale in the developer’s project receives a percentage (often half) of the brokerage commission. Without this type of arrangement, independent brokers may choose not to show a project or fail to refer prospects. If finished homes are being sold, model units can show the product to best advantage. Models are vital for sales of cluster and multifamily units in resort- and second-home communities. Even if the project is primarily oriented to lot sales, models offer examples of the style and quality of housing planned for the community. For large resorts, a sales pavilion of some size might be appropriate. This would include scale models or computer simulations depicting the entire site, with

262 Resort Development

various current product lines highlighted and the recreational facilities shown in some detail. Under these circumstances, some of the product lines might be developed by other entities than the master developer and would be represented in the main pavilion but have a sales center of their own. The collateral materials required for an effective real estate sales operation include a sales brochure, CD, or DVD that explains the total community concept; a site plan; a buyer’s guide that outlines all basic project data such as areas of development, building design, floor plans, and prices; a room card that invites hotel guests to visit the sales center or attend a social mixer and see property products; direct-mail pieces; and all other documents used as sales tools. Closed-circuit television in hotel rooms can encourage potential buyers to explore a resort’s product lines in the convenience of their rooms. This type of marketing should aim to get interested prospects to take the step, after viewing the video, of visiting the sales pavilion, which in some cases might even be located in the hotel. Sales Organization Usually a resort community needs at least one sales manager who assumes responsibility for all phases of product sales. Planning and design consultants for the project can offer valuable assistance by thoroughly

TUCKER’S POINT CLUB, BERMUDA TUCKER’S POINT CLUB, BERMUDA

Tucker’s Point Club in Bermuda includes custom homes, town homes (pictured), fractionals, and a hotel and spa.

explaining the rationale for the land plan and design. Knowledge of what customers want can enable salespeople to present a product that meets needs buyers may not even perceive. The sales organization should be carefully structured from the beginning of the presales period. All mem-

bers of the sales team should be aware of how their efforts will be supervised and evaluated and how they will be compensated. From the outset, a policy statement should clarify the respective responsibilities of the developer and the sales team. The sales manager should establish procedures that the sales staff must

Marketing and Repositioning 263

follow in reporting prospects, daily and weekly activity summaries, and monthly sales. By analyzing sales and traffic data, the sales manager can accurately assess the staff’s productivity. One measure of staff effectiveness is a conversion ratio that indicates the number of contracts written as a percentage of total traffic. Developers should conduct weekly meetings with the sales staff, perhaps best on Fridays just before the active weekend selling period. Salespeople need to know how far they can go in adjusting the standard purchase contract with a customer. The meetings should therefore address such issues as nonstandard upgrades, extended closing dates, contingency contracts, early move-in dates, the form of payment of earnest money, and other related matters. Given the resort industry’s reputation (deserved or otherwise) for aggressive and sometimes unethical sales practices, salespeople must be fully acquainted with ethical practices and counseled against misrepresenting the project. Overzealous or high-pressure sales techniques, while possibly yielding higher sales over the short run, can severely tarnish a resort’s image over the long run. Misrepresentation of the community—future facilities, owners’ rights, timing of development, and so on—even can lead to legal action against the developer. Thus, careful monitoring of the sales staff is important. This is particularly the case when rental programs are available to buyers, because of the elevated risk to the developer resulting from unscrupulous or overly aggressive sales practices. One of the greatest risks is a salesperson making claims about (or even hinting at) the income that a buyer might derive from ownership of a unit. Launch Marketing A highly successful marketing technique has been launch marketing, used primarily for high-end products: lots, luxury hotels, and fractionals. A lot sales program typically might show potential buyers predesigned homes as an incentive to make a reservation. Such presales events resemble auctions if properly organized; it make take over six months of preparation to produce a four-hour event.1 Experts in this marketing strategy see it as a technique for attracting the greatest number of qualified prospects as early as possible. It is sometimes possible to have all available products sold from reservations taken at a launch event. The ultimate success of a launch event will be tied to having the right amount and type of products matched with a well-qualified, motivated group of prospects.

264 Resort Development

Tom Clark, president of the Communiqué Group, suggests that launches “need to be a fun experience. Your prospects will enjoy being a part of a special event. There need to be participation events such as helicopter tours to see product from the air and nearby amenities. Hands-on experience with anchor amenities such as a closest to the pin on a new signature hole on the golf course, or a boat ride on a special yacht from a marina. If kids are invited—and they should be if you are focused on the total family—you need to provide a segregated fun environment for them that is safe while the prospect is in the launch tent.”2 The Internet is a key part of a launch marketing program. Richard Sonntag, senior vice president of Pivotal Group, summarizes the following fundamentals for the use of the Internet. ; Marketing. A Web site must have the right message to take people off the market and keep them off the market until the launch occurs. ; Sales. Prospects should be qualified six months out. Each prospect has to be a legitimate opportunity. Developers must think about their escalation pricing strategy over 12 to 18 months. ; Market demand. A responsive Web site offers search capabilities based on desired price, view, or other factors that match your product lines. ; Just as resort products must offer the right mix of product, price, and “touchability,” a Web site should also cover these elements. Web visitors’ responses may give a developer feedback that might allow critical adjustments to product, price, or touchability. ; Internet users are well educated and savvy. They will have done their homework and will have researched not only the product but also the competition, and they will have market comparables. If the sales staff is not up to speed, these buyers may know the product better than the salespeople. A Web page is not just a marketing tool; it should function as an online sales center. A prospect is getting his or her first sales presentation online. Thus, developers should spool out information carefully and “listen” to prospects, obtaining information as they search sites. The exchange of information on the Web must be managed. Do not give away information without obtaining data that helps establish the prospect’s qualifications. ; A resort’s Web site can generate a general prospect group. With e-mail and further Web activity, it is possible to qualify prospects to be a part of an early

CENTRAL COUNTRY ESTATE, INC.

The marketing office at Lakeshore, a waterfront resort community in Pampanga, Philippines.

notification group. From this group, using e-mail and telephone contact, prospects can be identified for a founders presale group.3 Measuring Market Acceptance Measuring the performance of the marketing program is a critical final element in the marketing process. While completed sales are the ultimate measure of performance, professional marketing consultants can analyze traffic by conducting “exit polls” at the property to gauge consumers’ impressions of the project. They can also try to ascertain the effectiveness of each stage of the marketing effort. Because of the value of consumer impressions, all visitors to the sales office should be asked to fill out entry cards. Potential buyers who visit the property should be surveyed on site after they have toured the models. Another option is to use the sales staff’s follow-up call as an opportunity for a short survey. Prospects also may be selected at random for a more extensive survey to assess their attitudes toward the resort. The opinions of prospects who ultimately buy

units must also be considered. These consumers might be asked to complete a short questionnaire when they sign a sales agreement. In addition to focusing on the units, the amenities, and the community itself, surveys should probe respondents’ opinions on the major aspects of the property’s marketing effort. Questions should cover all phases of the marketing effort, so that consultants and developers can ascertain the effectiveness of their advertising and merchandising programs and fine-tune accordingly. Evaluating traffic, absorption, and profiles of buyers against projections and corresponding budgeted expenditures ensures that the marketing plan is working to maximize market penetration. Monitoring should not end with the completion of a sale. Developers should learn from their successes and failures by soliciting continual feedback and using the results to inform the next development phase or the next project. To be able to correct undesirable patterns of development that do not work (or that work infrequently), developers should solicit residents’ opinions to learn first-hand what is wrong with a project.

Marketing and Repositioning 265

Private Residence Clubs When Star Resorts, LLC, introduced the first equity residence club 15 years ago, the property was located within the pricey, snowy confines of Deer Valley Resort in Park City, Utah. The prototypical Deer Valley Club, which offered luxury vacation homeownership with the services and amenities of an upscale hotel, soon spawned similar club concepts in other well-known ski destinations in Colorado. Subsequently, this blend of high-end residential/resort-style development—in which investors owned a fraction of a unit—slowly spread to other mountain sites. Though this type of development remained principally the domain of top ski destinations for years, that is no longer the case. Today, these private residence clubs or fractional ownership clubs, as they are sometimes called, are as easy to find in urban or warm-weather venues as they are in the mountains. One segment that is experiencing heightened interest in the high-end fractional market is master-planned golf course communities—particularly private resort developments. At Seven Canyons, a private golf club community in Sedona, Arizona, membership is limited to 325 members with an initiation fee of $250,000. Seven Canyons offers 30 estate-sized homesites and 84 villas sold in one-tenth shares. Twenty of the 30 estate lots, ranging in size from approximately one acre (0.4 ha) to more than 2.5 acres (1 ha), were sold on average for $1.1 million, with the last lot closing at $2.9 million; the fractional shares sold for $429,000, with annual dues running at $9,950. “What happened was that, from a whole-ownership perspective, prices in ski resort areas like Aspen, Vail, and Telluride had gone off the wall,” notes industry expert Richard Ragatz of Eugene, Oregon–based Ragatz Associates. The advent of the fractional concept enabled the industry to grow. “Typical prices in golf communities are not as high as they are in ski communities because of the greater supply of land. Now it’s getting up there,” Ragatz observes. “The industry is still in its incubatory stage. At one time, about 80 percent of the private residence clubs were in ski communities—ski in/ ski out communities—and not more than 5 percent were in golf communities. In the most recent Ragatz survey on fractional use, probably 25 percent of all private residence clubs were in golf-oriented communities.” According to Ragatz, as the fractional industry continues to be better understood and accepted by real estate investors, private residence clubs will continue to grab more market share from whole-ownership vacation homes. That includes all types of vacation homes—in ski, beach, or golf venues. “In upcoming projects, the vast majority of resort development that

266 Resort Development

includes vacation home sales will have some form of residence club/fractional element,” he maintains. This also is the opinion of Scott Denney, one of the principals behind Pronghorn, a private golf resort community in Bend, Oregon, with close to 70 fractional villas overlooking the 18th green of the club’s Jack Nicklaus Signature course. “The trend started in the ski mountains, but it’s now gravitated to golf,” explains Denney. “Even though Bend has one of the top ski mountains in Mount Bachelor, we have no ski in/ski out. But we have 25 to 28 golf courses. We were the first to have an amenitized fractional development in the Bend region. We call it golf in/golf out.” At Pronghorn, that means having access to two private golf courses designed by Nicklaus and Tom Fazio—a distinction that makes Pronghorn the only development in the western region that offers courses by both popular golf course architects. When Pronghorn registered its residence club with the requisite agencies, Denney says they “weren’t sure how the market would react to the upstart product,” so they decided to register their two- and fourbedroom villas as one-twelfth interests or four weeks of use time, enabling the club also to market in fractional shares of one-sixth and one-fourth. Prices for the luxury units range from $157,000 to $470,800, depending on the size of the unit and the fractional amount of use. Denney credits the fractional jet industry—in which use of jet time is sold in different amounts or fractions— for the fractional real estate industry’s continued growth. For example, North American sales volume in the overall fractional real estate industry jumped from $530 million in 2003 to approximately $2 billion in 2005, according to Ragatz. “I think the fractional jet market opened the doors,” says Denney, whose 640-acre (259-ha) Pronghorn community also offers a variety of wholly owned real estate, ranging in price from $500,000 to $2 million for vacant lots to homes that go up to about $3.5 million. A number of Fortune 500 companies have chosen to buy fractional ownership in several jets instead of maintaining dedicated corporate jets. “It really makes sense,” he maintains. “You don’t have to buy a hangar, and you save on fuel and maintenance. We’d sell these fractional villas for $1.8 million to $2.2 million. Now you can buy a share, so you get this really cool unit for a fraction of the cost. You say to yourself, ‘I can’t really get away for more than a month or two months anyway; why not buy what I’ll use?’” Also attractive, according to a number of developers of these fractional products, is the opportunity to invest in a vacation property in which all maintenance-related issues or other typical vacation-home responsibilities already are covered by the respective clubs. This is

ultimately what James and Deborah Deutsch say sold them on the new Residence Club at PGA West in La Quinta, California. Located on the perimeter of the PGA community that includes three world-class resort courses designed by Nicklaus, Greg Norman, and Pete Dye, this 20-acre (8.1-ha) enclave includes 32 freestanding villas, each of which is being sold in one-ninth undivided deeded shares. “I have several friends who own vacation homes in the Palm Springs area and every time we visit them there, they spend the first day fixing things and waiting for people to show up to take care of something,” says James Deutsch. “Then, the last day they do the same thing, getting all these things taken care of before they leave. So they spend half their time in the desert not vacationing. I didn’t want to have anything to do with all that. The fractional ownership addresses all our needs,” he adds. Marc Bailes, principal of Scottsdale, Arizona–based Bailes & Company, the operating partner behind the Residence Club at PGA West, says all but one of his club’s members are from the West Coast and many are drive-in investors from southern California. Most of them already own fractionals at other ski or beach locations, according to Bailes. The appeal of the PGA West project is simple, he notes. “Members want a second home in PGA West but don’t want to pay $1.6 million for a home because of their use profile.” Though the Residence Club at PGA West is not part of a self-contained community like Seven Canyons or Pronghorn, it is not lacking in amenities. For example, as part of the gated Residence Club, members have three 6,000-square-foot (558-sq-m) putting greens, a members-only clubhouse scheduled to open early next year, preferential treatment to use five championship golf courses at PGA West and the La Quinta Resort & Club, access to La Quinta Resort’s 23 tennis courts and numerous pools, and discounts on spa treatments at Spa La Quinta. When asked about the key to success, Bailes replies: “I think you have to be in highly amenitized areas. You have to be in ski, beach, golf, and island settings or in urban settings like San Francisco or New York. I don’t think you can just stick one in the ground anywhere. Also, you have to have expensive, wholly owned real estate around you.” East West Partners, a Colorado-based developer of luxury second-home communities, is exploring the concept of incorporating enclaves of fractional residences with wholly owned real estate for its Tahoe Mountain Club in North Lake Tahoe, California. Comprising four high-end communities, two of which are golf course developments, Tahoe Mountain Resorts offers memberships in the Tahoe Mountain Club, a four-seasons club

with full ownership and fractional ownership in ski in/ski out residences at the Ritz-Carlton Highlands community, as well as a variety of golf course real estate options at the club’s Old Greenwood and Gray’s Crossing communities. At Old Greenwood, a 600-acre (243-ha) development that includes a Nicklaus Signature course just outside the historic town of Truckee, East West Partners plans 159 fractional residences: 85 cabins at Old Greenwood; mountain-themed three- and four-bedroom units along the ninth and tenth fairways; and 74 townhome units adjacent to the 17th and 18th holes. The fractional residences are being sold in oneseventeenth shares, and they range in price from $60,000 to $230,000, depending on the type of unit and the “primary use period,” according to East West Partners’ sales team. The fractional includes a $30,000 membership fee to join the Tahoe Mountain Club, giving fractional residents and guests full use of the numerous amenities scattered throughout the four communities whenever they are in residence. Fractional buyers are “fundamental to our success” and are noticeably much younger, according to Harry Frampton, founder/managing partner of East West Partners. For example, East West Partners’ typical fractional buyer is 35 to 50 years old, compared with its wholeownership buyer, who is 50 to 60 years old. Frampton notes that most of the private residence clubs are focused on families and “many who come have kids,” so that one of the driving forces behind fractionals, at least for a lot of the younger families, is the affordability issue. “What we find is that a lot of the families end up buying wholly owned residences, so it’s a fabulous incubator for the future,” adds Frampton, whose group was the visionary behind Beaver Creek, Colorado, and has also developed numerous other master-planned resort communities beginning in the 1970s. “It’s the best thing to uphold property values, because these younger people are buying into communities later. They have more pressures on their time, so owning three weeks of time makes a lot of sense for them. We don’t look down at these buyers; we look up and treat this group just the same as the whole ownership group. They’re club members, not second-class citizens. It’s very fundamental to our core strategy.” This strategy—the integration of fractional residences with traditional wholly owned units—is also becoming fundamental to numerous other high-end, resort-style developments, and the common denominator for many of them is that age-old amenity: golf. Source: Scott Kauffman, “Golf-In, Golf-Out,” Urban Land, August 2006, pp. 90–95.

Marketing and Repositioning 267

Timeshare/Vacation Ownership Marketing

CORDEVALLE, A ROSEWOOD RESORT

Since timeshare and vacation ownership products are marketed using similar methods and practices, they are treated together in the following discussions except where exceptions are noted, and are referred to under the encompassing rubric of timesharing. U.S. companies are now developing timeshares internationally, under many different rules. Outside the United States, there are few laws that govern the marketing and advertising of timeshare interests. All jurisdictions in commercially advanced countries prohibit outright fraud but, unlike in some U.S. states that require all advertising material to be reviewed, such material is largely unregulated offshore. Since most offshore timeshare products are mostly targeted to U.S. buyers, the lack of regulations means that developers considering offshore developments must understand that self-discipline must govern their marketing and advertising, less exaggerated claims tarnish offshore timeshares, as was the case in the early days of timeshare marketing in the United States.

Effective Sales Techniques The sales techniques of the past largely have given way to a needs-focused approach in which the salesperson functions as a counselor, helping prospects optimize price and maximize the value of their vacation arrangements. Moreover, on the assumption that high-pressure selling arises in part from commission-based sales, some organizations have moved away from straight commissions to a salaryplus-commission or straight salary arrangement. Sales executives increasingly have come to realize that opportunities exist beyond the realm of first-day incentive sales. The old adage that “there’s no such thing as a be-back”4 has yielded to sales practices that treat customers with respect, encourage return visits, and offer alternative programs for prospects whose needs are not met with the products offered. At some resorts, relationship-based selling extends beyond the sales center. The salesperson may spend an entire day with new buyers, take them to dinner, call them at home, and send thank-you cards to maintain contact beyond the time of the sale. Even where postsale relation-

The focal point of Cordevalle, a Rosewood Resort, in San Martin California, is its private, championship golf course designed by Robert Trent Jones. The resort also includes a spa, winery and vineyards, and meeting facilities.

268 Resort Development

Marketing Volume Requirements In creating a lead-generation program that involves a mix of techniques, a marketer relies on research, past experience, and industry rules of thumb to estimate both the number of contacts needed to attract one responsive prospect and the number of prospects who must be toured through the property to obtain a sale. A 10 percent closing rate is considered average for the timeshare industry, although many marketers claim more—and few will admit to less. The methods used to calculate closing rates vary widely from one operation to another, with some marketers counting and others excluding from their computations any walk-in visitors and identified prospects who do not meet specific marketing criteria. Industry surveys indicate that developers report average rescission rates of 14 to 15 percent. However, some industry observers believe that a rescission rate of about 20 percent is in fact more typical. Traditional Marketing Techniques In the industry’s early years, scattershot marketing and heavy-handed, high-pressure sales tactics earned timesharing a questionable reputation. Recent years, however, have seen a trend toward the use of more sophisticated techniques, such as database management, that target likely prospects. In addition, softer-sell approaches build personal relationships while exploring the prospect’s need for the product. The American Resort Development Association has enacted and enforced a code of standards and ethics that contains numerous provisions dealing with the marketing and sale of vacation ownership products.5 With respect to marketing, the code calls for “accurate and clear” information, descriptions, and disclosures, as well as “avoidance of false and deceptive statements.” Newer Marketing Techniques In recent years, industry marketers have begun to use a variety of innovative, nonthreatening, and respectful techniques to familiarize prospects with timeshare products.

WILSON ASSOCIATES INTERIOR DESIGN

ship practices have not been integrated into the standard sales process, most resorts employ a “button-up” or “verification officer” to review with buyers in a systematic and informative way the details of what they have bought. This review ensures that buyers understand the nature of the product and the transaction. It also helps short-circuit buyers’ remorse and reduce rescissions in the hours and days immediately following the sale.

Many hotel chains are expanding their brands into timeshare products, creating profitable synergies between the hotels and owners clubs. The restaurant at Ritz Carlton at Bachelor Gulch, in Aspen, Colorado, is patronized by hotel guests and residents.

Visitor Information Centers. In communities with a large influx of tourists, a timeshare resort may open an information center staffed by trained professionals who provide directions, offer literature, sell attraction tickets, make hotel reservations, and offer tours of the sponsoring resort. A low-key version of an OPC, such a center may function solely as a community service project sponsored by the resort or as a joint effort of the resort and the local chamber of commerce or convention and visitors’ bureau. Branding. The 1984 entry of Marriott Corporation into the timeshare industry signaled the official debut of the hospitality-brand timeshare. Today, most of the major brand-name hospitality companies in the United States including Marriott, Disney, Hilton, Hyatt, Starwood, Four Seasons, and Ritz-Carlton (a Marriott-owned brand), have embraced the timesharing concept. From the consumer’s standpoint, a brand name makes the timeshare product recognizable and familiar in form, feel, and personality. Antonio Dagot, CEO of Hilton Grand Vacations Company, observes that “hotel com-

Marketing and Repositioning 269

panies also like this industry because it generates extra revenue for their hotels. I would say 90 percent of timeshare owners spend more money on vacation than hotel guests because their units are already paid for.”6 Branding, however, is not just getting a known name hotel to locate in your resort. Branding is necessary to identify and distinguish tourism destinations on the basis of the peculiarities of their market environments, rather than solely on their own specific characteristics. Cross-Marketing of Brand Products. A hospitality brand usually considers its hotel customers prime prospects for its vacation-ownership products. A company may market its vacation-ownership resorts through tent cards in hotel rooms, information desks in hotel lobbies,

and videos on an in-house television channel. When a hospitality company builds a timeshare resort near one of its hotels (as in the case of Marriott, Hyatt, and Four Seasons), the proximate location facilitates marketing as well as shared use of recreational amenities. This enables timeshare buyers to participate in “frequent user awards” programs, further strengthening the tie to the hospitality brand. Market Segmentation. One sign that timeshare marketing has grown more sophisticated is the increasing tendency to target particular market segments. Three quality tiers have emerged: moderate, quality, and luxury. The moderate tier is composed primarily of regional drive-to destinations chosen by timeshare clients who

HILTON GRAND VACATIONS CLUB

The Hilton Grand Vacations Club on the Las Vegas Strip is among the company’s fastest-selling timeshares.

270 Resort Development

are likely, for example, to use a unit’s kitchen for preparing most meals and typically are more interested in saving money than in paying for added features and services. The quality tier is home to the big brands that are adding on to existing resorts to leverage their assets to the fullest. The luxury tier focuses more on the unit and less on the site. Luxury customers are more likely to have traveled internationally and have more discerning tastes in architecture and interior design. Off-Site Selling. For years, the popular view in vacation ownership held that a product had to be seen to be sold. Today, however, increasing numbers of marketers are selling from off-site sales centers. With an off-site setting, the consumer obviously cannot feel, see, or touch the product. Even though some off-site sales centers include a model unit, the challenge lies in conveying the experiential value and appeal of a swimming pool or beach, golf course, ski slope, and other on-site amenities. Thus, in an off-site setting, the use of video and multimedia technology is extremely important to push prospects’ hot buttons. It is equally important to employ salespersons who hail from the immediate vicinity of the sales center. The fact that salespersons live in the same community as prospective customers introduces a trust factor that can be highly beneficial. After the sale is completed, local salespersons are likely to maintain a relationship with their customers. Especially for resorts in locations that are remote from the point of sale, the prospect of exchange may play an important role in an off-site sale. Prospective owners in New Jersey or Minnesota may not plan to travel to a home resort in the Caribbean or Hawaii every year, but the knowledge that desirable alternative destinations are available for exchange can make the product far more attractive to customers who have never seen the home resort but are considering a purchase sight unseen. With off-site sales, the pressure for a first-day close is not as intense, the sales staff engages in more follow-up, and a greater number of prospects come back another day for another look. Over time, an off-site sales center also may become a service center where owners make reservations, pay maintenance fees, and request assistance with exchanges. Affinity Marketing. An example of affinity marketing is a rental car with a hangtag on its mirror promoting a major hospitality chain’s resorts. The vacation-ownership divisions of hospitality companies take advantage of their corporate parent’s strategic alliances both to create cross-

promotions and to send direct mail targeted to strategic partners’ customer lists. However, a hospitality brand is not a prerequisite for participation in affinity marketing. Database Marketing. The evolution of market research in recent years has made possible the refinement of databases that permit prospective customers to be targeted with pinpoint accuracy. The process requires state-of-the-art computer technology for storing and processing large amounts of data and the use of that technology to segment large populations into recognizable groups based on demographic, cultural, lifestyle, and socioeconomic variables that reflect a propensity to purchase. Today’s technological resources enable vacation-ownership marketers to analyze their buyer profiles and create models to concentrate on their best prospects, thus decreasing marketing costs while achieving higher closing rates. Reloads and Upgrades. Reloading is selling more of a product to people who already own it; upgrading enables owners to turn in their existing product for a larger or newer product with features not available at the time of the initial purchase. Reload and upgrade efforts can be extremely profitable because they involve a universe of informed, prequalified buyers and require little or no expenditures for lead generation. From a broader perspective, everything a resort does over time to keep its owners satisfied with the vacation-ownership product enhances owner receptivity to a reload or upgrade program. Some multisite developers rely heavily on reloads and upgrades to sell their newest inventory. Referrals. Most vacation-ownership marketers embrace the time-honored practice of generating prospects by asking satisfied customers to refer their friends. The customer making the referral typically receives some type of consideration or gift after the referred person becomes an owner. Large developers with extensive owner bases commonly use referral programs. For them, the referral process can be inexpensive; most costs are incurred after the sale, and referrals can yield high closing rates. Electronic Marketing to Individuals. Nearly all middle- and higher-income American households own personal computers, and astute vacation-ownership marketers are employing the Internet, video disks, and interactive kiosks in public places to communicate with individual customers. By using database marketing to tailor their message and information technology to deliver it, marketers have the capability to design products for an individual market segment and then custom-

Marketing and Repositioning 271

ize intensely motivating messages targeted to specific members of that segment. Web-based bookings and sales tour appointments are particularly inexpensive, and the reduced costs in delivering them online can help make product prices more competitive, although these activities raise legal issues with respect to registration requirements. Furthermore, Web-based marketing requires a commitment of resources to manage Web sites properly and keep them up to date. Biennials, Exit Programs, and Trial Memberships.

Three main categories of programs may be offered to prospects who do not choose to purchase the primary vacation-ownership product: biennials, exit programs, and trial memberships. A biennial provides every-other-year use of a primary vacation-ownership product. It is ideal for prospects who either want to buy a timeshare interval but cannot afford

the cost of the annual-use product or prefer not to commit to an annual timeshare vacation. Where a lock-off option exists, purchasers of a biennial can, if permitted, vacation every year by occupying half the unit at the home resort one year and, during the next year, exchanging the use of the other half for a vacation in a different timeshare resort. An exit program offers to sell something other than the primary timeshare resort product when a sale is obviously not forthcoming at the conclusion of a sales presentation. The alternative product might, for example, consist of an added-value package of savings on various travel products and services. Developed in the late 1980s, exit programs provide a way to offset a portion of the costs associated with an unconsummated sale. Trial membership are used by some developers to recapture a percentage of sales from prospects who agreed to buy the primary product and then canceled

OZ ARCHITECTURE, ASA PHOTOGRAPHY

The Village at Baytowne Wharf in Sandestin, Florida, is a bayfront resort community that features hotels and condominiums, with retail and restaurant development on the ground levels.

272 Resort Development

DALE A. HORCHNER/DESIGN WORKSHOP

The Park Avenue redevelopment project is a public/private partnership to redevelop the ski resort area of South Lake Tahoe, California.

during the rescission period. According to one developer, perhaps as many as 20 percent can be recaptured through a trial membership. Trial memberships provide low-cost, time-limited travel and leisure benefits that typically include an opportunity to sample the developer’s primary product line of vacation-ownership accommodations. Exchange Programs. From a marketing and sales standpoint, the opportunity for exchange enhances the value of a resort product. Other than the resort itself, consumers cite exchange programs as the major reason for their purchase of a vacation-ownership product. Exchange adds value by making the product flexible and providing vacation alternatives. In recent years, exchange programs have come to include additional lifestyle benefits and services beyond vacation time at participating resorts. For instance, International Cruise and Excursions, Inc., a Phoenix-based Internet marketing and e-commerce development corporation, works with the timeshare and cruise industries to offer cruise exchange options. The two major exchange companies, Interval International and Resort Condominiums International, support participating resorts’

marketing and sales efforts by providing a wide variety of collateral materials, including brochures, directories, kiosks, videos, wall tours, and other sales aids that help motivate prospects to buy. Recognizing that the average vacation owner owns 1.8 weeks of time and that many owners have bought additional weeks at resorts into which they have exchanged, resort operators welcome exchange guests as prospective purchasers. The cost of lead generation is practically nil, and owners already understand and have “test driven” the product at no cost to the host resort. Resorts with large amounts of unsold developer inventory even may arrange with their exchange company to fill their properties with exchange guests. Guests then receive an invitation to take a sales tour. Resale Programs Resales long have been the Achilles heel of the timeshare industry. Unlike a car or a house, for which a ready resale market exists, the resale market for vacation ownership property often is unpredictable and fraught with ethical pitfalls. In the past, many salesper-

Marketing and Repositioning 273

DESTINATION HOTELS & RESORTS

In 2007, the Gant, a resort condominium in Aspen, underwent a major renovation both inside and out.

sons improperly alleged that a timeshare was a good investment that could be resold easily at a profit. Today, the onus is on all sales personnel to emphasize that vacation ownership products are best understood not as investments but rather as leisure products to be purchased for the owner’s use and enjoyment. Four types of resale resources are available to individual owners who wish to sell their vacation-ownership products: ; In-house resale programs. Some developers, management companies, and property owners associations use in-house resale programs, primarily targeted to other owners at the resort or within the multisite vacation club in which the property is available. When such a program exists, sales personnel use it as a reassuring selling point for new inventory. ; Independent resale companies. Resales also may be managed by an independent resale company. Independent resellers frequently charge upfront advertising or listing fees and require (and charge for) an appraisal as a condition of listing. After collecting these fees, however, some resale companies may do little or nothing to sell the listed property. Such inaction has prompted complaints from timeshare owners.

274 Resort Development

; Independent licensed resale brokers. These are brokers that charge no upfront fees and receive compensation as a commission only when a property is sold. ; Classified advertising. Ads can be placed by owners in newspapers, in consumer-oriented special-interest publications, and on various Web sites. Individuals who try to resell a vacation-ownership product usually are disappointed at the relatively low price the product fetches on the resale market and the high commission charged by the facilitator of the transaction. These factors reflect the nature of the resale marketplace, which discounts the portion of the initial price attributable to marketing expenses and the costs of sale, as opposed to the product’s inherent value. Furthermore, most buyers of vacationownership resales are consumers who already own a week and are searching for bargains. Because these consumers know what they want and what it should cost, pricing is the biggest single factor in the resale marketplace. Such price sensitivity leaves no funds available for traditional marketing and sales efforts that might attract a customer base that extends beyond current owners.

Rental Programs Resorts with vacant accommodations may rent units to the general public, thereby creating an opportunity to market and sell vacation-ownership interests to renters. Space available to renters may be unsold inventory from which a developer is seeking an alternative source of income, or already owned units that owners wish to rent rather than exchange or occupy themselves. Any resort operating a rental program must proceed judiciously to avoid competing with its owners. Owing to accounting and legal considerations, including complex provisions of securities law that may be triggered by a rental program, some developers prefer not to establish a rental program, although such developers may still accept owners’ units for rentals on an individual basis. In these instances, the developer typically avoids complaints of unfair competition by filling all the space that individual owners have made available for rent before placing renters in any of his or her own unsold inventory.

Promotion of Golf and Tennis Facilities Most often the advertising and promotion of resort golf courses is tied to the overall promotion of the resort. This is especially true when the golf course is tied to real estate development and sales. In many cases,

however, there is an arms-length relationship between the golf course and the resort. Coordination between the advertising and promotion of the resort and the golf facilities is important, but the golf facility’s management often needs to look to its own needs for effective advertising and promotion. It thus may be appropriate to craft a separate message that focuses on the quality of the golf experience and the range of golf-related opportunities. To the extent that the course is available to residents outside the resort structure on a daily fee or membership basis, the golf facility management needs to be responsible for advertising and promotion to this market segment. Internal advertising is another area not to be neglected. High-end clubs typically advertise via a newsletter or the resort or club Web site. Tennis has declined in popularity in recent years, but, with an effective marketing and promotion strategy, resorts that cater to this niche will continue to draw a dedicated core market. To entice established local players to a fledgling club, a developer must establish the facility’s credibility early on. Most tennis programs require four or more courts so that they can accommodate tournament play, which also requires at least some seating for spectators. The surface of the courts has a major impact on whether a club will be considered a true “tennis club.” The level of training provided also is critical

JUMBY BAY, A ROSEWOOD RESORT

With effective marketing, tennis programs still draw a dedicated clientele.

Marketing and Repositioning 275

for establishing credibility. Management might consider setting up a tennis advisory board or committee composed of key members of the local tennis establishment and perhaps a well-known touring professional. One method of establishing credibility is to host a tournament. Men’s and women’s professional circuit tournaments are expensive to host, but they can greatly boost a project’s Image and attract thousands of potential real estate buyers. Some experts caution, however, that the costs of a major tournament may not equal the benefits. Other kinds of tournaments also can draw attention. For example, Kiawah Island Golf Resort near Charleston, South Carolina, hosts an annual junior clay court competition for boys and girls aged ten to 18. The event draws young players and their families from throughout the United States, some of whom are likely prospects for home purchases. For more localized promotions, clubs can organize a variety of tournaments, leagues, camps, competitive ladders, and other events, usually under the direction of the tennis pro. The Ponte Vedra Racquet Club in Florida offers a well-respected annual summer tennis camp for both children and adults of all skill levels.

Renovation, Repositioning, and Redevelopment A resort management team should have an ongoing program of repair and renovation as a part of its marketing and asset management strategy. Even with such continuing efforts, however, resorts can become tired and outdated, particularly when compared to newer projects that meet the ever-changing expectations of the marketplace. Even resorts with loyal patrons and property owners eventually will realize the need to do more than maintain the status quo. Thus, major renovation, repositioning, and in many cases redevelopment are fundamental activities for resort developers and owners. In fact, much of the resort development activity taking place today involves the repositioning or revitalization of existing properties. Periodic renovation of varying degrees or timely repositioning as market changes are perceived can prolong the competitive position of a resort, although even the best-maintained facility will reach a point at which a complete revitalization will be required. Certain events may trigger the need for repositioning, such as when a resort property has changed hands, finds itself facing new competition, or encounters a significant change in the expectations of the marketplace.

276 Resort Development

Resort Development Cycles The resort industry worldwide typically has experienced cyclical periods of growth and maturation followed by periods of stagnation and decline. Both internal and external factors have affected the direction, extent, and timing of these cyclical changes. Market changes and changes in access are the most significant factors that determine whether a given resort experiences a period of growth or a period of decline. Technological innovations, along with changes in the nature of recreation and leisure, are shortening the life span of many resorts and accelerating the need for revitalization. Travelers’ increasing tendencies to combine business with pleasure has brought about the need to accommodate family activities in hotels that previously catered exclusively to business and conference travel. Alternatively, resorts that specialize in leisure accommodations are now expanding their reach to include more conferences. Finally, economic cycles, changes in political climate, and dramatic geophysical events can have significant negative or positive effects on the market for resorts. Shifts in currency valuations long have had significant impacts on travel behavior. The 2001 terrorist attacks of September 11 reduced travel, particularly foreign travel from the United States. It also caused a temporary fear of flying that created opportunities for resorts in close proximity to large metropolitan areas. The U.S. embargo on Cuba has had a long-term negative impact on that island’s tourism sector. On the other hand, improving economic conditions have had a positive effect on tourism in parts of Asia. Resort developers are well advised to be watchful of world events and, if possible, to be nimble in their response. Well-distributed announcements of renovations, quick repositioning, or adjustments in an ongoing revitalization effort can target suddenly emerging or modifying market sectors. This is another example of why ongoing market analysis is critical to a resort’s management and operational success. There are a multitude of reasons for renovation, repositioning, or redevelopment. In most instances they are based on physical conditions, market considerations, or both. Physical Reasons

; to repair and restore aging facilities to their original quality; ; to adapt facilities to meet changes in codes and regulations;

Hurricane Restoration for Cap Juluca On Wednesday, November 17, 1999, guests at Anguilla’s Cap Juluca resort enjoyed breakfast on the terrace, perched at the edge of pristine Maundays Bay in the Caribbean. They strolled along lushly landscaped paths and contemplated days of snorkeling off the whitesand beach, taking a dip in the pool or engaging in a brisk game of tennis. One guest attended to last-minute details for her wedding, scheduled for later in the week. On Thursday, November 18, Hurricane Lenny canceled everyone’s plans. While most hurricanes strike Anguilla from the east, this Category 4 storm struck from the southwest, hitting Cap Juluca dead-on. It then stalled over the island for two full days, generating a ten-foot (3-m) storm surge and pounding the resort with wind, rain, and sand. Lenny’s arrival was so swift and unexpected that, when hurricane warnings were finally posted, the airport closed immediately, leaving most guests with no choice but to hunker down and hope for the best. When it was over, Cap Juluca lay devastated. It would not reopen for more than a year. The Damage Clive Metz, the Miami-based representative for South African entrepreneur Dion Friedland, who developed Cap Juluca in the late 1980s, was on the first plane to land on the island after the storm. He would spend the next nine months there, coordinating the restoration. “The view from the air was shocking,” he recalls. “Cap Juluca’s villas had been built on a sandstone bluff ten feet [3 m] above sea level and fronted by a sand dune. Access to the beach had been via tall staircases

built down the side of the dune, about 30 feet [9 m] from the villas. From the plane that day, we saw the staircases on the beach, twisted but mostly still standing—with nothing between them and the villas but blue sky. The hurricane surge had sucked away the sand dune and left the villas clinging precariously to their foundations at the edge of the bluff.” Surveys would confirm a loss of 1,900 linear feet (580 m) of beach and dune and 40,000 square feet (3,700 sq m) of heavily landscaped beachside frontage. Fort Lauderdale–based Adache Group Architects, Inc., was retained during insurance claim resolution as a trustee to monitor the restoration. The firm’s CEO, Daniel Adache, described the villas as “on the verge of structural failure . . . my first impression was surprise they hadn’t fallen.” Though the resort’s entry bridge collapsed, structural damage to the resort buildings turned out to be quite minimal. But canal spillover from the behind the resort flooded the buildings with four inches (10 cm) of water, causing serious interior damage. Building exteriors had been stripped, literally sandblasted by windpowered sand and rain. Sandblasted, too, was the resort’s lush, signature landscape that had made Cap Juluca a secluded, tropical mirage on flat, arid Anguilla. It had also provided dense sound and visual buffers between the villas, essential for a resort where guests, including frequent celebrities, highly value their privacy. After Lenny, some ten acres (4 ha) of irrigated plantings were in shambles. More than 70 percent of the trees, shrubs, ground cover, and flowering plants were destroyed. Much of what survived

WITKIN DESIGN GROUP

Stairway to nowhere, after hurricane.

Marketing and Repositioning 277

Hurricane Restoration for Cap Juluca

continued

WITKIN DESIGN GROUP

Cap Juluca after restoration.

WITKIN DESIGN GROUP

Restored beach and seawall.

succumbed from heat soon after, because the resort’s entire irrigation system had been destroyed. Nearly 240 tall potted trees and plants that had adorned the resort’s great house, villa entrances, restaurants, and interior courtyards were gone. Cap Juluca’s scenic pathways were broken and, in some areas, gone altogether. Its exterior lighting fixtures were ruined. Just as staggering were the losses to the “back of the house,” remembers Clive Metz. “The storm destroyed

278 Resort Development

the systems that make a resort work—electrical, refrigeration, air conditioning, septic tanks, plumbing. The kitchen and laundry were out of commission, the accounting office was under water. In addition, the roads were washed away and all the recreational amenities were badly damaged. There were exposed electrical wires everywhere. Every single light switch needed replacing. Everything needed to be dried, cleaned, repaired, repainted. It was an incredible mess.”

The Solutions Metz says the one of most important lessons he learned during the restoration was the value of hiring a private loss adjuster to help inventory damages, obtain estimates, create a database of assessments and bids, and help negotiate with the insurer. He reports the cost was negligible compared with the mental anguish of trying to do all of it yourself, especially when you’re sitting in the midst of a disaster area. “I’m talking about counting every cup, plate, and wineglass. Our accounting office was under water. We had to separate and freeze dry all documents and paperwork. And those are just the small things. It’s staggering. The goal in hiring a loss adjuster isn’t to take advantage of the insurer but to create a fair balance. 2000, the millennium, was shaping up to be our best year ever. Fortunately, we had business interruption insurance.” Metz says he would also advise anyone in similar circumstances to take time to develop a plan and recruit experienced specialists for each element of the restoration. “Cap Juluca clearly could not be restored without building a seawall to protect the villas from future storms,” he says. “But Anguilla’s government worried that a seawall would be an eyesore along the island’s famed white-sand coast. We needed designers who could allay those fears.” Lakdas/Yohalem Engineering, Inc., of Fort Lauderdale was retained to design the seawall. Witkin Design Group was retained to restore Cap Juluca’s landscape and to work closely with Lakdas/Yohalem on seawall camouflage strategies. “Thanks to that early collaboration,” Metz reports, “the restored beachfront is vastly superior to what had been there before: a much broader beach, far better beach access from the villas, and absolutely no hint that a seawall is in place. Lakdas Nanayakkara explains how it was done. “The first concern was to stabilize the villas,” he says. “They had been built on strip foundations and the sandstone beneath had deteriorated. We installed temporary steel shoring piles [12 inches by 9 feet, or 30 cm by 2.7 m] under all the buildings, then sprayed Gunite to stabilize the surface of the ground. Ten-foot [3-m] concrete wall panels were built right there on the reclaimed beach . . . there was plenty of room, since the storm had flattened the dune. We then installed 30-foot [9-m] steelreinforced, precast concrete auger piles every ten feet [3 m] to support the wall panels.” With the seawall in place, millions of tons of sand— 120,000 cubic yards (92 million l) or 5,000 dump trucks full—were brought in. Some of the sand was installed beachside to create a natural slope from the seawall, .

which Witkin Design Group then camouflaged with cascading plantings. The rest of the sand was placed between the villas and the seawall, covered with an array of tropical vegetation to provide a lush foreground view from the villas. The solution also replaced the original steep stairways to the beach with landscaped pathways from the villas to shorter, more inviting stairways. Building the seawall took five months. At the same time, other areas of the resort were being addressed. The first step toward restoration of Cap Juluca’s decimated landscape was to conduct a thorough site inventory, complicated by the fact that no accurate prehurricane inventory was available. After walking the site many times to catalog what was lost and what had survived, CAD inventories were created. Then preliminary and final designs for landscaping, lighting, and pathways were developed. The designers chose a more limited but bolder palette than Cap Juluca originally had, focusing on materials that had survived and using weaker materials only as accents. Since there are no native nurseries in Anguilla, designers identified South Florida plants with similar properties and imported them, developing a greenhouse staging process to facilitate acclimation to Anguilla’s sunny, arid climate. Planting designs placed less hearty materials behind stronger materials to create a buffer from ocean winds. Drought-tolerant and wind-resistant grasses were introduced. It was essential to create immediate privacy buffers between the villas. This was achieved by importing mature coconut palms, green buttonwood trees, pink Tabebuia, and Washington palms, all 14 feet (4 m) or taller. More than $30 million was spent on restoration and related improvements. Virtually all resort repairs and design implementation (including the seawall) were done by members of Cap Juluca’s 400-member Anguillan staff, which represents 18 percent of the island’s workforce. “Our staff is our greatest asset,” Metz explains. “We didn’t want to lose them during the restoration.” The service personnel who were not involved in the physical restoration were relocated to Boca Raton and Naples, Florida, where arrangements were made for them to work—and learn—in exclusive resorts there. Metz adds that the yearlong hiatus gave management the opportunity to undertake some improvements they might never have had time for otherwise: staff training programs, implementing suggestions from guest comment cards, and total refurbishing of rooms and public areas. During the restoration, a number of amenities were added or upgraded: an expanded health club and spa, an aqua driving range, a third restaurant, and a second kitchen.

Marketing and Repositioning 279

Hurricane Restoration for Cap Juluca

continued

Witkin Design Group designed a new water feature at the main house: a series of falls that cascade into a pond planted with water lilies. It also created an entry feature, which Cap Juluca had never had before. The entry feature reflects local Arawak culture, combining fire and water, earth and air. Damaged exterior lighting was replaced with new low-wattage, recessed fixtures that enhance the resort’s romantic atmosphere. “Cap Juluca is even better than it was,” Metz says. “Our occupancy averages 94 percent, we have a five-year wait list for some rooms, we continue to win awards. While I would never, ever want to go through that grueling process again, I guess you could say that Hurricane Lenny was something of a blessing in disguise.” The experience at Cap Juluca provides some lessons for other hurricane-prone resorts. First, keep an accurate, updated landscape inventory: plant materials, exterior lighting, water features, signage and hardscapes, with documentation, for both insurance and replacement purposes. Dan Adache suggests that resort owners “think loss prevention from the outset. Get specialized consul-

; to renovate or redevelop to improve operational efficiencies; ; physical facilities have not been renovated or have reached the end of their economic life; ; the availability of undeveloped adjacent land allows diversification of product or expansion of existing product; or ; a flood or other disaster has caused significant damage. Market Reasons

; to maintain appeal to the existing core market; ; to appeal to a different market than that previously targeted; ; to broaden market appeal, capturing a larger market spectrum; ; to focus market appeal on a narrower niche market; ; the existing facilities need to be replaced or redesigned to meet a different development strategy; ; market potential has been reassessed owing to change of ownership; ; previously supported markets have changed, and the current design cannot be adapted by a more limited renovation strategy; or ; competition from newer competitive developments dictates a revitalization or redevelopment to maintain market share or price point.

280 Resort Development

tants—oceanographers, tide and wind specialists, structural engineers, and landscape architects with resort experience who can advise you of worst-case storm scenarios. Choose materials carefully—plaster instead of drywall to avoid mold problems, pressure-treated lumber to reduce salt and termite problems, stainless steel over galvanized, impact glass. Use what’s most resistant and easiest to fix.” Lakdas Nanayakkara advises to “choose consultants with strong disaster restoration experience and the credentials to successfully go to bat for you during insurance negotiations if necessary.” What of the bride whose wedding Hurricane Lenny so rudely crashed? “Despite everything, she didn’t want to leave Anguilla an unmarried woman,” says Metz. “So the day after the storm, amid all the debris and turmoil, we threw a rather unusual but really fabulous wedding. Within two days, all guests were evacuated.” All have since returned to Cap Juluca. Andrew Witkin, ASLA, Witkin Hults Design Group, Inc.

Cosmetic Improvements and Minor Renovations For most resorts, renovation is a constant process. Hotel rooms and public areas must be refurbished and redecorated, clubhouses must be remodeled, golf courses must be modified, marinas must have docks rebuilt or berths added, and ski resorts must replace old chairlifts with faster, higher-capacity ones. These activities are perceived as maintaining the resort’s existing position in the marketplace. Cosmetic improvements occur throughout the life of a resort. Often, such renovations are maintenancerelated, such as replacing faded drapes, worn carpets and furnishings, returfing golf greens, resurfacing swimming pools, replacing shrubbery and other plant materials, and so on. Such work is necessary to keep a property fresh and attractive. Beyond these cosmetic improvements are a range of minor renovations and additions that are generally driven by operations needs or changes in the marketplace. While fixtures and furnishings may have more life left in them physically, property owners often prefer a fresh look, a more trendy design. Redesign of key resort elements is important because resorts do not get a second chance to make a favorable first impression. Therefore, many renovation projects center around

INN AND SPA AT LORETTO

INN AND SPA AT LORETTO

The 134-room Inn & Spa at Loretto in Santa Fe, New Mexico, was opened in 1975 and renovated in 2008.

Marketing and Repositioning 281

the arrival experience. Expectations are high when a guest arrives at a resort, and the property should not disappoint. The driveway and entrance must reflect the resort’s highest standards. Lobby areas should be upto-date and in excellent condition. In recent years, lobby areas have taken on roles beyond greeting patrons. Lobby bars and other profit-generating facilities have become more commonplace. Improvements to back-of-house facilities may be equally important if they can improve service levels and reduce expense. Many resorts are finding that back-ofhouse renovations can contribute to a resort’s ability to attract and retain employees. For example, the provision of on-site affordable housing may be critical for employees of resorts in high-cost areas or remote areas where other housing is not readily available. More Significant Renovations Renovations may be instigated by the need for more technological amenities. A few decades ago, a basic telephone and a television were enough. In today’s guest rooms, the TV might be a high-resolution flat screen with satellite hookup, a DVD player, and a game system. High-speed Internet access is essential, as is good cell-phone reception. And the “business office” has been replaced by the “executive business center,” with up-to-date computer equipment and a variety of communication and output choices. Food service is another area that constantly must be evaluated for updating. Restaurant concepts and ambi-

ence quickly go out of vogue: a tapas bar is trendy one day and out of fashion the next. Changing target markets may require different restaurant options. A hamburger shack by the pool may be fine for families on a budget, but when a new luxury spa draws a different clientele, poolside dining options must appeal to that niche as well, both in terms of menu and ambience. Renovation is not just about buildings and interiors; all facilities and features need periodic attention. Landscapes become overgrown and even out of style, swimming pools need to meet changing standards for handicapped users, the golf course irrigation system must be more efficient in water consumption. Tennis courts may be popular when a resort is built but on the decline later, necessitating partial or complete conversion to a more popular amenity. Frequently, however, the market for an existing product remains sufficiently strong, but a major repositioning is desired. The revitalization of the Kauai Coast Resort at the Beachboy in Hawaii offers an example. A loss of market position led to a change of ownership and conversion from hotel to a vacation-ownership resort. The resort gradually went through a bottom-up revitalization that gave it new life in a new ownership format. Major Redevelopment and Repositioning Redevelopment efforts essentially result in a new resort. They frequently involve an expansion of a resort through the addition of adjacent land or the development of underused land. A new golf course or other major recre-

WILSON ASSOCIATES, INTERIOR DESIGN

Dining concepts must be updated often to keep up with changing tastes. Pictured: Le Telfair Golf & Spa Resort, Mauritius.

282 Resort Development

Atlantis Resort in Bahamas Adds Two New Towers With about $1 billion worth of additions and expansions to its Las Vegas–style Atlantis Resort on Paradise Island, Bahamas, concluded at the end of 2007, Kerzner International Holdings, Ltd., has made a commitment to sustainable tourism. For every booking at its new Reef tower, the company is donating $10 to the concept of “blue tourism,” carried out by the Blue Project, on top of $1 million in upfront funding from the hotel company. “We created the idea of blue tourism as a way of giving back to the ocean and local community,” says Lauren Snyder, senior vice president of corporate communications for Paradise Island–based Kerzner International. The Blue Project will help fund regrowth of damaged reefs and maintain the upkeep of these protected areas. The project is being implemented in conjunction with other companies still to be named and with a Kerzner nonprofit organization, the Kerzner Marine Foundation, which fosters preservation and enhancement of global marine ecosystems. Recently, the Kerzner Marine Foundation uncovered two new species of coral living off the coast of Oman. Kerzner International currently is identifying reef sites in the Bahamian waters off Paradise Island to be included in the project. A scientific group led by members of the Bahamas National Trust, the Nature Conservancy, and the Bahamas Reef Environment Education Foundation will choose Blue Project sites, which will be marked with a blue buoy to serve as an identifier for divers and snorkelers and as a mooring for boats so the coral reefs remain undisturbed. Onshore, Kerzner International has completed two resort towers—the Cove and the Reef. The 600-room Cove opened in 2007 as a separate resort within the overall Atlantis property with its own pools, beaches,

nightclubs, restaurant, spa, and casino. The tower sits on a peninsula, rising above two beaches, and includes rooms with step-down living space. The smallest is 650 square feet (60 sq m); the presidential suite on the 21st floor has 2,750 square feet (255 sq m); and the penthouse suite, occupying both the 14th and 15th floors, has 4,070 square feet (380 sq m). The Reef is a 22-story, 497-room tower consisting of 307 studio units, 188 one-bedroom units, and two penthouse units, with living spaces ranging from 519 to 3,102 square feet (48 to 288 sq m). Because Atlantis wanted the Reef to be more like a real residence, all the accommodations come with a kitchen area and living area with a sofa bed and are fully stocked with tableware and linens. The one-bedroom suites include a washer and dryer. “All the accommodations face the ocean from an angle that removes land from the sight line,” says Snyder. “Wraparound terraces provide a unique living space over the ocean.” The Reef is located at the farthest point on Cove Beach and adjacent to the Cove, with the towers sharing a private beach and pool club. With the addition of the Cove and the Reef, Atlantis now offers 3,414 rooms. While the Reef is the only part of Atlantis to donate a portion of the room rate to the Blue Project, the resort has developed a program giving guests an opportunity to interact with and support the ocean conservation efforts. These range from dives and scuba programs to the opportunity to walk into the ocean off Paradise Beach and visit the coral reef that Atlantis created 13 years ago when it developed a rock formation to mitigate rough waters.

ational facility is often part of a redevelopment. In some cases, it might entail a teardown and rebuilding of a hotel or clubhouse and a total reconstruction. Conversion of a hotel to condominiums, fractionals, or club ownership is also a reason for redevelopment. Sometimes a redevelopment is necessitated by a disaster, such as the hurricane that destroyed Anguilla’s Cap Juluca resort. In any case, the ultimate objective of a redevelopment is usually to reposition a resort more competitively in the marketplace. When a resort reaches a certain age—typically, 20 to 25 years—it is usually time for a major repositioning/redevelopment effort. At that age,

especially if minor upgrades have not been undertaken on a regular basis or maintenance has been deferred, a resort may be both functionally and physically obsolete. It is also highly likely that the market may have evolved and left the resort behind. Thus, the need for repositioning is often a question of pure survival. The excitement comes, however, from the opportunity to breathe new life into a tired old resort. The redevelopment of the Atlantis Resort on Paradise Island in the Bahamas offers an example of the complete redevelopment of a resort under new ownership with a fresh marketing strategy under a long-term multiphase master plan.

Source: Steve Bergsman, “Atlantis Resort in Bahamas Adds Two New Towers,” Urban Land, February 2008, p. 28.

Marketing and Repositioning 283

WILSON ASSOCIATES INTERIOR DESIGN

CARNEROS INN

Resorts in the United States must be ADA (Americans with Disabilities Act) compliant, providing wheelchair accessibility with wide, barrier-free doorways, ramps, handrails, and so on. Such accommodations can be unobtrusively integrated into the design as shown at the Carneros Inn, above, and Montage Laguna Beach, below.

Master Plan Redevelopments In the case of megahotel and multiuse resorts, renovation and repositioning often involve rethinking the entire plan and resort concept. The effort goes far beyond mere renovations. In fact, the planning that goes into such a project is usually geared toward a long-term view of maximizing a return on investment. The tearing down and rebuilding of many elements and introduction of new concepts at Hilton Hawaiian Village on Waikiki Beach, the incredible range of new marine-based attractions at Atlantis on Paradise Island, and Intrawest’s creation of a European-style

284 Resort Development

pedestrian village at the base of the ski lifts at Mont Tremblant in Quebec are just a few examples of major resort master plan redevelopments. A problem with master-planned improvements in multiuse residential resorts involves existing property owners. Wayne S. Hyatt of Hyatt & Stubblefield, PC, Atlanta, cautions that there may be one or more independent legal entities such as community associations or special districts in existence that need to be involved in new master planning. The developer’s first objective must be to turn existing owners into a positive force or, at the very least, to avoid acrimony and opposition. The

redevelopment strategy thus must identify and reflect all direct and indirect owners’ concerns in a business plan. Emerging Trends Three major factors are influencing the nature of resort renovation, repositioning, and redevelopment. The first is the green movement. Opinion polls have indicated that about 70 percent of Americans support broad environmental goals. Resorts that make environmentally related improvements can promote that fact and market themselves as environmentally friendly. The second factor that has driven renovations in the United States is related to compliance with the Americans with Disabilities Act (ADA). The ADA falls under the jurisdiction of the U.S. Department of Justice, not a local building code issue. Given that accessibility modifications can be costly and inconvenient, it is often the threat of a lawsuit under the ADA that provides the incentive to make existing resorts accessible to the disabled. But there is also a more positive reason these upgrades are being made: the opportunity to attract persons with disabilities. An estimated 6.8 percent of Americans over age five have some kind of disability, and 13 percent of those between the ages of 21 and 64 have some kind of disability. A 2002 Census study found that 2.7 million Americans (1.2 percent) over the age of 15 used a wheelchair.7 As baby boomers age, this number is likely to grow. Improving accessibility will be good business and should be a part of any renovation strategy. Hotels have created accessible guest rooms with wider doorways and roll-in showers to accommodate wheelchair users. Braille and sound pings are common in elevators, and ramps are becoming more common in swimming pools. Ski resorts have found ways to accommodate handicapped skiers and have taken positive measures to attract this segment. Parking spaces for the handicapped have become a requirement. While the ADA does not apply to resorts outside the United States, resorts worldwide that cater to U.S. clients will find that such accommodations expand their potential customer base. The U.S. Department of Justice provides a checklist specifically for lodging facilities to help developers and managers ensure that properties are ADA compliant.8 A third factor is travelers’ increasing tendency to combine business with pleasure. With a laptop and highspeed Internet access, anyone can work while they play, almost anywhere in the world. As resorts and hotels target business travelers, they are adding business ser-

vices and reconfiguring their guest rooms to function as complete offices, with more space, better desks, two telephone lines, and free high-speed Internet access.

Conclusions As with all significant decisions regarding resort planning, design, operations, and management, marketing begins with the initial conceptualization of a resort and continues throughout the life of the project. Decisions made early in the process can have a significant impact on all aspects of the resort’s subsequent development. Renovation, repositioning, and redevelopment are activities worthy of some consideration even as a new project or phase is being conceptualized. To undertake a significant makeover may make it possible for a resort to mature with fewer limitations. The key is to build in flexibility where possible so that change can be accomplished with reasonable ease, while maintaining the protective controls that are desired to preserve the quality and character of a project in its initial form and its potential future.

Notes 1. Leighton Collis, “Launch Marketing for Resort Projects” (presentation at the ULI conference, “Developing Golf Course and Resort Communities,” Orlando, Florida, April 4–5, 2005). 2. Tom Clark, “Launch Marketing for Resort Projects” (presentation at the ULI conference, “Developing Golf Course and Resort Communities,” Orlando, Florida, April 4–5, 2005). 3. Richard Sonntag, “Launch Marketing for Resort Projects” (presentation at the ULI conference, “Developing Golf Course and Resort Communities,” Orlando, Florida, April 4–5, 2005). 4. A “be-back” is a customer who returns later to make a purchase after having left at the conclusion of an initial sales presentation. 5. Timeshare Industry Resource Manual (Washington, D.C.: American Resort Development Association, 2002), appendix A. This manual can be ordered from the ARDA, 1201 15th Street, NW, Suite 400, Washington, D.C. 20005. 6. Randie Golkin, “Broadening the Brand,” Urban Land, August 2001, p. 85. 7. U.S. Census Bureau, Americans with Disabilities: 2002, available online at www.census.gov/prod/2006pubs/p70-107.pdf, table A. 8. U.S. Department of Justice, Civil Rights Division, Disability Rights Section, ADA Checklist for New Lodging Facilities, available online at www.ada.gov/lodgesur.htm.

Marketing and Repositioning 285

7. Case Studies

Banyan Tree Lijiang, Lijiang, China A 7.34-hectare (14-ac) boutique resort with 55 guest villas, two restaurants, a spa, and a main pool. The Carneros Inn, Napa, California A 27-acre (11-ha) resort of 24 for-sale homes and 17 fractional ownership units, along with 86 guest cottages, ten suites, a spa, two pools, a small town center, and three restaurants. Doonbeg Golf Club, Doonbeg, Ireland A private club ownership golf resort of 388 acres (157 ha) on the coast of southwest Ireland, with 56 suites and 80 cottages in full ownership. Hampton Lake, Bluffton, South Carolina A 906-acre (367-ha) second-home and retirement community of approximately 900 homes ranging from custom lots to fourplex units, developed around a 165-acre (67-ha) manmade lake and surrounded by a wetlands nature preserve. Jackson Gore at Okemo Mountain Resort, Ludlow, Vermont A new 505-acre (204-ha) addition to Okemo Mountain Resort, including 156 fractional ownership condo units, 169 fee-simple condos, 14 new ski trails, and a hotel with indoor/outdoor pool and other amenities. Jardins Victoria, Vilamoura, Portugal A recent 7.7-hectare (19-ac) development adding a 280room hotel and 145 whole-owner luxury flats within Vilamoura, a master-planned, second-home golf resort. JW Marriott Starr Pass Resort and Spa, Tucson, Arizona Part of a larger master-planned community, this 575room resort hotel includes a 20,000-square-foot (1,900sq-m) spa, five restaurants, and 90,000 square feet (8,400 sq m) of conference and meeting space.

Lake Las Vegas Resort, Henderson, Nevada A master-planned resort community encompassing 3,592 acres (1,454 ha), built around a privately owned manmade lake and featuring an array of housing types, hotels, golf courses, open space, and a town center. Montage Laguna Beach, Laguna Beach, California A beachfront 262-room luxury resort hotel and spa that includes 28 privately owned residences on a 30-acre (12-ha) site that was previously a trailer park. The Reserve, Indian Wells, California A luxury private-equity membership golf course community with club facilities and 241 residential lots and homes occupying 730 acres (295 ha). Roaring Fork Club, Basalt, Colorado A private, invitational golf and fishing club on 282 acres (114 ha) with an 18-hole signature golf course and cabins available for sale to members as whole or fractional ownership. Sunrise Ridge Phase II, Yellowstone Club, Big Sky, Montana A luxury vacation condominium development within the Yellowstone Club, including 43 duplex and triplex units. Taj Green Cove, Trivandrum, India A 57-room beach and spa resort featuring 57 luxury guest cottages, two restaurants, a spa, a fitness center, and a pool, on a four-hectare (ten-ac) site. WaterColor Inn and Resort, Santa Rosa Beach, Florida A master-planned, 499-acre (202-ha) coastal resort community that includes 1,020 single-family and multifamily homes, 100,000 square feet (9,300 sq m) of commercial space, a 60-room hotel, a beach club, tennis club, boathouse, abundant open space, and a lakefront park.

Case Studies 287

Banyan Tree Lijiang LIJIANG, CHINA

The Banyan Tree Lijiang resort is the first all-villa-style hotel resort created in China. Located just outside the historic city of Lijiang in Yunnan Province, it features a design that melds traditional architecture from the area with chic, contemporary elements. The hotel has a total of 55 rooms: 40 garden villas, 13 pool villas, one two-bedroom pool villa and one presidential villa. The garden villas, which occupy 355 square meters (3,821 sq ft), each feature a bedroom, bathroom, and separate study, plus an outdoor plunge pool. The pool villas are bigger, ranging from 359 to 628 square meters (3,864 to 6,760 sq ft), and have a larger-sized heated pool. The luxurious presidential villa has a second bathroom and bedroom, plus living, dining, and study areas, as well as an outdoor heated pool. Resort amenities include two restaurants, a full-service spa, fitness center, gallery gift shop, and tennis court. Meeting facilities include a 20-personcapacity function room, board room, and a functional hall that serves as a meeting room. Banyan Tree Hotels and Resorts is a Singaporebased hotel and spa management company that began in 1994 with the launch of its flagship Banyan Tree resort in Phuket, Thailand. Since that time, the company has expanded throughout Asia and now manages or has ownership interests in 19 resorts and hotels, 52 spas, and 60 retail galleries and two golf courses in the Asia Pacific. In 2006, Banyan Tree went public and was listed on the Singapore Stock Exchange. Today the company is engaged in an ambitious expansion program into China, the Middle East, the Americas, and Europe. The company is committed to sustainable development, and in 2001 it established the Green Imperative Fund to expand and formalize its environmental conservation and community development efforts. Hotel guests are asked to contribute $2 to the fund for every

288 Resort Development

night they spend at a Banyan Tree resort, and the company matches guest contributions, dollar for dollar. The company also endeavors to make a positive impact on the communities where it has a presence. It employs local staff as far as practical in each location and provides staff training and opportunities for transfers to other resorts managed by Banyan Tree. At Lijiang, one of several activities financed by the fund is the creation of a fruit tree orchard supported by students at the local university’s tourism program. Produce from the orchard, which will grow from 400 to 1,000 trees in the next several years, is supplied to an orphanage in Lijiang. Location The resort is located just outside the historic city of Lijiang. Situated at 2,000 meters (6,500 ft) above sea level, Lijiang has a pleasant climate much of the year, with blue skies and spectacular views of the Jade Dragon Snow Mountain to the north. The city includes the charming old town of Dayan, which has been designated by UNESCO as a World Heritage Site. Built more than 800 years ago at the beginning of the Yuan Dynasty, the town is known for its traditional architecture and preponderance of small streams, cobblestone streets, and stone bridges. UNESCO notes that “Lijiang is an exceptional ancient town set in a dramatic landscape which represents the harmonious fusion of different cultural traditions to produce an urban landscape of outstanding quality.” Lijiang is home to several ethnic minority groups, the most prominent of which are the Naxi. This group has a distinctive style of houses constructed of gray brick and stone and topped by a sweeping curved roofline. Each house typically has a gated wall surrounding a private interior courtyard and garden. This architectural style influenced the design of the resort.

COURTESY OF LIJIANG BANYAN TREE HOTEL & CO., LTD.

The architectural style of the Naxi, a local ethnic group, heavily influenced the design of the Banyan Tree Lijiang resort. Its sloping roofs and stone walls reflect common features of Naxi homes.

Around 5,000 hotel rooms of all types and sizes are available in Lijiang, but only a handful of those could be categorized as of international quality. Max Lennkh, the resort’s general manager, admits that Banyan Tree took a risk in building a luxury hotel in this new and still emerging destination. A big concern was whether room rates, which are several times higher than the next best hotels in town, could attract a strong clientele. After the first year of operating experience in mid-2007, it appears that they can. The resort has attracted considerable publicity, its occupancies are rising steadily, and there are already repeat guests. Advertised room rates start at $500 for the garden villas. Since most guests are individual travelers rather than members of groups, there is little discounting of room rates. According to Lennkh, the resort’s major selling point is its stunning natural setting and the area’s variety of natural and cultural attractions. Jade Dragon Snow Mountain is notable as the southernmost glacier of the Northern Hemisphere. The surrounding grasslands are home to 400 different types of trees and 30 varieties of animals, including the Yunnan golden monkey, alpine

butterflies, lesser pandas, musk deer, and sacred blacknecked cranes. The hotel offers customized hiking tours as well as driving tours to natural sites, including Tiger Leaping Gorge and the Yangtze River bend. Cultural attractions include Dayan Old Town, the 600-year-old Baisha frescoes, and Yufeng Lamasery, among others. In the immediate area there are opportunities for hiking, mountain biking, river rafting, and golfing at the 18-hole Jade Dragon Snow Mountain course, which is located at an elevation of 3,100 meters (10,170 ft). Lijiang is generally well served by domestic flights from Kunming Wujiaba International Airport, one hour away by air. Currently, about 50 percent of Banyan Tree’s guests originate from Asia (Asians as well as expatriates living in the region), 20 percent come from the United States, and the remainder travel from Europe and other parts of the world. The guests from outside Asia are typically independent travelers who have already visited the major attractions in China and who are now looking for more unusual, out-of-the-way destinations. To meet the needs of individual travelers who are not part

Banyan Tree Lijiang 289

Site Planning and Development In 2005, Banyan Tree identified Lijiang as a potential location for a new resort development. At that time, the area was just coming into vogue as a travel destination for foreign as well as domestic Chinese travelers. The local government showed the company several sites in and around the city. The resort’s 14.7-hectare (36.3-ac) site, which is leased from the local government, was undeveloped, with portions used for farming. It was selected based on several important pluses: a location just outside Lijiang but still within convenient access, excellent views to the Jade Dragon Snow Mountain, and close proximity to the small traditional village of Shuhe. Regulations regarding development were quite strict. To obtain building permits from the local and provincial authorities, it was necessary to comply with a variety of environmental and architectural guidelines. The architectural guidelines were not detailed in writing, but the local authorities provided comments on the design, weighing whether it sufficiently respected regional architectural traditions. In the case of the dramatic three-story-high pagoda at the center of the development, an exemption from height controls was obtained. The master plan, design, and interior design of the resort were undertaken by Architrave Design and Planning, Banyan Tree’s in-house architecture firm. As is common in China, a design institute was also engaged to produce the technical drawings and to act as the liaison with local government authorities. The objective driving the resort’s master plan was the preservation of views toward Jade Dragon Snow Mountain from all points throughout the site. To ensure that every villa would have an unobstructed mountain vista from its bedroom, the architect undertook extensive calculations that considered the height of all buildings and walls. The result was a site plan in which the guest villas are angled to the northeast and staggered to allow views through the rooflines. Stone walkways throughout the resort provide access to the villas by foot or on staff-operated golf carts. Native plant materials soften the edges of the walkways and walls and are often used in ingenious ways to create a contemporary ambience in both the public spaces and private gardens: willow trees in stone planters and hung with red lanterns punctuate the edges of the central pond, and stands of young bamboo line backlit sections

290 Resort Development

COURTESY OF LIJIANG BANYAN TREE HOTEL & CO., LTD.

of a package tour, the hotel employs five tour guides and provides comprehensive travel services.

A handcrafted, Naxi-style three-story pagoda sits at the heart of the resort. The pagoda and all 55 villas in the resort offer unobstructed views of Jade Dragon Snow Mountain.

of the villa walls. Narrow canals with running water reflect the famous canals in Lijiang’s old town. As a conservation measure, the water is recirculated and filtered. Construction Construction of the resort was complicated for a number of reasons, not the least of which was the fact that the site lies within an active earthquake zone. (In 1996, a major earthquake struck in the area, inflicting considerable damage to the old town.) The building challenge was therefore to create structures that were strong and safe but still graceful in appearance. For the front-ofthe-house buildings, exposed steel was used to support the large curved roofs. For the individual villas, the roofs and columns were constructed of solid concrete, which was hidden under traditional materials such as tiles, stone, and wood. Finding workers for the modern components of the construction posed another challenge. The many skilled local stone masons lacked experience in the fine finishing work necessary for contemporary details.

COURTESY OF LIJIANG BANYAN TREE HOTEL & CO., LTD.

The 2,131-square-foot (198-sq-m) library and games room is decorated in traditional Chinese shades of gold, vermilion, and crimson.

COURTESY OF LIJIANG BANYAN TREE HOTEL & CO., LTD.

The gift shop offers Banyan Tree products, Asian-style home furnishings, ethnic apparel, and handicrafts created by regional artisans, with information available on the background of these products and the artisans.

To address this shortcoming, a coordinating contractor from Beijing was hired, and a quality control process was instituted. As much as possible, local workers were given the freedom to use the age-old techniques they knew. Instead of architectural drawings, they were shown small-scale models and given dimensions and overall parameters for the work. The three-level pagoda at the center of the pond was thus designed and built by Naxi craft workers without any plans or drawings. A practical approach was taken toward environmental sustainability. Steel and concrete were favored over

timber, which is scarce in the region, and local materials were used whenever possible. Design A small village of stone houses, interwoven with stone alleys lined by narrow canals with flowing water, is the concept underlying the resort’s design. But Banyan Tree Lijiang would not be mistaken for an old village— architect Dharmali Kusumadi describes the design as an interpretation rather than an exact copy of the indigenous Naxi architecture. For example, since the villas

Banyan Tree Lijiang 291

are larger than the traditional Naxi houses, it was necessary to modify the shape of the roofs to suit the proportions of the new buildings. Inside the villas, traditional materials are combined with new features to create a contemporary feel. Each of the individual guest villas is hidden behind high stone walls. Stepping through a wooden doubledoor gate, guests enter a spacious private outdoor area with a swimming or plunge pool on a raised platform and a series of small hidden gardens that are visible only from inside the villa. The focus is the bedroom, which is a large-volume space with a high peaked ceiling lined with wooden beams above and wooden sliding pocket doors that open to reveal the gardens and Jade Dragon Snow Mountain in the distance. Off the bedroom to one side is a small study room with a Ming-style red lacquer daybed, desk, and built-in television and minibar area. On the other of the bedroom is an expansive bathroom with a freestanding tile tub, two sinks, glass-enclosed shower and toilet areas, and built-in closets. Black marble floors throughout are covered with Chinese rugs. Soft furnishings provide a mix of bold colors of red, gold, and black. In addition, decorative objects and works by local artists are used throughout. The interiors of Naxi homes do not have a distinctive style, according to the architect, and so the villa interiors were designed with Chinese features inter-

292 Resort Development

COURTESY OF LIJIANG BANYAN TREE HOTEL & CO., LTD.

COURTESY OF LIJIANG BANYAN TREE HOTEL & CO., LTD.

The two restaurants—Ming Yue, serving western cuisine, and Bai Yun, offering Cantonese and local specialties—feature high ceilings with glass walls to provide views of the mountain and countryside.

A fitness center forms part of the resort’s spa, which also includes a reception area, an activity room, a salon, a yoga pavilion, a tea house, a treatment pavilion, and six individual treatment rooms.

preted in a contemporary manner. The result is a sophisticated blend of old and new. Public areas are arranged in a series of unfolding courtyards that open up to a central pond and pagoda in the foreground, with the snow-capped mountain behind in the distance. The first courtyard at the resort’s entrance provides access to a small reception area visible through glass sliding doors. Beyond is a second courtyard that connects to a gallery gift shop on one side and a restaurant on the other. All the public spaces, particularly the restaurants, are mostly transparent, with high ceilings and large glass walls that offer expansive views of the mountain and surrounding countryside.

COURTESY OF LIJIANG BANYAN TREE HOTEL & CO., LTD.

Thirteen of the villas are equipped with private heated outdoor swimming pools. Small hidden gardens are visible only from within each individual villa.

The use of local building materials, such as gray bricks and traditional clay roof tiles, takes advantage of the skills of local

COURTESY OF LIJIANG BANYAN TREE HOTEL & CO., LTD.

craft workers and helps create a sense of place.

The two restaurants include the Ming Yue, an all-day dining venue with western cuisine and the Bai Yun, which features a blend of Cantonese dishes and local specialties. A separate bar and lounge, the Wen Hai, overlooks the pond. Next to it is a spacious library with a large-screen TV and comfortable seating. As with other Banyan Tree resorts, the resort at Lijiang has a spacious, well-designed spa facility. Housed in a separate wing near the front of the hotel, it features Chinese-accented decor in shades of gold, vermilion, and crimson. The spa includes a small shop, fitness center, yoga pavilion, and tea salon. There are six double treatment rooms, each with an en-suite shower and dressing room, plus a more luxurious treatment pavilion room with shower, rain mist, steam, bathtub, and toilet. Like all Banyan Tree galleries, the gift shop features a mix of Banyan Tree products, Asian-style home fur-

nishings, ethnic apparel, and handicrafts created by regional artisans. To educate customers about the support they are providing to local groups through their purchases, information is provided regarding the source and origin of these products, as well as background on the artisans’ groups. Future plans at Banyan Tree Lijiang call for the construction of 50 additional villas in a mix of sizes, both smaller and larger than the existing units. In addition to more one-bedroom villas, plans call for larger two- and three-bedroom units, some with their own spa rooms. To take advantage of the area’s emerging role as a corporate retreat and meeting center, there will also be smaller suite rooms of about 72 square meters (775 sq ft) in a new hotel block. More meeting space is also on the drawing boards, and the spa will be enlarged with additional treatment rooms.

Banyan Tree Lijiang 293

Site plan.

Financing, Management, and Operations The development of Banyan Tree Lijiang was financed by Banyan Tree, and it is 100 percent owned by the company. As at other Banyan Tree resorts, Lijiang operates as three different divisions: hotel, spa, and retail. Many of the upper-level staff have had prior experience at other Banyan Tree resorts around Asia. At the lower levels, such as housekeepers and spa therapists, there is a strong effort to recruit and train local staff. The 14 staff members in the spa division take part in regular training programs at Banyan Tree’s spa academy in Thailand. A second Banyan Tree resort is located about five hours’ drive to the northwest in Ringha outside the town of Shangri-La. This resort, made up of reconstructed Tibetan farmhouses, is completely different in setting, style, and overall ambience, providing a strong contrast with the resort in Lijiang and helping to create a stronger overall destination in the area. Since Ringha is situated at 3,200 meters (10,500 ft) above sea level, it is also beneficial for guests to stop in Lijiang first to acclimatize at 2,000 meters (6,500 ft). In the town of Shangri-La is a third hotel managed by Banyan Tree under its Colors of Angsana label. The Gyalthang Dzong Hotel is a 47-room, 3-star facility with room rates of about $100/night.

294 Resort Development

In addition to the benefits from shared marketing of the three resorts, there are also advantages in bulk purchasing of food and wine from sources outside the area. Lessons Learned Banyan Tree places special emphasis on providing guests with a sense of place, and each of its resort properties reflects the use of local materials and native design and landscape features. An in-house design team employed through the sister company of Architrave Design and Planning is typically responsible for the resorts’ exterior and interior designs. Using the same team of designers has helped establish a subtle design consistency for hotels in different locations. It also helps maintain cost controls. Using local materials in the construction not only adds charm and authenticity to Banyan Tree Lijiang’s design, but it also takes advantage of the skills of local workers and the availability gray bricks and traditional clay roof tiles that can be sourced from local kilns. Operating a luxury hotel in a newly emerging international tourist destination requires more attention than usual to guest travel services such as tour planning, guides, and cars for touring the area.

Project Data: Banyan Tree Lijiang

Land Use Plan

Other

Total site area

Area (sq m/sq ft)

7. 34 ha/14 ac)

Area occupied by hotel facilities

5,100 sq m/54,898 sq ft

Open space and landscaping

68,000 sq m/731,970 sq ft

Library/games room

198/2,131

Board room

35/377 (capacity of 10–20)

Meeting room

96/1,033 (capacity of 60–70)

Prefunction courtyard

Hotel Information

Rooms

Indoor Area (sq m/sq ft)

Outdoor Area (Gardens + Covered Area) (sq m/sq ft)

Total keys

55

Garden villas

40

57/614

298/3,208

Pool villas

13

61/657

298–567/ 3,208–6,103

2-bedroom pool villa

1

182/1,959

882/9,494

Presidential villa

1

182/1,959

882/9,494

123/1,324

Spa Area (sq m/sq ft) Reception

44/474

Activity room

44/474

Salon

32/344

Fitness center

56/603

Yoga pavilion

44/474

Tea house

96/1,033

6 treatment rooms @ 36 sq m each 1 treatment pavilion

Phase II (planned) 2- & 3-bedroom pool villas

9 units

230–274/ 2,476–2,949

690–735/ 7,427–7,912

Suite rooms

42 units

60/646

30–84/323–904

Spa suites

16 units

161/1,733

142/1,529

216/2,325 60/646

Development Cost Information Total development cost

$26.4 million (US$)

Developer/Owner Lijiang Banyan Tree Hotel & Co., Ltd.

Rack Rate Garden villas

$500

Singapore

Pool villas

$700

www.banyantree.com

2-bedroom pool villa

$1,800

Presidential villa

$2,800

Principal Architect and Interior Designer Architrave Design and Planning Co., Ltd.

Average annual hotel occupancy

79%

(Sister company to Banyan Tree Resorts) Singapore www.banyantree.com

Restaurants Area (sq m/sq ft)

Seating Capacity

301/3,240

72 (indoor and outdoor dining)

Bai Yun (Chinese specialties) 368/3,961

60 + private dining for 20

Ming Yue (all-day dining) Wen Hai Bar

112/1,206

43 (indoor and outdoor seating)

Tierra Design PTE, Ltd. Singapore www.tierradesign.com Development Schedule

Retail (operated by Banyan Tree) Area (sq m/sq ft) Total retail area

170/1,830

Banyan Tree Gallery

120/1,292

Banyan Tree Gallery at Spa

Landscape Architect/Site Planner

50/538

Planning started

July 2003

Site purchased

July 2003

Master plan approval

March 2004

Construction started

December 2004

Hotel completion

August 2006

Grand opening

October 2006

Banyan Tree Lijiang 295

The Carneros Inn NAPA, CALIFORNIA, USA

The Carneros Inn is a 27-acre (11-ha) resort located in California’s Napa Valley about 45 miles (72 km) northwest of San Francisco. Along with 86 guest cottages, ten suites, a spa, two pools, a small town center, and three restaurants, it includes 24 for-sale homes (which can be rented) and 17 fractional ownership units. The property is sensitively situated among the rolling vineyards, with undisturbed views of the Napa River and Mayacamas Mountains. The buildings borrow design from local architecture. Gravel paths connect the guest units, which overlook courtyards landscaped with indigenous plantings. The project was designed to have minimal environmental impact, so it uses geothermal heating and recycles stormwater for on-site irrigation. In addition, the property has a strong connection to the community, featuring works by local artists and photographs from long-standing area families. The development is the area’s first new resort to be built in 20 years. The county’s stringent land use regulations discouraged large-scale development and prevented zoning changes on the site, but the developers used a creative strategy to turn a blighted area into a distinctive yet fitting resort community that draws local residents as well as tourists. The Site The Carneros Inn is located six miles southwest of downtown Napa and within short driving distance of the wineries that have made the area a leading tourist destination. The project is entered from the Sonoma–Napa Highway. A winding road takes visitors up a small hill to the reception area, which includes the Hilltop Restaurant, the spa, and a pool area offering clear views of the Mayacamas Mountains and neighboring farmland. The surrounding land is owned by area residents and is

296 Resort Development

used for agricultural purposes. Split-rail fences denote property lines and keep the neighbors’ horses from wandering onto the property (although guests enjoy feeding the horses). From the Hilltop Restaurant, the property steadily slopes down to the densely clustered guest cottages, the for-sale and fractional ownership units, and the Boon Fly Café, which can be accessed from either the resort or the Sonoma–Napa Highway. To the west of the guest cottages, the Orchard stands as the resort’s fractional ownership community, made up of 17 well-appointed, mid-sized homes. Next to the Orchard is the property’s second pool, a 3,000-square-foot (279-sq-m) fitness center, and a cluster of commercial uses, including the resort’s premier restaurant, E@QL , meeting halls, a bocce court, a small food market, and a post office. Despite being relatively close to a major roadway, the lack of surrounding development and the siting of the buildings make the property exceptionally quiet. The commercial uses and key infrastructure buildings housing water and wastewater treatment are located next to the highway, which buffers the guest and residential units from the traffic noise while allowing for convenient access to the town center from outside the resort. The property functions as a self-contained village but is not isolated or exclusive. The location of the commercial uses at the entrance encourages patronage from area residents who do not live in the resort. The site originally contained a trailer park, an RV storage lot, and a mix of small-scale commercial uses that faced the Sonoma–Napa Highway. The property was neglected and stood in sharp contrast to its striking natural surroundings. As the Carneros Inn, the site has been transformed, with brightly colored vernacular-influenced buildings subtly announcing its location along the highway.

MARK HUNDLEY

The Carneros Inn, in Napa, California, is a 27-acre (11-ha) resort with 17 fractional- and 24 whole-ownership homes.

Development Process A group of young real estate professionals—Keith Rogal, Richard Walsh, Caspar Mol, and Nicholas Monroe—conceived the vision for the project. They visited Napa and thought the underused site, with its pristine surroundings, would be an ideal place for an imaginative redevelopment. However, the site presented several challenges, the foremost being Napa’s restrictive growth policies. When Rogal, Walsh, Mol, and Monroe pooled their resources and those of family and friends

to put the property under contract in 1997, it had been 15 years since a luxury resort development had won approval in Napa County. The group then spent several years working with the community and overcoming various hurdles in the development process. Napa’s roots lie in agriculture, especially wine making. As American vintages became more popular during the 1970s and 1980s, tourists came to the Napa Valley to experience its wines, regional restaurants, and rural character. However, the tourism boom, resulting traffic

The Carneros Inn 297

ANGIE SILVY

The designs of the manufactured guest cottages echo the Napa vernacular. The corrugated metal roofs, color scheme, and porches are drawn from the surrounding agricultural landscape.

congestion, and escalation in real estate values greatly concerned the vineyards’ landowners, fearful that they would end up losers in a battle for property against real estate developers. Further, the perceived gentrification of the area angered many residents, who successfully joined with agricultural land interests to tighten development regulations. Minimum lot sizes of 160 acres (65 ha) were established across most of the valley, and voters and elected officials rejected any new project that seemed to threaten their quality of life. The Carneros Inn development team, however, envisioned a resort that would respect Napa’s particular character as well as the natural environment and that would offer something to the residents, not just the tourists. Rogal launched a monumental community outreach campaign. He spoke of the development team’s vision of an environmentally sensitive destination that would reflect the values of the community in its project program and design character, and he talked one-onone with residents and business owners to shape those ideas. After years of community meetings, conversations, and compromises, the project gradually won political and popular approval. The development team was faced with relocating the residents of the trailer park—an often controversial and expensive undertaking. Rogal and his colleagues put in the time to handle this issue one-on-one, directly with the tenants, on terms that were clear and uniform. As a result, most of the trailer park residents voluntarily terminated their tenancies, accepting the development team’s offers to buy their units or to have them moved to another location. Most residents then relocated to

298 Resort Development

other housing in the area. Remarkably, the process never led to contentious public discussion in the press or at community forums. Another challenge, which turned out to be an advantage, was the site’s zoning. The 27 acres were a jumble of parcels containing various commercial uses along with the trailer park. It would have been nearly impossible to rezone the site, as the county requires a majority vote by its citizens to overturn a zoning designation. The developers chose to use the existing zoning and densities, which, after some creative thinking, proved to work in their favor. The approved density that existed in the RV park allowed for the 86 guest cottages and 24 residential sites. The development team worked within the constraints of the RV and mobile home park building codes to produce structures that conformed with those regulations but were designed from scratch to meet the standards of understated luxury accommodations. The remaining parcels, which had conventional commercial zoning, were used for the restaurants and town center. The mobile home park, with its existing density of six units/acre, constituted a significant exception to the surrounding agricultural zoning of a 160-acre (65ha) minimum for a single house. By creating factorybuilt homes to conform with the mobile home code, the development team was able to build twenty-four 2,400-square-foot (223-sq-m) single-family homes in the site’s southeastern section. These homes were sold as market-rate units at an average price of $1.8 million. They are used as second homes and year-round residences, with some placed by their owners into a rental pool for short-term guests.

ART GRAY

Adding to the agricultural theme, horse troughs serve as water features in the cottage courtyards.

The Napa Valley’s water shortage issues prompted concerns regarding how the project would manage its water. The development team responded by building an on-site bioreactor wastewater treatment plant that can process up to 60,000 gallons (227,000 l) per day; actual demand is less than 30,000 gallons (113,500 l) per day. The plant recycles the resort’s wastewater and uses it to irrigate the landscape, also storing it for fire protection. The treated wastewater is stored in reservoirs during the winter and then reused in the summer for drip irrigation, which uses less water than traditional spray systems. The tragedies of September 11, 2001, and the resulting national economic slowdown required that the project’s debt financing be reassessed, and new appraisals and studies were prepared. The lender concluded, however, that the project’s fundamentals were strong, and the construction loan was able to close, keeping the project on track. Construction started in 2002, and the first phase was completed the following year. The owners decided to pause after the project opening so

that operations could become well-established before embarking on the second phase, which included the town center and the fractional ownership units. That phase was completed in 2007. Planning and Design From the beginning, the development team knew that it wanted to create a distinctive resort that would be inviting, environmentally sensitive, and respectful of its surroundings. Rogal, who oversaw much of the conception and design processes, wanted to develop a place that offered a genuine Napa experience. Other resorts in the area evoke historic European and French Provençal styles, but the Carneros Inn’s design is rooted in the Napa Valley. Corrugated tin roofs, barns, and horse troughs, which serve as fountains, all reference the fact that the inn is surrounded by an agrarian community. Although the development is upscale, its rustic modern design appeals to a different market segment than the other area resorts. Rogal wanted to attract seasoned travelers who appre-

The Carneros Inn 299

ART GRAY

Named for a Carneros pioneer who planted orchards and vineyards in the mid-1800s, the Boon Fly Café serves “modern rustic” fare in a casual environment.

ciate place-specific authenticity and value understated design over a more typical branded hotel experience. The development team chose Boston-based William Rawn Associates, an architectural firm that had worked with universities and would understood the “campus” feel of the resort’s vision. Zoning requirements forbade the developers to build cottages larger than the footprints of the former trailer homes and also barred foundations. The designers produced three principal floor plans for the 86 manufactured guest cottages, ensuring an efficient system for production and enhancing commonality for marketing purposes. The cottages are clustered in groups of ten, each surrounding a central courtyard and landscaped with orchard trees and native plantings. Each cottage, with an average interior square footage of 400 square feet (37

300 Resort Development

sq m), has a porch overlooking the courtyard as well as a private deck space with an outdoor shower. The cottage exteriors are faced with board and batten siding, painted in muted colors that blend with the landscaping. Guest cars are parked in small gravel lots at the entrance to each grouping, avoiding the usual sea of parking. A network of paths and wooden signs guides guests to the amenities. As a reminder of the project’s deep roots in the community, the resort’s artwork is composed of local families’ framed snapshots. Each compound and street is also named after area residents, from all walks of life, who had spoken out on behalf of the project. The for-sale units, which are physically separated from the guest units, each have approximately 2,400 square feet (223 sq m) of indoor space and over 1,400

ART GRAY

Guests enjoy poolside dining at the Hilltop Dining Room.

square feet (130 sq m) of outdoor living space. With 24 units on less than four acres (1.6 ha), they were a far more dense development than the typical Napa residential neighborhood. Owing to the homes’ courtyard design, the residents gain a feeling of privacy and exclusivity without having to use any land beyond the footprint of the house, courtyard, and deck. The homes offer two master suites, each with master baths, a den with a private bath, furnished courtyards, and a second-story sundeck. They feature Brazilian cherry-wood floors, stone kitchen counters, professional-grade appliances, wood-burning fireplaces, private outdoor showers, and living rooms with 16-foot (4.9-m) ceilings. Owners have the option of renting their cottages to the resort’s guests at prices ranging from $1,600 to $2,400 per night. The 17 fractional units are marketed as a private residence club. Known as “the Orchard” (named for nearby apple orchards), these units are similar in design to the guest cottages and also make use of prefabricated construction. The two-bedroom houses contain about 1,250 square feet (116 sq m) of indoor living space and 500 square feet (46 sq m) of covered outdoor space. Each unit features indoor and outdoor fireplaces, an outdoor spa tub, and garden space. As of late 2007, fractional ownership pricing started just under $300,000 for a one-tenth share. The owners have rights to 21 days

at the property and access to all amenities. They pay annual dues of $8,100 plus property taxes that currently average around 1 percent of the purchase price. Rogal hired the interior design firm Shopworks to provide the interior fixtures and furnishings, which play up the buildings’ agricultural aesthetics. Shopworks made extensive use of natural materials such as heated slate floors and concrete-faced fireplaces. Furnishings include beds with tall linen-covered headboards, classic modern Le Corbusier chairs, and burnished steel tables. These design elements appear throughout the resort with slight variations. To ensure guest satisfaction, owners of the private residences who choose to place their units in the rental pool and the fractional unit participants are required to buy their homes fully furnished, including not only furniture but also all linens, china, stemware, and cookware. The designers’ choices were sufficiently appealing that a number of homebuyers who had no intention of renting their properties also chose to purchase the furnishings package. The development team made sure that the check-in/ reception area, where guests form their first impressions, was welcoming both in design and function. The hilltop reception area offers commanding views of neighboring vineyards and, like the other commonspace buildings, is a barnlike structure with high ceilings and exposed framing.

The Carneros Inn 301

ART GRAY

Vineyard suites feature two separate cottages connected by a private patio and gardens—one cottage includes a sitting area, entertainment system, and a full bathroom, and the other cottage has a king-sized bed, entertainment system, and a bathroom with a soaking tub as well as indoor and alfresco showers.

In addition to its water treatment facilities, the Carneros Inn features innovative energy-saving devices. A ground-source heat-pump system is used in every one of the hotel cottages, and four are used in each of the residences instead of traditional air-conditioning/heating systems. Water circulating through subterranean tubes is either cooled in the summer or heated in the winter by the earth’s temperature and then fed back into the homes. The resort’s roofs are made of galvanized sheet metal, which reflects heat and reduces cooling loads. Unlike composite shingles, the material can be recycled when it has outlived its current use. The Carneros Inn was designed to be a full-service destination resort community that would also provide a convenient and luxurious place for guests to stay while touring the Napa Valley wineries. Amenities that are available to both permanent residents and guests include: ; three full service restaurants: the Boon Fly Café and E@QL , which are open to the public, and the Hilltop Dining Room, which is open to guests only; ; the Hilltop Pool, an adults-only infinity-edged pool, and an all-ages pool; ; a spa with nine indoor and five outdoor treatment rooms and customized hydrotherapy baths; ; complimentary fitness classes offered on weekends: yoga, water aerobics, and morning walks or runs through nearby vineyards; ; a yoga studio; ; a 3,000-square-foot (279-sq-m) state-of-the-art cardiovascular fitness center; and ; an upscale general store/gourmet grocer.

302 Resort Development

Marketing, Management, and Performance From the beginning, the Carneros Inn’s development team knew it wanted to create a differentiated resort that would appeal to discerning travelers who appreciate rustic and modern design. Psychographics, rather than just demographics, have played a large part in both its market study and current marketing. Some travelers have arrived at the Carneros Inn expecting plush, overstuffed surroundings and found that the resort’s minimalist, natural approach to design is not for them. In that way, the inn differentiates itself from nearby competing resorts such as Auberge du Soleil, which offers a “Mediterranean-style” design and attracts travelers who want a more traditional resort experience. The inn relies mostly on word of mouth and has not had to pursue large-scale advertising campaigns. Approximately 30 percent of guests make a return visit. Visitors are mainly from California, but the inn is also popular with Midwesterners, New Yorkers, and Texans and is known as a romantic getaway that appeals to couples yet is also popular with families. Over a quarter of its lodging business comes from groups such as corporate retreats and weddings. The for-sale housing sold out within the first six months of availability. The fractional units, as of early 2008, are almost sold out. Room rates run from $391 to $1,575 per night in the winter and from $505 to $2,300 per night during peak season. The project’s development team raised the initial development capital from a variety of private sources and investors and formed the Carneros Partners. There are currently 30 equity holders and two institutional

COURTESY OF CARNEROS PARTNERS

The Carneros Inn site plan.

holders. In 2004, the resort’s holding company, Carneros Holdings, LLC, appointed the Plumpjack Group of San Francisco as the management company. The Plumpjack Group, which owns several wineries, hotels, and restaurants, oversees the day-to-day management of the resort but is not directly involved with the fractional or for-sale housing units. The development team’s conviction and attention to detail have paid off. The Carneros Inn has received positive press coverage and several awards, including a 2007 American Institute of Architects Honor Award for Urban and Regional Design, a 2007 Charter Award from the Congress for the New Urbanism, and a 2008 American Institute of Architects Housing Award. It was recently listed as number 11 in the top 50 mainland U.S. resorts in a Condé Nast Traveler readers’ poll. Experience Gained Because this was the developers’ first project, there was a learning curve involved. The team members’ diverse yet complementary backgrounds kept the project on track. Each one of the development partners had a strength (in design, finance, law, or land planning) that helped move the project along. Each member was also committed to the vision and involved because they

wanted to achieve something that not only aligned with their values, but that had never been done before. Working closely with the community was essential for this project to proceed. The Carneros Inn was the first resort to be built in Napa in over 20 years, and the area’s attitude toward developers was not friendly. Rogal, who is not from the area and therefore not a “local,” had to communicate his vision while allaying fears of improper development. His diplomacy and goodwill were rewarded by the support of those who could have opposed him and the project. Rogal’s outreach efforts and the success of the Carneros Inn have earned the trust of the community. This has aided in staff recruitment, benefited the property through wordof-mouth referral, and enabled him and his partners to more easily pursue further development opportunities. Although presented with many challenges, the developers thought creatively and overcame seemingly insurmountable challenges. They were able to solve potential setbacks, such as having to build their own wastewater treatment facility, by generating ideas that are now considered model solutions.

The Carneros Inn 303

Project Data: The Carneros Inn

Land Use Plan

Development Costs Acres/Hectares

Single-family residential

4/1.6

Hotel

20/8

Retail

1/.4

Town/village center

2/.8

Total

27/11

Total Units

Density

Unit Size (sq ft/sq m)

Typical Sales Price

24

6/ac

2,500/232

$1.8 million

Courtyard homes

Fractional Unit Information

Unit Type

Number of Housing Units

Interval Type or Length

17

1/10th

Orchard cottages

Unit Size (sq ft/sq m)

Typical Sales Price

1,200–1,700/ 111–158

$300,000

Rooms

Average Daily Room Rate

Average Occupancy

$500

70%

86

Number of Facilities

Total Area (sq ft/sq m)

Retail

2

3,500/325

Restaurants

3

12,201/1,133

Spa/Recreation

1

9,955/925

Total

6

25,656/2,383

Tenant Type

100

750,000

5,700,000

1,720,000

4,720,000

2,600,000

3,550,000

6,150,000

17,800,000

8,510,000

26,310,000

Site work Direct construction costs

—

1,540,000

1,540,000

Utilities

1,300,000

5,360,000

6,660,000

Water/wastewater treatment plants

1,200,000

300,000

1,500,000

Soft costs (A/C/E, fees/ permits, insurance)

1,700,000

4,100,000

5,800,000

Furniture, fixtures, and equipment

3,900,000

3,660,000

7,560,000

Development and preopening

3,400,000

420,000

3,820,000

400,000

—

400,000

—

—

—

$43,700,000

$31,330,000

Sales and marketing Financing and closing costs (N/A) Total project costs

Developer Carneros Partners San Francisco, California

Owner Carneros Holdings, LLC Napa, California Architect Boston, Massachusetts www.rawnarch.com

Average annual sales

Approximately $720 per square foot ($400–$1,800)

Landscape Architect Olin Partnership Philadelphia, Pennsylvania www.olinptr.com

Note *All facilities are hotel-owned.

304 Resort Development

$4,870,000

4,950,000

William Rawn Associates Percentage of GLA occupied

$1,420,000

3,000,000

www.TheCarnerosInn.com

Retail and Restaurant Information*

Total

$3,450,000

Land development

Total Development Cost

Hotel Information

Lodge Phase II

Landscaping, irrigation

Offsite improvements

Residential Information Unit Type

Land acquisition

Inn Phase I

$75,030,000

Interior Design Shopworks Napa, California www.shopworksdesign.com Development Schedule Planning started

1997

Site purchased

1997

Construction started

2002

Sales/leasing started

2003

Inn opened

2003

Phase I completed

2004

Phase II completion

2007

The Carneros Inn 305

Doonbeg Golf Club DOONBEG, IRELAND

Doonbeg Golf Club, is a second-home community, located in the parish of Doonbeg on the craggy coastline of Southwest Ireland adjoining White Strand Beach, approximately 44 miles (70 km) from Shannon International Airport. It is the single largest tourism project ever undertaken in the west of Ireland. In the mid-1990s, the Doonbeg Community Development Company (DCD), a local organization founded by leaders in the village of Doonbeg to promote economic development, began to study the possibility of a golf course at Doonbeg. With the encouragement of the site’s landowners, DCD urged Shannon Development, a government economic development agency, to purchase options from four farmers to make their lands available as well, should a golf course developer be found. Shannon Development’s involvement was necessary because it was the conduit for European Union (EU) funds available to attract economic development and had the capacity to assist in the search for potential developers. Among the first entities interested was developer Landmark National, partnered with golf course architect Greg Norman. After initial planning efforts, Landmark decided not to proceed, but it identified a U.S. firm, Kiawah Development Partners (KDP), as another potential developer. KDP became interested in the site in the fall of 1999 and formed Doonbeg Golf Club, Ltd., to purchase the site in December 1999, with Greg Norman continuing as the architect for the course. Because Norman’s design was well advanced when KDP became the developer, course construction could proceed immediately, even though a master plan for the entire site was not finalized, nor had public approvals been obtained for KDP’s approach to the remainder of the development (including a condo hotel and revised suites and cottages).

306 Resort Development

KDP’s underlying concept for the golf club was that it would be structured as a private (nonequity) membership deposit club with limited public access. Membership would be heavily U.S.-based, with a strong Irish contingent. Concept and Plan Design Shannon Development and Doonbeg Community Development had four principal economic expectations for KDP to address as their plans evolved: ; good-faith employment of local people; ; local participation in the membership of the golf club (up to 200 locals); ; expansion of an existing inadequate sewage treatment plant; and ; assurance of public beach access. These expectations had to be incorporated into KDP’s plans. While these four requirements had clear economic implications for the costs of development, one counterbalancing incentive made available to KDP by Shannon Development was a grant of €3,099,000 in support of economic development. The site totals 388 acres (157 ha) primarily of what is known as “links land”—land adjacent to the ocean that features sandy soil, dunes, and undulating topography, with farmable land further inland. This term has become the identifier for coastal golf courses in Scotland, England, and Ireland. Doonbeg Golf Club may well be the last true links course that will be built in Ireland. Norman’s golf course plan stretches almost the full length of the site’s Atlantic Ocean frontage, consuming 136 acres (55 ha). Norman made 23 trips prior to and during construction of the course, since his design focused on using the natural terrain rather than a bulldozer.

COURTESY OF DOONBEG GOLF CLUB, LTD.

Golf course designer Greg Norman designed the links course so that nearly all holes overlook the ocean. By incorporating the existing dunes into the course’s design, he was able to leave much of the natural terrain intact. Resort buildings occupy 11 acres (4.5 ha) of the site’s 157 acres (52.5 ha).

The resultant course is a classic 18-hole single-loop design. The course lies alongside 1.5 miles (2.4 km) of crescent-shaped beach and dunes. The ocean is visible from the green, fairway, or tees of 16 of the 18 holes. The centuries-old dunes reach almost 100 feet (30 m) in height, and Norman used a “least disturbance” philosophy of routing the course to fit the existing terrain. Twelve of Doonbeg’s fairways were simply mowed. The fairways and greens were augmented with native grasses, including fine fescue, bentgrass, and ryegrass. The par-72 layout plays from 6,885 yards (6,296 m) from the back tees down to 5,400 yards (4,938 m) from the front tees. This natural routing within the existing dunes resulted in an uncommon combination of five par-3s, five par-5s, and eight par-4s. Variations in wind speed and direction ensure that the course plays differently almost every day. Several changes had to be made to the original course layout during the first two years of play to accommodate for sand blowing, salt spray on the greens, and increased golfer traffic. Within and adjacent to the course area are two fenced conservation areas totaling 52 acres (21 ha) that are part of the environmental conservation program. The 252-acre (102-ha) remainder of the site was thus required to hold facilities that would support both the course and the maintenance of the conservation areas, providing sufficient economic development for KDP to justify its investment. From 1999 until July 2002, while the golf course was under construction, KDP developed plans for the remainder

of the site. KDP applied for planning permission in April 2002. With approvals from that submission and subsequent amendments, the maximum allowable development for the club was set at 56 suites and 80 cottages, with the suites to be part of a central complex and the cottages to be scattered adjacent to the golf course. Construction of the lodge and suites began in April 2004, and membership promotion began at the same time. The central complex was completed in May 2006, and the first of the cottages was finished in December 2006. The remaining suites and cottages will proceed as market demand dictates. The four economic goals set at the project’s beginning have received sustained attention. Many area residents are on staff at the club, and the caddie program recruits strongly from the community. A local golf club, the Doonbeg Links Society, was formed and received 150 limited memberships to allocate within the Doonbeg community. The developer can approve another 50 memberships. The sewage treatment plant has been expanded. Allegations made by a few locals regarding preexisting rights of pedestrian or vehicular access to the beach either have been resolved or are currently under consideration by the local government. Environmental Preservation and Management The Doonbeg site contains two significant elements that have been meticulously protected: the grey dunes (a term applied to the oldest intact dunes) and an endangered snail, Vertigo angustior.

Doonbeg Golf Club 307

FRANK SPINK

The lodge’s architectural style evokes the design of grand Irish country houses. Nonmember visitors and guests have limited access to the lodge and other facilities.

Two areas of grey dunes at Doonbeg have been designated as Special Area of Conservation (SAC) candidates by the National Park and Wildlife Service (NPWS). Under a management agreement between Doonbeg Golf Club and the NPWS, these 52 acres of grey dunes are fenced off permanently for preservation and are not in play. The remainder of the site, including the course, is designated as a proposed Natural Heritage Area (NHA). Vertigo angustior, a microscopic snail just 2 millimeters (.08 in) high and 1 millimeter (.04 in) wide, was discovered on the site during the developer’s environmental impact assessment. As with the grey dunes, the snail is listed for protection under the EU’s Habitats Directive. After analysis by the leading Irish expert on Vertigo angustior, it was concluded that the snail could coexist with the club both in the dunes and on the course. A management plan carried out by the developer regularly monitors and protects the snail habitat; to date, the annual inventories show sustained growth in the snail population. When the site was acquired, the natural range of bird and animal wildlife had been sadly depleted by farm operations that viewed foxes, birds, and other animals as nuisances to be eliminated. With the current management policy, the club has become a refuge and

308 Resort Development

home to foxes, hedgehogs, rabbits and hares, deer, and a barn owl, as well as three pairs of kestrels. As with any course adjacent to the coast, the potential exists for beach and dune erosion. The club is seeking permission for a project of storm beach augmentation along several sections of White Strand Beach to prevent erosion. Financing The long-term financing for the project has come primarily from the U.S. parent company. The project also received an economic development grant from Shannon Development Company in the amount of €3,099,000. The construction of the golf course was financed by Anglo Irish Bank and was subsequently refinanced with a long-term loan from Ulster Bank in the amount of €7,600,000. The bank has also provided construction financing for the suites and cottages in Phase I and Phase II. These construction loans will be repaid from release fees as suites are sold. The club also maintains banking relationships with Allied Irish Bank. Building Design, Operations, and Management KDP decided that the club should reflect Irish architectural heritage. Thus, both the lodge and suites draw

inspiration from the grand Irish country houses. Designers spent three years collecting $2.2 million worth of 18th- and 19th-century antique furnishings and art for the lodge. With the club structured as a private membership organization within a golfing resort, the lodge’s design reflects this strategy. The members only section includes a number of private facilities, including a dining room and pub, a billiards room, a living room, and men’s and women’s locker rooms. Nonmember visitors and guests have limited lodge access. The areas open to the public are the formal and casual dining rooms, a sitting room, and the entrance lobby, which provides access to all member and nonmember facilities and to the suites in the lodge proper. The formal dining room overlooks the 18th green and faces the ocean. The casual dining room is adjacent to the first tee. A special feature of the club is the world-class White Horses Spa. It is located in the lodge building, with separate steam, sauna, deep-soaking whirlpools, showers, wet and dry treatment rooms, and exercise rooms for men and women. Attached to the lodge but in separate buildings are the Garden, Norman, and Courtyard suites. A golf shop, owned and operated by the club, is located adjacent to the members’ wing and accessible via a hallway or pathways from that area or from the courtyard. A shuttle service provides convenient transportation between the cottages and the lodge.

The operation of the golf course is somewhat different from what is typical in the United States. Golfers may carry their bags, rely on a caddie, or use a pull cart (trolley). Electric golf carts are not allowed, except for disabled golfers. With a single-loop design, a cart shuttle service is provided for players who want to return to the lodge after nine holes. Food and beverage services carts are available on the course, and toilet facilities are located between holes 7 and 8. Initially, caddies were not readily available, so a caddie school was founded and the club now has 100 caddies drawn mostly from the community. Some local farmers caddie on the side. One incentive to enter the caddie program has been the potential to earn a scholarship to Georgia Southern University (GSU) in the United States. This scholarship program was established by the Doonbeg Foundation and is funded largely by an annual event at the club that has raised as much as €30,000 for caddie scholarships and other community organizations. The winner of the GSU scholarship plays team golf and is trained to become a tour golfer. Membership Membership in the club is by invitation only and thus has been a closely operated program. As of 2007, there were 427 members, with 44 of them owning Doonbeg residences. This does not count the 150 Doonbeg Links Society limited memberships allocated primarily

FRANK SPINK

Almost all of the 47 suites at Doonbeg are available as shortterm accommodations for guests.

Doonbeg Golf Club 309

PETER VITALE

The living room in the lodge, which is open only to members of the club, is accented with 18thand 19th-century antique furnishings and art.

FRANK SPINK

The 80 cottages—most of which have been bought by Irish citizens—are located adjacent to the golf course.

to those in the Doonbeg community. The club has also attracted members from China, Bermuda, Australia, Canada, and Europe. Memberships can be individual or family and can be passed down to children and grandchildren as a family legacy. Membership initiation deposits are the same for both Irish and U.S. members; however, there are differences in

310 Resort Development

the types and use of memberships. Irish members tend to bring families, which has generated a need for facilities and programs suitable for children. Original planning did not foresee these needs, and so they are currently provided in a tent located near the 18th green until permanent facilities can be designed and constructed. Experience also has determined that Doonbeg will not be the

COURTESY OF DOONBEG GOLF CLUB, LTD.

Aerial drawing of the site showing the guest lodgings, the golf course, and the ocean.

primary club for its U.S.-based members, who will likely visit two or three times annually. U.S. parties are more typically couples without children and groups of male golfers who play together at several courses in the region. In contrast, Irish members tend to use the facilities biweekly. The refundable membership initiation deposits are priced in U.S. dollars, as are the annual dues for U.S.based members. Membership initiation deposits initially were offered for $20,000, but they had increased to $70,000 by 2007. The 150 local memberships allocated by the Doonbeg Links Society required an initial joining fee at a range from €318 for a child member to €1,270 for a full member. Only 50 of these memberships have been used actively. Real Estate Products Unlike many recent U.S. private golf clubs, where interval ownerships can provide a multiplier of the available units for sale, Doonbeg has only 136 units to sell to members (56 suites and 80 cottages). The initial spaces included 15 lodge suites, six Garden Suites, seven Norman Suites, and 19 Courtyard Suites. All but one of these 47 suites were sold in advance of opening. Currently, all but seven have been placed in the Doonbeg rental program and are available as short-term accommodations for visitors. Under the rental program, most owners may use their suites, without any housekeeping charges or management fees, for 28 days a year (14 days in high season, 14 in low season). To purchase a unit, one must either be an existing member of the club or obtain a membership prior to closing.

When the cottages were being planned, an attractive tax relief plan became available for sales to Irish citizens who purchased before July 31, 2008. This plan was an effort by the Irish government to increase the number of hotel rooms in Ireland. While the club does not view itself as a hotel, it is structured as a “condo hotel” and therefore does qualify under this tax relief incentive legislation. By using specific registration procedures and placing a cottage in a rental pool for 21 years, with a breakaway possible after 10 years, investors are entitled to capital allowances at various rates for both unit purchase and fitout. The benefit depends on the year in which the expenditure was incurred. It was also made available for the Courtyard Suites and was retroactively applied to certain of the Garden and Norman suites, making these various units attractive real estate investments for Irish buyers. Tax relief owners may use their suites during low season (November 1 to March 31) for 14 days at no cost, and 31 additional days with maid-service cost. When the tax relief benefit is no longer available after 2008, the loss of this benefit may cause a shift in the sales ratio between Irish and U.S. buyers, as will changes in the dollar-to-euro ratio. Marketing There are two somewhat separate marketing strategies for the lodge at Doonbeg Golf Club. The first involves the offering of memberships in a private club along with the sale of residential units within the resort community. The second is the marketing of accommodations and use of the lodge to the general public. This secondary source of revenue is needed to provide income to

Doonbeg Golf Club 311

Links Golf Course Definition Many golfers use “links” and “golf course” interchangeably. But “links” is actually a specific type of golf course. A traditional links course will have many—perhaps all—of the following features: ; The course is built along the seaside. ; The soil is sandy and drains easily. ; The course is laid out naturally, so that unusual bumps and slopes in the fairways and greens remain, rather than being smoothed over. ; The rough features natural seaside grasses. ; Bunkers are numerous, very small and very deep (to keep the sea breezes from blowing the sand away). ; Fairways are rarely (if ever) watered and play firm and fast. ; Links courses usually have few if any trees. ; The course routes out and back. The no. 1 hole begins at the clubhouse and the front nine plays straight out so that no. 9 is the farthest hole from the clubhouse; the direction turns back at no. 10, and the course ends with no. 18 back at the clubhouse. Source: www.Golf.about.com.

COURTESY OF DOONBEG GOLF CLUB, LTD.

the suite and cottage owners, to fund club operations, and to help maintain the golf course. These two strategies may ultimately conflict with one another as membership nears the planned maximum. The initial real estate marketing in 2002 was to the 1,500 property owners at Kiawah Island in South Carolina, which brought 274 replies. Marketing to potential Irish members was initiated through a targeted referral process. Eighty percent of the suites in the lodge were sold with membership to U.S. buyers. The majority of the cottage buyers, however, have been Irish. There has been limited interest from the U.K. and European Union nations. Marketing accommodations, membership sales, and golf has been accomplished by many means, including use of press releases to the golf media, the Doonbeg Web site, radio advertising, cable television programs, various Internet travel sites, print ads, and insertions in publications throughout the United States, U.K., and Ireland. A strategic B2B (business-to-business) plan was implemented for selling accommodations to intermediaries. Luxury golf tour operators, such as the Ireland Golf Tour Operators Association, have also been a significant source. Doonbeg received the 2006 Golf Course of Year from this association.

The plan of the main lodge.

312 Resort Development

COURTESY OF DOONBEG GOLF CLUB, LTD.

The plan of the main lodge.

Various events have been held for the Irish public, club members, real estate prospects, and media representatives, beginning with the unprecedented kickoff party for Doonbeg villagers with a Greg Norman and Padraig Harrington exhibition match, a village pub crawl and barbecue for 5,000, and the biannual coveted Writers’ Cup invitational tournament. Numerous brochures and e-mail blasts have been sent in targeted direct distribution for membership, accommodation, and real estate promotion. One membership direct mailing was targeted to prospective members’ wives. The developer has a well-qualified advisory board that helps the club’s direct marketing endeavors. There are also three public relations teams in three countries that manage promotion of accommodations, golf, real estate sales, and membership via community relations, story generation and placement, endorsements, events, cooperative brand promotions, and familiarization trips for press and others.

; Relying on employees from the community for grounds maintenance has tapped their considerable knowledge of successful methods for cost-effective management. ; When operating in another country, a developer needs to take into account the potential for currency fluctuations that may affect development costs when funds come from outside that country. ; Knowledge of planning and other statutory requirements for development, labor laws and regulations, and Irish tax laws were critical, as were local legal expertise and representation. ; Creative marketing to various regions of the country was essential. ; Given Doonbeg’s somewhat isolated location, extra attention was devoted to efficient and convenient types of access and transportation. ; Experience has shown that the Irish members participate as families, and thus there has been a need to create programs and facilities for children and young people.

Experience Gained ; Responding effectively to the expectations of the community has given Doonbeg Golf Club the reputation of a good neighbor within the community rather than an isolated private club.

Doonbeg Golf Club 313

Project Data: Doonbeg Golf Club

Land Use Information

Greens Fees (2007)

Site area

157 ha/388 ac

Units approved

56 suites/80 cottages

Land Use Plan

Category

Rate

Resident rate

€150

Rack Rates

Facility

Hectares/Acres

Lodge complex

2.752/6.8

Links cottages

8.175/20.2

Golf course

55.118/136.2

Conservation space

20.639/51

Undeveloped/beach

70.334/173.8

Total

157/388

Visitor rate

€190-200

Twilight rate (after 4 pm)

€100

Replay rate

€100

Winter Rate

€100

Tour Operator Rates Tour operator

€130-160

Member/Guest Rates

Membership Information Membership fees

$70,000 (2007)

Member

Annual fees (2007)

U.S.: $3,600 for family or individual

Unaccompanied guest

Irish: $6,300 for family, $5,000 for individual

Accompanied guest

-0€150 €65-150

Local members (150): €950 Total members (2007)

U.S.: 223; Irish: 168; other: 36; total: 427

Corporate and Society Corporate

Category Lodge suites

€110

Society

Accommodation Information

€90

Range Daily Rate (2007) €221–€1,134, depending on size of unit and season

Garden, Norman, Courtyard suites

€221–€914, depending on size of unit and season

Links cottages

€452–€819, depending on season

Real Estate Units Number

Description

Unit Size Range (sq m/sq ft)

Average Sales Prices1

Lodge suites2

15

1–4 bedrooms

58–242/621–2,593

€983,000

Garden suites2

6

2 bedrooms

121/1,296

€650,000

Norman suites2

7

2 bedrooms

147/1,575

€735,000

19

1–4 bedrooms

88–207/943–2,218

€920,000

Category Central Complex

Courtyard suites2 Future suites

9

Cottages Links cottages II

17

4 bedrooms

224–234/2,399–2,507

€1,599,0003

Links cottages III

11

4 bedrooms

223–234/2,389–2,507

€1,930,50034

Future cottages IV

52

Notes Except for Phase IIIB (Links Cottages III), prices generally do not include fitouts of the suites, which have ranged from €49,000 to €150,000, depending upon the size of the unit and purchase date. 1

The conversion ratio between euros and dollars ranged from 1.03 to 1.38 between 2003 and 2007.

2

Prices sometimes included club membership.

3

Prices include club membership. Prices shown reflect Irish tax shelter program. Deduct €300,000 for non–tax shelter price.

4

Cottages are sold fully furnished.

314 Resort Development

Development Cost Information Estimated costs at completion

Operations/Management €192.5 million (includes European structural funds of €3,099,000)

Site acquisition/predevelopment costs

€8.9 million

Site Improvement Costs Infrastructure

Landscaping and signage Other: erosion control Total

€7.5 million €1 million €1.7 million €25 million

Cottages and suites

€6.9 million €101.8 million

Halfway house/restrooms

€281,000

Golf maintenance building

€814,000

Golf pro shop

€3.5 million

Temporary clubhouse

€969,000

Administrative office

€300,000

Spa

€1.4 million

Welcome center

€5.5 million

Total

www.doonbeggolfclub.com

Greg Norman Jupiter, Florida www.shark.com/gngcd/ Architects CCH Architects

Building Construction Costs Club house/lodge

Doonbeg, County Clare, Ireland

Golf Course Designer

€14.8 million (includes beach access road at €725,000)

Golf course

Doonbeg Golf Club, Ltd.

€121.5 million

Dublin, Ireland www.cch-architects.com/ John Denton Haley Charleston, South Carolina Interior Design Consultants Jacquelynne Lanham and Norman Askins Atlanta, Georgia CLR Design Dublin, Ireland Spa Designer

Soft Costs Architecture, engineering, planning

€9.7 million

Clodagh

Project management

€9.3 million

www.clodagh.com/

Marketing

€2.3 million

Legal/accounting

€825,000

Development Schedule

Taxes/insurance

€365,000

Landmark Development starts planning

1995

Construction interest and fees

€4 million

KDP purchases site

December 1999

Impact fees

€1 million

Golf course construction starts

December 1999

Golf course completed

July 2002

Club facilities application

July 2002

Total Furniture, fixtures, and equipment Total Development Cost Developer Doonbeg Golf Club, Ltd. an Irish entity created by

€27.5 million €9.6 million €192.5 million

Construction of lodge complex starts

April 2004

Lodge complex completed

May 2006 (Lodge, Garden, Norman, and Courtyard)

Cottages Phase I completed

December 2006

Cottages Phase II

Under construction

Cottages Phase III

TBD

Kiawah Development Partners 2 North Adger’s Wharf Charleston, South Carolina

Doonbeg Golf Club 315

Hampton Lake BLUFFTON, SOUTH CAROLINA, USA

Hampton Lake, with its 165-acre (67-ha) freshwater lake, is a distinctive second-home and retirement community located in Bluffton, South Carolina. The greater Hilton Head/Savannah area is a well-known secondhome and resort destination location with communities typically oriented toward the ocean, intracoastal waterways, and high-end golf facilities. The project was initially conceived as a high-end golf course community but market changes eventually led the developer to the lake concept. The lake mirrors the layout of the courses and winds through the community, surrounded by a 340-acre (138-ha) wetlands nature preserve, not only serving as a major amenity and focal point for the community, but also acting as a filtration system for the larger regional wetlands system draining into the May River. The 906-acre (367-ha) project will include approximately 900 homes ranging from custom lots to fourplex units. Site and Area Hampton Lake is located approximately nine miles (14 km) from Hilton Head Island and 17 miles (27 km) from Savannah, Georgia. As Hilton Head approached buildout in the early 1990s, developments such as Colleton River by Reed Development and Sun City Hilton Head by Del Webb Communities helped stretch the definition of Hilton Head Island to include the inland areas of Bluffton and southern Beaufort County. Hilton Head Island’s economy is driven primarily by tourism and real estate. More than $1.5 billion entered the Bluffton/Hilton Head Island economy in 2000, brought by 2.5 million visitors, many of whom made the move permanent. One of the reasons the area is so attractive to visitors and buyers is that it enjoys four distinct seasons and has an annual mean temperature of 65 degrees. It is also conveniently

316 Resort Development

located within a one-day drive for 80 percent of the U.S. population east of the Mississippi River. The development is surrounded by compatible land uses. To the east of the property is Hampton Hall, a luxury golf course community developed by Reed Development and Toll Brothers. The back entrances of both communities line up with each other, allowing Hampton Lake golfers easy access to the adjacent Hampton Hall course via golf cart. The northern edge and entrance to the property along Bluffton Parkway will feature a mixture of commercial and resort uses. The land south and west of the property is currently vacant but is planned for smaller-scale residential communities. The site itself was formerly owned by a paper company and was used for wood pulp production. The wetlands, which make up approximately one-third of the property, were never timbered. The rest of the property was timbered in the late 1980s and 1994. Therefore, most of the property was covered by trees, an asset largely preserved during the development of the Hampton Lake community. The lake, although manmade, appears natural and in most places borders the wetlands. Acquisition, Development, and Financing The site, known as the Buckwalter Tract, was formerly owned by Union Camp, a timber company acquired by International Paper. John Reed of Reed Development put the property under contract as it was going through a planned unit development (PUD) process with the town of Bluffton. The project was approved for 950 units and two golf courses. Reed purchased the property with entitlements in 2000 for $27.55 million. The land purchase was made through a combination of equity and mezzanine debt. Approximately 30 percent of the land cost was financed with equity pooled by a

IMAGE DESIGN

The 165-acre (67-ha) lake serves as the focus of the resort and acts as a stormwater retention area for the May River.

small group of investors. The rest of the land cost was borne by Reed Development’s charter member program. This is technically mezzanine debt, but from the bank’s perspective, it functions as equity since it is subordinate to the construction loan. Because of its past success and reputation for quality development, Reed Development was able to draw former buyers and friends of the firm as investors through its charter member program, which has been used at preceding developments since the 1980s. The firm was able to raise approximately $40 million between investment and charter lot purchases. Charter members receive a 12 percent return on their investment and an approximate 20 percent lot discount. They also provide an effective source of word-of-mouth marketing for the project. In addition to the equity and mezzanine debt, the project can draw on a revolving line of credit for up to $20 million from the National Bank of South Carolina. Due to the success of the project, there is currently a zero balance on the loan, even though the community is only in its second year of development. As of late 2007, 88 percent of the project’s hard costs have been expensed, and only 12 percent of the costs are still unknown or have no contract in place.

In addition to the land cost, there were considerable upfront development costs. In order to sell the project and concept, all of the amenities, including the $12.5-million lake, were started at the beginning of development. Lot and home reservations began being accepted a month before construction on the lake started, and reservations were converted to binding contracts in April 2006, a month before construction began on the community amenities. The amenities were completed in May 2007, before the first residents moved into the community. The original pro forma projected a five-year buildout. Today, the project is expected to take less than four years, with an anticipated 2009 completion date. The initial year of sales (2006) far exceeded expectations, with 349 lot sales. Hampton Lake initially was able to insulate itself from the national housing slowdown through a combination of good location and execution, attractive offerings, targeted price points, and a solid reputation. More recently, toward the end of 2007, the housing market slowdown began to catch up with Hampton Lake, as many prospective buyers were unable to sell their existing homes. Lot closings as of September 2007 were at 51 for the year, with an additional 40 product sales. This pace, albeit below expectations, remains sufficiently healthy.

Hampton Lake 317

Intrawest, an internationally known resort developer, had purchased 100 acres adjacent to Hampton Lake along Bluffton Parkway to develop a resort. The property has since been put on the market. It is zoned and planned for 600 whole ownership units or 1,200 hotel units and 10,000 square feet of commercial space. There is also a 19-acre (8-ha) commercial parcel along Bluffton Parkway that will house a small grocery store with associated retail. It is projected to be developed within the next three years. Planning, Design, and Construction The story of how Hampton Lake changed from a highend golf course community to a lake-oriented community demonstrates how being willing to take risks and do something different can pay off. High-end secondhome and retirement communities without golf courses are not at all common in the region. John Reed and his team discerned the changing trends in the Hilton Head area second-home industry around 2000: the market was becoming saturated with high-end golf, the high-end market was moving off of Hilton Head toward Bluffton, and there was limited product available in the $400,000 to $1 million range. These factors, however, did not stop Reed Development at the time from conceiving of Hampton Lake as a golf course community. Two courses were planned for the site and received Army Corps of Engineers approvals. But that all changed on September 11, 2001. John Reed and Pete Dye were working on the design of the

first course when the world for selling second and vacation homes changed overnight. It suddenly became out of vogue to collect multiple golf course memberships; instead, the family became the prime driver for real estate purchases. The team recognized that another luxury golf course community was no longer the answer. In order to plan the ideal community, they completed exhaustive consumer market research to determine what buyers (in particular, women) wanted. They kept coming back to water and family. Baby boomers wanted something different; more people were playing less golf and looking for lower dues, with preferences changing to communities offering entertaining, comprehensive amenities, which serve as a vehicle for more quality time with their families. The developers gambled that they would get the same value out of a lake that they would have gotten on a similarly priced golf course, and this has proved to be true. They ascertained it would cost approximately $10 million to develop the lake if they could keep the excavated dirt on site, or $17 million if they hauled the dirt away. They decided to keep the dirt. The success of the lake spawned a new theme for the project, influencing everything from planning and architecture to programming and amenities. The entire lake had to be built out of the uplands, and it was influenced by the location of the wetlands. The lake winds through the community, offering water frontage and views to a large number of units and providing a large open-space system with the wetlands; in some places,

IMAGE DESIGN

“Sunbrellas” lining Sandi Point Beach, part of Hampton Lake’s village area and amenities cluster.

318 Resort Development

IMAGE DESIGN

Adventure Lagoon was designed to appeal to everyone from residents to their young grandchildren, providing a family-friendly swimming area that is fun and casual.

such as near the amenity center, it affords long-range views. Owing to the long coastline and large amount of wetlands, all of the single-family lots will feature a water or natural wetlands orientation. In addition to influencing changes in the hard infrastructure and architecture, the new theme also changed the feeling of the community. The atmosphere at Hampton Lake is described as “not your daddy’s club”; the amenities, signage, and naming aim to create a sense of fun, family, casualness, and friendliness. In order to meet the needs of their customers, of which up to 80 percent wanted built products as opposed to custom lots, the developers created a wide variety of housing types, including: ; custom lots at approximately three units per acre (with eleven “idea homes” constructed by local custom homebuilders); ; cottage homes, single-family detached homes at four units per acre, by David Weekley Homes; ; fourplex carriage homes, with each unit’s front door facing the front of the unit, by Weldenfield LifeStyle Group;

; fourplex villa homes, with each unit’s front door on a different side of the building, by Weldenfield LifeStyle Group; and ; fourplex coach homes, with two units on the first floor and two units on the second floor, by Lake Estates. These units were originally conceived as the lowest-priced, smallest products in the development, but the builders decided to try a more luxurious, highend product since the location is near the amenity center and the site has lake frontage. This was the first coach home product to be introduced in the greater Hilton Head market. The decision to go more upscale paid off, as all 28 units in the first phase were sold within four months. Given the 165-acre (67-ha) lake, construction timing was complicated. The lake took one year to dig. Since it meanders throughout the community, its development had a great impact on the construction of other land uses. In particular, the need to overlap construction of the amenity center and the lake created access issues and challenges in keeping the process moving. The lake

Hampton Lake 319

IMAGE DESIGN

The aquatic theme unifies the amenities and extends to the decorative details in the resort’s restaurant, BackWater Bill’s.

was built in stages, and dikes were used to keep water out of certain areas. Amenities The focal point for the project is water, including seven miles (11 km) of navigable waterways and 15 miles (24 km) of shoreline. The goal is to give residents the opportunity to see and experience the water within an environment that emphasizes family, friends, and fun. The center of the amenities is Lakeside, Hampton Lake’s village area. This is a resort-style amenity complex with Doc’s, the community boathouse; the Lakehouse, the clubhouse, with BackWater Bill’s Restaurant, Fitness Central, and the Spa; Adventure Lagoon, a family-oriented resort-style swimming pool; and many other activity venues. Each of the amenities was given a name that helps reinforce the community’s brand and emphasizes the aquatic theme. Amenities were also designed to appeal to residents’ young grandchildren. Residents can rent boats or keep boats at their own docks. The lake, stocked with a variety of fish, is designed to be the premier freshwater fishing lake on the East Coast. One unusual amenity is Dog Paddle Park, a park with separate areas designed for large and small dogs. The Outpost Campsite, located across the lake from Lakeside, offers a place for families to camp. Accessible only by boat, it includes picnic shelters, prepitched tents, a bonfire ring, and a bathhouse. The concerns arising from the exclusion of golf at a high-end second-home community were alleviated by

320 Resort Development

offering golf memberships at Hampton Hall, the adjoining golf course community. Residents who want to play golf are thereby offered the opportunity, but those who don’t are not forced to pay for an expensive membership that does not interest them. The developer worked to find a property owners association (POA) structure that would fit the target market: baby boomers. The challenge was finding the optimum price point at which people would still find value in their dues. At typical luxury-level golf club communities in the area, dues are in the range of $12,000 per year. At Hampton Lake, by not having to pay for the high costs of a golf facility, the community could provide the same high level of amenities and service but only charge $3,250 per year. Unlike at other Reed Development communities, the majority of Hampton Lake’s operations are managed by outside vendors, selected from among the area’s best. While a typical golf course club operation employs 150, Hampton Lake currently has five employees and plans to employ only six full-time personnel, plus sales and support staff at full operation. The developer has contracted out the management of the pool, fitness center, restaurant, security/entry control, landscaping, and lake maintenance, enabling Reed Development to control costs while maintaining the high level of execution for which it is known. Water and Environmental Management One of the spin-off benefits of creating the lake was the benefit it provides to the regional water system and

the goodwill it has generated from the greater Bluffton community. The lake acts as a stormwater retention area for the May River. Approximately 2,500 acres (1,012 ha) drain through the property, with the wetlands and lake filtering the water as it moves through. The wetlands are part of the headwaters of Stony Creek. The May River always has been important to Bluffton, and residents initially were concerned about the environmental impact of the project’s two originally planned golf courses. The creation of the lake alleviated concerns about stormwater management and gave Reed Development the opportunity to highlight its commitment to sustainable and green development. The lake, approximately eight feet (2.5 m) deep, was completely filled by the summer of 2007, a year and a half after construction began. The water is continually replenished with groundwater and through natural rainfall, as well as through the natural flushing of runoff through the wetlands into the lake basin. The lake is designed to be fed from the north with runoff to the south. A series of overflow weirs between the lake and the wetlands help regulate the water level. The lake also has numerous bubblers and aeration devices that help keep the water fresh. Marketing, Management, and Performance Unlike many communities that relaxed their marketing efforts during the residential boom of the late 1990s and early 2000s, Reed Development never abandoned the basics. The campaign for Hampton Lake, as well as

the other Reed Developments, started with a kickoff to the local Realtor community. Approximately 70 percent of all sales have been co-op sales with outside real estate agents, so Reed understands the importance of building relationships with local agents. Reed hosted a breakfast for as many as 500 real estate agents to explain the community concept prior to offering lots to the general public. The agents then had several weeks to contact their clients to get them interested in the project. Reed also pays agents a 5 percent commission on top of the 3.5 percent commission their in-house sales staff receives. The developer schedules semiannual events with Realtors to update them on the project; these events have helped keep agents interested in Hampton Lake. Charter members also act as marketers for the project. Reed expects them to be involved in their communities at home and to help sell the project to their friends in their hometowns. This strategy has been particularly successful. Charter members are invited to special events both at the project and in their hometowns and are encouraged to bring friends. Hampton Lake also advertises in local papers. Owing to its location adjacent to Hilton Head Island, which has 2.5 million visitors per year, and Savannah, Georgia, with its 6.8 million visitors per year, Hampton Lake is able to rely on an interception strategy once the initial push to the real estate community has ended. The project has 20 model homes, far more than is typical for this type of project. Eleven of these are cus-

MARK STAFF

Shrimp’s Place offers a playground and “wet play” area for children and includes whimsical details such as pelican fountains.

Hampton Lake 321

COURTESY OF HAMPTON LAKE, LLC (REED DEVELOPMENT COMPANY)

Site plan of the amenities village.

tom “idea” homes, and the rest are fully built products. Having such a large number of models has kept traffic high at the community. The developer aims to treat both employees and customers with respect and integrity. The focus is on creating places where people can connect with nature and with each other. Reed Development has 41 employees, of which 34 remain directly affiliated with Hampton Lake. (As previously mentioned, Hampton Lake has outsourced most of its club operations, so it will only have six full-time club employees and nine sales people, plus support staff.) The project exceeded sales expectations in the first year. Because of the national housing market slowdown, it experienced slower sales than expected in the second year (it was projected to sell 75 to 90 lots and 75 attached homes by the end of 2007, although it had originally projected to sell 150 lots and 120 attached homes). However, the project is still outperforming the local market and has appeared to target a price point and lifestyle that is appealing to buyers.

322 Resort Development

The majority of buyers, about 75 percent, are secondhome and preretirement buyers. The remaining 25 percent are split between full-time retirees (about 18 percent) and working people (about 7 percent). This breakdown is similar to other Hilton Head area projects. The majority of the second-home buyers are empty nesters or retirees from the Northeast, Midwest, Atlanta, and Florida. What has been different in this community is that approximately 70 percent of buyers already own property in the Hilton Head area and are looking for something different. In February 2008, Lakeside at Hampton Lake was awarded a 2008 BALA Award (Best in American Living Award) by the National Association of Home Builders and Professional Builder magazine for the “best community facility” for a community with 151 units and above. Key Lessons Learned ; Be willing to try new ideas. Strong market and consumer research was the basis of the project’s lake theme, design, and marketing. Many ideas were new

COURTESY OF HAMPTON LAKE, LLC (REED DEVELOPMENT COMPANY)

Site plan.

to the development team but were fully consumertested. The team worked diligently to understand in depth what their target market wanted. They targeted women in particular, because research indicated that women make about 90 percent of second-home buying decisions. ; Build a solid brand so that any new product can benefit from the firm’s reputation. ; Even though Reed already had a strong reputation at the beginning of the project, the firm chose to build the amenities upfront as a way of instilling confidence from buyers, the community, and lenders. The superbly designed, branded, and executed amenities that were in place at the beginning of the project enabled buyers to see and experience what they were buying. Because 70 percent of the buyers already had homes in the local market, they were able to begin to use the amenities while their homes were being constructed, thus giving life to the project prior to their actually moving in. ; Constructing a lake, amenities, and site grading at the same time presented challenges. A more thorough construction plan at the outset of the project could have eliminated some of the resulting conflicts. ; The charter member program has been highly successful in raising money, awareness of the project,

and maintaining relationships with past and future customers. ; It is important to deliver excellent value, even at a high price point. There is a strong perceived value in Hampton Lake’s yearly dues relative to the amenities and services the buyer is getting in return. ; Contracting out key club operations has enabled the developer to better control costs. So far, Reed Development has been able to manage the potential risks of a lower level of execution by scheduling training sessions for contractors, reiterating that everyone is part of the same team and is required to meet the same high standards. The primary benefit of contracting out is flexibility in hiring the best local organization for each business unit while monitoring costs through a competitive bidding process. Each vendor is an expert in its particular field of work. Reed does not believe that a developer could replicate these service capacities at higher quality levels. ; The entire development team shares similar values regarding what is important to the community. Functioning well as a team encourages each of the staff and contractors to do their best and contribute to the project’s success.

Hampton Lake 323

Project Data: Hampton Lake

Land Use Information

Development Cost Information

Site area

909.6 ac/368.1 ha

Percentage complete

80

Estimated cost at completion

$27,550,000

Site Improvement Costs

Land Use Plan Acres/Hectares Single-family residential

181.5/73.5

Carriage home residential

16.9/6.8

Multifamily residential (villa and coach)

27.0/10.9

Cottage residential

16.9/6.8

Town/village center1

10.8/4.4

Open space Lake Road right-of-ways

$12,550,000

Lot infrastructure/development

2,000,000

Total

$57,500,000

Construction Costs Lakehouse (clubhouse)

$3,350,000

Spa and fitness center

3,700,000

Boathouse

2,750,000

(units per acre/ha)

Total site

1.0/2.5

Net buildable

3.8/9.3

Trails, parks, campsites, fencing, boat storage, and boat ramp

3,000,000

Pools, beach, and tennis

3,950,000

Sales centers

750,000

Total

$17,700,000

Soft Costs Architecture, engineering, planning

Retail and Restaurant Information Tenant Type2 Retail

Number of Facilities

Total GLA (sq ft/sq m)

2

2,000/800

1 restaurant/1 juice bar

5,150/1,000

4

7,150/1,800

Total

42,950,000

Entry features

165.0/66.8 909.6/368.1

Residential Density

Lake development

423.7/171.4 67.8/27.4

Total

Restaurants

$144,000,000

Site acquisition costs

7,700,000

Marketing and sales

10,100,000

Legal/accounting

950,000

Taxes/insurance

1,150,000

Construction interest and fees

8,900,000

POA subsidy

3,250,000

Total Percentage occupied

100

$2,500,000

Project management

$34,550,000

Total Development Cost

$109,750,000

Residential Information Number of Units Completed/Total Planned

Density (units per acre/hectare)

Unit Size (sq ft/sq m)

Typical Sales Base Price

Villa condominiums

4/130

6.7/16.5

1,918–2,238/178–208

$360,000–$425,000

Carriage homes

3/100

5.9/14.6

2,583–2,717/240–252

$440,000–$500,000

Coach homes

4/74

9.9/24.4

2,341–3,450/217–320

$549,000–$759,000

Cottage homes

1/67

4.0/9.9

2,220–2,950/206–274

$497,000–$598,000

Custom single-family lots

411/537

2.9/7.2

13,600/1,263 avg.

$200,000 wooded avg.

Total units

423/908

Unit Type

$350,000 lakefront avg.

Notes 1

Includes Lakeside Amenity Village, Outpost Campsite, dog park, boat storage and boat launch.

2

All retail shops and food and beverage outlets are developer-operated.

324 Resort Development

Developer/Owner

Landscape Construction

Hampton Lake, LLC (Reed Development Company)

Palmetto Coastal

Hilton Head, South Carolina

Hilton Head, South Carolina

www.hamptonlake.com

www.palmettocoastal.net

Architect

Development Schedule

Cowart Coleman Group

Planning started

2000

Savannah, Georgia

Site purchased

November 2005

www.cowartgroup.com

Lake construction started

December 2005

Community infrastructure started

May 2006

Site Planner

Presales reservations started

November 2005

Wood & Partners, Inc.

Sales started

April 2006

Hilton Head, South Carolina

Phase I completed

July 2007

Phase II completed

January 2008

www.woodandpartners.com Engineering (Phase I & II) Thomas & Hutton Engineering Company Savannah, Georgia www.thomas-hutton.com Infrastructure Construction (Phase I) Malphrus Construction Company, Inc. Hilton Head, South Carolina www.malphrus.com Infrastructure Construction (Phase II) PBG of South Carolina Hardeeville, South Carolina Construction of Lakeside Amenity Center Fraser Construction Bluffton, South Carolina www.fraser-construction.com Construction of Entry Gatehouse, Dog Park, Wilderness Campsite Full Circle Development Ridgeland, South Carolina www.fullcircledevelopmentsc.com

Hampton Lake 325

Jackson Gore at Okemo Mountain Resort LUDLOW, VERMONT, USA

Jackson Gore is the newest addition to Okemo Mountain Resort, located in the town of Ludlow in southern Vermont. It includes a fractional ownership condominium called the Jackson Gore Inn, and fee-simple condominiums (Adams, Bixby, and Coolidge), as well as the Jackson Gore Peak area, with 14 new ski trails. Okemo opened in 1956, and its current owners, Tim and Diane Mueller, purchased a majority share of the resort in 1982. Since then, annual lift tickets purchased have increased from around 100,000 to approximately 600,000, making it the second largest resort in New England. The resort presently contains 117 ski runs and 18 chairlifts on two peaks, in addition to an 18-hole golf course, a significant lodge, and over 800 housing/lodging units. Substantial development since 2000, including the opening of the Jackson Gore Peak and base area, is part of a strategy by the resort not only to expand ski operations but also to provide a range of year-round activities and to increase overnight stays and yield per visitor. The owners of Okemo aim to make the resort as family-friendly as possible in every season, with a wide range of activities available in addition to skiing, which remains the primary focus. Site Development/Background The original resort was located on Okemo Mountain, with an elevation of 3,300 feet (1,000 m) at the peak and a 2,200-foot (670-m) vertical drop. The base of the mountain contains typical ski facilities such as lift ticket sales, a ski school, and concessions. The first homes on the mountain were developed in the 1960s, and the Okemo Mountain Lodge opened in 1964 at the base. Additional housing has been built since, some by Okemo Mountain Resort and others by

326 Resort Development

separate developers. One of the more recent developments, Solitude Village, which began in the late 1990s, includes both single-family homes and condominiums. All the housing developed by Okemo Mountain Resort is ski-in/ski-out, which allows residents and visitors access to skiing directly from their units, without the need for other forms of transportation. The resort purchased the nearby Fox Run Golf Club in 1997, expanding it and rebuilding it to an 18-hole course, the Okemo Valley Golf Club, with a clubhouse. The area around Ludlow is rural in character, with little level terrain and numerous mountains, ridges, and valleys. Winter activities in the region around Okemo are primarily downhill and cross-country skiing and snowshoeing. Summer activities are more numerous and include golf, hiking, canoeing, rafting, antique shopping, and art fairs. A significant expansion to the resort has occurred in recent years with the addition of ski runs and a base lodge on Jackson Gore Peak, an adjacent 2,725-foot (830-m) mountain. The development process for the base area began in the late 1990s. Jackson Gore Peak opened for skiing in 2002, and the first phase of development opened in 2003. Working with state and local jurisdictions, Jackson Gore Development, LLC, gained approval of a master plan projecting 325 units, a nine-hole golf course, a conference center, and a gondola chairlift. The impetus for development at Jackson Gore was to increase yield among skiers and visitors in a variety of ways. The owners of Okemo realize that the number of lift tickets sold per year is no longer likely to increase substantially. Therefore, their goal is to obtain more revenue from each skier through food and beverage sales, rental shops, lessons, daycare, conferences, and, most of all, the sale of condominiums. This strategy will

OKEMO MOUNTAIN RESORT

State environmental regulations required that approval be obtained for the master plan and all development phases to ensure the preservation of the rustic Vermont landscape.

enable the resort to rely less on lift ticket sales as an overall proportion of operating income. The owners of Okemo found the master planning and permitting of Jackson Gore to be costly and time-consuming. Vermont land use laws greatly restrict sprawl, and it is one of the few states with statewide environmental permitting. Towns and villages are confined to areas along roads and highways, and little development occurs on hillsides and mountains. As a result, significant land uses such as ski resorts face a rigorous approvals process. Enacted in 1970 as a response to concern over increasing development pressure, Act 250 is a statewide set of environmental regulations pertaining to developments of more than ten units or greater than ten acres. The act ensures that development does not cause undue environmental or aesthetic damage. As a result, an overall master plan for Jackson Gore was required for approval, as well as separate approvals for each phase of development as the master plan is built out. One outcome of Act 250 is that Vermont retains a distinctly more rustic and rural feel than its neighboring states. The upper elevations of both resort mountains (Okemo and Jackson Gore Peak) occupy state forest land that is leased to the resort. Okemo Mountain Resort and state officials negotiated a new lease for the Jackson Gore expansion. The terms of the lease are confidential, but they were based on the elevation change and the number of ski lifts and runs. As part of the negotiations, the resort agreed that 50 acres (20 ha) at the base of the mountain would be set aside to preserve trees and habitat. This required rerouting one of the proposed ski trails that was denied during the approvals process because of a sensitive habitat area. State environmental regulations also prohibit the resort from drawing water from rivers or streams that are below

a certain rate of flow. To ensure water availability, two snowmaking ponds are located on the mountain. Planning, Design, and Construction The general concept of the Jackson Gore master plan is to concentrate services and amenities in a small area at the base of Jackson Gore Peak, while also providing a significant amount of parking to relieve traffic and congestion at the base of Okemo Mountain. Working with Burlington, Vermont–based Truex Cullins & Partners Architects and San Francisco–based BSA Architects, a multiphase master plan was created, projecting 325 units of housing, in addition to shops, restaurants, a conference center, a fitness facility, a skating rink, and a nine-hole executive golf course. As of early 2007, close to half of the condo units were complete, as were the fitness center, skating rink, and restaurants and shops. The first structure completed was the Jackson Gore Inn, which opened in 2004. The building is U-shaped, and the three sides of the U surround a courtyard area that faces the mountain. An archway at the middle of the building provides pedestrian access from the shuttle bus dropoff in front to the base of the ski area in back. The building contains 117 residential units on three floors above a first floor that is made up of common areas and amenities. Uses on the first floor include the lobby, two restaurants, a separate bar, a video arcade, lift ticket sales, ski rental, daycare, lockers, a spa, and an outdoor swimming pool. This level also contains a conference room, a ski shop, a gift shop, and the real estate sales office. The swimming pool is almost entirely outdoors but is accessed from an indoor entrance. The area is surrounded by glass, providing a clear view of the valley.

Jackson Gore at Okemo Mountain Resort 327

SAM NEWBERG

The design scheme incorporates traditional New England motifs with natural stone and red and yellow paint colors.

Daycare is provided for a fee, sometimes in conjunction with ski lessons for children. Food service includes a cafeteria that serves breakfast and lunch, two formal restaurants serving lunch and dinner, and a bar in the lobby. Most of the cafeteria food is made to order, and the restaurants feature highquality menus and extensive wine lists. Adjacent to the Jackson Gore Inn is a fitness and aquatic center, which opened in early 2007. It features an indoor pool with lap lanes and access for handicapped patrons, a splash pool for children, a basketball/ racquetball court, a fitness studio, and an exercise room with a variety of weightlifting equipment and treadmills. The residential units at the Jackson Gore Inn were sold in quarter shares, with a total of 468 shares sold in 117 units. The inn is managed much like a hotel, with housekeeping and other services provided. Owners are able to use their units every fourth week, and they also have the option of placing any number of their weeks into a rental pool managed by the resort. Owners are asked to notify the resort regarding what weeks they

328 Resort Development

want to use themselves and which they want released to the rental pool for up to three years in advance. Units at the inn range in size from 667 to 2,306 square feet (62 to 214 sq m), accommodating a variety of needs in terms of space and bedrooms. All are furnished by the condominium association and are kept in optimum condition for owners and renters alike. To reduce wear and tear on both the units and common areas, skis are prohibited indoors; each unit is provided with a first-floor locker for ski storage. State and local approvals have affected not only the siting of the buildings, but also design and even color selection. The overall design of buildings at Okemo fits a traditional New England/colonial motif, making use of natural stone and a red and yellow color scheme. The design and layout were kept somewhat dense to reduce land consumption, and much of Jackson Gore is largely hidden from view from the highway. Additional residential buildings at Jackson Gore include Adams House, completed in early 2007, Bixby House, completed in late 2007, and Coolidge House,

which began marketing in 2007 and whose construction will be dependent on sales pace. A small chairlift will be built to provide access to all housing units. An ice rink that operates during the winter months opened in 2006, providing another activity for families. A nine-hole executive golf course is planned, as is a gondola to provide direct access to Okemo Mountain, although the exact timing of these facilities is uncertain. A conference center accommodating up to 500 is also planned. Its goal is to generate demand for an additional 10,000 room nights per year. Okemo is holding off on the conference center development until additional condominiums are finished, since the current room capacity at Jackson Gore is not sufficient to accommodate a 500-person conference. The original master plan submitted for Jackson Gore in 1998 contained nearly 30,000 square feet (2,800 sq m) of commercial/retail space. This plan was scaled back substantially because of concerns from existing retailers in the town of Ludlow, as well as the uncertainty of sustaining a retail market year-round given that occupancy at Jackson Gore would fluctuate substantially by season. Although the project contains a number of expensive amenities, two of the most popular features were two of the least expensive to build. An outdoor fire pit was constructed in the courtyard of the Jackson Gore Inn. It measures approximately eight feet (2.4 m) across, enclosed by a stone ledge and surrounded by numerous wooden chairs, and is kept lit on most winter days, providing a community gathering space for meeting and relaxing. Adjacent to the fire pit is a pile of snow approximately 15 feet (4.5 m) in height that is groomed nightly and maintained specifically for children to play on. Both have proven immensely popular with guests.

There are 980 parking spaces permitted at the base of Jackson Gore. This allocation includes approximately one underground parking space per condominium unit, a 75-space lot outside Adams House, and a 600-space terraced lot on the base area’s downhill side. A major challenge in planning and design was a freight railroad that crosses both mountains above the base of each. To develop the Jackson Gore area, two bridges for ski trails and one tunnel for vehicles had to be created. Okemo Mountain Resort participates in a program to purchase wind credits as part of its electricity budget. Although wind energy is not directly available in most locations in Vermont, the wind credits can be used by consumers elsewhere nationwide through an agreement with the Gunnison County Electric Association in Colorado. All three resorts owned by the Muellers (the other two are Mount Sunapee Resort in New Hampshire and Crested Butte Mountain Resort in Colorado) participate in the program. All energy use at the three resorts is offset, saving an estimated 18,800 tons (17,056 metric tons) of carbon dioxide from being released into the atmosphere annually (equivalent to the electricity consumption of 2,200 homes). Financing Financing for Jackson Gore was provided by conventional means. Citizens Bank New Hampshire provided a loan for the Jackson Gore Inn. Typically, lending institutions require 25 percent equity for resort projects. In the case of Jackson Gore Inn, nearly all units were sold by the time the loan was approved, so the lender only required 15 percent equity. This consisted mainly of the appraised value of land at the resort, which far outstripped the 15 percent value required. Each successive phase will be financed in a similar manner.

SAM NEWBERG

The Jackson Gore Inn has three levels of residential accommodations above a main floor that includes the lobby, spa, swimming pool, conference room, and retail uses.

Jackson Gore at Okemo Mountain Resort 329

Marketing and Performance Marketing of condominium quarter shares at the Jackson Gore Inn began in 1998. Pricing of shares ranged from $35,000 for 443-square-foot (41-sq-m) one-bedroom units to $160,000 for 1,769-square-foot (164-sq-m) threebedroom units. All 117 units (468 quarter shares) were reserved quickly, although the lengthy approval process resulted in numerous cancellations. Because there was greater demand for units than there was supply, these cancellations were replaced by those on the waiting list. Original pricing was maintained for initial buyers, and prices were adjusted for units placed back on the market. The inn was completed in spring 2003. Phase II of Jackson Gore consisted of three condominium buildings marketed and built at different times. Presales for Adams House began in 2004, and as of early 2007 its 39 units (156 quarter shares) were 80 percent sold. Adams House was completed in 2007. Bixby House began sales in 2006, marketing singleshare units. A total of 27 of its 30 units were sold as of early 2007, and it was completed at the end of 2007. The final building of Phase II, Coolidge House, began marketing its 35 units in early 2007; depending on sales, it could open in late 2008. Pricing for units at Coolidge House ranges from studios for $395,000 to five-bedroom townhomes for $2.9 million. Although the quarter shares at the Jackson Gore Inn and Adams House have been highly successful, sales staff saw significant demand for single-share units as well. Given numerous resales at the inn, which competed against new units, the decision was made to sell single shares at Bixby House and Coolidge House. Many skiers and visitors to Okemo travel from the surrounding states of Connecticut, Massachusetts, and New York, particularly the major metropolitan areas of Boston and New York City. On the busiest day of the 2006–7 season, the resort tracked the license plates

330 Resort Development

SAM NEWBERG

The long-term return on investment (ROI) anticipated by the resort is approximately 20 percent. The ROI on the Jackson Gore Inn so far has been less than 10 percent, owing mainly to the fact that the entire first floor is devoted to nonsalable common areas and amenities. Some of these spaces, such as the gift shop and restaurants, generate revenue, but their square footage is not sold or leased. These uses, however, are amenities that help drive sales of units across the Jackson Gore area, so the lower rate of return on the inn will be compensated for by a higher rate on subsequent phases. An eight-foot (2.4-m) -wide fire pit in the courtyard of the Jackson Gore Inn provides a communal meeting place and is adjacent to a children’s snow mound.

of vehicles in its parking lots. The most license plates were from Connecticut (24 percent), followed by New York (22 percent), New Jersey and Vermont (16 percent each), Massachusetts (13 percent), New Hampshire (4 percent), and all other states (less than 4 percent). The ski season lasts up to 150 days at Okemo, and approximately 600,000 lift tickets are sold during each season. Up to 10,000 lift tickets can be sold on a busy Saturday. Summer is also a relatively busy time for the resort; that season’s broader range of activities includes golf, rafting, and hiking. The Okemo Valley Golf Club sells 22,000 to 25,000 rounds of golf per year. Occupancy at the Jackson Gore Inn averages approximately 35 percent on a year-round basis. On most weekends between December and March the resort is mostly full, whereas midweek winter occupancy runs 45 to 50 percent. Summer weekends average 40 to 50 percent occupancy, although midweek is usually very quiet. Summer events such as family reunions and weddings and performers such as the Vermont Symphony Orchestra draw visitors and boost occupancy. Of the more than 800 total housing/lodging units on the mountain, management estimates that 130 to 160 of them are in the rental pool at any given time. Owners who choose to put their units in the rental pool receive a 55 percent split of revenue for every night sold, with Okemo Mountain Resort receiving 45 percent. The Jackson Gore Inn is also affiliated with Resort Condominiums, Inc., whose members can trade nights in their units for those in other participating resorts worldwide. The marketing strategy for Okemo is twofold. General marketing for the resort, aimed at a wide audience,

COURTESY OF JACKSON GORE DEVELOPMENT, LLC

Site plan.

consists of billboards in major metropolitan areas such as Hartford, Boston, and New York City. On-mountain advertising in lodges and on lifts is targeted to the resort’s 600,000 skiers each year, encouraging them to stay longer on the mountain or to purchase property there. Experience Gained The opening of the new mountain and base area at Jackson Gore has been successful for Okemo Mountain Resort. The owners understood that providing a wider range of amenities and activities would attract more visitors and increase the yield per visitor. They have successfully taken advantage of recent trends in resort development, including improved restaurants, fractional ownership, fitness and spa facilities, and well-designed communal areas. They also understood the importance of building a large number of the amenities in the first phase of development so as to attract visitors and buyers to later phases, even though it has meant a much lower initial return on investment. The owners of Okemo keep up with sales trends and alter their product offerings when necessary. For example, they decided to begin selling single-share condos

as opposed to quarter shares, based on the demand patterns experienced by the sales staff. Understanding the limitations of a seasonal operation is also important. The development team realized that the original plan for more extensive retail development at Jackson Gore would be risky owing to the seasonal nature of businesses on the mountain and fluctuations in traffic. The resulting reduction of retail space at Jackson Gore was an appropriate adjustment. Although the state of Vermont has a more lengthy and detailed approval system than many states, the Jackson Gore development team stresses the importance of gaining early consensus for any project. Knowing the potential roadblocks to approvals being granted can save valuable time and cost. The team even suggests that it is better sometimes to acquiesce rather than to appeal a denied permit. In the case of one of the trails that was denied because of a sensitive habitat, it was easier in the long term to cooperate and spend the time and cost on rerouting the trail, especially when approvals still lay ahead for future phases of development.

Jackson Gore at Okemo Mountain Resort 331

Project Data: Jackson Gore at Okemo Mountain Resort

Site Area

Retail and Restaurant Information

Jackson Gore expansion of the ski resort Entire resort Percentage complete

505 ac/204 ha

Facility Type

Total Area (sq ft/sq m)

2,000 ac/809 ha

Retail3 Restaurants3 Other

5,085/472 8,835/821 12,191/1,133

Total

26,111/2,426

96 percent of currently permitted development

Land Use Plan Acres/Hectares Townhome residential

6.5/2.6

Hotels

4.04/1.6

Retail

< 1/0.4

Town/village center

< 1/0/4

Club facility (excluding golf clubs)

< 1/0.4

Golf course

14.2/5.7

Open space

51.2/20.7 (restricted lands)

Other (multirecreational facility and completed ski trails)

92.3/37.4

Total

171.24/69.3

Residential Information Units Completed/ Unit Type

Total Planned

Fee-simple condo

0/1691

Quarter-share condo

156 (624 shares)/156 (624 shares) (units per acre/hectare)

Net Residential Density

325 units/10.54 acres = 30.8/ac, 76.1/ha

Units Completed/ Total Planned

Unit Size (sq ft/sq m)

Average Sales Price

0 /169

667–2,306/62–214

$826,500

Condo

2

Estimated costs at completion

$181,162,000

Site acquisition costs

$7,606,477

Site Improvement Costs Infrastructure

(Included in site costs)

Golf courses

$2,100,000

Total

$9,706,477

Construction Costs Phase I

$56,000,000

Phase IIa

$41,050,000

Phase IIb

$19,100,000

Total

$116,150,000

Soft Costs Architecture, engineering, planning Project management Marketing Legal/accounting Taxes/insurance Construction interest and fees

Fee-Simple Condominiums Unit Type

Development Cost Information4

$5,100,000 $370,000 $6,300,000 $1,000,000 $23,200,000 $8,300,000

Total

$44,270,000 $160,420,000

Total Development Cost Developer/Owner Jackson Gore Development, LLC Ludlow, Vermont

Hotel Information

Hotel Name

www.okemo.com

Rooms Completed/ Total Planned

Daily Room Rate

Average Occupancy (%)

156

$200–$1,000

35 (over entire year)

Jackson Gore Inn

Principal Designers Truex Cullins & Partners Architects Burlington, Vermont www.truexcullins.com

Fractional Unit Information Unit Type Condos

Number of Housing Units

Interval Type or Length

Unit Size (sq ft/sq m)

Number Sold

Average Sales Price

156 (624 shares)

Quarter

443–1,769/41–164

149 (596 shares)

$180,600

Notes 1

Assumes all units in Phase III will be fee-simple single-share, although some could be fractional ownership.

2

65 units will be complete by end of 2008, with Phase III to follow.

3

Retail and restaurants are owned and operated by Okemo Mountain Resort.

4

Totals estimated through Phase III.

332 Resort Development

BSA Architects San Francisco, California www.bsaarchitects.com BreadLoaf Corporation Middlebury, Vermont www.breadloaf.com Development Schedule Planning started

1996

Site purchased

1998

Construction started

Spring 2000

Sales/leasing started

Spring 1999

Phase I completed

Spring 2003

Phase II completion

Fall 2008

Phase III completion

Not determined

Jackson Gore at Okemo Mountain Resort 333

Jardins Victoria VILAMOURA, PORTUGAL

Jardins Victoria, a golf resort community, is the latest development within Vilamoura, one of the most important resort developments in Europe. Located in the Algarve region of southern Portugal, the project remains the largest resort under single management in Europe. The 7.7-hectare (19-ac) extension is an example of how a resort can benefit from single-management principles even though different parts of the site have separate owners. It also continues the story of how resorts can leverage world-class golf courses to attract golfers and nongolfers alike. The site is unusual in that the developer chose to incorporate a vision for a grand European hotel within the master plan, with the hotel taking a prominent position that would usually have been reserved for residential uses. Site and Development Process Southern Portugal’s Algarve has been integral in the evolution of resort development in Europe since the 1960s. Its year-round sunshine was irresistible to the increasingly mobile European rich, and the region was too attractive to remain the sole domain of local farmers who benefited from the soil’s fertility. With 3,000 hours of sunshine a year, average temperatures range from the high 50s (F) in the winter to the low 80s in the summer. The area receives 5 million tourists a year, and many of the 50,000 British who live year-round in Portugal and the 150,000 with holiday homes have chosen the Algarve. Vilamoura was one of three major master-planned resorts that, when conceived in the 1960s, formed a “golden triangle” of resort development in the area. Along with its other triangle occupants—Val do Lobo and Quinta do Lago—Vilamoura benefits from the area’s gentle slopes, coupled with the natural growth of pine trees. The former afford good views over the attractive landscape,

334 Resort Development

while the two combined provided a good foundation for the development of some high-quality golf courses. At first, the relative inconvenience of the location (a grueling six-hour drive on single-lane roads from Lisbon) made it a retreat only for the seriously rich, but its resident base soon broadened following the opening of Faro Airport in 1968 and, more recently, an improved motorway link from the Portuguese capital. Now its increased accessibility and the advent of low-cost flights—it is less than a three-hour flight from anywhere in Europe—have cemented its popularity, particularly among the British and the Irish, as well as the Portuguese. Jardins Victoria is located in the northwest segment of the Vilamoura master plan and is a 25-minute drive west from Faro Airport. The development comprises the Victoria Golf Course, several residential projects, and a hotel. The site is surrounded on its south, west, and east sides by two golf courses, one of which, the Victoria Golf Course, was designed by Arnold Palmer and regularly hosts international competitions, including the Portuguese Masters. The north side fronts onto a stretch of undeveloped land. The site is 2 kilometers (1.2 mi) from the Atlantic Ocean, and its beaches form part of a 150-kilometer (93-mi) uninterrupted stretch of sandy coastline. Sandwiched between the beach and the development is a 200-hectare (494-ac) environmental park owned by Vilamoura and integrated within both the National Ecological Reserve and the Agricultural Reserve. The park includes a horseback riding center, bird-watching facilities, and a wetlands trail. Vilamoura’s city center and 1,000-berth marina is a short drive away. Acquisition and Development The vision for Jardins Victoria originated with Vilamoura’s former owner, André Jordan. In the 1970s,

Irish golf, beach, and leisure property group Oceânico Developments for €125 million. Four companies now own the major parts of the Jardins Victoria site. Golf Estates (Portugal), a company managed by the Jordan family, which is developing Victoria Residences, retained a 2.8-hectare (6.9-ac) portion of the site. Newlyn Developments (Portugal), a private Irish developer that is in the process of completing Victoria Boulevard, bought its site before Vilamoura’s ownership was transferred in 2005. Tivoli Hotels, which is developing the hotel, also acquired a site under Jordan’s ownership. Finally, Lusotar, which owns a project similar to Victoria Boulevard, also has developed a series of apartment blocks on the site’s northeastern part. There are also a number of individual owners, as Lusotar (now rebranded as Lusort) has begun to sell plots around approximately 50 percent of the edge of the site for houses. These plots have been sold for approximately €1,000 per buildable square meter. Planning, Design, and Construction Jardins Victoria was still under the full ownership of the Jordan family when the master plan was created by architects Wimberley Allison Tong & Goo, also known as WATG. Gilberto Jordan, André’s son, wanted Jardins Victoria to move away from the urbanism that

GOLF ESTATES (PORTUGAL), S.A.

Jordan had created the neighboring Quinta Do Lago, a resort that took pride in retaining its single-management approach despite the sale of parcels of land to investors, including individual residents, timeshare developers, and hotel developers. Quinta Do Lago’s development densities and styles were controlled as part of the master plan, and an annual service charge ensured high-quality infrastructure and superior maintenance standards, such as refuse collection on a daily basis. Jordan expanded his resort holdings in December 1995 through the acquisition of Vilamoura, which then included three golf courses, and began to apply his management principles to upgrade the resort, which had declined as it passed through several ownerships. The property included expansion land, which through its “Vilamoura XXI” initiative had been planned as part of a vision for 21st-century development. This master plan included Jardins Victoria. In 2005, Lusotar, the Jordan-controlled company that owned Vilamoura, sold the development to a private Spanish joint venture owned in equal shares by the Cordobês Prasa Group and Procam (Caixa Catalunya Property Group). This company’s investment in the wider Vilamoura has reached €750 million. The golf courses, by then numbering five, were not part of the sale; these were sold by the Jordan family in March 2007 to the

The Victoria Golf Course, several residential developments, and a hotel form Phase I of the Jardins Victoria, which is located 1.2 miles (2 km) from the Atlantic Ocean in the Algarve region of southern Portugal.

Jardins Victoria 335

GOLF ESTATES (PORTUGAL), S.A.

The Residences at Victoria Clube de Golfe is a development of 145 luxury two- and three-bedroom apartments.

Two golf courses surround Jardins Victoria, located in the northwest sector of Vilamoura, on its south,

ANDREA CARPENTER

west, and east sides.

had defined the Vilamoura of the 1960s, focusing on elaborately planned residential areas with intricate road patterns that caused local and passing traffic to enter and exit randomly throughout the resort. Instead, the general plan created residential areas in clusters with limited access points, minimizing the inflow of traffic. The general master plan also dictates Vilamoura’s planning requirements, which, for example, limit the height of development to an average of 2.5 stories across the site and a maximum of four stories in any one building. Another aspect of the approach to general development was that parcels of land would be sold to individual developers. The Jordan family, however, instilled a continuity of design in the master plan that was intended to retain an aesthetic unity across the site while giving some design freedom to the developers.

336 Resort Development

An important goal of the master plan was to accommodate the families settling and visiting here. The amenities that are provided across the site, including swimming pools and play areas, are designed to serve the flow of families on holiday. Families with younger children are more likely to drift back from the beach by midday, and these extra facilities are integral to providing them with recreation throughout the day. The master plan also maximized the site’s proximity to the surrounding golf courses by sharing the views across the greens with a stepped, low-to-high arrangement from the edge of the development to the middle. The general master plan was approved in 1967, adjusted in the 1980s, and has been in its present form since 1999. Jardins Victoria had permission to build approximately 100,000 square meters (1,076,000 sq ft)

by Tivoli Hotels, which is part of the Espírito Santo Hotel Group and one of the major Portuguese hotel operators. Due to open in January 2009, it is situated on Jardins Victoria’s southern section, with the main spur from the site’s focal roundabout providing a grand boulevard up to the entrance on the north side of the building. The construction has required an investment of €60 million and is presently the largest private construction project in Portugal. The design affords prime views across the golf course for the majority of the rooms, including a presidential suite, two executive suites, and fourteen junior suites. The hotel will also have two restaurants, three bars, two swimming pools, 900 square meters (9,700 sq ft) of conference facilities, and a ballroom of 600 square meters (6,500 sq ft). An indoor swimming pool and a spa will be located on the roof of the central block. The facilities also include a caddie house, an old-fashioned addition common on high-level courses to stop players from bringing golfing equipment into the hotel. The roundabout at the hotel’s entrance will provide a place-making link between the hotel and residential uses. It is designed to draw residents toward the hotel, encouraging them to use its amenities. Shops and services are planned around the courtyard entrance, creating a small “town center” for the resort. Behind the western end of the hotel site is Golf Estates’ €60 million project, the Residences at Victoria Clube de Golfe. This project on a 2.8-hectare (6.9-ac) site is designed as an intimate cluster of 145 two- and threebedroom apartments, as well as centrally placed recreational amenities, including a gym, swimming pools, and a themed garden occupying just over two hectares (4.9 ac). This project is being marketed to luxury buyers, with

ANDREA CARPENTER

with a ratio of 100 square meters per salable unit, in theory allowing for up to 1,000 units on the site. The municipality approves site plans provided that they fall within these parameters. Approvals for the site require 1.5 parking spaces for apartments up to three bedrooms and two parking spaces for units with four or more bedrooms. Because Vilamoura is a major tourist destination, it attracts a large volume of cars, with both domestic traffic and high tourist volumes in July and August. The Jordan group has responded to this over the years with 100 kilometers (62 mi) of cycle ways and footpaths to encourage other forms of transport. There is no active green building on the site, and the current projects were conceived before recent legislation by the Portuguese government to require higher energy efficiency and more solar panels in new developments. However, Vilamoura has demonstrated its wider commitment to sustainability through its creation and support of the environmental park and by ensuring that the golf courses and the marina meet international environmental standards. For example, the beach, the marina, and the golf courses’ environment management systems meet ISO 14001 standards, which aim to reduce environmental impact while maintaining profitability. (ISO 14001 is an internationally accepted, voluntary set of specifications for establishing environmental policy, determining environmental impacts, planning environmental objectives, and implementing programs to meet objectives and targets.) The Jardins Victoria site is anchored with a grand hotel in the traditional European style—an unusual choice for the mainly residential site, which was conceived to be marketed to international buyers. The Jordan family recognized that one of the main issues for resort developments attracting international residents is how to sustain activity throughout the year. Many of the residential units are owned as second homes and therefore either remain empty for part of the year or are rented out to tourists on a weekly basis. The inclusion of the hotel aims to mitigate some of this inactivity, capitalizing on the year-round attraction of golf. This is why the hotel was rewarded with the site’s prime location, overlooking the Victoria Golf Course, the park, and the sea. Golf views in the past have been reserved for plots sold to individuals for large homes, and this is the only part of Jardins Victoria backing onto the golf course that is not used for private dwellings. The 280-room, five-star, 26,000-square-meter (279,900sq-ft) hotel is being developed on four hectares (9.9 ac)

Four-story apartment buildings with end units of varying heights were designed to optimize views of the surrounding landscape.

Jardins Victoria 337

GOLF ESTATES (PORTUGAL), S.A.

Amenities are designed with families in mind. Lazy river pools are gaining popularity worldwide.

a typical price for one of the 72 two-bedroom apartments of €509,500. A typical three-bedroom apartment is listed for €618,750. This positioning is in part dictated by its prime golf vistas, with two sides of the site overlooking the 8th and 9th holes on the Victoria course. It is also reflected in the lowest residential density on the Jardins Victoria site other than the individual plots of 20.955 units per acre. This translates to a density of 20.81 for the two-bedroom apartments and 21.10 for the three-bedroom units. The Residences offers 24-hour reception and security and golf tee off times as part of its contracts. The developer anticipates that the management of the Residences will reflect the next generation of resort management, taking its lead from hotel management practices. In addition to the many services it provides, creating a clublike atmosphere, the developer will also manage the renting of villas on residents’ behalf, again aiming to maintain a steady level of activity both on the project and on the wider Jardins Victoria site, as well as providing an additional income stream. On the north side of the entrance roundabout is the Victoria Boulevard project. On this two-hectare (five-ac) plot, Newlyn has created 97 middle-market two- and three-bedroom apartments, as well as 30 three-bedroom townhouses. The townhouses occupy .44 hectares (1.09

338 Resort Development

ac) and the apartments .47 hectares (1.17 ac), with the remainder of the site in communal uses, including two landscaped pool areas. The project has 206 parking spaces in an underground garage below the development. The townhouses and the second- and third-floor apartments are allocated two parking spaces each, while the ground and first-floor apartments are allocated one space. The development occupies each side of a boulevard extending off the same entrance roundabout. The boulevard’s eastern side has views across the Millennium Golf Course, with the site planned to maximize these views. The townhouses occupy the outside edge, set back from the row of lots that back the golf course, which will be sold to individuals. Behind are the taller apartment buildings, which offer some views over the golf courses from higher levels. Typical sales prices are €350,000 for a 135.15-square-meter (1,455-sq-ft) two-bedroom apartment and €400,000 for a 138.58-square-meter (1,492-sq-ft) unit. The three-bedroom townhouses are typically selling for €550,000 for a 227.5 square-meter (2,449-sq-ft) unit and €600,000 for those with a terrace, which are 290.61 square meters (3,128 sq ft). Newlyn was first to begin construction, and a highly successful launch in Ireland saw off-site sales as early as 2003, with sales completed in May 2007. In retro-

spect, the developer says it should have waited, since prices escalated considerably after the launch. With bank financing in place, however, the developer was keen to sell and be able to invest in future projects. Newlyn made some changes, in particular upgrading the swimming pool and landscaped areas from their original basic design. It also amended the interior design of the apartments for a more open-style floor plan. It has been successful in selling upgrades to buyers, including full furniture packages, air conditioning, and under-floor heating. To the northwest of Victoria Boulevard is a site with plans for a similar development around a boulevard, again with views of parts of the two golf courses, but set back to allow private lots to be sold around the edge. The final project in the northeast corner, which is under construction, is Lusort’s development of 22 townhouses and 48 apartments. These apartments include one-bedroom units, thus providing the entry-level prices on the Jardins Victoria site. Lusort also owns the surrounding plots being sold to individual buyers. Lusort (formerly Lusotar) is also responsible for the ongoing management of the entire Jardins Victoria site. This arrangement has been structured as a joint venture, with 49 percent owned by the municipality while Lusort controls the remaining 51 percent. This strategy allows local government buy-in to maintain services such as roads and refuse but with extra resources and investment for an improved level of service to residents in return for an annual service charge.

GOLF ESTATES (PORTUGAL), S.A.

GOLF ESTATES (PORTUGAL), S.A.

The Victoria Club House serves nearby golf courses, including the Victoria Course—chosen to host the Portuguese Masters for three consecutive years (2007–2009).

Buyers have the option of buying interior upgrades such as full furniture packages, air conditioning, and under-floor heating.

Recreational and Cultural Amenities, Soft Infrastructure The continuing impact of Lusotar’s initial golf strategy in the success of Vilamoura cannot be underestimated. When André Jordan bought Vilamoura in 1995, there were three golf courses that had been undermanaged. Lusotar first set about refurbishing the Old Course, which had enjoyed the status of one of Europe’s top courses. In 2000, the Millennium Course was completed, providing an accessible course for the everyday golfer. The decision to promote the Victoria Course as a world-class course was unusual, especially considering the high caliber of the Old Course. However, Lusotar recognized that golf continued be an ideal cross-marketing tool for all its activities and was a

Jardins Victoria 339

GOLF ESTATES (PORTUGAL), S.A.

Site plan.

year-round income source, as well as generating interest in the residential components. In 1999, when the contract was put in place for the Victoria, it was thus seen by the developer as an ideal way to continue the revitalization of Vilamoura. The 6,500-meter (21,300foot) -long course was designed by the Arnold Palmer Design Company and opened in 2004. The development of the course further raised the profile of the resort, attracting not only more and better golfers but also generally a wealthier set of clients for attractions in the rest of the area, which has helped raise land and residential prices. In 2006, 214,000 rounds were played on the five courses in Vilamoura, an 11.5 percent growth rate over the previous year. In 2005, the course fixed its place on the global stage when it hosted the Golf World Cup. It went on to be chosen to host the Portuguese Masters for three consecutive years (2007–2009). Lessons Learned Jardins Victoria’s challenge has been the waves and lulls of activity that a resort experiences owing to its transient population. The choice to locate a large hotel within a predominantly residential area has not only created more year-round activity but also fostered

340 Resort Development

more of a community feel among permanent and temporary residents. The project illustrates how important golf courses can be in creating and maintaining a successful resort (when well-managed for the top-tier golf market) and how further marketing advantages can be leveraged through high-profile events. The investment of €25 million in the Victoria Golf Course has paid off in terms of creating a high-caliber marketing image, which has raised Jardins Victoria’s desirability among golfers and other vacationers. The decision to put the courses forward for major worldwide golfing competitions has ensured sustained global exposure. The benefits of an overriding management approach are also evident. While the ownership of various plots and projects has diversified, the principles put in place at the master-plan stage have ensured continuity of design and services, which have not faltered despite changes in ownership.

Project Data: Jardins Victoria

Land Use Information

Owner Hectares/Acres

Site area

7.7 ha/19.0 ac

Residences site

Golf Estates (Portugal), S.A. Lisbon, Portugal

2.8 ha/6.9 ac Operator/Management Constantino Jordan

Residential Land Use Plan Hectares/Acres

Vilamoura, Portugal

Multifamily residential

0.7/1.7

Open space

2.1/5.2

Principal Designers

Total

2.8/6.9

WATG London London, England

(units per acre/hectare)

Net Residential Density

20.9/51.6

www.watg.com David Sinclair & Associados, Arquitectos, Lda. Cascais, Portugal www.dsinclair-architects.com

Hotel Information (separate site) Hotel Tivoli Hotels

Rooms Planned

Hectares/Acres

280

4.0/9.9

Development Costs at Completion (in millions) The Residences

€60

Hotel Tivoli Victoria

€122

Development Schedule Planning started

September 2005

Site purchased

August 2005

Construction started

January 2007

Sales/leasing started

May 2006

Phase I

Not yet finished

Developer Golf Estates (Portugal), S.A. Cascais, Portugal www.residencesvictoria.com

Residential Information Number of Units Completed/Total Planned

Density (units per acre/hectare)

Unit Size (sq ft/sq m)

Typical Sales Price

T2

72

20.81/51.4

101.9

€509,500

T3

73

21.10/52.1

123.75

€618,750

Unit Type

Jardins Victoria 341

JW Marriott Starr Pass Resort and Spa TUCSON, ARIZONA, USA

The JW Marriott Starr Pass Resort and Spa is a 575-room resort hotel with a 20,000-square-foot (1,900-sq-m) spa and 90,000 square feet (8,400 sq m) of conference and meeting space. Completed in 2005, the resort is part of a larger master-planned community, also called Starr Pass, with over 1,000 homes and a 27-hole golf course. Also part of the resort are five specialty restaurants and one Starbucks coffee shop. The developer, Dev-Con Associates, was incorporated in 1979 as a small, independent developer of a variety of real estate types. The firm has been involved in the development or renovation of eight hotels since incorporating, in addition to four master-planned communities (including the master plan for Starr Pass) and several mixed-use developments. Site and Location Starr Pass is located along the western edge of the city of Tucson in the Tucson Mountains and adjacent to Tucson Mountain Park. The location is convenient to Tucson International Airport, which is approximately 15 to 20 minutes away by car. In this respect, Starr Pass has a competitive edge over other area resort hotels, which are located north of the city and 45 to 60 minutes from the airport. The Starr Pass resort is part of the Starr Pass masterplanned community, which began offering home sales in 1994, after the land and an existing golf course were purchased out of foreclosure. Nearly 1,100 homes have been developed since then, and the original 18-hole championship golf course has been redesigned and integrated with an additional nine holes. A final nine holes have been platted, so that eventually there will be two 18-hole courses that both start and finish at the clubhouse. The resort site is located on the side of a 1,000-foot (300-m) mountain, at a higher elevation than much of

342 Resort Development

the master-planned community. Tucson Mountain Park, a county park offering desert and mountain wilderness hiking, biking, and horseback riding trails, surrounds the resort on three sides. The hotel complex’s higher elevation provides views to the east and southeast overlooking the city lights of Tucson. The 50-acre (20-ha) resort was carved out of a 200acre (80-ha) parcel that Dev-Con purchased for development. In 1999, 150 acres (60 ha) were deeded to Tucson Mountain Park to ensure that the hotel would retain a buffer of open space between it and future development. An additional 84 acres (34 ha)—not included in the original resort site, but part of the Starr Pass masterplanned community—were deeded to the park in 2007, so that resort guests and Starr Pass residents would have direct access to numerous hiking and biking trails. In total, Dev-Con has deeded 279 acres (113 ha) to the park, which gives the resort a rare setting at the edge of a wilderness area. The donated acreage was part of a three-way deal between the city of Tucson, Pima County, and the developer. The agreement provided Dev-Con with a sitespecific zoning that allowed for the hotel, fractional ownership residences, and increased residential densities. In exchange for the park land, Dev-Con allowed the city to annex the resort, gaining its tax revenues. The developer believes this agreement was not just a series of tradeoffs but that it truly added quality and value to the development, producing benefits for all involved entities. Public/Private Partnership As a condition of purchasing the original project out of foreclosure, Dev-Con initiated a public/private partnership with the city of Tucson, starting with an agreement to allow rental apartments, timesharing, and commer-

COURTESY STARR PASS RESORT DEVELOPMENT, LLC

The resort, just west of the city of Tucson, lies adjacent to Tucson Mountain Park. The hotel is in the background, with the residential portion of the resort in the foreground.

cial development rather than purely single-family residential uses. This required a change to the official plan and zoning for the master-planned community, resulting in a lower number of units but more open space, which increased the value of the project. Starr Pass’s name honors a local entrepreneur, Richard Starr, who ran a stagecoach trail through the Tucson Mountains in the 1880s. The city renamed 22nd Street (the road between Interstate 10 and the resort) Starr Pass Boulevard and provided 11 freeway direction signs. It also approved the commercial zoning for a 600,000-square-foot (56,000-sq-m) resort abutting Tucson Mountain Park. This included site-specific zoning that dictated various building heights so that the massing would still fit the overall desert and mountain setting. The city later approved another commercial zoning allowing a 250-unit fractional ownership development that will be built to the south and west of the resort.

The city also assisted with financing for the resort following the terrorist attacks of September 11, 2001, when the local hospitality sector fell on difficult times. The city came through with subsidies in the form of grants and tax-exempt bonds. These contributions helped to bridge the developer’s equity gap. Starr Pass is located between Tucson Mountain Park and the University of Arizona’s Desert Laboratory on Tumamoc Hill. This laboratory was originally started by the Carnegie Foundation in the late 1800s to study the ecology of the upper Sonoran Desert. Starr Pass’s location places it in the path of wildlife moving between the two preserves, and the city and county requested that Dev-Con work with them to plan a series of wildlife corridors. A mechanism was created to use the 2 percent sales tax collected on all revenues generated by the resort to fund the maintenance of the corridors, the ongoing study of wildlife at the laboratory, and to maintain trails in the park. The tax was

JW Marriott Starr Pass Resort and Spa 343

SAM NEWBERG

The hotel’s layout along the mountainside allows for an entrance and parking on the uphill side, maximizing views of the valley from the rest of the resort.

renamed the “environmental enhancement fee,” and half of these funds would go to the park and the other half to the developer to pay for the land used for the corridors. All these public/private partnerships have been critical to the development and success of the Starr Pass resort and the master-planned community as a whole. Planning and Development The development of the JW Marriott Resort and Spa at Starr Pass involved a close partnership between Marriott as the resort’s manager and Dev-Con as its developer. Dev-Con selected Marriott because of the hotel chain’s appreciation for the environmentally sensitive site, and Marriott in turn was attracted by the site’s direct access to hiking, biking, and horseback riding that could not be replicated elsewhere in Tucson. Marriott performed internal research on the hospitality market and determined that a group hotel (one that caters to conferences and other groups) would be appropriate for the site. In fact, Marriott recommended that the developer create larger meeting spaces than what is typical for Marriott facilities, with 153 square feet (14 sq m) of meeting area per guest room, versus the industry average of 85

344 Resort Development

square feet (8 sq m). This strategy was encouraged for several reasons, including the relatively short distance to the airport, the somewhat weak competition in the Tucson area, and the potential to compete against other desert markets such as Phoenix/Scottsdale, Las Vegas, and Palm Springs, California. The timing of construction posed a challenge. Marriott had decided on a January opening date to coincide with the year’s peak tourism time. According to Dev-Con, a project of this size typically takes 24 to 26 months for design, permitting, and construction. Financing was secured in March 2003, leaving just 22 months to complete the Starr Pass resort. A great deal of coordination among all parties was required for this rapid development to be accomplished, and the resort opened on time. Given the accelerated time frame, prebooking was key to generating a revenue stream, and Marriott managed to prebook around one-third of all available rooms for the first year prior to opening. Design The hotel’s general layout is elongated along the side of the mountain. The main entrance and parking are on

SAM NEWBERG

the uphill side, which maximizes the number of rooms, restaurants, and common areas with views down the valley. Views to the north and west look directly at the mountainside and, though appealing, are not as spectacular as those down the valley toward the city and the other mountain ranges to the east. The front entrance and lobby area are positioned at the core of the building’s westernmost portion, with three wings of rooms radiating in different directions. A breezeway elevated above the desert floor connects with two additional wings. The meeting rooms and ballrooms occupy the eastern end of the building. Circulation throughout the hotel is focused on a single level, which houses the main entrance, lobby, gift shop, spa entrance, several meeting rooms, bus loading, and ballroom access. The entire hotel is accessible to guests on this level, which is called the third floor. Due to the sloping site, however, the third floor is at ground level on the uphill side of the hotel and a level or two elevated above the downhill side. Restaurants, ballrooms, pool access, and parking are located below the main level on the first and second floors. Most of the restaurants, several meeting rooms, and the common areas outside the ballrooms have outdoor terraces. The main lobby also has direct access via two

The developer sought to include desert features in the landscape design. Important stands of native saguaro cactus were preserved and integrated into the complex.

SAM NEWBERG

The hotel’s main pool and terrace are on the downhill side of the main building, helping to create a focal point to orient guests. A separate lap pool can be used by spa guests.

JW Marriott Starr Pass Resort and Spa 345

SAM NEWBERG

large open stairways to a bar, Salud, and the hotel’s main terrace one level below. Salud and its adjacent terrace face southeast, and the terrace is in shadows by late in the afternoon, allowing guests even in the warmest weather to be outdoors starting at happy hour without being exposed to direct sunlight. A large glass curtain wall is opened late on most afternoons, creating a pleasant blending of indoor and outdoor space and making the terrace a central gathering space. The developer and architects worked closely with Marriott on the design. Marriott specified both general and detailed requirements for the size of the facility and conference spaces, number and sizes of rooms, number of restaurants. Typically, JW Marriott resorts are characterized by more concentrated building spaces, adjacent surface parking, and pastel colors for interiors. Dev-Con negotiated to use more local design themes. For example, the architecture borrows from Arizona’s territorial and mission buildings, with warm exterior colors that draw from

346 Resort Development

SAM NEWBERG

The main lobby connects via two stairways to a bar and the hotel’s main terrace one level below. A large glass curtain wall that divides the indoor and outdoor space is opened on most afternoons.

the surrounding desert landscape. Marriott also agreed to eliminate interior pastels in favor of a more earthy color palette: white, tan, and reds, with natural woodwork. And rather than surface parking, they agreed to a 500-space parking facility built underground, below the ballrooms. Although the hotel is elongated, it is broken up in enough wings and with sufficient articulation so as not to appear monolithic. From any vantage point, one cannot see all wings of the hotel at once, and the concentration of circulation on the third floor makes the facility manageable. The building’s downhill side forms a rough L shape, with the pool and main terrace at the crook or elbow. As a result, from most vantage points on the downhill side of the hotel, the pool and terrace area form a focal point that help orient guests. It was important to the developer that the look and feel of the desert be included and preserved as much as possible,. The developer, architect, land planner, and other members of the team walked the site to determine the exact positioning of the buildings to take advantage of views, maintain good circulation, provide access to trails, and preserve important stands of native saguaro cactus. A major example of this is the breezeway between the lobby and meeting areas, which is elevated above a natural wash that preserves a wildlife corridor and many desert plants, including saguaros. Guests are likely to cross the breezeway at least once or twice a day (usually much more) and therefore experience the desert climate to some degree. Valet parking is provided to all guests at Starr Pass, but guests also have the option of self-parking. A total of 1,180 parking spaces are available at the hotel. A two-level, 500-car parking structure is located below the ballrooms on the building’s east end. Adjacent to that is an additional 180-car parking ramp intended mostly for employees. A separate 500-car ramp is located next to the golf clubhouse, which is approximately one-half mile from the hotel. A shuttle van operates between the hotel and golf clubhouse. Guest rooms are well appointed, with high-quality fixtures and furnishings. Bathrooms have separate showers and soaking tubs. Rooms contain flat-screen televisions, and minibar refrigerators offer a place for guests to store food or drinks. The beds are outfitted with 300-thread-count sheets and down-filled duvets. The five-hotel restaurants consist of the Signature Grill, Salud, Plunge, Primo, and Starbucks. The Signature Grill serves three meals daily and has the widest-ranging menu. Salud, the main hotel restaurant, is located adja-

cent to the main terrace, with a glass curtain wall that is opened to the outdoors in evenings. Plunge, a poolside restaurant, serves casual food and drinks. Primo, the premier restaurant at Starr Pass, offers organic food prepared by a renowned chef with a culinary focus on Spain and southern France. An additional restaurant, the Catalina Steakhouse, is located at the golf clubhouse. A gift shop occupies space along both sides of the hotel’s main corridor, just east of the breezeway. This area experiences high foot traffic, since guests must walk through it to get to the meeting rooms and ballrooms. The orientation of the retail space is markedly elongated and open to the corridor, which maximizes the exposure of inventory to passersby. The Hashani Spa is a 20,000-square-foot (1,900-sq-m) facility on three levels. The spa’s location ensures that the majority of guests pass by its entrance, which by both sight and sound is intended to attract customers. The main entrance is on the third floor near the gift shop, with workout space, a dance studio, locker rooms, and treatment rooms on the two lower levels. A separate outdoor pool and hot tub are accessible to spa clients only. The hotel’s 90,000 square feet (8,400 sq m) of meeting and convention space are located in the east wing and include two ballrooms of 15,000 and 20,000 square feet (1,400 and 1,900 sq m), respectively. The remaining 55,000 square feet (5,100 sq m) include both indoor and outdoor space of various sizes, including two boardrooms. Most meeting rooms and the ballrooms have breakout space that leads to outside patios or balconies. One example is a 10,000-square-foot (930-sq-m) outdoor terrace outside the ballrooms that is commonly used for receptions or meals in conjunction with conferences. A large group entrance outside the hotel’s east wing is intended for groups arriving and departing by bus or van. It includes a large bus turnaround area and a registration desk and provides immediate access via the escalators to the ballrooms. The house service corridor (known by the staff as “the golden mile”) runs the entire length of the hotel on the second level. This corridor accesses the truck loading docks and all the food and beverage storage areas and kitchens; services the ballrooms; and houses the employee cafeteria, locker rooms, maintenance, offices, and housekeeping areas. Service elevators operate directly from this corridor for housekeeping and maintenance. Located off the main kitchen is a foodtasting room for potential group organizers to sample meals. Having the service areas all on one level greatly

JW Marriott Starr Pass Resort and Spa 347

COURTESY STARR PASS RESORT DEVELOPMENT, LLC

The design of the 575 guest rooms drew inspiration from Arizona’s territorial and mission buildings, using an earthy color palette of whites, tans, and reds.

improves the efficiency of the hotel operation. The loading docks receive all deliveries via a separate service road that branches off from the public roads one mile (1.6 km) from the main entrance. This ensures that delivery and guest traffic do not mix. To attract more leisure travelers and families, Starr Pass has added a “lazy river” pool for rafting or tubing. It is not as elaborate as a water park, but it provides an entertaining activity for both children and adults. An island with meeting space is located in the center of the river’s loop. The river is located along the hotel’s west side, with a waterslide coming off the side of the mountain to a plunge pool that is integrated with the river. Financing Although financing commitments were obtained before the terrorist attacks of September 11, 2001, most of the banks involved subsequently backed out. Dev-Con then approached a Canadian bank, Scotiabank, with whom it had a 22-year relationship. However, the lending criteria had changed dramati-

348 Resort Development

cally owing to the attacks, with the debt-to-equity ratio plunging from 80/20 to 50/50. An additional barrier emerged because there was no long-term money available for normal construction loans. The construction lender therefore extended its agreement into a mini-perm loan with options to extend out to stabilization of the hotel. Effectively, the loan consisted of a two-year construction loan, plus three one-year extensions, amounting to $101 million. It was supported by the underlying land and a guarantee of $40 million, which was reduced to $20 million upon completion by way of a letter of credit. To bridge the gap in the new equity requirements, Dev-Con was able to obtain a mezzanine loan and city grants and bonds. Marriott was instrumental in providing and arranging both the mezzanine and the guarantees. In 2006, after one year of operations and as the financial markets recovered, Dev-Con was able to obtain new five-year financing. The new financing was through Jones Lang LaSalle and included much more favorable terms and conditions, eliminating the mini-perm.

COURTESY STARR PASS RESORT DEVELOPMENT, LLC

Site plan.

Marketing and Performance With 575 rooms and 90,000 square feet (8,400 sq m) of meeting and event space, the JW Marriott Starr Pass is the largest resort hotel in the Tucson area and one of only eight hotels in Arizona with more than 500 rooms. The closest competition in Tucson is the Westin La Poloma Resort and Spa, with 487 rooms and nearly 60,000 square feet (5,600 sq m) of meeting space. However, Starr Pass is programmed to compete against the larger hotels in Phoenix/Scottsdale, Palm Springs, and Las Vegas. Starr Pass’s performance has exceeded that of its competitors in Tucson in terms of both rates and occupancy. When compared with the competition in Scottsdale, Palm Springs, and Las Vegas, however, there remains a wide margin in room rates that should eventually allow Starr Pass to increase prices. Revenue generated per available room (revPAR) increased 16 percent between years one and two of operation, and another 9 percent between years two

and three. Dev-Con felt that, given the large rate difference between Starr Pass and other desert resort destinations, the increase should have been larger. According to data generated by Smith Travel Research, a leading hotel industry consultant, Starr Pass performed at an index of 110 percent, or 10 percent better than the average of its competition, with regard to group travel. However, Starr Pass had an index of just 70 percent, or 30 percent less than that of its competition, in leisure travel. After assessing the amenity program, it was determined that adding more family-oriented amenities such as the lazy river, the waterslide, and a multisports surface (for tennis, basketball, volleyball, and rollerblading) could increase the resort’s leisure travel index to 100 percent, based on a forecasted occupancy increase of 8 percent. The decision was therefore made to invest an additional $1.5 million in these new amenities, which were completed in early 2008. Dev-Con expects the potential increase in revenue from these improvements

JW Marriott Starr Pass Resort and Spa 349

will exceed the $1.5 million investment by a factor of as much as eight to one. Starr Pass offers several locational advantages over its competitors in the Phoenix/Scottsdale, Las Vegas, and Palm Springs areas, including a higher elevation, which generally provides for more lush vegetation as well as cooler temperatures in the summer months. The nearby Tucson International Airport is served by most major domestic carriers, with nonstop service to numerous hubs as well as several point-to-point routes. To further benefit from the JW Marriott name, DevCon is now planning to develop a new product with Marriott known as the JW Residences. Set into the mountains to the south and west of the resort, these new units will have a similar level of quality in their design, furnishings, fixtures, and equipment. Residents will have full access to the resort’s amenities and services, including maintenance, room service, and housekeeping. Owners will be able to enter their units into a rental pool for times they are not in residence, with reservations to be handled by the hotel reservation system. The JW Residences will increase demand for resort amenities such as the restaurants and golf courses. It will also offset some of the operating overhead for the administration, housekeeping, and maintenance staff. Dev-Con’s philosophy has always been to develop in phases, so that the first phase enhances the value of the second phase, and so on. The opening of the JW Marriott Starr Pass Resort and Spa increased the residential values of the existing Starr Pass homes by 58 percent during the first year of operation and an additional 52 percent the second. Because of proper phasing, the project’s total profitability should continue to exceed the sum of its parts because of the synergies that have been created among the different products. Lessons Learned The single most important key to the success of Starr Pass has been the relationship between the developer and key stakeholders, including both government entities and private partners. Strong working relationships with Pima County and the city of Tucson enabled potentially difficult aspects of the project to move forward. Examples of effective public/private partnerships have included the land donation by the developer to Tucson Mountain Park, the site-specific zoning, additional financing, and the creation of the environmental enhancement fee.

350 Resort Development

Equally important have been relationships with private entities, particularly the lender. The precarious lending situation after September 11, 2001, jeopardized the project’s financing. Only through complex arrangements among Dev-Con, Scotiabank, and Marriott was the project enabled to move ahead.

Project Data: JW Marriott Starr Pass Resort and Spa

Land Use Plan

Developer/Owner Acres/Hectares

Hotel and conference center

50/20

Golf courses (27 holes)

Dev-Con Associates (Starr Pass Resort Development, LLC) Toronto, Canada

Not part of hotel site; part of overall master plan

Open space

1,500/607 in Starr Pass master plan, half dedicated to Tucson Mountain Park

Percentage complete

Operator/Management Marriott International, Phoenix Phoenix, Arizona

100 Architect Hornberger + Worstell, Inc.

Parking Spaces Structured

500

San Francisco, California

Surface

180

www.hornbergerworstell.com

Off-site

500

Total

1,180

Interior Designer Hirsch Bedner Associates

Hotel Information

Santa Monica, California Number of Rooms

Average Daily Room Rate

Average Occupancy (%)

www.hbadesign.com

575

$136

68

Landscape Architect

Guest rooms

EDAW Retail and Restaurant Information (all owned and managed in-house) Seats

Total Area (sq ft/sq m)

—

2,000/186

Signature

185

5,800/539

Primo

135

4,300/399

Plunge

50

1,100/102

Catalina

120

6,100/567

Salud

164

3,900/362

Type Retail (gift shop) Restaurants

Starbuck’s Total

14

Phoenix, Arizona www.edaw.com Development Schedule Planning started

October 1998

Site purchased

October 1998

Construction started

March 2003

Resort opened

January 2005

750/70 21,950/2,039

Development Cost Information for Resort Only (in millions) Land

$27.7

Professional fees

$9.2

Preopening, administration, taxes

$7.1

Working capital and financing arrangements

$2.1

Hotel hard costs

$81

Parking ramp

$2.5

Utilities to site FF&E

$3.5 $24.3

Additional nine holes of golf

$5.4

Refurbishment of existing 18 holes

$1.4

Clubhouse refurbishment

$1.4

Golf fees

$0.9

Financing fees and expenses

$4.7

Interest reserve

$3.4

Interest for financing Total Development Cost

$2.1 $176.6

JW Marriott Starr Pass Resort and Spa 351

Lake Las Vegas Resort HENDERSON, NEVADA, USA

In a region with many world-class resorts, Lake Las Vegas Resort stands out for its attractive setting and first-rate hotels, recreational facilities, and residential development. This destination resort community in Henderson, Nevada, about 17 miles (23 km) southeast of Las Vegas, is situated around a 320-acre (130-ha), privately owned manmade lake that serves as a design focal point as well as a recreational amenity. The resort includes an array of housing types, hotels, golf courses, and a town center with shops, restaurants, and a casino. Lake Las Vegas Resort encompasses 3,592 acres (1,454 ha) of land, much of it preserved as open space. Site and Area Lake Las Vegas Resort is located in Clark County, Nevada, about ten miles (16 km) southeast of the Las Vegas Strip and McCarran International Airport. Henderson is one of the fastest-growing communities in the United States. The Clark County school district is the fifth largest in the United States, with over 300,000 students. The region features a desert climate, with an average of only four inches of rainfall per year. Average daily temperatures range from the 50s (F) in winter to over 100 in summer. The development is surrounded by Bureau of Land Management lands and the vast Lake Mead Recreational Area, two miles (3 km) to the east. The project occupies a dramatic site, with its lake as the focal point and rugged hillsides and outcroppings as backdrops. Beyond the hills, the views are of desert landscapes, and the Las Vegas Strip and Lake Mead can be seen from the hilltops. Acquisition, Development, and Financing In the mid-1980s, inspired by a trip to Lake Como in northern Italy, Ronald F. Boeddeker, president and chairman of Transcontinental Properties, Inc., envi-

352 Resort Development

sioned a lake surrounded by a Mediterranean-style resort that would include homes, golf courses, hotels, gaming, restaurants, and boutiques, a vision that has become reality. In the fall of 1988, construction began on the 150-foot (46-m) -high dam that created Lake Las Vegas. By 1991, the dam was completed and development around the lake could begin. Custom home lot sales began in 1993, along with the construction of the first golf course, SouthShore Golf Club. The first two hotels, the Hyatt and Ritz-Carlton, opened in 1999 and 2002, respectively. By 2003, development accelerated with the opening of MonteLago Village. In 2007, the Hyatt changed hands and is now owned by Loews Hotels. That same year, Hilton Hotels purchased a third hotel site, with plans to break ground in 2008. Creating a sense of place and value was critical to the project’s success. Boeddeker’s vision for the property was in total contrast with the region’s character. Yet, although the concept breaks with traditional desert themes, the designers were sensitive to the surroundings. The scenic background created by the rugged ridge lines was considered an essential part of the landscape and was not disturbed during development. The land previously was owned by a local rancher. The Bureau of Land Management (BLM) eventually condemned the land and parceled it into ten-acre (4-ha) lots. When Transcontinental Properties purchased the site from the BLM, the parcels had to be reassembled. The initial contract between BLM and Transcontinental in 1989 set a price of $4 million, but it took 12 years to clear mining claims. By that time, the developer had gone ahead and created the lake and the first golf course, increasing the appraised value of the land considerably. The BLM required that payment be based on the new appraisal, or $62 million.

COURTESY OF TRANSCONTINENTAL PROPERTIES, INC.

The Italian-themed resort comprises two luxury hotels, several golf courses, a town center, and 8,900 residences, situated around a 320-acre (130-ha) manmade lake.

The initial land purchase and infrastructure development were made with cash. Wells Fargo financed an additional $500 million for development. The developer currently has no debt or cash invested in the project. The public investor set performance benchmarks, and the project has maintained much greater absorption than required. The first phase has a $75 million bond. The second phase has a $48 million bond. A final bond will close out the three-phase project. There were considerable upfront development costs beyond the land purchase. Before any lot sales took place, infrastructure costs of $90 million had accrued for development of the lake, followed by two golf courses. It was also important to have the hotels up and running early in the project, before a solid market had been established for them. Therefore, Transcontinental became an investor in the hotels to ensure financial stability in the early stages. The original pro forma projected a ten-year buildout. Today, the project is expected to take 20 years, with a 2015 completion. But the slowdown has been intentional; it offers a way to capitalize on the strong demand and consequent increasing land values.

When the project began, development agreements with the city of Henderson were not common, and so one does not exist for the resort. While this leaves open the possibility that the city might reject further development plans, it has generally been an advantage for the developer because it has permitted greater flexibility to respond to market shifts. A total of 500,000 square feet (46,500 sq m) of retail will eventually be developed, spread throughout several small villages and commercial nodes. Planning, Design, and Construction The resort’s primary design feature is its 320-acre (130-ha) lake, offering ten miles (16 km) of shoreline along which development is sited. The lake averages 150 feet (46 m) in depth and is the largest privately owned lake in southern Nevada. Located along the lake’s south side is the 550-acre (223-ha) SouthShore development, comprising custom home sites. Four residential areas are located along the lake’s north side, next to the Jack Nicklaus–designed Reflection Bay Golf Club. The north side is anchored

Lake Las Vegas Resort 353

COURTESY OF TRANSCONTINENTAL PROPERTIES, INC.

A floating stage serves as the venue for the resort’s annual “Stars on the Lake” concert series, which brings noted performers and media attention.

by the Loews Hotel, originally under the Hyatt flag. On the lake’s west side, the 350-room Ritz-Carlton Hotel is the centerpiece of MonteLago Village, a $500 million Mediterranean-themed town center developed by Intrawest Corp. The original resort concept called for 15,000 hotel rooms and 5,000 homes, numbers that would have required high density and high-rise buildings. But ultimately the developer chose lower density, greater exclusivity, and a more resident-oriented community. To achieve this goal, the current plan calls instead for approximately 1,900 hotel rooms and 9,000 residences.

354 Resort Development

Lake Las Vegas Resort includes a wide variety of housing types: custom homes, attached five-unit complexes, condominium flats, and fractional ownership flats. A total of 19 residential communities have been built. Home prices range from the high $300,000s to over $4 million. Custom lots range from $600,000 to $20 million. Demand for property has been strong enough that the developer does not have to finish lots, so raw land is sold to homebuilders. Once the land has been sold, the developer does the grading, engineering, and platting. Numerous national and regional homebuilders have been constructing a wide variety of housing types, rang-

level rooms are located on the Ponte Vecchio–inspired bridge crossing Lake Las Vegas. The rooms occupy the upper two levels of the bridge’s buildings, with retail space on the ground level. Currently the ground level includes a wedding chapel and a flower shop. The RitzCarlton at Lake Las Vegas has been included on Condé Nast Traveler’s gold list for resort hotels. It is rated five diamonds by the American Automobile Association. USA Today ranks the hotel’s Medici Café as one of the top 100 hotel restaurants in the United States. The Loews Lake Las Vegas Resort opened in 1999 under the Hyatt name but was purchased by Loews Hotels at the end of 2006. It comprises 493 guest rooms including 46 suites and occupies a 21-acre (8.5-ha) lakefront site adjacent to the Reflection Bay Golf Course. The hotel’s amenities include four restaurants, a 9,000-square-foot (836-sq-m) spa, children’s camp, two pools and a swimming lagoon, and a lakeside fire pit. The hotel keeps an “adventure concierge” on staff to arrange excursions beyond the resort. In addition to these traditional hotels, Lake Las Vegas offers extended-stay accommodations on a pernight rental basis. These include Intrawest’s MonteLago

COURTESY OF TRANSCONTINENTAL PROPERTIES, INC.

ing from multifamily timeshares and condo hotels to townhouses, courtyard homes, and single-family detached homes. These builders have included Amland Development, Amstar Homes, Centex Homes, Engle Homes, Innovative Communities, Intrawest, Pardee Homes, Storied Places, Toll Brothers, and Woodside Homes. MonteLago Village, which opened in 2003, is the project’s town center. Nestled along the lake, its mixeduse core reflects an Italian-style ambience: cobblestone streets and piazzas provide the setting for luxury boutiques, restaurants and condominiums, and the RitzCarlton resort hotel. The Italian theme is reinforced by a shop-lined bridge spanning Lake Las Vegas that is modeled after Florence’s Ponte Vecchio. MonteLago Village was built by Intrawest, a company known internationally for its resort town centers. The Ritz-Carlton, the town center’s anchor, is a boutique resort hotel with 349 rooms, a fine-dining restaurant, luxury spa, and conference facilities. About 70 percent of the hotel’s business is groups. Occupancy averages 76 percent, and the average room rate is $225. The hotel provides guest transportation to the Las Vegas Strip. A distinctive design feature is that the club-

Luxury boutiques and the Ritz-Carlton’s club-level rooms are located on the Ponte Vecchio–inspired bridge that crosses Lake Las Vegas.

Lake Las Vegas Resort 355

COURTESY OF TRANSCONTINENTAL PROPERTIES, INC.

The resort’s $500 million town center features cobblestone streets, piazzas, waterfront restaurants, lakeside boat docks, and specialty boutiques with housing on upper floors.

COURTESY OF TRANSCONTINENTAL PROPERTIES, INC.

Custom homes make up the SouthShore development, located on 550 acres (223 ha) along the lake’s south side.

Village Resort, which includes 150 condominium hotel units, and Lake Las Vegas Resort Vacation Villas, a luxury rental property with villas and individual homes available for extended stays. Phase III, which began construction in 2007, consists of 1,000 acres (400 ha), including the 60-acre (24-ha) Island of Lake Las Vegas. Phase III will include 3,000 homes, a hotel, a casino, and a golf course. The island will be this phase’s signature component. Designed as a Venetian-inspired village at the lake’s north end, it will include a second town center with a hotel and a casino. Housing at the center will be multifamily flats over

356 Resort Development

retail. Buildings will step up from one to three stories at the edges to five to eight stories at the core. The market for luxury housing continues to be strong, so Phase III will address this demand with a custom lot program. Amenities The lake serves as the primary amenity, design feature, and marketing tool for the resort. “The one thing this project has that nothing else can match is the largest privately owned body of water in the state,” says Transcontinental Properties president and chairman Ronald Boeddeker. Because it was built with private funds, the developer is

permitted to restrict access to residents and guests of the resort. The lake offers swimming, boating, fishing, and party cruise boats for rental. Only electric and nonmotorized recreational boats are permitted on Lake Las Vegas, except for the chartered yachts and safety boats. Golf has been part of the Lake Las Vegas amenity package since the Jack Nicklaus–designed SouthShore Golf Club opened in 1995. Reflection Bay Golf Club, a daily-fee course also designed by Nicklaus, followed in 1998, and the Falls Golf Club opened in 2002 with a Tom Weiskopf–designed course. The next course to open will be the Rainbow Canyon Course, with an 18-hole layout designed by Tom Fazio, located on the lake’s northwest shore. MonteLago Village constitutes another major amenity. Residents and guests can enjoy shopping and dining without having to leave the property or even getting

in their cars. The developer is seeking to add a small high-end grocery store to the current mix of 28 shops and restaurants. Despite being located in a very low crime jurisdiction, residents consider security an important amenity. A private security company roves the property 24 hours a day in two patrol cars. The SouthShore neighborhood is gated and has its own roving security. All residences have alarm systems that are part of the homeowners association dues. The hotels also have their own security. Walking trails and soft programming such as a widely acclaimed concert series round out the resort’s amenities. In 2006, Lake Las Vegas Resort provided $2 million to host an Andrea Bocelli concert, “Amore under the Desert Sky,” part of PBS’s Great Performances series. Resort management believes the event served as a major marketing tool.

COURTESY OF TRANSCONTINENTAL PROPERTIES, INC.

The waterfront community of MiraMonte lies within the larger SouthShore community and features single-story executive homes.

Lake Las Vegas Resort 357

Site plan.

358 Resort Development

Water and Environmental Management Lake Las Vegas is filled from Lake Mead and the Colorado River. Water rights from Lake Mead conveyed with the land at the time of purchase. Water quality in the lake is biologically controlled; no chemicals are used. It is stocked annually with fish for insect control and recreational purposes (with a catch-and-release policy). In summer, the water is tested weekly because of beach use. In winter, it is tested monthly. Wastewater is pumped back to the city system where it is purified. Lake water is used to irrigate the golf courses and common-area landscapes with evapotranspirationbased irrigation systems. Residents can use electric or wind-powered but not gas-powered boats, which helps keep the lake clean as well as quiet. The community encourages nonautomobile transportation. Golf carts and Vespa motor scooters are used by many residents. A water taxi crosses the lake. The community bike trails link with a regional system. An electric trolley operates during special events. Desert plantings are used for the common-area landscapes, and residents are discouraged from planting turf grasses on their properties. Permeable pavers are used for road surfaces, enabling rainwater to be absorbed rather than to run off. French drains circulate water back to the golf course. A ten-acre (4-ha) wetlands wildlife preserve was created as part of the open-space program. There, residents can see bighorn sheep, which are native to the region, as well as raccoons, quail, eagles, foxes, blue herons, and coyotes. Marketing, Management, Tenants, and Performance The master developers of Lake Las Vegas Resort are Transcontinental Properties, Inc., and Sid and Lee Bass of Fort Worth, Texas. Transcontinental Properties, formed in 1987, is a subsidiary of Transcontinental Corporation of Santa Barbara, California. The firm has a diverse portfolio of real estate developments throughout the United States. Transcontinental Properties operates largely as a “horizontal developer.” That is, the firm buys, permits, and engineers the land, then sells it to builders to complete the “vertical” or structural development. At Lake Las Vegas, the firm operates the golf courses and restaurants with an in-house staff of about 450 employees. Lake Las Vegas’s environment appeals to a broad base of buyers of first, second, or third homes. The typical buyer is over 45 years old. Currently there are few children, but that is beginning to change.

The lake is viewed as a marketing tool, an advantage that no other local property can offer. The MonteLago Village town center, with its restaurants and other amenities, is another strong marketing feature, since it establishes the kind of lifestyle residents and visitors want. They don’t have to drive outside the community for dining, shopping, or recreation. Because this is a resort community, providing other daily needs on site is not considered essential. The developer receives a percentage of gross sales from the homebuilders, including 50 percent of all lot premiums, 1 to 2 percent of the base home prices, and a small percentage for options and upgrades to homes. The developer expects to gross $7 billion in land sales by the time the project is complete. Lessons Learned ; Flexibility can pay off. For example, the developer initially expected to draw casino hotels. But casinos were not interested in this location, so resort-style hotels were sought out instead. This effort succeeded handsomely, with two desirable, upscale hotel properties locating in the project. ; Using business improvement districts as a funding mechanism for infrastructure investment worked well. Lake Las Vegas was the first local improvement district to be designated in Henderson. ; Time is not always the enemy. In a project where values have escalated rapidly, it has proven advantageous to hold back some of the best land for the end. In this way, the value created by the development can be fully realized in these last parcels. Land that had been selling (to builders) for $300,000 per acre at the early stages of development sold for more than $2.3 million per acre in 2007.

Lake Las Vegas Resort 359

Project Data: Lake Las Vegas Resort

Land Use Information

Retail and Restaurant Information (operated by Intrawest)

Site area

3,592 ac/1,454 ha

Percentage complete

55

Land Use Plan Acres/Hectares Single-family residential

746/302

Townhome residential

30/12

Multifamily residential

667/270

Hotels (4)

48/19

Retail

24/10

Town/village center

41/17

Club facility (excluding golf clubs)

15/6

Golf courses (4)

Number of Facilities

Tenant Type Retail

13

Restaurants

11

Other

4

Total

28

Percentage occupied

80

Development Cost Information Estimated Costs at Completion (in millions) Site acquisition costs

Not available

726/294

Open space

1,295/524

Total

3,592/1,454

Site Improvement Costs Infrastructure

$180 (excluding lake)

Lot finish (units per acre/hectare)

Net Residential Density

6.2/15.2

$30

Golf courses

$65 (excluding club houses)

Lake and dam

$42

Landscape

Hotel Name

$25

Total

Hotel Information

$342

Guest Rooms

Average Daily Room Rate

Average Occupancy (%)

493

$179

60

Clubhouses

$36

76

Total

$36

Loews Ritz-Carlton

349

Planned

$225

Construction Costs

845

Total

Soft Costs

1,895

Fractional Unit Information (MonteLago Village Resort) Number of Housing Units

Interval Type or Length

Unit Size (sq ft/sq m)

Typical Sales Price

32

1/8 year

1,900–3,100/177–288

$400,000 per interval

Architecture, engineering, planning

$10

Project management

$20

Marketing

$20

Legal/accounting

$20

Taxes/insurance

$40

Total

$110

Total Development Cost

$488

Residential Information Unit Type Custom lots Production single-family Townhouses Multifamily

Units Completed/Planned

Typical Sales Price $600,000–4 million/lot

380

n/a

485/2,430

1,400–4,800/130–446

$500,000–4 million

246/720

1,136–2,823/106–262

$350,000–1.1 million

435/1,390

1,100–4,500/102–418

$350,000–3 million

TBD

4,000

Total

8,920

360 Resort Development

Unit Size (sq ft/sq m)

Developer/Owner Transcontinental Properties, Inc., and the Bass family interests Santa Barbara, California www.lakelasvegas.com Designers Berkus Design Studio Santa Barbara, California www.berkusdesignstudio.com Peridian International, Inc. Newport Beach, California www.peridian.net David Jensen Associates Denver, Colorado www.davidjensenassociates.com Engineers RBF Engineers Las Vegas, Nevada www.rbf.com Kimley Horn Associates Las Vegas, Nevada www.kimley-horn.com Development Schedule Planning started

1986

Site purchased

1987

Construction started

1989

Sales/leasing started

1995

Phase I completed

2003

Phase II completion

2010 (est.)

Phase III completion

2015 (est.)

Lake Las Vegas Resort 361

Montage Laguna Beach LAGUNA BEACH, CALIFORNIA, USA

For more than 50 years, one of the most desirable sites along California’s south coast was home to a gated, asphalt-covered trailer park for 268 mobile homes. The site was not only an eyesore; it also prevented muchdesired public access to the adjacent beach. In 1998, the Athens Group purchased the 30-acre (12-ha) site and developed Montage Laguna Beach, transforming the derelict trailer park into a high-end beachfront resort. The project, which opened in 2003, comprises a 262-room world-class hotel with an award-winning 20,500-square-foot (1,900-sq-m) spa and 28 privately owned residences, including 14 condominiums and 14 estate lots. In addition, about half the site, 14 acres (5.7 ha), is public open space. Unlike so many upscale resorts that are walled and gated, Montage opens its edges to a public park. The beach and coves below can now be accessed from the resort and park by way of stairs and ADA-approved ramps. Location and Site Laguna Beach is located in Orange County, California, about midway (60 miles, or 97 km) between San Diego and Los Angeles. It is home to about 24,000 residents and is a tourist destination that draws about 3 million visitors annually. The climate is warm and sunny, tempered by ocean breezes. The major tourist attractions are the ocean and its beaches. Popular activities include surfing, swimming, kayaking, and whale watching. The arts have been an important part of the community, and several art festivals and other arts-related events are held each year. Visitor accommodations include a range of bed-andbreakfasts, cottages, motels, and small hotels. Montage Laguna Beach is located on a bluff overlooking the Pacific Ocean. The property occupies a dramatic site about 50 feet (15 m) above the ocean. It

362 Resort Development

is bound on the west by an oceanfront linear park and pathway, which were created by the resort and dedicated to the public. Multifamily residences and beach houses are located to the north and south. The eastern edge is bound by the Pacific Coast Highway, which links the various towns along this stretch of coastline. Development Process The Montage site had been privately owned since the 1800s. In 1986, Treasure Island Associates bought the property with plans to redevelop it into a private, luxury residential community with its own private beach. However, Laguna Beach city officials wanted a project that would open the beach to the public. They also wanted a hotel that would bring in tax revenues and provide much-needed meeting and event spaces. A public park was on their wish list as well. After a number of developers failed to produce a plan that would meet public approval, the Athens Group, a Phoenix-based resort developer, bought the site in 1998 from Merrill Lynch, which had it under contract at the time. The Athens Group first partnered with LendLease; then Marriott took over the LendLease portion. Design and construction began, and in 2002 Montage Hotels and Resorts bought Marriott’s share. The partnership formed by the Athens Group and Montage Hotels and Resorts completed the project in 2003. Today, the partnership remains active with the Athens Group as the development arm and Montage Hotels and Resorts as the management component. The Athens Group, which specializes in the development of upscale resort properties, has gained a reputation for its environmentally sensitive resorts and golf courses. The company was founded in 1984 and completed four projects prior to Montage. Loews Ventana

SCOTT FRANCES

Art plays a prominent role in the resort’s decor, with paintings, sculptures, photographs, and mosaics on display throughout the property. Art even extends to the main pool, which features a mosaic sunburst design that can be seen from the hotel lobby, above the pool.

Canyon in Tucson, Arizona, was the firm’s first project, followed by the Four Seasons Resort in Hualalai, Hawaii, and by Ritz-Carlton resorts in Half Moon Bay, California, and Beaver Creek, Colorado. Currently, the partnership of the Athens Group and Montage Hotels and Resorts has three resorts under development in Beverly Hills, California, Deer Valley, Utah, and a 340acre (138-ha) resort in Laguna Beach that is envisioned as a sister resort to the Montage. The developer’s vision for the Montage site was to create an intimate, low-key resort that would maximize

the spectacular coastal setting and views and enhance its environmentally sensitive surroundings. The Athens Group worked extensively with the city to create a plan that would meet the demands of both the community and the developer. Initially, there was strong antidevelopment sentiment among area residents, who didn’t welcome an outside developer proposing significant change along the coastline. Once they understood the plan, with its public access and environmental improvements, however, they were much more supportive. The entitlement process spanned five years and included

Montage Laguna Beach 363

THE ATHENS GROUP

Montage transformed a blighted trailer park into a luxury resort that maintains public access to the beach and coves.

42 public hearings, two referendums, and two rounds of California Coastal Commission approvals. Ultimately, the planning commission’s approval was unanimous. Planning and Design The sloping site dictated the resort’s design. From the road, the resort is hardly noticeable, owing to careful landscaping and the low profile of the buildings. The hotel’s street-level entrance and lobby are on the fifth floor—the topmost level—while guest rooms and other facilities are located on lower levels below the roadway and facing the ocean. The parking garage is situated along the highway but below grade, so as to be nearly invisible from almost any angle. The roof of the parking structure is landscaped and serves as parkland. Perhaps most important, the resort provides public beach access, which had long been denied. The site plan takes full advantage of the bluff’s dramatic slopes and ocean views. To maintain a low profile and protect views for the surrounding neighborhoods, about half of the resort’s buildings are sited below the level of the Pacific Coast Highway. A chain-link fence along the highway was removed, and a dense row of eucalyptus trees was thinned, opening up 550 feet (168 m) of unobstructed ocean views. A number of measures were taken to protect the site’s environmental features. The developer removed a concrete slab that jutted out from the beach and used it to create a jetty that would protect the beach from erosion, thus restoring a 12,000-square-foot (1,100-sq-m)

364 Resort Development

sandy beach. This work also resulted in the creation of a 6,000-square-foot (560-sq-m) intertidal reef habitat and new state marine park. The Athens Group implemented a water treatment system to protect the ocean water quality from the resort’s runoff, as well as from that of the 60 acres (24 ha) of development located above the property. Trees were removed and stored until construction was completed; then they were replanted as part of the new landscaping. A key feature of the site plan is a linear public park along the property’s coastal edge, part of the 7.25 acres (3 ha) of public parkland created on the site. Landscaped with native species and bright flowering plants, the park features a broad paved trail overlooking the ocean. Teak benches provide resting spots along the way. The trail is furnished with trash receptacles, water fountains, and low lighting, allowing its use at night. The park was constructed for a total cost of $9 million, with no cash outlay from the city. All costs for the park, as well as the on-site public parking garage, were advanced by the developer and are being repaid through the resort’s transit occupancy taxes. Because the hotel’s occupancy has been so high, costs have been repaid more quickly than anticipated. The resort’s architecture reflects the local vernacular. It can be described as a modern adaptation of California Arts and Crafts style, which was popular during the early development of Laguna Beach. Rough fieldstone, shingle and clapboard siding, and whitepainted Craftsman-style posts and beams make up the

ADRIENNE SCHMITZ

The developer sought to take full advantage of the coastal setting and respect its environmentally sensitive surroundings with an unobtrusive design.

THE ATHENS GROUP

The 262-room hotel wraps around the main swimming complex on three sides to help create an intimate atmosphere.

low-slung buildings’ exteriors. Dark wood moldings, decorative glazed tile, and metalwork enhance the interiors and lend a casual, comfortable atmosphere. The color palette is lighter than traditional Arts and Crafts colors, reflecting the relaxed beachfront setting. Art is displayed throughout the property, much of it by local artists. These works include paintings, sculptures, photographs, and a mosaic mural facing the public park. A mosaic sunburst lines the bottom of the main pool. There are 262 guest rooms, of which 51 are suites and 37 cottages with porches. All hotel rooms have generous balconies. Hallways in the main building are single-loaded so that every guest room has an ocean view. Large marble baths include separate showers and oversized soaking tubs.

The spa facilities are extensive and luxurious. They include marble saunas, indoor-outdoor whirlpools and showers, a glass-walled exercise studio, a large, wellappointed fitness center with ocean views, and 21 treatment rooms. The spa is located adjacent to the central pool area for easy access. Montage was the first spa to receive the Mobil Travel Guide’s five-star rating. In addition to the highly acclaimed spa, amenities include a large swimming pool and small wading pool, both located at the core open space, and a lap pool, accessed through the spa. The main swimming pool complex is nestled within a landscaped area sheltered on three sides by the hotel, with the linear park along the fourth side and the ocean below.

Montage Laguna Beach 365

SCOTT FRANCES

Taking advantage of the slope of the site, the hotel’s street-level entrance and lobby are located on the topmost level, with guest rooms and other amenities situated on lower levels below the roadway.

THE ATHENS GROUP

Studio is one of three restaurants at the resort, located in its own building overlooking the ocean.

THE ATHENS GROUP

The highly acclaimed spa facilities include marble saunas, indooroutdoor whirlpools and showers, an exercise studio, 21 treatment rooms, and an outdoor lap pool and a fitness center, both with ocean views.

366 Resort Development

The resort includes several dining venues. The Loft, a mid-priced restaurant located in the main building, offers three meals per day. Mosaic Grille, a poolside restaurant, offers casual outdoor dining. Studio, an award-winning destination restaurant housed in its own outbuilding adjacent to the park and overlooking the ocean, serves dinner only. Montage is the only local hotel to offer ballroom facilities for large events. Meeting and event space include a 7,500-square-foot (700-sq-m) ballroom, a 3,200-square-foot (300-sq-m) junior ballroom, and three additional meeting rooms. Outdoor space is also available for meetings and events. All spa, restaurant, and other facilities are owned and operated by the resort. The privately owned residential villas, which average about 3,000 square feet (280 sq m) of living space, are clustered at the resort’s north end. The custom home sites lie adjacent to the villas on the west, affording expansive ocean views from most locations. Lots average 13,000 to 15,000 square feet (1,200 to 1,400 sq m). An 80-page design guidelines manual was prepared to ensure that custom homes are designed to complement the resort’s Arts and Crafts style. Residents of the villas and estate homes have full access to the resort’s facilities and services, including room service, maid service, and a special residential concierge. Financing, Marketing, and Management The Athens Group purchased the land for $40 million and invested $30 million in site improvements for the residential portion. Residential land sales have reaped $115

million, resulting in $45 million profit on the residential component and a zero basis on the hotel land. The resort is now the city’s largest taxpayer and employer. In 2005, it generated over $4 million in local tax revenue. The project’s economic success has exceeded the owner’s expectations. Return on cost was estimated at 10 percent in 2005 (over $75 million in revenue) and 12 percent in 2006. The estate lots and villas sold for a 50 percent premium over comparable residential products in the area. The hotel commands the highest rates and occupancy of any luxury resort property in the area, with an average rate of over $500 per night and an average occupancy rate of 70 percent. Total nightly revenue per room is $1,100, which includes meals, spa treatments, and other on-site purchases in addition to the room rate. Laguna Beach offers other resort hotels, but most are not of the high caliber that defines Montage. The nearest two competitors are the Ritz-Carlton, Laguna Niguel, and the St. Regis, Monarch Beach. Montage has competed quite successfully in this market. About 60 percent of the guests are from the local region. The remaining 40 percent come mostly from other parts of the United States, with a small percentage being international travelers. The residences were marketed through a local broker. All the villas and residential building lots have been sold. The villas sold for more than $1,100 per square foot ($11,800 per sq m), and the lots ranged from $4 million to $6 million each. These are typically second homes. While the park that the developer created is now in public ownership, maintenance remains in the hands of

SCOTT FRANCES

The hallways in the main building of the hotel are single-loaded, affording every guest room an ocean view.

Montage Laguna Beach 367

THE ATHENS GROUP

Site plan.

the resort to ensure that the landscape stays consistent with the resort’s design and quality. Park maintenance costs about $100,000 per year. Experience Gained Public/private partnerships proved essential for the success of the project. The developer involved all stakeholders in the process and generated a plan that addressed the interests of all sides. Environmental sensitivity goes a long way. Especially in California, which has particularly strict standards, it is important to understand, enhance, and protect the natural elements of a development site. Public access and openness were critical components of the plan. They helped win the public support that was necessary for approvals. They also provided a certain energy and synergy that Montage guests appreciate. Unlike some regions, public access to the beach is typical along the California coast. It is also common in Hawaii, where the Athens Group is working on a new project with a public trail along the beach. The developer believes that Montage has set the standard for public access and public

368 Resort Development

amenities, and it prefers to create this kind of guest experience rather than a closed, artificial environment. While the developer is quite pleased with the project’s results, a guest room mix that included fewer, larger guest rooms might have been desirable. A higher ratio of suites to standard guest rooms would probably be a better mix for this type of luxury resort. The spa component of the resort has won numerous accolades and brought additional visibility. Unlike some resorts, where the spa is located in a penthouse or separate building with limited access, the Montage spa is a part of the main public area, where every guest has easy access to it. At the same time, the design affords an appropriate level of privacy for spa clientele. Outdoor living is the best reason to visit Montage. The grounds are exceptional, and there is much opportunity to spend time outdoors. Mosaic Grill, the casual poolside restaurant, is an especially popular outdoor venue; in hindsight, it could have been larger to better accommodate more diners.

Project Data: Montage Laguna Beach

Land Use Plan

Developer/Owner Acres/Hectares

Hotel

8.5/3.4

Residential

7.5/3.0

Open space

The Athens Group Laguna Beach, California www.athensdevco.com

14.0/5.7

Total

30.0/12.1

Parking

70 public spaces, 409 private spaces

Hotel Information Guest Rooms 262

Average Daily Room Rate

Average Occupancy (%)

Over $500

70

Other Uses (all in-house ownership) sq ft/sq m Retail

1,600/148

Restaurants

11,500/1,068

Other (spa)

20,500/1,904

Total

33,600/3,120

Operator Montage Resort Laguna Beach Laguna Beach, California www.montagelagunabeach.com Architect (hotel) Hill Glazier Architects Palo Alto, California www.hillglazier.com Site Planner McLarand Vasquez Emsiek & Partners Irvine, California www.mve-architects.com Landscape Architects Burton Landscape Architecture Studio

Development Cost Information Site acquisition costs

$40 million

Site Improvement Costs Residential portion

$30 million

Solana Beach, California www.burton-studio.com Development Schedule Site purchased

June 1998

Construction started

2001

Hotel opened

February 2003

Residential Information Number of Units

Density (units per acre/hectare)

Unit or Lot Size (sq ft/sq m)

Villas

14

9/23

3,000/280

$3 million

Estate lots

14

2.4/5.9

13,000/1,200

$4–6 million

Unit Type

Net Residential Density

Typical Sales Price

(units per acre/hectare) 3.73/9.33

Montage Laguna Beach 369

The Reserve INDIAN WELLS, CALIFORNIA, USA

The Reserve is a luxury private-equity membership golf course and second-home community located in Coachella Valley, California, whose best-known city is Palm Springs. Within the valley are over 120 golf courses, ten of which are luxury courses that represent the competition. The Reserve is located within two valley cities, Indian Wells and Palm Desert. Lowe Enterprises, Inc., developed the Reserve; Ted Lennon, senior vice president of Lowe Destination Development (LDD), Inc., and president of Lowe Reserve Corporation, was the visionary, along with chairman Bob Lowe, who identified the site and led the complicated ten-year effort required to bring it to fruition. Indian Wells and Palm Desert are outstanding addresses, as is the Reserve’s location, nestled against the Santa Rosa Mountains and surrounded on three sides by never-to-be-developed open space. While this location borders the urbanized fringe of Indian Wells and Palm Desert, the Reserve is also just a short distance from Indian Wells’s upscale shops and restaurants on El Paseo. Concept and Plan In 1989, while developing the luxury Terraces condominiums at the nearby Vintage Country Club, Lennon sharpened his understanding of the region’s luxury market. Vintage had 500 members and two courses over 720 acres, which Lennon felt was too many members for a high-end development with a true sense of community. This led to an idea for a low-density, private club and residential resort with one golf course, all on over 700 acres (280 ha), that would maintain a limit of 250 regular members. The site aggregation started with one large parcel of 455 acres (184 ha). The site belonged to a surgeon who was reluctant to award the long-term option to purchase

370 Resort Development

that would be needed to pursue a development agreement with the cities involved. An additional 150 acres (60 ha) belonged to the Coachella Valley Water District, of which two-thirds were occupied via an unrecorded lease by the Living Desert, a well-known wilderness preserve. Another 40 acres (16 ha) needed to be optioned from 12 different owners. A further 160 acres (65 ha) from the Bureau of Land Management were required for completion of the flood control program and were donated by the developer to the University of California as part of the approval process. After this donation, the net site for development was 645 acres (260 ha). The site was originally zoned as a nature preserve and watercourse, and its open space was bordered on the north and east by the Living Desert and on the south by the 14,000-acre (5,700-ha) University of California Deep Canyon Research Center, federal Bureau of Land Management lands, and the Ironwood Country Club. There is no housing adjacent to the golf course at Ironwood Country Club, but this club’s housing clusters along Portola Avenue near the Reserve’s entrance. None of the adjacent entities wanted to see the site developed. In addition, while the majority of the site was located in Indian Wells, about 50 acres (20 ha) were located in Palm Desert, and these two communities are not always on the best of terms. From the beginning, the developer’s concept was for a low-density, private residential community, surrounded and integrated with a golf club, and committed to preservation and enhancement of the natural environment. After searching for an architectural concept that would have an old-world flavor, the developer chose Tuscan as the style for the golf club facilities, thus setting the tone for the surrounding residential community. Before any hard planning was done, Lennon, a civil engineer by training,

LOWE ENTERPRISES, INC.

The 30,000-square-foot (2,787-sq-m) clubhouse is housed in a freestanding building with the pro shop and fitness facilities in separate but closely clustered buildings.

penciled out his ideas. He even camped out on the land and developed a sketch plan for how a golf course could be integrated with the topography, leaving adequate space for residential development. Ultimately the golf course was designed with 21 holes on 272 acres (110 ha), with housing lots on 145 acres (59 ha) and almost 40 percent of the remaining site left as open space. While most high-end clubs combine their clubhouse, pro shop, and fitness facilities within a single structure, the Reserve Village is instead a cluster of freestanding but closely related buildings and recreational facilities. In keeping with the high-end, low-key approach, the entrance to the Reserve is almost invisible to passersby—only a small sign appears in the median strip on Portola Avenue. Rather than placing a gatehouse at the street, a stunning desert landscape of several hundred yards leads to the gatehouse, with the Reserve sales office and LDD offices discreetly tucked in along a side driveway just outside the gatehouse. Public Approvals It took ten years to complete the development. Of that, the first two and a half years were spent obtaining agree-

ments from the cities of Indian Wells and Palm Desert. Over this period, one-on-one discussions were held with all of the many interested parties in these communities, all the adjacent landowners, and other stakeholders, including the Sierra Club and California Department of Fish and Game, so that the developer could respond to their various concerns. Lennon believed that acquiring the necessary entitlements would best be achieved by approaching the communities with a plan that would win support from all the interested parties. The past reputations of both Lowe Enterprises and Ted Lennon proved instrumental in gaining support. After all the advance efforts, the approval process ultimately required only one hearing each before the planning commissions and city councils of both communities. Thus, in 1992, LDD received ten-year development agreements from both cities. The approvals were for a gated master-planned community surrounding a private 21-hole golf course and clubhouse facility. The site was zoned as “very low density,” with the several flood control corridors that cross the site zoned as “watercourse.” The site’s most easterly portion abuts the Santa Rosa Mountains and is zoned “country club open

The Reserve 371

; A written agreement was executed with the homeowners association of the adjacent neighborhood to respond to their concerns. ; Allan Muth, director of the University of California’s Deep Canyon Research Center, was placed on the project’s architectural review committee to ensure that the university’s concerns would be heard as building and site development designs were considered. In addition, the developer donated 160 acres (65 ha) of open space to the university as a buffer. The Living Desert was promised 120 acres (49 ha) of mountain land in light of the unrecorded lease it had with the water district. ; The developer agreed to pay off government land debt to provide for bighorn sheep mitigation. ; The developer established a residential sales transfer fee, with 50 percent of the proceeds to go to the University of California and 50 percent to the Living Desert. ; The developer established a golf club membership transfer fee, with the proceeds to go to a Wildlife Fund. Financing LDD began talking with the largest property owner as early as 1988, first seeking a long-term option with this owner. Other options then were acquired as efforts

LOWE ENTERPRISES, INC.

space.” Because of the golf course, the area is overlaid with a “golf course overlay zone,” which governs the use and development of the golf course. Several design factors agreed to by the developer were incorporated in the proposed development design. ; To maintain the open movement of wildlife and the spread of wildflowers, individual homes would not be allowed to have walled enclosures of their lots. ; All landscaping visible on the exterior of the dwellings and throughout the project would use indigenous plant materials from a specified list. ; A watershed flood-control design for the water district would be built by the developer for a 40-squaremile (4-sq-m) drainage area to control a storm equivalent to the highest recorded rainfall of six inches in four hours, which translates to a 400-year storm. The cost of this infrastructure was $12 million. The drainage land was in a redevelopment district that could have allowed tax increment financing of a $10 million loan from Indian Wells. However, Indian Wells wanted to close down its redevelopment agency and decided instead to make a direct payment of $5 million toward the developer’s costs.

The resort sits in the shadow of the Santa Rosa Mountains and is surrounded on three sides by open space.

372 Resort Development

Legal, Management, and Operating Structures The Reserve Golf Club, a private membership club with a maximum of 250 members, owns the golf course and related property. Membership in the club does not require individual ownership of property in the community. The club has its own board; but, because 90 percent of members are residential property owners, most of the board members are always likely to be property owners. The golf club has the usual organizational structure, with all the various ancillary facilities such as a pro shop and fitness center owned by the club and staffed by club employees. In this desert climate, the clubhouse (but not golf course) is closed from June until November; most of the members who would support clubhouse operations are not in residence during the hottest months. However, some do come for short periods for golf. While much of the clubhouse wait staff is seasonal, there are ongoing operations for the majority of the golf course and property maintenance staff.

LOWE ENTERPRISES, INC.

toward entitlement were being pursued. When entitlements were achieved in 1992, however, no money was available to finance the project and it was put on hold. Shortly thereafter, the bighorn sheep was placed on the U.S. Fish and Wildlife Service’s endangered species list, and the developer had to pursue a federal permit to develop the property. To finance the long entitlement process, an entitlement group of 16 investor/shareholders was formed to provide just under $2 million and to assume the risks associated with achieving approvals. When financing became feasible three years later, this group was folded into a founders group that provided $6.6 million. The entitlement group was at financial risk until the entitlement had been accomplished; the founders group was at risk only if the project were unsuccessful. By 1995, funding for the project had become possible and LLD assembled $25 million in equity: 25 percent from Lowe Enterprises, Inc., 50 percent from a New York hedge fund, and 25 percent from private investors. This amount was in addition to the combined investments by the entitlement and founders groups. The founders group received memberships, lot purchase discounts, and dues waivers. Significant early sales and presales precluded the need to call on the $25 million equity group for funds. The original pro forma had assumed a six-year sellout and financing of the real estate and golf club membership, but sellout was accomplished within two and a half years.

The entrance bridge exemplifies the resort’s low-key design, blending in seamlessly with the surrounding landscape.

The Reserve Community Association, a homeowners association (HOA), is a separate independent corporation with its own board. Again, since the majority of property owners in the HOA are also golf club members, the HOA’s board is always likely to have a majority who are also members of the golf club. The HOA owns all the common areas, including the streets and open spaces that are not a part of the golf club property. Recognizing that the road system and other elements support the viability of and access to the golf club, the club is obligated to fund 10 percent of the HOA’s annual budget. Security is the largest line item in HOA’s budget. The next largest line item is the maintenance of common areas. Crime in a gated community like the Reserve, although rare, is usually internal, primarily thefts by employees of the numerous contractors providing services to the HOA or to the homeowners. Thus, a major task of the HOA security staff, in addition to the routine patrol of the community, is to screen and identify reliable service vendors with honest employees. The HOA also offers a wide variety of individualized services to the homeowners comparable to those that would be offered by a luxury residence hotel, such as concierge and maid service, opening and closing residences, stocking comestibles, booking travel, and other support.

The Reserve 373

Unlike the golf clubhouse, which goes into holding mode over the summer with reduced staff, the HOA must remain fully operational year-round and is responsible for the maintenance and upkeep of the common areas, streets, and other public open space and facilities. It is also the enforcer of the CC&Rs that specify the use of private property, including various landscaping and design regulations. Because most homeowners are seasonal residents, the HOA has taken on a variety of additional support functions. It operates a central post office that receives and distributes all the mail to the individual properties. It can therefore hold or forward mail, according to owners’ instructions, independently of the U.S. Postal Service. The HOA also provides many contract services for individual owners, including landscape maintenance, building maintenance and repair, cleaning, and opening and closing services. Architectural and Landscape Design The HOA’s architectural review committee is responsible for ensuring conformity with the architectural and landscape design standards set forth in HOA documents. These standards encourage a wide variety of building styles, while specifically prohibiting use of colonial, Tudor, oriental, Egyptian, and other styles. An approved palette of 45 paint colors, 22 natural stones,

20 faux stones, 11 clay roofs, and two flat-roof materials may be used on residences. For landscaping, there is a long list of permitted plant material: 26 varieties of trees, well over 100 shrubs, 20 ground covers, three vines, and numerous annuals, perennials, cacti, and succulents, all indigenous to the Coachella Valley and the Southwest desert. A minimum caliper for trees and minimum sizes for other plants are required. Nineteen plants are specifically prohibited. This list of approved and prohibited plant materials aims to preserve a native desert landscape that sets this community apart from most of the valley’s clubs. Within each individual building site, specific front-, side-, and rear-yard setbacks are required. A formula permits an equal square-foot transfer of required natural landscape areas into the building envelope in exchange for the encroachment of patios, pools, privacy walls, and so on into the yards. This allows for flexible and creative site design and applies in varying degrees to the casita, villas, and custom lots. Golf Club Design The golf course was designed by Tom Weiskopf and Jay Morrish. The 18-hole, par-72 course is 7,014 yards (6,414 m) from the back tees and 5,243 yards (4,794 m) from the most forward tees. Each hole has at least four tees, so the course can be played and enjoyed by players

LOWE ENTERPRISES, INC.

To harmonize the development with its natural surroundings, residential exteriors consist of aged wood and earth-derived materials such as stucco, plaster, and stone.

374 Resort Development

of every skill level. The designers preserved the natural topography as much as possible, aiming to produce a course that could be played many times over in different ways. (When Weiskopf and Morrish completed their design, 13 of the holes conformed with the general locations that Lennon had first sketched.) Of the regular 18 holes, three lie in Palm Desert and the rest are in Indian Wells. Three additional championship “trophy holes” adjacent to the driving range can be used for practice, as playoff holes for a tournament, or as warm-up holes before starting a full 18-hole round. The driving range is attractively shaped to be a visual asset as well as a functional facility. An 18-hole putting course lies adjacent to one of the lakes and across from a cluster of bungalows. A series of lakes are scattered throughout the property, some serving as water hazards for the golf course and others providing water vistas for homes. In stark contrast with the desert landscape, the developer installed waterfalls, bubbling streams, stone bridges, and sculptures provide the sound of moving water and visual interest. Ponds provide irrigation water for the course and for the bubbler system that runs throughout the community to water the landscape plants. This system is fed by two off-site wells owned by the club, with water fed first to the largest lake just inside the gatehouse. From there it is pumped to the other lakes and then into the irrigation system. All the water is consumed where it is sprayed on the course or bubbled next to the plants, so there is no runoff. The developer was required to build a 5 milliongallon (19 million-l) reservoir off site as the community’s source of potable water. The Reserve Village is comprised of several separate buildings: the clubhouse, pro shop, fitness center, and the Lake House Grill. The village includes adult and children’s swimming pools, a spa, tennis courts, and related parking, all in a pedestrian-friendly grouping. All the golf club’s buildings are designed to blend in with the natural surroundings. Exteriors are limited to aged wood, and earth-derived materials such as stucco, plaster, and stone, including stones unearthed during the course’s excavation. Interiors feature wood-paneled walls, exposed stone, and other elegant old-world detailing. The men’s and women’s locker rooms have wood-paneled lockers. There are extensive dining areas, both formal and casual. A wine cellar is available for hosting intimate dinners for six to 14 people. The pleasant winter climate justifies a variety of patio spaces for outdoor dining or relaxation. The project’s locational advantages included its Indian Wells and Palm Desert address and a 5 percent

slope to the site that gives many dwellings views down into the valley that are spectacular at night. All sites offer views of three mountain ranges that are snowcovered during the winter. Equally important to potential buyers was the certainty that no additional development could occur on adjacent open space. There are 241 homesites, some with build-to-sell dwelling units. All units have views of the golf course or water elements; many have both. All units were priced individually, with equal premiums for water versus course views and higher premiums where both occurred. All the landscape and built elements were designed to enhance the views from the homesites or when moving through the community by car, golf cart, or on foot along the extensive trails system. Seven real estate products are offered. The first to be available were the bungalows—the smallest and lowest-priced products, built on speculation. The bungalows comprise three different floor plans, each with a variety of exteriors. The casitas and villas were sold from plans rather than from models, with three floor plans offered for each category and a variety of exterior designs, all of which could be further customized. The remaining four housing groupings were all lot sales for custom homes. With sales beginning in 1998, the project was basically sold out by 2001. Membership and Marketing Club membership is by invitation and referral. There has been essentially no formal marketing—just word of mouth. Early on, the developer established an “eagle” membership category for members of other clubs who were interested in the Reserve, in addition to their primary club. The full membership is limited, as planned, to 250, with the eagle and life members excluded from the count, as are the 13 current social members. Memberships can be inherited by relatives. With home sales essentially completed in two and a half years as compared to the pro forma’s projected six-year sellout, it was possible to achieve an overall 20 percent increase in prices over the pro forma. Purchasers have included young families, retirees, CEOs from nearby southern California and throughout the United States, and several foreign buyers. The on-site sales office will remain to provide an office for resales over the long term. Fifty percent of early sales were to individuals who subsequently sold and traded up to larger units. There was only a limited need for formal marketing, since sales were generally stimulated by

The Reserve 375

LOWE ENTERPRISES, INC.

The Reserve Village has both formal and informal dining and lounge facilities.

word-of-mouth. The resale of existing homes and unbuilt lots will continue for the foreseeable future. Community Participation and Environmental Concerns Every original homebuyer was awarded a life membership in the Living Desert by LDD. Subsequent owners are given a two-year family membership. Many of these Living Desert members have become sufficiently interested in the work of the wilderness preserve to become major donors. With the resale of any residential unit, there is a transfer fee of 0.125 percent of the gross selling price of the property. Each year 50 percent of such transfer fees are given to the Living Desert and 50 percent to the University of California’s Riverside Foundation. This amounts to about $30,000 for each group per year. A transfer fee is also charged when club memberships are sold, and these proceeds are given to the local wildlife fund. In addition, LDD agreed to host an annual fundraising golf tournament for the Living Desert for ten years. After this commitment expires, the Living Desert may well seek to continue the practice. Fundraising tournaments are also very selectively allowed for other environmental groups. LDD has encouraged the creation of a “give back group” within the Reserve, and this group has provided both financial and volunteer support for a variety of community activities. As a direct environmental commitment, over 700 native trees and over 1,000 shrubs removed from the golf course were replanted. The Reserve also is home

376 Resort Development

to one of the few remaining stands of blue palo verde trees in the valley and to creosote bushes that have a life potential of up to a thousand years. All these plants, as well as the new plantings, are watered by an extensive community-wide bubbler system fed from the same wells that provide irrigation water for the golf course. Wildlife on the Reserve includes cottontail and jack rabbits, coyotes, other small animals, and over 50 species of birds that migrate through the area. The HOA and the club are committed to supporting this wildlife with appropriate land use practices. Experience Gained, Lessons Learned ; Always use the SWOT approach to the development process: Determine your strengths, weaknesses, opportunities, and threats. Then eliminate the weaknesses and the reasons behind the threats. ; Having the right partners and lenders makes the development process more manageable, particularly when unanticipated issues or delays appear that require patience and respect to achieve success. ; Establishing and maintaining good relations with neighbors, community/civic groups, and units of governments is essential. Communicating and working with the many entities who had concerns about the Reserve project was the only way to achieve entitlements without raising significant opposition. ; Establish and revise realistic development budgets rather than underestimating the real costs.

LOWE ENTERPRISES, INC.

Site plan.

LOWE ENTERPRISES, INC.

; Seeking maximum return is not always good business. Lennon prefers to sell a community out within a shorter period of time rather than squeezing the last dollar out of each sale. ; The market responded well to the spec-built dwelling units that were offered for sale, and the developer believes that a better strategy would have been to offer more finished homes rather than so many lot sales for custom homes. This strategy probably would have increased profitability by adding homebuilding profit margins to the venture. ; In a high-end second-home golf club market, the bread-and-butter product is a 3,000- to 3,500-squarefoot (300- to 325-sq-m) dwelling unit. ; Recognize that up to 50 percent of first-time buyers will also become move-up or move-down buyers. It is therefore important to sustain long-term relationships with buyers. ; When staffing and operating a high-end development, build on the skills of the people you have.

Desert Villa, floor plan I

The Reserve 377

Project Data: The Reserve

Land Use Plan

Greens Fees 2007 Acres/Hectares

Golf course

Winter

254.5/103.0

Club facilities and parking lot

18.0/7.3

Residential

Summer

145.3/58.8

Sales office and LDD offices

1.2/.5

Open space

289.5/117.2

Circulation: streets/roads

21.0/8.5

Total

Accompanied guest

$125

Unaccompanied guest

$250 + fore caddie fee $150

Accompanied guest

$75

Unaccompanied guest

$175 + fore caddie fee $150

Accompanied family (over age 35)

$65

Unaccompanied family (over age 35)

$90

Junior (under age 17)

$25

729.6/295.2 Development Cost Information Site acquisition cost

Range of Prices

$16,227,000

Homes

Lots

Bungalows

$1,400,000–$2,250,000

None

Site Improvement Costs

Casitas

$2,300,000–$2,895,000

None

Infrastructure and off-site improvements

$31,107,000

Golf course construction

$16,007,000

Desert villas

$3,500,000–$4,950,000

$1,000,000–$1,100,000

$4,850,000

$1,595,000

Other

Deep Canyon

$4,350,000–$8,400,000

$1,495,000

Total

Hidden Valley

$5,000,000–$25,000,000

$2,000,000–$4,000,000

Estate

$6,000,000–$12,000,000

$1,500,000–$3,000,000

Reserve

Construction Costs Clubhouse/pro shop/buildings

Golf Club Information Building Area (sq ft/sq m) Clubhouse

$16,402,000

Other

$1,380,000

Total

$17,782,000

30,000/2,787

Pro shop

1,500/139

Soft Costs

Health and fitness center

4,500/418

Architecture, engineering, planning

Lake House Grill

1,800/167

Project management

Total

37,800/3,512

$14,954,000

Membership Fees Reserve

$684,000

Taxes/insurance

Golf Club Membership Information Number

Initiation

Annual Fees/ Dues

212

$250,000

$22,500

$1,270,000

Construction interest and fees Impact fees (public contributions)

Eisenhower

18

$250,000

$22,500

Total

Eagle

16

$200,000

$22,500

Total Development Cost

Life

7

$250,000

$22,500

Social

13

$50,000

$11,250

Total

266

No. of Lots/Units

Acres/Hectares

Units/Acre

Sq Ft/Sq M

Bungalows

39

11.62/4.70

3.67

2,615/243

Casitas

62

23.40/9.47

2.76

3,620/336

Desert villas

47

22.25/9.00

2.21

5,000/465

Reserve

21

16.25/6.58

1.37

6,033/560

Deep Canyon

24

15.20/6.15

1.69

5,903/548

Hidden Valley

25

25.21/10.20

1.03

7,153/665

Estate

23

31.39/12.70

0.75

6,378/593

241

145.32/58.81

378 Resort Development

$14,158,000 $1,423,000 $49,319,000

Residential Information

Total

$7,786,000 $9,044,000

Marketing Legal/accounting

Unit Type

$3,042,000 $50,156,000

$133,484,000

Developer/Owner Lowe Enterprises, Inc. Los Angeles, California www.loweenterprises.com Project Management LDD Desert Development, Inc. Indian Wells, California www.thereserveclub.com Golf Course Architects Tom Weiskopf and Jay Morrish Architect Altevers Associates San Diego, California www.altevers.com Landscape Architect Brant & Greey Phoenix, Arizona Land Planners McLarand Vasquez Emsiek & Partners Irvine, California www.mve-architects.com Gage Davis Associates Scottsdale, Arizona www.gagedavis.com Development Schedule Site acquisition initiated

1989

Entitlements approved

1992

Planning started

1995

Site purchased

1996

Construction started

1997

Sales/leasing started

1998

Project completed

2001

The Reserve 379

Roaring Fork Club BASALT, COLORADO, USA

The Roaring Fork Club is a private, invitation-only golf and fishing club with limited real estate offerings. The club is located in the Roaring Fork Valley within the town of Basalt, Colorado, 15 miles (24 km) from Aspen and 24 miles (39 km) from Glenwood Springs and the interchange with Interstate 70. Its 282 acres (114 ha) are bisected by Colorado Route 82, the main highway between Glenwood Springs and Aspen. The project’s main features are an 18-hole signature golf course, designed by Jack Nicklaus, and one mile (1.6 km) of the Roaring Fork River, which bisects the site, paralleling Route 82. The club made improvements to portions of the river, both for erosion control and as a major fly-fishing amenity. Within the site are only 60 housing units, primarily cabins of 2,400 square feet (223 sq m), available for sale to club members either as whole units or through a shared ownership program. A second phase, still in the planning and public approval stage, will add more cabins and other amenities that were not included in the original plan. Once called Frying Pan Junction, Basalt was a stop along the Colorado Midland Railroad in the late 1800s. The railroad had been built to carry coal and silver ore between Aspen and Leadville over Hagerman Pass. Immigrant families from Switzerland and northern Italy settled there and worked for the railroad, the mines, and the coal smelters. In 1901, the town incorporated and its name changed to Basalt, reflecting the dense, black volcanic rock found throughout the region. Remnants of Basalt’s mining heritage can still be seen today. Ranching replaced the railroad as the region’s primary economic staple in the early 1900s. Three families owned the 282 acres (114 ha) that have become the Roaring Fork Club. For almost 100 years, the Arbaney family and its descendants owned nearly

380 Resort Development

half of the club’s property. For 37 years, Leroy and Martha Waterman owned the balance of the land. Both families retained small parcels for their continued presence. The third family sold their property outright. The development group for Roaring Fork Club is a partnership of James J. Chaffin and James W. Light, operating as Chaffin Light Associates (CLA), and David Wilhelm for the Wilhelm Family Limited Partnership. Chaffin and Light began their development careers with Sea Pines Plantation on Hilton Head Island. Their energies have always been focused on the development and operation of high-quality recreation and resort communities with conservation-based development principles. Their Colorado experience began in 1978 with the acquisition of 3,000 acres (1,200 ha) for the Snowmass Club and West Village areas. Wilhelm has been a leading developer of commercial properties in St. Louis. He has 25 years of development experience, with 15 of those in golf club development. His entry into Colorado development was with the Cordillera Valley Club near Vail/Beaver Creek. Concept and Plan Design Wilhelm found two ranches in Pitkin County where land use approvals were difficult and barriers to market entry were high. He believed that approvals could be obtained by doing a better job than anyone else. Chaffin and Light were cautious about the political risks. Their previous experience had involved greenfield communities such as Spring Island, South Carolina, which were typically much less dense than allowed and in areas more accommodating to development. For Roaring Fork, Wilhelm, Chaffin, and Light agreed on a lowdensity, environmentally friendly model where access to the cabins would be primarily by electric golf carts.

through the property, the plan also included the creation of a fishery and nine well-stocked ponds. The ponds, which are interconnected on the north side of the property, flow from the top at pond no. 1 (adjacent to golf hole 1) to pond no. 5, drawing their water from existing irrigation channels connecting with the river. They act as settling ponds, so that when the water reaches pond no. 5, it is available for irrigating property on the north side. On the southern portion of the property, a new Spring Creek was created by naturalizing an existing irrigation ditch. Two ponds on the south side provide the irrigation water for that portion of the project. In the western United States, water rights can be as important as landownership. The design of these ponds and the management and reshaping of the preexisting irrigation ditches were therefore important elements in the project’s land planning and design. The resolution

STEVE MUNDINGER

When the three partners first walked the ranchlands and riverbank that would become the Roaring Fork Club, their vision began to evolve. They wanted to create a distinctive golf and fishing experience within an environment that fostered family traditions and neighborly interaction. Understanding that traditions, like heirlooms, should be passed from one generation to another, the three men sought to create an unparalleled experience for anglers, young and old. Unlike other private golf courses that focused heavily on real estate, this invitation-only club would feature a limited number of wellcrafted log cabins and suites for members’ lodging. A central feature would be the 18-hole Jack Nicklaus signature course, which blends seamlessly into the lush mountains and valley terrain, providing a fortunate few with the unhurried pleasures of a challenging game. With a healthy stretch of the Roaring Fork River meandering

The members’ lodge features a two-story great room with a moss rock fireplace, as well as a veranda that overlooks the 18th hole on the golf course.

Roaring Fork Club 381

ROBERT SHAFER

The 1,500-square-foot (139-sq-m) pro shop sits near the swimming pool and tennis courts.

of a lawsuit brought by an adjacent receiving property on the south side required the piping of one such ditch through the golf course on that side. The inspiration for the Roaring Fork Club’s design concept was the “great camps” of the Adirondacks, built in the late nineteenth century, which emphasized the soothing qualities of the wilderness and the pursuit of sport. The project’s 48 cabins are rustic in design, scattered in an informal way, and connected only by cart paths, since the club does not allow automobiles beyond some limited areas. The central facility is the Members’ Lodge, reminiscent of old fishing lodges, with its chinked timber facades and wide, inviting porches. The comfortable two-story great room, with a moss rock fireplace, and the veranda overlooking the 18th hole are popular places to gather and reflect on the day’s adventures. The lodge also houses a dining room, a library with billiards, a vintner room, and fitness and business facilities, as well as the men’s and women’s locker rooms for the golf club. Near but not attached are the Lodge Suites, originally planned as rentals for nonresident members but later converted to tenant-in-common shared ownership. Adjacent to the Members’ Lodge is the golf pro shop, with a swimming pool and tennis courts nearby. Maintenance buildings are discreetly located away from housing; the staff housing is accessed by a separate entrance road. One major challenge was the need to connect the site’s north and south portions. Automobile entrance drives

382 Resort Development

on each side lead to the limited facilities that can be accessed by car. The main transportation link, however, is the cart path that was tunneled under Highway 82. Spring Creek, which meanders parallel to the Roaring Fork River, provides a quiet setting for 15 of the cabins. The creek is also the setting for the River Cabin, one of the first structures built. It served as the initial gathering place for the early members, fostering a sense of community when much of what is now in place was not yet available. Conservation and Environmental Initiatives In 1997, the developers initiated restoration of approximately one mile (1.6 km) of the Roaring Fork River. Under this project, based on plans approved by the U.S. Army Corps of Engineers and Pitkin County, the river was enhanced to improve fishery habitat, aesthetic quality, and channel stability, to reduce erosion, and to improve flood control and riparian areas. Spring Creek, a 20-foot (6-m) -wide stream on the golf course, was constructed from a historic irrigation ditch to enhance trout fish habitat. An extensive system of manmade lakes has been connected to serve as settlement ponds for the irrigation water. Grass carp were added to the lakes’ fish species for aquatic weed control. A biological islands (“bio-islands”) program is a part of the conservation and environmental initiatives at Roaring Fork Club. Working with a permaculture (agroecology) expert, Jerome Osentowski, the club has successfully introduced two bio-islands of native plants

that attract benign insects, thus reducing the need for chemicals to combat weeds and pests. The golf course is also managed on an environmentally friendly basis, and the town pf Basalt annually reviews the club’s maintenance program. Organic fertilizers are used when possible and, after mowing a chemically treated area, the equipment is washed and the water filtered into safe graywater, which is then suitable for discharge into Basalt’s sewage system. Environmentally friendly building elements were used extensively. Standing dead spruce trees were used as logs in building the cabins, reception center, pro shop, and lodge. All wood floors were created from salvaged, recycled products. Chosen for their energy efficiency, multilayered, coated, insulated glass windows were used in all the buildings. The water heater and forced-air heating systems use a heat exchanger design with sealed combustion, creating 90 percent efficiency (10 to 20 percent more efficient than typical systems). Water efficiency is accomplished with builtin flow restrictors in faucets and showerheads, and 1.6-gallon (6-l) -per-flush toilets. Fly-Fishing as a Major Amenity A major amenity at Roaring Fork Club is its outstanding fly-fishing, and a highly structured program of support is

offered for this sport. Both the Roaring Fork and Frying Pan rivers have attained Gold Medal designations from the Colorado Wildlife Commission, placing them among the best fly-fishing rivers in the state. Home base for fly-fishing, the Roaring Fork River flows for one mile (1.6 km) through the middle of the club, offering easy access and private water. The fish population is large, and the trout are healthy and robust. The predominant trout are browns and rainbows. There are also many cut-bows, which are a cross between rainbows and cutthroats. Depths vary, and there are thus many choices for fly-fishers. Float trips are also offered on the lower Roaring Fork, making it possible to float all the way to Glenwood Springs. Fishing on the Frying Pan is between five and 20 minutes away. This famous tailwater (a river that originates below a dam) starts at the base of Ruedi Dam and flows 14 miles (23 km) down into the town of Basalt, where it empties into the Roaring Fork. The club’s guide service now offers year-round U.S. Forest Service permit days on waters previously unavailable to club members and guests. This arrangement makes available approximately four more miles (6 km) of water on guided trips along the upper Frying Pan, the most prized fly-fishing water in the western United States.

DAVID O. MARLOW

The logs used in many buildings, including the clubhouse, came from standing dead spruce trees. Multipane, coated, insulated windows in the buildings are used for greater energy efficiency.

Roaring Fork Club 383

DAVID O. MARLOW

Located 15 miles (24 km) from Aspen, Colorado, the resort is a desirable winter destination.

Although it is public water, only guides with U.S. Forest Service permits can operate commercial guide trips. The Roaring Fork Club Fly Shop, a licensed Orvis authorized dealer, can fish any water that any other regional shop can access. Previously there were only four fly shops with the ability to fish these waters, and they had been around for ten to 20 years. Roaring Fork Club has thus joined the ranks of the elite in guiding flyfishing members and guests. Roaring Fork Club’s fly-fishing resources include its eight healthy, stocked ponds and the .75-mile (1.2-km)

384 Resort Development

Spring Creek. Rainbows are the predominant trout in these club waters, but there are also browns, brooks, and even some cutthroat trout. Fishing in the Roaring Fork River is good year-round, but fishing in the creek and the ponds is possible only in the spring, summer, and fall. Fishing on the ponds is limited to a catch-andrelease program except for pond no. 16, which is called the Kids’ Pond; here, one fish per day can be a keeper. The fly-fishing program has a staff of four, all of whom are highly qualified wade guides. Two are also certified float guides. This staff, along with the many

outstanding fly-fishing opportunities, give Roaring Fork Club an amenity that any other club would have great difficulty duplicating. Golf Golf remains the club’s principal sport amenity. The course is the property’s visual centerpiece, and in a 2006 survey of the membership, golf was ranked the number one physical activity (92 percent), followed by downhill skiing (75 percent), fishing (71 percent), hiking (65 percent), and fitness (64 percent). The course measures 7,312 yards (6,686 m), par 72 from the longest tees. However, most of the holes have five tee locations, and the course length from the shortest tees is 5,252 yards (4,802 m). Thus the course can accommodate a wide range of golfing skills. In 2005, it was named one of the ten best mountain courses by The Golfer magazine. The golf program is run by a staff of six golf professionals, a pro shop manager, an outside supervisor, about 18 employees, and a caddie master who oversees up to 50 club caddies. Student caddie participants complete a two-day training program that includes videos, written materials, and hands-on training. As a final test, the students are required to caddie for a member of the Par Club Committee. Once they are accepted, they can earn up to $150 a day, along with golf and practice privileges. They are also urged to attend periodic formal clinics given by the club’s professional PGA instructors. Scholarship opportunities are available through the Roaring Fork Club’s participation in the Western Golf Association’s Evans Scholarship Program, which provides talented student caddies with full scholarships to colleges and universities across the United States. So far, four Roaring Fork Club caddies have won scholarships. Membership Structure and Real Estate Ownership Opportunities Roaring Fork Club offers three categories of membership: regular, national, and social. Regular membership may be offered to any individual who has been sponsored by two members. Such membership entitles the member to the use of all golf, fishing, tennis, pool, and social facilities. Regular members include those individuals who own or lease a residence in the Roaring Fork Valley and may include individuals who do not own units in the Roaring Fork Club. There can be a total of 375 regular members. As of spring 2006, there were 300 regular members. Virtu-

ally all regular members own property in the Roaring Fork Club or elsewhere in Roaring Fork Valley. National membership is designed for occasional visitors who do not own or lease a residence in the Roaring Fork Valley. National members have the same privileges as regular members, except that golf play is restricted to 30 days a year (further limited during prime season). There can be a maximum of 125 national members. As of spring 2006, all these memberships were subscribed. When national members visit the Roaring Fork Club, they are allowed to rent one of the various cabins or suites or can stay elsewhere in the valley. Designed for nongolfers, the social membership category, limited to 50, entitles members to the use of all fishing, tennis, pool, and social facilities, excluding golf privileges. All these memberships have been sold. Recognizing the need for some flexibility in the membership mix but still wanting to limit the absolute number of members, the founding documents permit a shift of one regular membership to 2.5 national memberships (or, in reverse, 2.5 national memberships could be converted to one regular membership). With any of these memberships, participants in the Roaring Fork Club can then purchase one of the real estate offerings. Real Estate Offerings There are 48 rustic, hand-hewn log cabins situated along the wooded riverbanks and throughout the undulating meadows overlooking the valley. Some cabins are sold in whole ownerships while others are sold in 1/4 or 1/6 shared interests known as the “Cabin Partners” program. These cabins are sold fully furnished in a western theme with luxury design features. Three different cabin floor plans are offered, each encompassing 2,400 square feet (223 sq m), with three bedrooms, and 2.5 baths Other rooms include a great room with an open kitchen and living/dining area, a large master bedroom and bath, plus two guest rooms and baths. Each cabin includes indoor/outdoor fireplaces. Terms are as follows: ; Fee-simple deeded interest in a specific cabin. ; 1/4 interest = six prime weeks (three summer and three winter). ; 1/6 interest = four prime weeks (two summer and two winter). ; When space is available, members have unlimited additional use of partnership cabins.

Roaring Fork Club 385

There are 12 suites in four unit clusters that were originally planned for rent but later were converted to sales units in 1/6 interest. All are fully furnished, measure 700 square feet (65 sq m), and include one bedroom, 1.5 bathrooms, a large open living area with a rock fireplace, and an efficiency kitchen. Exteriors are board-and-batten, with river rock accents. Features include a shared hot tub. Some units interconnect.

Management Structure and Operations There are three management and operations entities at Roaring Fork Club. Two are homeowners associations (HOAs): the Roaring Fork Club Cabin Corporation, Inc., and the Roaring Fork Club Suite Association, Inc. The third, the Roaring Fork Club, is responsible for the overall management of the club and is in effect the service provider for the HOAs. The two HOA boards establish the annual assessments for these associations, with a pro rata share for each owner, and these shares are added to the annual dues for Roaring Fork Club members, since buying a property at Roaring Fork Club requires membership in the club at purchase. The Roaring Fork Club does not follow the typical private golf club management structure. It has a general manager and several department heads for golf operations, fly-fishing, food and beverage, cabin operations, building maintenance, housekeeping, and sales and marketing. The overall management standard is equivalent to that provided by the best resort hotels. Public Approvals The site was originally in Pitkin County, adjacent to the town of Basalt. Under Colorado law, owners may, as of right, subdivide their property into 35-acre (14-ha) sites, and owners of such parcels may, as of right, build 15,000-square-foot (1,400-sq-m) residences. The town of Basalt was in the process of developing a master plan for the community, and in the process it considered the areas surrounding the then-current town limits. Public opinion was split, with some residents wanting adjacent land to remain agricultural, while many landowners wanted to see further development, with a reduced amount of agriculture remaining. Town plan-

386 Resort Development

COURTESY OF CHAFFIN/LIGHT ASSOCIATES

Suites Ownership and Use Regulations ; 1/6 interest = 60 days per year/ four prime weeks (two summer and two winter). ; When space is available, members have unlimited additional use.

Each of the 12 suites is fully furnished and includes one bedroom, 1.5 bathrooms, a living area with a fireplace, and an efficiency kitchen.

ners were also interested in creating a green buffer around the community. While the county did not have a zoning designation that would have allowed the developers’ vision for Roaring Fork, the town of Basalt had a planned unit development (PUD) ordinance that would permit such a plan. Thus, the development team saw the site’s annexation by the town of Basalt as the way to pursue their vision for a private club modeled after the great camps of the Adirondacks. The approval process took approximately two years and included acceptance of the developer’s proposal to provide seed money to create the Roaring Fork Conservancy. To ensure the continued health of the Roaring Fork Conservancy, the Roaring Fork Club offered to donate one-half of 1 percent of all cabin and membership sales in support of the conservancy. In addition, the plan to limit the size of the cabins to 2,400 square feet (223 sq m) won favor with those residents who objected to the very large houses that were being built in the up-

county areas of Snowmass and Aspen. This size was determined, through discussions with potential buyers, to be sufficient for three bedrooms and other desired living spaces. Since there would be no subdivision and no public streets, the town would not be burdened by public maintenance costs. And since the membership occupancy would be seasonable, there would likely be no burden on the school system. The club was, however, expected to generate a significant number of new jobs, many of which might fall to Basalt residents. Finally, because of a significant shortage of affordable housing in the area, the developer agreed to provide 18 rental units for the project’s employees and four units that would be made available to town residents on a priority basis. These mutually agreed upon aspects of the plan, along with the developer’s commitment to revitalizing a portion of the Roaring Fork River and the fly-fishing emphasis of the planned amenities, helped win the desired approval. Financing The project required $20 million in owners’ equity and $10 million in debt. The remainder of the project was financed with no-interest loans from the membership deposits. The original 30 founding members’ deposits

were $55,000 each. The founders were to get one-third of their funding back when the regular membership reached 125 members, an additional third when the club opened, and the final third when membership sold out. Construction was financed by bank loans at prevailing rates. Personal guarantees by the general partners were required on all debt. Marketing Club memberships have been generated by invitation only. The initial marketing effort began with the partners approaching family and friends to enlist 30 founding members. This group came largely from the local area and from several primary markets in Texas, California, Florida, Illinois, and New York. Each of the 30 founders then were asked to offer five names of individuals that they would sponsor as club members, resulting in 100 charter members. Each potential new member must be sponsored by two members of the club. This process has worked well. As membership has grown, continuing interest in the club has been generated largely by word of mouth. Since Phase II will be a gradual development process with cabins built out over several years, the same marketing strategy is envisioned for Phase II.

DAVID O. MARLOW

The resort’s 48 cabins are rustic in design and scattered around the site in an informal way. Each cabin measures approximately 2,400 square feet (223 sq m) and has an indoor/outdoor fireplace.

Roaring Fork Club 387

Community Ties and Benefits The original partners made a number of commitments to the town of Basalt at the time of the annexation in 1997. In general, they agreed to be good citizens and to protect the environment. This philosophy has been beneficial to the members, residents of the area, and the environment. Basalt residents can participate in several of the club’s programs. An affordable pass enables them to play ten times per season. The club has designated two parking spaces on its property for Basalt fishers to access the Roaring Fork River. It also maintains a Nordic skiing track for area residents to enjoy. Portions of the track are accessible from the Rio Grande Trail. The club has also reached out to various community charities and nonprofit organizations. It sponsors a golf tournament each year for local charities, public causes, and the Roaring Fork Conservancy; hosts an annual fundraising event for the town’s public schools; and donates the course to three local schools for tournaments. Annual contributions to various organizations include over $100,000 in cash, use of the club facilities, and 250 golf rounds. A key part of the club’s commitment to the town of Basalt and the environment is the Roaring Fork Conservancy, cofounded with the town in 1996 as an independent nonprofit organization dedicated to inspiring people to explore, value, and protect the Roaring Fork watershed. Each year one-half of 1 percent of the club’s gross revenues from cabin and membership sales is allocated to the conservancy, which has grown into an organization with an annual budget of over $500,000. The club has generated numerous positive fiscal impacts for the town, with minimal impact on the town’s municipal services. The club donates to the town a 1 percent real estate transfer fee on gross sales for cabins, suites, and memberships sold within the Phase Ib property. This contribution for 2006 was expected to exceed $25,000. In 2005, the club’s annual property and sales produced nearly $800,000. Lessons Learned and Experience Gained ; With a strong initial market, the partners pushed up prices too fast in 2000 and 2001, and potential sales were lost as the market softened after September 11, 2001. It is always prudent to reevaluate the pricing structure and consider smaller increases to maximize sales, even in a strong market.

388 Resort Development

; The original intent was to market the suites as rentals. Realizing that rental demand from members would be less than originally forecast caused a change to 1/6 interval sales. However, this change in strategy would have been more effective with a different product design, such as a two-bedroom unit with a small kitchen. ; A changing market has clearly identified a much greater need for fitness facilities. In response, the plans for Phase II will include a 9,000-square-foot (836-sq-m) fitness center. ; A key objective was to have enough use by cabin owners and other nonowner regular members to support the project’s high service level. To increase occupancy in nonprime seasons, more cabins were offered in the shared ownership program, and the Phase II strategy will also stress shared-ownership cabin units. This program also is desirable for the town of Basalt, since it will increase the number of people who patronize local businesses. ; Experience has demonstrated the need for a banquet facility, which is planned for Phase II. ; The golf course fairways were originally planted with fescue grass, which proved to be difficult to maintain. In 2006, all the fairways were replanted with perennial ryegrass, which is more suited to the valley’s climate. ; The original plans did not provide sufficient land for turf growing. A project of this size needs at least two acres (.8 ha) for this purpose if turf replacement is to be from on-site “native” turf. ; The circulation system does not provide for a separate service entrance and a separate system for servicing the cabins. As a result, the service operations are more visible than some members desire. Phase II will seek to provide less visible service access. ; The all-cart, no-automobile access has been highly successful and has created a distinctive character for the project. The number of covered electrical recharging spaces required for the carts, however, was significantly underestimated. ; The need for storage space by interval owners of cabin units was found to be greater than expected. ; Limiting the number of floor plans for the cabin units, but allowing earlier purchasers to make some design adjustments for the single-family units, has proven to be a cost-effective strategy and was not a sales deterrent.

COURTESY OF CHAFFIN/LIGHT ASSOCIATES

Site plan.

Roaring Fork Club 389

Project Data: Roaring Fork Club

Land Use Information

$2 million or approximately $215 per square foot

Average Annual Sales Acres/Hectares

Site area

282/114.1

Development Cost Information Site acquisition costs

$8,346,472

Land Use Plan Acres/Hectares Single-family cabins

7/2.8

Shared-ownership cabins

3/1.2

Shared-ownership suites

1/.4

Retail: pro shop

0.2/.08

Club facilities: buildings/parking lots/roads, etc.

33/13.4

Golf course turf surfaces

71/28.7

Bio-islands/gardens

45/18.2

Open space, including lakes and ponds

121.8/49.3

Total

282/114

Infrastructure

$14,417,242

Golf course construction

$18,019,072

Fishing habitat

$1,113,955

Total

$33,550,269

Construction Costs Clubhouse/pro shop/buildings; amenities/pool/tennis Employee housing

$3,041,111

Total

$19,653,482

Consultants

$6,712,751

Project management

$6,532,991

$9,900

Marketing and membership

$4,425,483

$120,000

$4,950

Construction interest and fees

$3,849,767

$35,000

$2,640

Charitable donations

Number Permitted

Number Sold 2006

Deposit 20061

Annual Dues

Regular

375

300

$200,000

National

125

125

50

50

Social

$428,349

Startup/operational subsidies Real Estate Offerings (Single-Family Cabins) Unit Type

Number of Units

Density (units per acre)

Unit Size (sq ft/sq m)

Typical Sales Price (2006)2

33

8

2,400/223

$2,250,000

Cabin

$16,612,371

Soft Costs

Club Membership Plan Membership Category

Site Improvement Costs

$3,477,037

Total

$25,426,378

Total Development Cost

$86,976,601

Developers/Owners Wilhelm Family Limited Partnership Chaffin/Light Associates

Net Residential Building Density All Cabins (per acre/hectare)

4.8/11.88

Telluride, Colorado www.chaffinlight.com

Retail/Restaurant Information (all owned space in several building locations) Type

Operator/Management

Total Building Area (sq ft/sq m)

Roaring Fork Club, LLC

Retail: pro shop

1,500/139

Basalt, Colorado

Restaurants/outdoor spaces

9,300/864

www.roaringforkclub.com

Total

10,800/1,003

Real Estate Offerings (Fractional Cabins/Suites) Number of Housing Units

Ownership Interest

Unit Size (sq ft/sq m)

Number Sold

Typical Sales Price 20063

Cabin

11

1/4

2,400/223

All

$525,000 per 1/4

Cabin

4

1/6

2,400/232

All

$325,000 per 1/6

Suite4

12

1/6

700/65

27

$189,000 per 1/6

Total

27

Unit Type

Notes 1

The membership deposit is refundable in full after 30 years of membership and thus is a no-interest loan to the club. This amount can be reduced to

$150,000 but is then only 70 percent refundable. The national and social categories’ deposits are also refundable under these terms. 2

Initially, single-family cabins started at $1,170,000.

3

Initially, 1/4 interest units started at $330,000, 1/6 interest units started at $195,000, and suites were to be rentals but converted to 1/6 interval starting at $170,000.

4

Suites are sold as “Cabin Partners” shares, with six periods available for each unit.

390 Resort Development

Golf Architect Nicklaus Designs North Palm Beach, Florida www.nicklaus.com Architect Poss & Associates Aspen, Colorado www.billposs.com Development Schedule Planning started

1995

Site under contract

1996

Construction started

1997

Sales/leasing started

1997

Phase Ia completed

1999

Project opened

May 1999

Phase Ib completed

August 2002

Pool/tennis, suites and three cabins were built as Phase Ib in 2000–2002.

Roaring Fork Club 391

Sunrise Ridge Phase II, Yellowstone Club BIG SKY, MONTANA, USA

Sunrise Ridge is a luxury vacation condominium development within the Yellowstone Club in Big Sky, Montana. Phase II of this development parcel, made up of 43 duplex and triplex units, is being developed by UpperCross Partners, LLC, a Boston-based developer, in a joint venture with CrossHarbor Capital Partners, LLC, the principal financial investor. The larger Yellowstone Club development had its beginnings in the 1990s, when Tim and Edra Blixseth began acquiring undeveloped land in Montana with the intention of creating a family retreat. This idea evolved into the concept of creating an exclusive vacation-home community centered around a private club available only to property owners. Yellowstone Club opened in late 2000 as a private luxury ski and golf community. With 13,600 acres (5,500 ha) of private land and over 2,200 acres (890 ha) of skiable terrain, it features more than 60 private ski trails served by 12 ski lifts. There is also an 18-hole golf course designed by former British Open and Senior Open champion Tom Weiskopf. Other activities for club members and their guests include trout fishing, biking, swimming, hiking, camping, and horseback riding in the summer. and skate skiing, Nordic skiing, and snowshoeing in the winter. The Yellowstone Club project has received approvals from Madison County for a maximum of 864 subdivided properties, but it is likely that the eventual number of families with homes will be smaller, since some homeowners are consolidating multiple parcels into larger property units or are retaining adjacent parcels to ensure privacy. Options for homebuyers include sites for their own custom-designed homes, private ranches with custom homes, on-mountain chalets, speculatively built luxury single-family residences, lodge condominium units, and duplex and triplex condominiums such as those

392 Resort Development

offered at Sunrise Ridge. Property buyers at the Yellowstone Club are generally high-net-worth families with a home base in another location and more than one vacation home. For many, the attraction of the resort is the exclusivity associated with its world-class recreational facilities. The 110,000-square-foot (10,200-sq-m) Warren Miller Lodge is the focal point for the basin at the foot of the two ski mountains. It includes 21 condominium units, dining facilities, a lounge, shops, office space, a fitness center, and a ballroom. Standalone lodge restaurants include the Rainbow Lodge and Timberline Café, both of which feature a “mountain elegant” atmosphere. A desirable amenity available to members for their guests is a collection of 20 serviced guest cabins situated midmountain and offering ski-in, ski-out access. Site The Yellowstone Club is located adjacent to the town of Big Sky in southwest Montana. The Gallatin Field Airport in Bozeman is 50 miles (80 km) away and is serviced by major commercial airlines. A seasonal airport at West Yellowstone is about 50 miles (80 km) to the south. The Yellowstone Club airport is the YC JetCenter, a fullservice facility and NetJet’s preferred FBO at Gallatin Field, designed to accommodate general aviation. The club enjoys spectacular Rocky Mountain views and excellent access to nearby national parks, wilderness areas, and other ski resorts. Yellowstone National Park and the Gallatin Mountains are directly east of the site. The Big Sky ski area and the Spanish Peaks are located to the north. National Forest lands and the Sphinx ski areas lie to the south, and the Lee Metcalf Wilderness Area, Muddy Creek drainage basin, and Cedar and Fan mountains are located to the west. Big Sky Resort’s 3,600 acres (1,450 ha) and Moonlight

UPPERCROSS PARTNERS, LLC

Located near the town of Big Sky in southwestern Montana, Sunrise Ridge is a 123-acre (50-ha) resort nestled in the Rocky Mountains.

Basin Ski Area’s 1,900 acres (770 ha) are connected with the Yellowstone Club, offering over 7,500 total acres (3,000 ha) of skiing terrain. The site encompasses a rugged mountain terrain with steep slopes covered with pine trees and dotted with high mountain meadows. It includes several major peaks: Pioneer at nearly 9,900 feet (3,000 m), Andesite at 8,500 feet (2,600 m) and Eglise at 9,500 feet (2,900 m). The 123-acre (50-ha) Sunrise Ridge site is situated on a steep hillside overlooking the ski base, several minutes’ drive away. A ridge generally running east-west across the site provides a natural platform for units with maximum southern exposure and views toward Yellowstone Park, Yellow Mule Ridge, the Tom Weiskopf–designed golf course, Warren Miller Lodge and base area, and Eglise, Sphinx, and Pioneer mountains. Planning and Development Many of the Yellowstone Club’s initial plans, including roads, infrastructure, and the overall configuration of land parcels, were laid out by Tim Blixseth, the visionary behind the project. His background in timber and land development and his feel for the land and its opportunities and constraints were invaluable. Several years after the initiation of the development, the company engaged Hart Howerton Planners from San Francisco to prepare proposals for a more formal master plan, but they were not implemented.

Overall plans for the resort include further buildout of the base area facilities to create a village atmosphere with additional recreational activities and entertainment options, as well as further development to maximize the potential of increasing ski terrain and equestrian facilities. Additional buildout will include development along the Gallatin riverfront to facilitate a pedestrian and recreational corridor linking various housing components in the vicinity of the base area and the village core. Future plans will increase awareness of the consciousness of the environment, with the potential for green or LEEDcertified architecture. Development of the Sunrise Ridge parcel was originally initiated by the Yellowstone Club. As a condominium community with a lower price point for entry into the club than the larger and more expensive single-family homes, it was believed to be an important component in encouraging sales and building up club memberships in the early phases of the development. Work on Phase I began with five buildings comprising 15 units, but in 2006 the Yellowstone Club development entity decided to forego developing the remainder of the parcel. A back-of-the-envelope deal was struck between the club and the team of CrossHarbor Capital Partners and UpperCross Partners to buy the land as well as the development rights to the remainder of the parcel. This agreement covered the rights to develop the remaining five triplex buildings and 14 duplex build-

Sunrise Ridge Phase II, Yellowstone Club 393

UPPERCROSS PARTNERS, LLC UPPERCROSS PARTNERS, LLC

Winter activities for club members and guests include downhill skiing, Nordic skiing, and snowshoeing.

The 4,000-square-foot (370-sq-m) clubhouse features a pool, fitness center, and an owners’ lounge.

394 Resort Development

Construction A variety of conditions make construction quite challenging at the Sunrise Ridge site. Foremost are the weather conditions that limit the types of work that can be undertaken during certain times of the year. For example, since concrete is highly sensitive to temperature, it is essential to ensure that correct climatic conditions are met. It is thus extremely expensive to lay concrete foundations during the winter months, and all construction has to be planned around this schedule.

The timing for earth moving is also dependent on seasons. Because the Yellowstone Club lies within a Zone 5 earthquake zone, grading and other works related to soils must be done during weather conditions when the ground is relatively dry, so that water-soaked soils do not experience adverse movement. The ideal situation is to complete foundation work, framing, and enclosure of the structure before cold weather sets in, so that interior work can be carried out during the winter months, which last from November through April. The rugged mountain terrain presents another challenge. Not only does it make it harder to bring large equipment to the site, but it adds another layer of difficulty in efforts to protect the environment during construction. The setting, including trees and vegetation and other natural features, is an important feature of the homesites, and it takes careful planning and sensitive building techniques to ensure that it is protected during the construction process. The steep terrain also demands specialized engineering and architectural considerations. Another major issue, common to all developers in these types of remote resort environments, is finding qualified construction contractors, and in particular those subcontractors who perform work under the general contractor. Design The clusters of two- and three-unit buildings at Sunrise Ridge have been designed to complement and blend into the native landscape. Buildings feature dry-stack masonry on the lower floors and rough-sawn wood siding on upper floors, topped with cedar shake roofs.

UPPERCROSS PARTNERS, LLC

ings for a total of 43 additional units. (One year prior to that time, the developers had purchased five singlefamily lots on which to build luxury speculative homes in the Andesite section of the Yellowstone Club, and this purchase became the basis for the eventual acquisition of the Sunrise Ridge Phase II project.) UpperCross Partners is a real estate developer specializing in high-end luxury vacation homes. CrossHarbor Capital Partners is an alternative investment management company that specializes in commercial real estate. The firm invests in a wide variety of opportunistic and value-oriented transactions where the conditions exist for exceptional risk-adjusted returns over a short and medium duration. It invests in singleproperty transactions, multiple-property portfolios, real estate–related operating companies, and all forms of real estate debt and equity securities. The firm invests extensively throughout the United States and selectively considers transactions in other countries. CrossHarbor’s investments are structured in numerous capital forms including equity, preferred equity, mezzanine loans, and transitional mortgages. Since 1993, it has committed $1.7 billion of capital to more than 140 transactions with a combined property value in excess of $8 billion. All approvals had already been obtained for the parcel from the Madison County planning department when the project was purchased. Because the plat specifications for building envelopes, sizes, and locations were finalized, this made any significant changes extremely difficult to implement. (Not only would changes have required approval from the county authorities, but they also would have required consent from all property owners in the Sunrise Ridge Condominium Association.) In mid-2007, UpperCross explored the possibility of adding more units to the development, but it quickly became clear that it would be impossible to gain approvals for such a plan.

Duplexes are large, with approximately 5,000 square feet (465 sq m) of living area including five bedrooms, seven bathrooms, a full kitchen, a dining room, a great room, a family room, and two mud rooms.

Sunrise Ridge Phase II, Yellowstone Club 395

UPPERCROSS PARTNERS, LLC

Site plan.

Generous outdoor decks and patios offer unobstructed views of the Yellowstone Club valley. Each unit is designed for luxurious mountain living with an open floor plan and classic alpine architectural detailing. The interiors include timber accents, wide-plank distressed oak floors, multiple fireplaces, and radiant floor heat. The ceilings are a combination of wood paneling with painted light skip trowel plaster finish. The doors and trim are stained alder, and the hardware throughout is Rocky Mountain cast bronze, which complements the warm color palette and adds a rustic touch. Triplex units have over 3,400 square feet (315 sq m) of living area: four bedrooms, six baths, a full kitchen, a dining room, a great room, a family room, and a mud room. Duplexes have approximately 5,000 square feet (465 sq m) of living area, including five bedrooms, seven bathrooms, a full kitchen, a dining room, a great room, a family room, and two mud rooms. Kitchens feature granite-slab countertops and a large work island. There are two laundry areas in each unit, with an under-counter washer and dryer on the lower level and a stackable washer and dryer in the master suite. Certain master bedroom suites have an additional loft and sitting area attached. All master baths include a steam shower and cast-iron whirlpool tub. The family room architecture allows for large-scale media functions and billiards. The living rooms are large, open, vaulted spaces contiguous to the kitchen, dining room, and outdoor decks and stone terraces. Residents of Sunrise Ridge can take advantage of all the amenities available at the Yellowstone Club, from skiing to golf. There is also a 4,000-square-foot (370-sq-m) clubhouse with pool, fitness center, and an owners’ lounge exclusively

396 Resort Development

for Sunrise Ridge residents. Services include a concierge and shuttle service to the main base area. Financing Senior construction financing for the project is held by an international bank. Sunrise Ridge has the ability to draw the amount of cash needed for construction as well as any soft costs that are incurred on a monthly basis. The loan allows for a maximum aggregate draw of $100 million, with a maximum of $65 million outstanding at any one time. The interest rate is LIBOR +275 basis points, and Sunrise Ridge can choose the type of LIBOR contract (one-month, three-month, and so on) at each draw. The loan allows up to six separate LIBOR contracts (tranches) at any one time, and once the contracts expire they can be rolled together into another contract. The loan has a maximum term of three years and can be repaid in part or in full with no penalty, as long as the lender is given advance notice. Marketing and Sales The marketing and sales of homes at Sunrise Ridge are handled by the Yellowstone Club’s in-house marketing and sales team, Big Springs Realty. Sunrise Ridge has proven to provide an alternative product to the larger single-family model typical of a private club, fulfilling a niche market previously unavailable to a prospective and existing membership. Yellowstone Club membership currently totals 300. Approximately 100 residences had been completed at the Yellowstone Club by yearend of 2007. It is estimated that these homes, some speculative and some custom-built, have ranged in cost from $2 million to more than $20 million.

UPPERCROSS PARTNERS, LLC

UPPERCROSS PARTNERS, LLC

Duplex floor plan.

Triplex floor plan.

Lessons Learned Although homebuyers appreciate the wilderness and wide-open spaces of Montana and the Yellowstone Club, club members also want convenience and easy access to services and amenities, as well as passive recreational pursuits. Future phases will focus on a mixed-use village environment located in proximity to the newly constructed Warren Miller Lodge and the base area. The new products will endeavor to offer more options, creating an increasingly diverse range of residence sizes and architectural styles while preserving the required integrity of the club architecture and environment. All future development will be more respectful of increasing concerns related to the use of natural resources and will continue to become more “green” as budget, environment, and circumstance allow.

Sunrise Ridge Phase II, Yellowstone Club 397

Project Data: Sunrise Ridge Phase II, Yellowstone Club

Land Use Plan

Lot Finish Acres/Hectares

Townhome residential

35/14

Open space

88/36

Total

123/50

Site area

123/50

Percentage complete

75

Approximately $2.5 million in landscape improvements inclusive of hard and soft costs Construction Costs Residential

$71,299,300

Clubhouse

$2,381,632

Landscaping Total

Residential Information No. of Units

Unit Size (sq ft/sq m)

Typical Sales Price

Duplex

28

5,000/465

$5–6 million

Triplex

15

3,400/315

$3.5–4 million

Total Units

43

Legal/accounting

Phase I units

15

Taxes/insurance

Total Phase I and II

58

Construction interest and fees

Unit Type

Soft Costs Architecture, engineering, planning

$1,701.339

Project management

$2,414,897

Marketing (including furnished models)

$2,232,834

Total Net Residential Density (units per acre/hectare) 1.65 per developed acre (4 per ha) Approx. 1 unit per 2 acres (.8 ha) overall

$2,244,166 $75,925,098

Total Development Cost

$792,460 $2,982,820 $7,609,416 $17,733,766 $153,996,021

Other Costs Various contractor contingency

$2,639,600

Development Cost Information

General contingency

$3,029,481

Estimated cost at completion

Borrower’s contingency

$1,000,000

Total project cost including contingency

$161 million

Site Acquisition Costs Land

1

19,611

Title insurance

68,821

Phase I report Total

Notes 1

Includes site improvements estimated at $5 million.

2

Low cost reflects previous research and development at site.

398 Resort Development

$100,000

Off-site mitigation and controls

$150,000

Temporary utilities and services

$135,000

$60,000,000

Due diligence2 Legal fees

Sports equipment, recreation center

238,726 10,000 $60,337,158

Developer UpperCross Partners, LLC Boston, Massachusetts www.uppercrosspartners.com

Owner CIP Sunrise Ridge Owner, LLC Boston, Massachusetts www.crossharborcapital.com Architect and Site Planner Snowdon and Hopkins, Architects, PC Vail, Colorado www.snowdonhopkins.com Landscape Architect Land Design, Inc. Billings, Montana www.ldinc.net Custom Builder Boles Construction, Inc. Bozeman, Montana www.bcbi.net Development Schedule Planning started

March 2006

Site purchased

June 2006

Construction started

June 2006

Sales/leasing started

June 2006

Phase I

Completed previously

Phase II completion

December 2008

Sunrise Ridge Phase II, Yellowstone Club 399

Taj Green Cove TRIVANDRUM, INDIA

Taj Green Cove is a four-hectare (10-ac), 57-room resort located at Kovalam Beach in the South Indian state of Kerala, approximately 14 kilometers (9 mi) from the city of Trivandrum (officially known as Thiruvananthapuram), on the nation’s southwestern tip along the Arabian Sea. The region’s climate is tropical, with high humidity and a monsoon season. The city of Trivandrum has a population of 1.1 million and an economy based on software and biomedical industries, animation, education, and tourism. Medical tourism is also of growing importance: people from western countries are increasingly traveling to India for its high-quality, affordable procedures such as joint replacement, cardiac surgery and cosmetic surgeries, as well as for rest and recuperation. The resort features three distinct environments: a palm-dotted hillside overlooking the sea, a lagoon, and a beachfront, thus recreating a microcosm of the Kerala region, which is known for its hill retreats, “backwaters,” and beaches. Facilities include an open-air reception area, a bar and two restaurants, a spa, a fitness center, a pool, and 57 luxury guest cottages. Location and Site Kovalam and the area surrounding it have been well known internationally as a tourist destination since the 1980s, but they are still largely populated by small, inexpensively priced hotels. The presence of a Taj hotel, one of India’s premier hotel chains, has helped elevate the area’s image for foreign as well as domestic travelers. Major changes are expected in the future; larger land parcels have been purchased by resort developers, and there are plans for more large-scale resorts in the area. The Taj Green Cove is a 30-minute drive from Trivandrum and its international airport. International flights

400 Resort Development

into Trivandrum are currently somewhat limited, but there are plans to build a larger facility in the vicinity of the current airport in the next few years. The main portion of the resort sits on a promontory of approximately 1.6 hectares (four ac) that overlooks the sea. From there, a paved pathway leads to the lagoon below and a stretch of beach just beyond. The beach associated with the resort was originally three hectares (seven ac), but it has been reduced to around 1.8 hectares (4.5 ac), owing to coastal erosion in recent years. The seafront parcel was purchased by the developer in the 1980s with the intention of building a hotel. New coastal land use regulations enacted in the early 1990s, however, prevented any further development from taking place in the zone between the high-tide line and 500 meters (1,640 ft) inland. As a result of this restriction, the company purchased the hilltop site overlooking the beach for the main portion of the resort. This previously undeveloped parcel was covered with scrubby vegetation and coconut palm trees. Its steeply sloping hillsides and rocky soil made it unsuitable for farming or palm plantations. These attributes also made construction difficult and time-consuming. Planning and Development Planning for the project began in early 2002, and construction was initiated in July of that year. The permit process, which involved both the local government and the national Ministry of Environment and Forestry, was relatively smooth, according to the project architect. The development conforms with all relevant regulations and in fact is the only project in the area that has received approval from the ministry. Because of the rocky character of the soils, it was necessary to undertake extensive blasting to prepare

COURTESY OF MUTHOOT HOTELS AND TOURISM VENTURES, LTD.

Taj Green Cove is a beach resort located in southern India.

the site for construction. Since the site is surrounded by villages, this had to be carefully controlled to limit noise and dust. Some residents living nearby received compensatory payments and were relocated. The Kerala region has a strong tradition of sustainability, and the resort incorporates several green features into its design and operations. About 70 percent of the materials used were sourced locally. Potable water is obtained from the local water supply system and is purified further through an on-site treatment system. Sewage is treated on site through an activated sludge process. The treated graywater is used for all landscape needs. Site preparation was a difficult, time-consuming, and expensive process owing to the site’s extremely rocky

conditions. It took a year to complete the blasting process, and up to 6,000 cubic meters (212,000 cu ft) of stone were removed. This translated to approximately 1,500 truckloads of stone. Site conditions also made it difficult to create level building platforms. Some of the guest villas are built on foundations on top of groundlevel platforms, while others perch on pillars standing on the platforms. Trenches were dug throughout the site to house 12 different utilities such as water pipes, electrical cables, and data and phone lines. Natural materials were used extensively in the construction, including stone rubble quarried from the site. The guest villas are built of load-bearing “random rubble” stone walls with concrete posts inside.

Taj Green Cove 401

COURTESY OF MUTHOOT HOTELS AND TOURISM VENTURES, LTD.

Facilities include an open-air reception area, a bar and two restaurants, a spa, a fitness center, a pool, and 57 guest cottages.

Design and Facilities The Taj Green Cove property is composed of three interconnected elements, each with a particular character. The palm-dotted hillside overlooking the sea is the site of the resort’s main portion. A lagoon area and a beachfront complete the landscape. Clusters of two- and four-unit guest villas perched on the hillsides overlook the lagoon and sea below. Described by the architect as “tropical cool,” the hotel’s design combines local architectural elements such as thatched roofs and stone walls with modern lines to create a warm, contemporary image. The resort’s main reception building is largely open to the elements and is defined by stone and plaster walls. This central facility contains the reception desk, a lobby lounge, an enclosed, air-conditioned bar, a spa, and a fitness center on the ground-floor level. Large floor-to-ceiling windows in the bar, fitness center, and spa bring the outdoor tropical garden views into the airconditioned spaces. A wooden-deck veranda topped by a trellis shades the windows and provides a pleasant walkway from the reception area to the guest cottages. The swimming pool, open-air casual dining, and an air-conditioned fine-dining restaurant occupy the level

402 Resort Development

above the lobby. A lower level houses the plant and engineering and receiving areas. Two restaurants are featured in the hotel’s central complex: Jasmine Bay, a casual poolside multicuisine café, and Curries, a more formal restaurant specializing in Indian cuisine. In addition, a seafood barbecue is set up every evening on the beach. The Neera bar is situated just off the lobby. The spa, located in the main reception building, is an integral part of the resort from both a design and a functional standpoint. It currently features a spacious reception area, a small gift shop, and a relaxation/yoga room with floor-to-ceiling windows providing a close-up view of a waterfall and tropical garden. Four treatment rooms look out to landscaped private gardens. Each room has a private steam bath/shower. Because of the spa’s popularity, there are plans to build two additional treatment rooms. The resort also features a conference room large enough to seat 150 people theater-style, and a boardroom with a capacity of 25 people in the main reception building. A small business center is located just off the main lobby. Other on-site facilities include a full kitchen and laundry, staff dormitory, and sewage treatment.

The superior guest-room clusters are configured with two units above and two below, while the larger suites are configured as one-over-one. The sea-facing rooms, located higher on the hillside, command higher room rates than the garden-facing rooms. The rooms are constructed of granite rubble walls topped by pitched thatch roofs. There is extensive use of timber both inside and outside the units; in addition to wooden window frames and shutters, there are carved doors and wooden balconies and railings. The villa-style guest rooms include a range of luxury-level accommodations: 40 garden-view rooms, eight sea-

view rooms, eight suites, and one presidential suite that features its own private pool. Landscaping is the thread that softens the edges of the buildings and helps create a tropical resort ambience. Designed and installed by Bali-based Australian landscape designer Made Wijaya, it exudes a lush, overgrown jungle ambience with abundant water features, including pools, fountains, and waterfalls, which ensure that the sound of moving water is always evident throughout the site. The gardens are interspersed with oversized stone statues in shapes based on South Indian symbols and objects such as brass lamps.

COURTESY OF MUTHOOT HOTELS AND TOURISM VENTURES, LTD.

A portion of the nearly 212,000 cubic feet (6,000 cu m) of stone removed during the blasting process was used to construct the buildings.

COURTESY OF MUTHOOT HOTELS AND TOURISM VENTURES, LTD.

Curries is the more formal of two restaurants at the resort. It specializes in Indian cuisine.

Taj Green Cove 403

COURTESY OF MUTHOOT HOTELS AND TOURISM VENTURES, LTD.

The reception area is linked to the guest cottage by a shaded wooden-deck walkway.

Financing, Management, and Operations The Muthoot Pappachan Group is the resort’s developer and owner. The company’s core business is microfinancing and the provision of gold loans. In recent years the Muthoot group has also been involved in real estate development. In addition to the Taj Green Cove, the company owns Muthoot Plaza, a business hotel in the center of Trivandrum. A destination resort and spa in the city of Cochin are also planned. The company purchased the land for the Taj Green Cove through internal financial resources. A construction loan was repaid within eight years. The hotel reached a break-even point after three years of operation. The hotel is managed by Taj Resorts and Palaces, one of Asia’s largest and best-known hotel groups, with 56 hotels in 39 locations across India and an additional 17 hotels in the United States, the United Kingdom, Africa, and other countries in Asia. It is part of the Tata Group, India’s premier business conglomerate. The resort’s general manager notes that staff recruitment and retention are difficult in this still relatively rural beachfront area. Since most staff come from outside the immediate area, it is necessary to provide accommodations for them on site. An intensive six-month training program is also provided. The program teaches basic skills in the first month and then operates through a mentor system for three months. Marketing One of seven Taj hotels in Kerala, and the Taj Green Cove is considered a gateway for the group’s resorts in

404 Resort Development

nearby Sri Lanka and the Maldives and a key component of the company’s strategy for expansion in South East Asia. A “Best of Kerala” package that requires a minimum of six nights at a Taj hotel in the region encourages travelers to stay at the other Taj hotels in the area. Other packages promote resorts in Kerala along with facilities in other destinations such as Tamil Nadu or Goa. The hotel attracts international tourists during the high season of November to March and a domestic tourist and corporate market in the monsoon season, which lasts from April to October. The hotel management attempts to separate these diverse markets through selective marketing that downplays corporate business during the high tourist season. About 50 percent of guests are from the United Kingdom and other European countries. Corporate guests travel from the United States, Germany, and other countries; many of them come to visit a nearby technology park. Business and conference travelers make up about 15 percent of the guests. There are a few international travelers from nearby countries, and the remainder of the resort’s market is largely domestic. In addition to Indian family vacationers, this market includes honeymooners, corporate travelers, and conference attendees. The average length of stay at the Taj Green Cove is four nights. The families and couples who come to the resort tend to stay on site rather than venturing out to sightsee. For that reason, the resort is now focusing on providing more activities and programs on site. The spa plays a significant role in marketing the hotel. About 75 percent of spa users are hotel guests,

and the rest are outside guests staying at other hotels in the immediate area. Taj Hotels have increasingly focused on spas as amenities, and the chain has gained a strong reputation for their spa services and facilities in India. The Taj menu of spa treatments is similar at all their hotels, but there are often specialties based on local traditions. At the Taj Green Cove, the focus is on South Indian ingredients such as spice scrubs or coconut exfoliates for rejuvenating treatments. Ayurvedic treatments are a local specialty that draws many foreign visitors. Ayurveda originated more than 10,000 years ago in this region of India. It involves a system of preventive and curative therapies such as oil and herbal

massages. Taj plans to create an expanded Ayurvedic component in a separate location at the hotel. It will include the services of an Ayurvedic doctor and specially trained therapists. The resort’s annual occupancy rate in 2007 was around 80 percent. A number of factors point to continued growth for the resort. The local and regional governments are becoming more proactive in promoting the Kovalam area as a tourist destination, and there are plans to more extensively develop and promote its backwaters and beachfront areas. A new Trivandrum airport, planned for completion in 2010, will also facilitate greater access.

COURTESY OF MUTHOOT HOTELS AND TOURISM VENTURES, LTD.

Typical sea-view guest room.

COURTESY OF MUTHOOT HOTELS AND TOURISM VENTURES, LTD.

The resort’s design blends regional architectural elements such as thatched roofs and stone walls with modern lines to create a warm, contemporary image.

Taj Green Cove 405

Lessons Learned The Taj management company was brought on board by the developer soon after project construction started. Although it is preferable for a management company to be part of the initial design and planning phases, Taj was able to work with the development team even at this late stage to alter some aspects of the design to fit its requirements and to make the resort more efficient from an operational standpoint. The developer and hotel management company experienced quite a few challenges in building and promoting a luxury resort in an area with minimal tourist infrastructure such as roads and water treatment facilities. Size constraints at the site’s hillside portion required careful placement of the villas and extensive landscaping to create a sense of privacy. According the owner, it would have been desirable to allow more space between individual villas and more space for gardens and open spaces, but the size constraints of the small, rocky site prevented this.

406 Resort Development

IYER & MAHESH

Site plan.

Other design shortcomings have been discovered after several years of operation. For example, a wider pool deck and a more spacious area for poolside dining would have been desirable. The room configurations work well, according to the owner, but in retrospect it would have been preferable to include larger wardrobe areas and bathrooms. As is typical at luxury resorts, suites are in large demand at the hotel, and so a larger proportion of suites to standard rooms would have further increased revenue. After several years of operation, the owner feels that there is a stronger market for upper-end tourism in this area of Kerala than anticipated, and it would have been preferable to have aimed for a higher proportion of affluent guests. This could have been accomplished through larger rooms and more extensive facilities. To help make the resort a stronger destination, a putting green has been added, and there are plans to create an Ayurvedic spa.

Project Data: Taj Green Cove

Land Use Plan

Soft Costs Acres/Hectares

Total site area

10/4

Hotel Information

Architecture, engineering, and planning

$17,400

Loan interest and fees

$163,700

Rack Rate

40

$250

Sea view

8

$300

Muthoot Centre

Suites

8

$450

Punnen Road

Presidential suite

1

not available

Total

57

$59,500

Legal and accounting

Number of Rooms Garden view

$223,200

Project management

Developer/Owner Muthoot Hotels and Tourism Ventures, Ltd.

Trivandrum Kerala, India www.muthoot.com

Average annual hotel occupancy 80% Hotel Operator/Management Taj Hotels Resorts and Palaces

Other Facilities Associated with Hotel Total Area (sq ft/sq m) Retail (operated by Taj)

1,830/170

Meeting room (seats 150)

2,000/186

Spa Total

2,000/186

Four treatment rooms

388/36 each

Site Acquisition Cost (U.S. dollars )

Mumbai, India www.tajhotels.com Principal Architect Iyer & Mahesh Kerala, India www.iyerandmahesh.com

1

Land

$1,507,500

Buggy path

$43,700 $9,700

Landscaping

$544,300

Parking area

$45,000

Hotel Construction Costs Central facility block

$2,630,800

Land cottages

$861,100

Security cabin

$1,100

Cold room (food storage)

PT Wijaya Tribwana International Jl. Pengembak 9B

Site Improvement Costs Service entry road

Landscape Architect/Site Planner

Sanur, Bali Indonesia www.ptwijaya.com Development Schedule Site purchased

Late 1980s

Planning started

Mid-2002

Construction started

July 2002

Completion and opening

December 2005

$25,000

Other Costs Electrical fittings

$423,800

Furniture and fittings

$798,900

Other equipment Plant and machinery

$136,200 $1,766,800

Computer

$157,400

Inventory

$365,500

Vehicles

$60,700

Library Total Construction

$1,100 $9,378,600

Note 1

Exchange rate 8/8/07: 1 rupee = $0.02480.

Taj Green Cove 407

WaterColor Inn and Resort SANTA ROSA BEACH, FLORIDA, USA

“It’s relatively easy to be called ‘a place.’ It’s a lot harder to be truly thought of as ‘a place,’” says chairman and CEO Peter Rummell of the St. Joe Company. St. Joe is the developer of WaterColor, a 499-acre (202-ha) coastal resort community on the Florida Panhandle along the Gulf of Mexico. The community, now completed, includes 1,020 single-family and multifamily homes, 100,000 square feet (9,300 sq m) of commercial space, a 60-room boutique hotel, and a wealth of recreational amenities: a beach club, tennis club, boathouse, dune walkovers and boardwalks, and a lakefront park. Nearly half the site is preserved as open space. The community lies adjacent to the Grayton Beach State Recreation Area and is bisected by Scenic Highway 30A, which runs parallel to the shore. WaterColor’s site has a distinctive advantage: it wraps around the community of Seaside, the town that established the new urbanism as a force in community design. WaterColor’s town plan was designed by master planner Jaquelin T. Robertson of Cooper, Robertson & Partners. His concept aimed to accord with that of Seaside. The two communities together create a large pedestrianfriendly district that encourages residents to park their cars and ride a bicycle or walk to everything they need. The Importance of Seaside It is impossible to fully appreciate WaterColor without first understanding the adjacent development of Seaside, an 80-acre (32-ha) beach resort town developed by Robert Davis. In 1946, J. S. Smolian bought the coastal property on Florida’s Panhandle to build a summer camp for employees of his Birmingham-based department store. But the site was so remote that no one wanted to go there, and it remained undeveloped. In the 1970s, Smolian’s grandson, Robert Davis,

408 Resort Development

inherited the land. Davis, a southern Florida developer, assembled a group of young architects—most notably Andrés Duany and Elizabeth Plater-Zyberk—and began formulating his vision of the kind of beach town he remembered from his childhood. The basis of this kind of town was the five- or ten-minute walk: the distance a person would comfortably walk to obtain daily needs. In 1981, Seaside opened as the prototype of what would become the new urbanism. Seaside also became the ultimate pedestrianoriented new community. The town is organized so that all homes are within a short walk to the center, the beach, and other carefully located facilities. The beach is accessed by nine boardwalks that run over the dunes, preventing foot traffic from destroying the protective dune grasses. Each boardwalk has its own individually designed pavilion that overlooks the beach, offers shade and seating, and serves as a neighborhood landmark. There are no parking lots for beach visitors, so everyone walks or bikes. At Seaside, the public domain takes precedence over the private. The town center is the community’s focal point. Surrounding a grassy amphitheater, it includes all the day-to-day basics (a grocery store, bookshop, post office, bike rental, and a range of restaurants) as well as luxuries like art galleries and jewelers. On upper floors and tucked behind the storefronts, one can find medical offices, insurance agents, and other services. Civic institutions include the Seaside Charter School and the Seaside Institute. The town center is a place to greet neighbors, get a newspaper, and have ice cream with the kids. If all of this sounds unexceptional, it is only because Seaside has been so influential as a model that many resort communities now strive to achieve the same kind of ambience and functionality.

THE ST. JOE COMPANY

With a beach club and full-service hotel, WaterColor’s town center was designed to complement the existing town center at the nearby town of Seaside.

Seaside has been enormously successful in economic terms, with its homesites appreciating an average of 25 percent annually. The first residential lots sold in 1983 for $15,000. Today, the few remaining lots sell for seven figures. Cottage prices can go above $3 million. Properties are snapped up quickly, often by current owners who either move up or increase their holdings. Vacation rentals are a thriving business at Seaside. Most of the housing stock is rented to vacationers at least part of the time. Rentals are managed through an on-site office that provides hotel-level service to guests. The cottages, townhouses, and flats command high prices, and vacancies are rare. Another measure of Seaside’s success is the way it has set the stage for development along the Gulf Coast

from Pensacola to Panama City. The coast is now home to several new urbanist communities in various stages of completion, including WaterColor, WaterSound Beach, Rosemary Beach, and Camp Creek. Seaside has also driven up the coast’s values, which are competitive with the best resort properties in the nation. The WaterColor Site WaterColor’s site is irregularly shaped and relatively level. With 1,400 linear feet (425 m) of beachfront on the renowned soft white beaches of Walton County, coastal pine forests, freshwater marshes, sawgrass wetlands, and a large natural lake, it offers a variety of natural landscapes and advantages. Much of the site is wooded, and care has been taken to preserve existing

WaterColor Inn and Resort 409

THE ST. JOE COMPANY

A canal leads to an oval pond in Cerulean Park, which is located near shops and the WaterColor Inn.

vegetation. The community of Seaside borders part of its southern and eastern edge. The St. Joe Company has owned the property since 1927. Planning and Design At full buildout, WaterColor will include 1,140 residences; 100,000 square feet (9,300 sq m) of commercial space; a full-service 60-room hotel; beach, tennis, and swimming facilities; dune walkovers and boardwalks; and a lake with a boathouse, surrounded by a lakefront park. Nearly half the site is being devoted to open space and preservation of natural habitats. The site plan is based on principles of the new urbanism, a decision that was influenced by its adjacency to Seaside. WaterColor is explicitly designed for connectivity with Seaside. View corridors were considered and walking paths connect, although neighborhood streets do not. Homes that back to Seaside were even designed to be compatible with the older project’s more exuberant style and color palette. The WaterColor plan emphasizes neighborhoods of houses on small lots. It respects the site’s diverse natural environment, making use of the marshes, creeks, and wooded lake frontage as natural settings. Destinations have been located along the central axis, making it easy to walk from nearly every home to the town center, the inn, and recreational facilities. Beach access is by way of footpaths located every couple of blocks. The beach is public and draws tourists, who also frequent the businesses at the town center. Interaction between residents and

410 Resort Development

tourists adds to the sense of community. Unlike most of Florida’s resort communities, WaterColor is not gated. Neighborhood character is enhanced by tree-lined, pedestrian-scaled streets and narrow alleys with houses designed in vernacular southern styles. The emphasis is on casual simplicity. Deep porches and overhanging roofs provide shady relief from the Florida sun. Color palettes combine pale neutrals with rich, deep shades, and materials are drawn from traditional southern beach houses: metal roofs, shingle and wood siding, simple wood trim. In keeping with the casual atmosphere of a beach town, walkways are made of crushed shell, as they are at Seaside. Boardwalks lead across the lake and to the beach. The landscape design relies on native plants, which are best suited to the environment and lend an appropriate character. A staff naturalist teaches residents the importance of retaining the native plants on their own lots rather than clearing them and installing lawns. A relaxed atmosphere is important for a resort community, and the developer believes that the pedestrian focus is an essential ingredient of that atmosphere. Once people arrive, they can escape from their daily routines, including their cars and traffic woes. It is obvious that residents have taken to this kind of lifestyle. Caravans of families biking to the beach are a common sight. Bicycles are included in cottage rentals, a great incentive for guests to embrace the WaterColor experience. The Bike Barn, a community amenity, also offers

bicycles of all sizes for homeowners and guests to rent, as well as maps and excursion information on the woodland train system. The parking spaces near the beach are rarely used. The project encompasses 27 neighborhoods in four phases. Buyers can select a lot and then choose a St. Joe home plan, or they can hire an architect to custom design a home for their lot. St. Joe’s house plans were designed by five nationally recognized architecture firms: Historical Concepts, Looney Ricks Kiss, Allison Ramsey Architects, Florida Haus, and Kiara Designs. These designs drew inspiration from the indigenous architecture of nearby Grayton Beach and Defuniak

Springs and the Carpenter Gothic houses found in lower Alabama and coastal Florida. They also drew on influences from Key West and the Caribbean. The architecture of the town center is inspired by the subtropical southern architecture that originally came to northern Florida by way of Georgia and Alabama and indirectly from the Caribbean via Charleston, which was considered the taste setter for the 18th- and 19th-century South. This somewhat rustic vernacular is found in the Florida Cracker cottages endemic to this area. These art and architectural themes are carried out in every detail, right down to the door pulls and bridge light fixtures. For example, the footbridge over Western

THE ST. JOE COMPANY

The homeowners association owns and manages the beach club in addition to other portions of the development.

THE ST. JOE COMPANY

Hotel-style services are offered at the beach club’s pool. A 90-seat deck overlooks the pool and beach along the Gulf of Mexico.

WaterColor Inn and Resort 411

Lake is lighted by a series of handmade copper and stained-glass cattails.

Community Amenities WaterColor offers a wealth of recreational facilities to residents, hotel guests, and those staying in vacation rentals. The beach club features a beachfront pool with

THE ST. JOE COMPANY

Town Center WaterColor’s planners recognized that Seaside’s town center is the area’s main commercial hub. In designing WaterColor’s town center, their goal was not to duplicate Seaside’s center but to enhance it, supplying whatever elements were missing. A major component, therefore, is the WaterColor Inn, the only full-service hotel in the area. In addition to the WaterColor Inn, the town center includes the beach club (a major recreational amenity, designed by Jaquelin T. Robertson of Cooper, Robertson & Partners, street-level shops and restaurants, and upper-level residential units. The layout was influenced by the public squares of the French and Spanish American colonies. Adjacent to the center is Cerulean Park, designed by landscape architects Susan Nelson and Warren Byrd. A landscaped canal/fountain runs along its length and leads to a wooden pedestrian bridge that crosses Western Lake, providing convenient access between Phase III residential neighborhoods and the town center and beachfront. The town center encompasses 30,000 square feet (2,800 sq m) of retail space, with residential units on upper floors. In addition, a 70,000-square-foot (6,500-sq-m) shopping center is located at WaterColor’s edge, anchored by a Publix grocery store.

WaterColor Inn The inn is a key component of WaterColor’s marketing strategy. Real estate buyers are usually visitors first, and the inn provides an initial opportunity for potential buyers to appreciate the WaterColor experience. Opened in 2003, the 60-room inn is the first boutique hotel in Northwest Florida. Now a part of Preferred Hotels & Resorts, the inn quickly gained favor among sophisticated travelers and presently is Northwest Florida’s only AAA fourdiamond hotel. In 2006 and 2007, readers of Travel + Leisure magazine voted the property one of the “world’s best.” Founded in 1968 as a referral service for six independent hoteliers, Preferred Hotels & Resorts is now a global brand of more than 120 independently owned luxury hotels and resorts worldwide. Architect David Rockwell designed the building with its natural setting in mind. All rooms have beach views and private balconies or patios. Six ground-floor rooms facing dunes feature canvas-enclosed outdoor showers. Hotel amenities include a day spa, a regional sales center, a library, a beachfront pool deck with heated swimming pool and hot tub, a restaurant, and guest access to community amenities. The hotel includes 4,000 square feet (370 sq m) of meeting space.

The 60-room WaterColor Inn serves in part as a marketing strategy to entice potential homeowners by giving them a taste of the WaterColor lifestyle.

412 Resort Development

THE ST. JOE COMPANY

A wooden pedestrian footbridge crosses Western Lake to join the Phase III residential area with the town center and beach.

hotel-style services and a poolside dining facility. Kayaks, snorkeling equipment, and other equipment are available. WaterColor Workout, a state-of-the-art fitness facility, is part of the amenity package. This facility, which includes a peaceful outdoor exercise garden, is not part of a recreational complex but rather is located at the town center, encouraging residents to combine their workouts with errands. The BoatHouse on Western Lake offers sailboats, canoes, kayaks, fishing, boat storage, an additional swimming pool, a restaurant, and tennis courts. Other amenities include an extensive trail system for hiking and biking, an outdoor amphitheater, and picnic and play areas. WaterColor’s staff includes a resident horticulturist, naturalist, and artist. An “art of living director” serves as a kind of social director and more, helping to foster a sense of community among residents, acting as an ombudsperson, and working with the homeowners association and event planners. Children who are full-time residents can attend the Seaside charter school or nearby Butler Elementary, both part of the public school system. The developer plans to expand opportunities for adult education, believing that educational amenities for adults are an important draw for people who are considering buy-

ing a second home but anticipate making WaterColor their primary home. Because residents can function at WaterColor without a car, aging in place is a likely possibility for many buyers. Sales and Marketing The second-home market for WaterColor encompasses the entire southeastern United States, particularly Georgia, Alabama, Tennessee, Louisiana, and Texas. About 90 percent of buyers are from these states, with the largest number coming from the Atlanta area. Most buyers are families with young children, and the average buyer age is 46 to 48. Following the events of September 11, 2001, the “drive market” actually expanded because people began seeking resort homes that they did not have to fly to. They were more willing to drive ten or more hours, which put many more buyers within the drive market of WaterColor. Buyers typically consider properties along the entire southern East Coast, from the Carolinas through Florida. Surveys show that buyers want outdoor places to walk and socialize. They also want the openness of an ungated community. WaterColor’s marketing program focuses on this kind of lifestyle. The campaign first began with

WaterColor Inn and Resort 413

direct mail, using St. Joe’s extensive databases. Advertisements were also placed in the regional editions of the Wall Street Journal and USA Today, as well as the Atlanta Journal-Constitution. The WaterColor Inn itself is seen as a marketing tool because hotel guests can experience the community before they consider purchasing a home. The resort sponsors public events as part of the marketing effort. MountainFilm, a touring version of the internationally known Telluride Film Festival, is an annual event planned by WaterColor that brings cuttingedge films and filmmakers to its Marina Park Amphitheater. This event and others promoted by Walton County Tourist Development help familiarize potential buyers with the community. In conjunction with the festival, the WaterColor Inn offers special weekend packages. After purchasing lots from the developer, WaterColor buyers can select a St. Joe home plan to be built on their lot, or they can select an architect either from an approved list or through their own choice. Architects must follow the design guidelines outlined in St. Joe’s The Guide to the Creation of WaterColor: Patterns for Place-Making. Typical lots are 55 by 110 feet (17 by 34 m). When sales started in 2000, lots sold for about $250,000. In 2008, lot prices ranged from $500,000 to $900,000, with lakefront lots among the most expensive. Through September 30, 2007, 755 lots were sold. The first three phases are nearly sold out, and sales are progressing in phase IV, the project’s final offering of property. Lot prices have far surpassed the developer’s expectations, even with high price assumptions that were

based on sales at Seaside. Several factors seemed to align at the same time: the baby boomer market had reached the age and degree of wealth appropriate for buying second homes, and many were rejecting suburban sprawl, seeking a more pedestrian-oriented environment in which children could be more independent. According to vice president of sales Tom Dodson, “WaterColor is incredibly successful by every measure.” Management The St. Joe Company, a publicly held firm based in Jacksonville, is one of Florida’s largest real estate operating companies. It is engaged in town, resort, commercial, and industrial development, land sales, and commercial real estate services. The firm also has significant interests in timber. St. Joe has been fortunate that demographic trends are working in its favor. As more people continue to enter the second-home and retirement-home purchasing demographic, it is in position to offer an abundant supply of high-quality, low-basis land in all regions of Florida. The company is disciplined about releasing new products, timing them so that values will appreciate. “We are setting our pace and phasing our development to maximize those values,” according to Peter Rummell, chairman and CEO of St. Joe. Homeowners Association Except for the commercial components, WaterColor will eventually be owned and managed by the home-

THE ST. JOE COMPANY

In keeping with the project’s new urbanist principles, residential porches open onto crushed shell walkways and a grassy common area.

414 Resort Development

THE ST. JOE COMPANY

Site plan.

owners, represented by a single homeowners association for the entire development. The developer has learned that most residents prefer minimal fees and restrictions. The average homeowner’s fee is $660 per quarter, which covers all common area maintenance and homeowner amenities: the beach club, swimming pools, and so on. The residential units located in the town center above the retail space have an additional maintenance fee. These units are not condominiums but rather freehold space: the land is owned by the master association, and the homeowner owns the air space and the inside of the unit. Lessons Learned WaterColor is a highly attractive, financially successful product. The town center concept will be replicated in other St. Joe projects. It serves as an amenity and hub for the community, as well as a profit center. The lake and boathouse complex has also become a template for other communities. The developer places great emphasis on enhancing residents’ and guests’ experiences, aiming for an overall ambience of relaxed vacation living. Open spaces, pathways, and gathering areas have proven to be extremely important components of the development. The openness that comes from being an ungated community is

another successful feature that will be implemented in future projects. A few aspects of the project might have been treated differently. Now that most of the town center retail space is leased, it has become clear that more commercial space would have been feasible. As of January 2008, 86,358 square feet (8,039 sq m) of the original 100,000 square feet (9,300 sq m) of commercial space has been sold. Only two commercial parcels remain. One is owned by St. Joe, and the other was sold to another developer. The market for retail at WaterColor has turned out to be countywide, rather than just for the residents of WaterColor. Initially, it was assumed that the town center’s grocery store would be a corner store to provide basics like bread and milk. But since the completion of the nearby full-scale Publix grocery store, it has evolved into a familyoriented restaurant instead. The beach club is owned and run by the homeowners association. In future developments, however, such facilities will remain part of the St. Joe portfolio so that they can be profit centers for the developer. The squares and other gathering places could use more seating, and more will probably be added. In some locations, the crushed shell paths are not functional and may be replaced with a more practical surface.

WaterColor Inn and Resort 415

Project Data: WaterColor Inn and Resort

Land Use Information

Hotel Information

Site area

499 acres/202 ha

Area

22,800 sq ft (2,118 sq m)

Total dwelling units planned

1,020

Number of guest rooms

Total dwelling units completed

1,020

Occupancy rate

Gross density

2 units per acre

Average net density

60 52 percent

Average room rate per night

$350

5.5 units per acre Site Improvement Costs (in millions) Excavation/grading/sewer/water/drainage

Land Use Plan Acres/Hectares

Percentage of Site

207/84

42

15/6

3

Residential Retail/office Resort/resort services

Landscaping/irrigation

$9

Fees/general conditions

$11

Total

$48

14/5.7

3

Governmental

3/1.2

.5

Common open space

9/3.6

2

Recreation

10/4

2

Public parking

2/.8

.5

32/13

6

Other

$4

103/42

21

Total

$19

Soft Costs

$10

Open water1 Wetlands Uplands setbacks Total

104/42

21

499/202

100

Construction Costs Beach club

$6

Tennis center

$2

Marina/pool

$5

Camp WaterColor

$2

Developer/Owner

Retail Information Number of

Total Area

Stores

(sq ft/sq m)

2

30,240/2,809

Type Grocery/specialty foods Restaurant/food service

6

10,507/976

Clothing/shoes/accessories

4

5,598/520

Hobby/special interest/gift

4

10,617/986

Other retail

8

43,038/3,998

Total retail

St. Joe Company Jacksonville, Florida www.joe.com/web Site Planner and Architect Cooper, Robertson & Partners New York, New York www.cooperrobertson.com

100,000/9,289 Master Code Consultant 100

Percentage of Retail Space Occupied

$20 to $30 per square foot

Annual Rents

Urban Design Associates Pittsburgh, Pennsylvania www.urbandesignassociates.com

$300 per square foot

Average Annual Sales

Four years

Typical Length of Lease

Inn Architect Rockwell Architecture, Planning and Design, PC New York, New York www.rockwellgroup.com

Residential Unit Information Lot Size Range (sq ft/sq m)

Unit Size Range (sq ft/sq m)

No. of Units

Sales Prices

4,000–7,000/370–650

1,250–4,400/115–410

81

$850,000–$3,500,000

n/a

1,250–3,070/115–285

117

$600,000–$2,500,000

4,000–7,000/370–670

n/a

822

$155,000–$1,800,000

Unite Type Single-family Multifamily Lots only Total units

Note 1

$28

Part of a 220-acre (89-ha) coastal dune lake.

416 Resort Development

1,020

Residential Architects Historical Concepts Peachtree City, Georgia www.historicalconcepts.com Looney Ricks Kiss Memphis, Tennessee www.lrk.com Kiara Designs Santa Rosa Beach, Florida Graham Gund Cambridge, Massachusetts www.grahamgund.com Glover Smith Bode, Inc. Oklahoma City, Oklahoma www.gsb-inc.com Allison Ramsey Architects, Inc. Beaufort, South Carolina www.allisonramseyarchitect.com Landscape Architects Nelson Byrd Woltz Landscape Architects Charlottesville, Virginia www.nbwla.com Engineer Post Buckley Schuh + Jernigan Tallahassee, Florida www.pbsj.com Environmental Support Environmental Services, Inc. Destin, Florida www.environmentalservicesinc.com Development Schedule Site purchased

1946

Planning started

First quarter 1998

Construction started

Second quarter 1999

Sales started

Second quarter 2000

First closing

Second quarter 2000

Phase I completed

Second quarter 2002

Phase II completed

Third quarter 2003

Phase III completed

Third quarter 2004

Phase IV completed

Fourth quarter 2005

WaterColor Inn and Resort 417

418 Resort Development

8. Trends and Outlook

Significant changes over the past few decades have had a major influence on the pace, pattern, and character of resort community development. These changes include the following: ; advances in communication technology, particularly the Internet, “smart” cell phones, and overnight delivery services, that enable people to work and stay in touch with their offices—as well as to research and make vacation and travel plans—from almost anywhere in the world; ; increasing affluence among the highest-income groups, as well as an increase in the numbers of people in those groups; ; concerns about safety and security in the post-9/11 world; ; trends toward shorter vacations, accompanied by shifts in why and how people vacation; ; friends and family groups traveling and vacationing together in larger and different types of configurations; ; the continuing evolution of fractional ownership products;

Gaylord Texan Resort and Convention Center, Dallas–Fort Worth.

LEN KAUFFMAN

; limited land available for development, increasing restrictions on how that land can be developed, and additional challenges to resort development, including limited workforce housing and resulting shortages of skilled workers; ; the decreasing popularity of traditional sports like golf, tennis, and skiing, and increasing interest in more diverse and adventurous recreational pursuits such as board sports, mountain biking, surfing, kayaking and canoeing, hiking, bird-watching, and so forth; ; the growth of shopping, dining, and other types of entertainment as leisure activities; ; an expanding interest in health and wellness—often more broadly defined as “well-being”—and a corresponding increased interest in spa- and fitnessoriented vacations; and ; increasing interest in experience and personal growth rather than relaxation, integration rather than isolation, and authentic environments rather than theme parks. While most experts agree that the demand for resort and recreational development products will continue to grow in the near future and that the market will become increasingly competitive, a wide range of factors, issues, and opinions must be considered in

Trends and Outlook 419

LOEWS HOTELS

Loews Portofino Bay Hotel at Universal Orlando is a themed resort, spa, and conference center with 750 guest rooms and suites.

assessing what the future holds for resort and recreation development. When several ULI Recreational Development Council members and other industry experts were asked to identify the most significant trends and issues for resort development over the next five years, they focused on demographics and psychographics; advances in communication and technology; lifestyle factors; shifting trends in how and why people vacation; evolving ownership structures; and sustainability and the environment. This chapter provides an overview of the issues, trends, and factors affecting the resort business today and those that are likely to affect it into the coming decade, including social trends, factors in related industries, recreational trends, and resort real estate patterns. It then offers an outlook for the resort business, focusing on the prospects for the development of new resorts—both in the United States and globally—and the revitalization and repositioning of existing resorts.

Social Trends and Lifestyle Factors Changing demographics, advancing technologies, the need for lifelong education, changes in work and leisure patterns, travel patterns, and safety and security concerns are among the social and lifestyle factors that are affecting the resort development industry.

420 Resort Development

Demographics and Psychographics A variety of demographic (age, income, and ethnicity) and psychographic (value and belief) factors influence resort and vacation real estate development. The roughly 85 million–member U.S. baby boom generation likely will continue to constitute the largest potential market ever for resort real estate products, especially second homes and fractional ownership products, throughout the next decade. Statistics indicate that second-home and retirement-home purchases most often are made by individuals in their 50s and 60s—and the boomers, aged 42 to 62 in 2007, are in or heading into those years. Other age groups, including the nearly 40 million people dubbed Generation X (aged 32 to 41) and the 80 million individuals called Generation Y (aged 12 to 31) also are beginning to have a major impact on vacation and leisure time spending.1 To what degree will the aging boomers’ resort usage and vacation-home purchasing patterns differ from those of previous generations? On one hand, the boomer generation faces rising and more formidable college tuition costs for their children than the World War II generation; it is living in an economy in which job security is a perceived problem; it is largely made up of two-income households with limited leisure time; and it is concerned about saving for a secure retirement that is threatened by financial strains on Social Security and Medicare. On

the other hand, boomers historically have indulged themselves and are strongly oriented toward spending discretionary dollars on entertainment and leisure travel. Few plan to fully retire in the same way their parents did: 43 percent of 45- to 64-year-olds plan to work, either full or part time, in their retirement years.2 Moreover, the growing popularity of timeshares, vacation residence clubs, and other fractional ownership products—an affordable alternative to whole ownership, particularly at the low and high ends of the market—will continue to broaden vacation-home options for this generation. How these various differences will play out in the coming years remains to be seen. Keith Morrow, senior vice president and principal of WilsonMiller, Inc., in Naples, Florida, believes that the boomer generation, with its typically more active, curious, adventurous lifestyle, is looking for different types of vacation experiences than earlier generations.3 According to Harry H. Frampton III, managing partner of East West Partners in Beaver Creek, Colorado, “It seems to me that we’re going through a transition. So many of our resort and golf course communities were built for the World War II and Korean War generations, for people who worked for GE or IBM all their lives. They had a dream of moving to Florida or Arizona, living in a golf course community, playing gin rummy and 100 rounds of golf each year. But we’re in a new era now. We have an entirely new customer, and that’s the last thing they want. They want

a far more integrated lifestyle, they want to be more active, they’re concerned about health and fitness, continuous learning and education. That’s a totally different buyer than the one we’ve been building for. The communities that adapt to this new kind of customer are likely to be the places that will be successful.”4 Another demographic factor affecting the industry is the remarkable growth in the ranks of the wealthy and very wealthy. Internal Revenue Service statistics indicate that the number of individuals reporting adjusted gross incomes of more than $1 million grew more than 70 percent between 2000 and 2005. Baby boomers have accumulated more real wealth and earn more real income than their parents did at a comparable age. Overall, boomers are expected to have higher incomes and lower poverty rates in their rapidly approaching retirement than current retirees. Inheritance is also a factor; the boomer generation is expected to inherit at least $10.4 trillion, with most of that money skewed toward the already wealthy. Baby boomers also will be the first generation to benefit from retirement investment accounts; they account for 15.5 million active 401(k) plans, with approximately $619 billion in assets.5 The increasing diversity of the U.S. population—a result of immigration and higher birth rates among some ethnic groups—also will affect the resort development market, in ways that are not yet entirely clear. In an increasingly global marketplace, developers also

WATG (WIMBERLY ALLISON TONG & GOO)

Increasing wealth is leading travelers to seek out more exotic destinations. Pictured: A private plunge pool at the Ritz-Carlton Bali Resort & Spa.

Trends and Outlook 421

This group is as much into well-being as being well off; they care as much about how they spend their time as how they spend their money.”6 Gadi Kaufmann, managing director and CEO of the real estate consulting firm Robert Charles Lesser and Company (RCLCO) headquartered in Bethesda, Maryland, comments on the importance of family gatherings: “The desire for family experiences, opportunities for family members to get together and interact in meaningful ways, is becoming a big driver in how people make vacation decisions. Creating a place for the family to come together—often intergenerationally—is becoming more and more important.”7 Savvy developers will pay particular attention to Generation Y, which, in size, approaches that of the boomers, has an annual purchasing power of $100 billion (2007), and will become progressively more influential as its younger members grow into adulthood. By 2020, it will make up 32 percent of the U.S. population. This ethnically diverse group is the first online generation, having grown up with Internet-based computers in

SIX SENSES

must consider global demographics. China and India, the world’s two most populous countries, also are home to the largest and fastest-growing travel markets, and both have rapidly growing middle classes that are interested in seeing more of the world. These travelers will have an impact on development patterns both within their own countries and worldwide. Resort developers must consider a wide range of psychographic changes that reveal much about what people expect from their vacations. Reconnecting with (often far-flung) family members and friends, experiencing the world and the environment in new and different ways, and learning about other cultures and communities all are becoming more common goals of vacationers. James Chaffin, chairman of Chaffin/Light Associates in Okatie, South Carolina, notes that developers of resort and vacation home communities must try to figure out the “heart, soul, and minds” of their target market, and should be aware that people today “are looking for authentic, familyfocused, multiple-activity, and environmentally sensitive communities and resorts—not sterile, featureless, tracts.

Earth Spa at the Six Senses Hideaway, Hua Hin, Thailand offers holistic wellness spa treatments in an eco-environment. The cluster of nine mud huts contains treatment rooms, steam rooms, a meditation cave, and private Jacuzzis.

422 Resort Development

their homes and schools. Generations X and Y, following in their boomer parents’ footsteps, appear to be even more focused on blending work and play, lifetime learning, and relationships with family and friends. They are motivated by a desire for action, adventure, and meaningful experiences, rather than relaxation and traditional vacation activities. As Toni Alexander, president and creative director of InterCommunications, Inc., in Newport Beach, California, puts it, “People in their late 20s are going to be more excited about being in a place where the X Games were held than where the Olympic Games were held.”8 Much of the potential demand for resort facilities comes from groups of extended families and friends who want to travel and vacation together, in configurations and with goals that contrast dramatically with the accommodations currently offered by most of today’s resorts. The next decade’s successful resorts will respond to this market segment by recasting themselves as family-friendly places that accommodate large groups of friends and family members. They will be resorts that stress comfort and gathering places while offering learning experiences and other opportunities for personal growth in authentic settings. Increasingly, perceived value will be based on the quality of the overall vacation experience and less on the luxury of a resort’s rooms and amenities. The concept of amenities themselves will be stretched far beyond the traditional swimming pools, golf courses, and tennis courts to include educational experiences, opportunities to connect with nature and the community surrounding the resort, and cultural attractions. Communications and Technology Widespread use of the Internet and other technologies made it possible for many executives and small businesses to relocate from major metropolitan areas to more remote locations—including resort communities—in the 1990s. This trend is continuing to expand in the first decade of the 21st century, as even newer technologies (including smart phones as well as Internet telecommunications and videoconferencing) make it easier for people to conduct business from remote locations. As technology enables people to live and work wherever they choose, these “location neutrals” increasingly are clustering in resort communities. The growing numbers of permanent residents in resort areas who work remotely (as opposed to those who retire or who work within the resort community) also is

creating hybrid communities, implanting urban incomes and lifestyles into small towns with attractive natural amenities. While the influx of location neutrals can bring an influx of money to these communities, it also may create conflicts between old and new residents.9 Evolving communications technology has led to both more frequent short vacations and longer stays at hotels and resorts that offer business centers and high-speed Internet services, which make it possible for travelers to maintain contact with their workplaces. A “working vacation” is no longer an oxymoron; it is a reality for many workers, as workloads increase and business moves at an ever quicker pace. To an increasing extent, Americans are combining their business and leisure travel. While many see this as a double-edged sword (since it has become more difficult to escape the workplace completely), technology no doubt has made possible many vacations for workers who still must attend to business while away. Few mainstream hotels and resorts will be able to survive in the future without offering such services—although those that do not do so may thrive by marketing themselves as places where people can truly escape from the world of work. The use of computers and sophisticated office management, project management, and financial analysis software also is continuing to change the practice of resort development. As in other businesses, these tools increasingly enable resort developers to keep their staffs small and overhead low. The ability to create and update databases, communicate and market via the Internet, and share information is likely to streamline business operations even further and enable resort developers to improve their decision-making processes. They will be better able to anticipate and respond to market preferences as databases expand and become both more sophisticated and more user-friendly. Internet marketing in particular has become more widespread and sophisticated. Future prospective travelers and homebuyers will be less likely to rely on traditional travel and real estate agents and more likely to do much of their own research on vacations and second-home purchases through search engines and Web sites. Resort developers and sales offices thus must hone their skills regarding these marketing tools, offering property Web sites with 360-degree “virtual tours,” online brochures and sales or reservation centers, and live chat or Q&A features. In recent years, the Internet has made possible an entirely new type of “vacation,” whose potential impact

Trends and Outlook 423

CHIVA SOM INTERNATIONAL HEALTH RESORT

Education can be incorporated into resort offerings in many ways. Pictured: A cooking class at Chiva Som resort in Thailand.

on the resort industry is not yet clear. Cyber resorts in virtual universes like Second Life, Entropia, and Matrix Online offer a variety of free, eco-friendly holidays with no jet lag, airport hassles, or weather delays to anyone with a broadband connection, and cutting-edge digital entrepreneurs are betting that virtual reality could soon become a popular vacation destination.10 The 2008 Guinness World Records book lists a cyber resort in Entropia Universe, Club NEVERDIE—an asteroid space resort purchased by a gamer for $100,000—as the “most expensive virtual object.” Education Education increasingly is viewed as a lifelong venture. Many people choose to pursue formal or informal educational programs while on vacation; others are involved in professions that require them to do so. Resorts are tapping into this trend in numerous ways. Some are partnering with universities or other educational entities to offer continuing education programs that also fill rooms, introduce their facilities to new guests, and enable those guests to combine required educational pursuits with vacations. The Sea Pines Resort, for example, offers physicians continuing medical education courses that are sponsored by the University of South Carolina and several affiliated organizations. Other resorts appeal to the conference business, which is essentially another form of continuing education for specialized groups. Both types of businesses are growing and are important for resorts that need to attract off-season guests.

424 Resort Development

Another way resorts can incorporate education is by offering educational opportunities and learning vacations to all their guests. These can be as simple as a halfhour cooking class offered by a resort chef or a weekly lecture by a visiting artist, or as in-depth as a weeklong workshop on nature photography, archaeology, or furniture building. As more resorts seek to provide learning experiences, they must be aware of their competition, the market to which they gear their offerings, and the importance of quality. Even high-quality educational offerings are no guarantee of success: the Disney Institute was unable to attract its target market of families interested in exploring educational offerings in a theme park setting, but it has reinvented itself as a source of professional development programs that help businesses and their employees apply Disney’s innovative systems and strategies to their own firms. Opportunities for partnering with colleges and universities abound. Many college towns, including Charlottesville, Virginia, Athens, Georgia, and Tallahassee, Florida, offer appealing recreational and cultural amenities, good restaurants, and teaching hospitals that provide excellent health care. All these factors make them attractive places for retirement and second-home communities as well as resorts, which in turn can tap into the universities’ educational offerings as a way to diversify the community or resort experience. Resort communities and resort hotels alike are responding to visitors’ desires for educational experiences with on-staff educators—botanists, historical

WATG (WIMBERLY ALLISON TONG & GOO)

Sasakwa Lodge in Tanzania borders the wilderness migratory route traveled by herds of zebra, lions, and elephants. The lodge offers luxury suites decorated in English manor style, each with its own pool.

preservationists, artists, and so forth—as well as visiting ones. As Gadi Kaufmann notes, “although these people’s primary responsibility may be to preserve, maintain, and enhance their area of expertise, providing educational content to guests is another very important part of their mission. They do this by presenting nature walks, guest lecture series, fireside chats, and more.” Jim Chaffin describes how Chaffin/Light Associates’ communities address this issue: “Each community has a fully staffed nature center that not only manages the conservation easement on the property but also provides environmental education, including the cultural and educational programs that are part of the life of the community. We also have visiting artist programs, which bring artists to live in the community for a minisabbatical; when they depart, they leave a work of art that enriches the community. Every Thursday night, people get to hear a lecture by the visiting artist, a historian, or a community resident. There’s always an intellectual component, as well as a music and entertainment component. And eventually this program is managed by the property owners themselves.” One challenge, notes Peter Rummell, chairman and CEO of the St. Joe Company in Jacksonville, Florida, is

to determine how to deliver regional education, to help people—including resort guests who may be potential second-home buyers—learn about the region in ways that are interesting, real, and organic, rather than in a cocktail party or sales center setting. “We’ve found that networking is the best way to do it,” he notes, “though I’m never convinced we do it as well as we could. It sounds easy, but it’s not.”11 Work and Leisure Once-rigid patterns of work and leisure continue to erode, both in the United States and globally, with significant implications for resort and vacation home development. Today’s vacationers face ever-increasing demands on their time, making it difficult for families to plan vacation getaways. Rather than reducing demand, however, these factors are likely to redirect it by making certain products and locations more popular than others. In the past, most people worked a fairly inflexible five-day week and took a one- or two-week annual vacation. Today, more people are scheduling more frequent short breaks and getaways in lieu of or in addition to occasional longer vacations. Short getaways often occur around long holiday weekends, increasing demand for

Trends and Outlook 425

destinations within driving distance of metropolitan areas during these timeframes. Successful resort management must anticipate regular guests’ shorter visits and develop programs and products that effectively tap the short-stay market. Many industry experts agree that demand for second-home purchases within a two- to four-hour drive of the purchaser’s primary residence will continue to be strong. In addition to full-ownership homes, timeshares, private ownership clubs, and other fractional ownership properties will meet the demand for getaway homes. Retirement patterns also are changing vacation habits—as people work longer than they did in the past. Overall, work has become less of a physical burden, making it possible for people to work well into their 70s and beyond. In many European countries, where vacations for the entire month of August have been the tradition, annual vacations are becoming shorter and supplemented by other breaks and holidays. In many Asian countries, governments and corporations are increasing paid holidays and vacation time and reducing standard work weeks and days to encourage citizens to take more time off. Historically, cultural shifts involving work and leisure time have taken generations to take hold, but major shifts now seem to be occurring much more quickly. Despite the debate about whether people actually have more or less leisure time than in previous generations, it is generally agreed that increased leisure-time options make most people feel that they do not have enough time to do everything they want to do. Most people voice interest in leisure-time activities and experiences that will help reduce tension and improve their health. Many also welcome opportunities to reconnect with friends and family whom they feel they often neglect during their busy workweeks. In weak economic times, when job security is lowest, people are more likely to defer major discretionary expenditures such as vacation travel and purchases of resort real estate. There are indications, however, that today’s and tomorrow’s young adults will be less focused on job security and more concerned about personal growth and leading meaningful lives, a trend that will have a significant impact on how and where they choose to vacation. Another trend—the growing popularity of shopping as a leisure-time activity—can both benefit and hinder resort development, depending on how well a resort can serve shoppers’ needs. Shopping at both high-end luxury stores and bargain outlets has become a favorite pastime in many resort areas. Providing attractive

426 Resort Development

shopping experiences that target the appropriate demographics will be an important consideration for resorts. The combination of these work and leisure-time trends bodes well both for resorts that are easily accessible for short stays and for those whose special appeal makes them destinations of choice for longer stays. Travel and Tourism The travel and tourism industry is a powerhouse in the global economy, generating more than $733 billion in annual revenue.12 In the United States alone, travel and tourism account for more than 8.6 million jobs and constitute the nation’s largest service export industry.13 The tourism industry has become more integrated during the past decade, and the interdependency of the airline industry, the cruise industry, the hotel industry, the car rental business, the travel agent business, independent tour operators, local tourism development organizations, and other industry segments has become increasingly evident. Resort developers must interact effectively with all these players if they hope to compete in the new global marketplace. Changing technology is having a major impact on how people purchase travel services and products. Internet bookings are booming, with an average of nearly 30 percent of all airline sales made online. Airlines, car rental companies, hotels, and travel search engines such as Orbitz, Expedia, and Travelocity all are expanding their online offerings, selling additional ancillary services such as tours, equipment rentals, insurance, and more. The major airlines, for example, offer online shoppers the chance to book cruises, hotels, car rentals, travel insurance, and vacation packages in addition to flights. Known as “dynamic packaging,” it offers resorts and hotels an opportunity to increase their revenues without substantially increasing their costs. Travelers’ growing interest in active rather than passive vacations also is having an impact on travel and tourism. Hiking and biking tours are becoming more popular, and many travelers are seeking ways to become more involved with the world around them. “Social engagement is becoming more important,” notes Adam Ducker, senior principal with RCLCO. “People want a chance to interact, not just in the traditional club style, but with a larger community. They want to feel good about how the places [where] they stay interrelate with the surrounding community, the surrounding area. They also are seeking vacations that allow them to become more engaged—to work on a

Combining Conservation and Upscale Lodging in Africa Hailed in the mid-1990s by Nelson Mandela, then president of South Africa, as “the model for the dream I cherish for the future of nature preservation in our country,” Londolozi “will help improve the living standards of the rural communities.” Mandela was not referring to a government program. Londolozi is a private game reserve with guest lodges run by Conservation Corporation Africa, or CC Africa, a Johannesburg tourism and lodging operation. CC Africa runs 30 safari camps and game reserves at 15 lodge destinations in six countries in eastern and southern Africa. The Londolozi Private Game Reserve is probably its highest-profile destination. Situated in South Africa’s Sabi Sand Game Reserve on the western border of Kruger National Park, Londolozi comprises five lodges and is the first game reserve to be accepted as a member of the Relais & Châteaux association of elegant, privately owned hotels. Londolozi, already established as a game reserve for about 20 years before CC Africa was founded in 1990, has been used as a model for combining conservation and tourism in other CC Africa properties. “The Londolozi model links international, first-world travelers—through the attraction of dangerous African wildlife—to rural communities that live adjacent to the area and would have no other means of generating any economic activity,” explains Les Carlisle, CC Africa’s group environmental manager. The model is generally defined by the term “sustainable development”: in CC Africa’s model, the global travel market is linked to economic benefits for African people, which are linked to conserving natural ecosystems, which in turn enhance the global travel market. “The economic engine is the wildlife experience,” says Carlisle. “We bring international travelers who are looking for a holiday and end up with a life-changing experience. They bring hard-earned dollars. Now you have people who can come on holiday, have a wonderful experience, and make a difference to thousands of people in the villages outside the park and help secure habitats for endangered species.” When Dave Varty, whose family owned Londolozi, got together with Alan Bernstein to form CC Africa, their first project was the Phinda Private Game Reserve in Zululand, South Africa. The land, now covering about 34,600 acres (13,760 ha), mostly was home to failed farms. “CC Africa bought up all the farms that had been devastated by drought, took down all the fences [between properties], and restocked the area with animals,” says Yvonne Short, director of South Africa operations for CC Africa. Established in 1991, Phinda—meaning “the return” in Zulu—focused on environmental

impact from the start, restoring overgrazed farmland to its original bushveld state and reintroducing the diverse wildlife that once inhabited the area. “It was a whole ecotourism project,” Short explains. “It was all about taking devastated land and turning it into profitable land and thus giving employment opportunities to the local people. If you look after the land, the animals will take care of themselves, so this is really about looking after the land, managing it properly, and not allowing it to get decimated by cattle.” About a six-hour drive from Johannesburg, Phinda includes four small but upscale air-conditioned lodges with pools and viewing decks: Mountain Lodge with 20 suites and a conference room, Forest Lodge with 16 suites, and the Rock and Vlei lodges, with six suites each. Game drives are offered twice daily in fourwheel-drive safari vehicles. Recognized as one of the world benchmarks for responsible, sustainable tourism, Phinda also is noted for supporting the world’s most successful cheetah reintroduction program. “We started with 12 cheetahs, and we currently have 25 in Phinda,” notes Carlisle. “We also sold 50 cheetahs to live at other game reserves, plus 20 have escaped from the park.” As happens in nature, seven were killed by lions. “This is a phenomenal story of an endangered species’ ability to bounce back,” he comments. In addition, lions have bred so well at Phinda that the park must sell some to keep the wildlife in balance. “The elephant population has doubled; the water buffalo population has doubled. All the endangered species are doing well under this model of protection,” Carlisle reports. “One of the original objectives was to see whether we could buy cattle farms, convert them into game reserves, build lodges, and run the whole thing in an economically sustainable manner,” notes Chris Kane-Berman, general manager for CC Africa. Twelve years ago, the cattle farms that formed Phinda employed a total of 60 people, generating $20 per acre (0.4 ha) per year. A year later, after the establishment of the game reserve, the same property employed 350 people and generated more than $134 per acre per year. “The multiples were massive, and the future of wildlife looked extremely promising even in those early years,” recalls Kane-Berman. Equally important is the multiple effects of salaries on the local communities. The norm in Africa is that one salary supports ten people, so the 220 local Phinda employees support 2,200 people in a community of 25,000 to 30,000—about 10 percent of the people. In addition, CC Africa supports schools—45 classrooms have been built—and a 24-hour hospital/clinic.

Trends and Outlook 427

Combining Conservation and Upscale Lodging in Africa In the northern Serengeti region of Tanzania in the heart of Maasai territory, CC Africa leased from the local community 5,000 acres (2,025 ha) to form Klein’s Camp, which has ten cottages. From its vantage point in the Kuka Hills, guests have unimpeded views of valleys along which wildebeests and zebras migrate. CC Africa has exclusive use of this Maasai land except during droughts, when the community can bring cattle back onto the property. In addition to the payment the community receives for the tourism operation, it receives employment and training. CC Africa’s charitable operation, the Africa Foundation, has built clinics and schools and has improved local infrastructure. “Out of the money the community earned from tourism, it appointed its own game guards to protect the wildlife that we need for tourism,” notes Carlisle. “It wasn’t done at our request, but because animals were being snared by outsider vagrants, and the community acted in the interest of protecting its relationship with us.” In the wilds of the continent, CC Africa must strike a delicate development balance while trying to reduce its impact on the environment. It also needs to cater to tourists at the top end of the market. Because temperatures are quite high at many of its locations, the company must offer air conditioning and plunge pools. “Our lodges are luxury loaded,” Short says. “It’s expensive to stay with us.” When CC Africa started its developments ten years ago, the tilt was toward the

farm, to learn about and care for dolphins, to volunteer in a refugee camp.”14 Travelers from nations with newly emerging middle classes, including China, India, and Russia, may soon transform the tourism landscape, just as Americans did in the 1950s and 1960s. Despite restrictions that allow travel only in guided groups and only to governmentapproved locations, tourists from China are the fastestgrowing group of travelers worldwide.15 Industry experts suggest that increasingly experienced and sophisticated travelers from all over the world will be searching out new destinations in the coming decade and will be willing to travel farther afield and to spend significant amounts of money to do so. Destinations in the Middle East (including Dubai, Abu Dhabi, and Bahrain), Africa, and Asia also are expected to become more popular vacation destinations among Europeans, Americans, and others—barring, of course, any major outbreak of hostilities or terrorist attacks in

428 Resort Development

continued

tourist, and big lodges, private swimming pools for each room, and heavy infrastructure were the norm. “But as we have gone along, we realized the impact of these huge lodges, and we started developing with a lighter impact and an architectural style designed around a smaller imprint,” notes Short. CC Africa is currently working on a smaller scale with much less concrete and less linear foundation. “At the top end of the air-conditioned market, our developments are still regarded as some of the most environmentally sensitive,” Carlisle asserts. The most important thing, he points out, “is that the design complements the environment in which it is built.” Today CC Africa is owned by two major shareholders, Capricorn Ventures (Pty.), Ltd., of South Africa and three Getty family trusts of the United States. “CC Africa is an investment the Gettys did as a family because they fell in love with Africa, and their values reflected the values of our company,” explains Short. According to Carlisle, CC Africa regularly audits its efforts to learn from its own mistakes, constantly recommitting itself to its conservation goal of “demonstrating that a financially sound ecotourism business can also make a significant contribution.” Source: Steve Bergsman, “Combining Conservation—and Upscale Lodging—in Africa,” Urban Land, August 2003, pp. 54–56.

these regions. U.S. developers are in a good position to export their expertise and undertake joint ventures in parts of the world where travel is increasing and new markets are opening. Exotic travel is expanding at an unprecedented pace. The African Serengeti, for example, draws high-end travelers seeking the unique experiences of third-world cultures, natural wildlife habitats, and the opportunity to support local economies in ways that help to preserve rather than to destroy what makes them special. With worldwide travel on the increase, U.S. resorts must compete with a wider range of destinations than ever. Inbound travel from other countries is the wild card; despite a weakened dollar, which should bring increasing tourism from overseas, the number of foreign visitors—especially those from Western Europe and Japan—to the United States declined by about 17 percent between 2001 and 2007. Increased security, delays for passports, and a general feeling that visitors

Qatar’s Desert Boom The tiny country of Qatar is located on a thumblike peninsula that pokes into the Persian Gulf where Saudi Arabia borders the United Arab Emirates. Qatar was born into wealth when it claimed independence in 1971, assuming ownership over billions of barrels of oil and gas reserves. Currently, more than $100 billion has been budgeted for new infrastructure and construction over the next six years. Much of this will go to develop gas fields, estimated to contain 5 percent of global reserves, giving Qatar the second-largest fields after Russia and some of the world’s highest gross domestic product—which soared 34 percent in 2005 to nearly $50,000 per capita. Yet, at least half of the investments are budgeted for nonenergy projects, according to Qatar’s minister of finance, Yousef Hussain Kamal. These include highways, sanitation projects, schools, and an array of new museums. But the most visible spending to date has been on public structures. An estimated $2.8 billion was doled out on facilities for December 2006’s Asian Games alone. Another $5 billion is being spent on a new airport, the New Doha International Airport, custom built to accommodate the coming Airbus A380 and its expected 12 million passengers per year. Another $140 million was spent to expand the existing airport to handle surging traffic as Qatar Airlines continues to buy planes and add routes at a world-leading pace. Until the late 1990s, Qatar remained a sequestered Islamic nation. In 1995, Sheikh Hamad bin Khalifa Al-Thani seized power from his father and began modernizing Qatar, which maintains close ties with the United States and hosts the largest air base in the region. Business leaders are flooding into the small kingdom, mainly from Gulf nations, which dominate foreign investment. But Westerners also are following the scent of opportunity. Bechtel Group is involved in the new Doha airport, along with St. Louis–based architects HOK (Hellmuth, Obata + Kassabaum). HOK also has consulted on urban planning and design for five hotel and condominium towers in Qatar, according to spokesperson Mike Plotnick. Real estate is booming, boosted by the liberalization of laws opening the market to greater development and foreign investment. Rents rose 40 percent in 2005, according to Commercial Bank of Qatar, which prompted the government to limit rate hikes and new property coming online in an effort to cool the economy. Nevertheless, the market remains hot. Everywhere one roams, Qatar seems to have one foot in the sand, the other in scaffolding. The tourist office estimates that some 100 buildings are under construction, lending a surreal feel to a desert capital where, until

recently, even a four-story structure stood out. There are plans for many megaprojects, including entire cities devoted to science, education, and entertainment. The gem of this construction boom is the Pearl, a $2.5 billion, 985-acre (400-ha) island project with golden sand beaches, marinas, and luxury villas and apartment towers, which will house up to 50,000 people. A bigger frenzy greeted a ring of smaller islands, each island designed to host one exclusive, lavishly expensive mansion. All these private isles were sold before the cement was poured. “Everything is changing by the day,” exclaims Roger Dagher, spokesperson for United Development Company, the government-funded firm behind Qatar’s first international real estate venture involving one of the world’s biggest manmade islands. The Pearl’s newly minted coastline, stretching across the azure sea to the existing shore of Qatar’s capital of Doha, is itself buzzing. Not only cranes but helicopters are hoisting girders to clusters of skyscrapers-in-the-making as a bedazzling new skyline is erected. Much of the rest of the new development will be part of the Lusail project, north of Doha near the Pearl but onshore. Spreading over 8,650 acres (3,500 ha), the $5 billion project will add hotels, theme parks, golf courses, more marinas, and housing for 200,000 people. “The launch of Lusail is a major milestone in Qatar’s development,” noted Nasser Hassan Al Ansari, head of the state company Qatari Diar, at Lusail’s launch in 2006. Construction is expected to span ten to 15 years. Qatar’s rapid-fire real estate development would seem earthshaking, if not for all the parallels in the region. To see Doha’s future, many say, look 200 miles (320 km) east to Dubai, which long ago began transforming its desert into a world-class destination, with gleaming skyscrapers, water parks, and six-star hotels—all funded by its huge oil wealth. “There are two questions I am asked all the time,” says Daniela Grendene, marketing director at the Qatar Tourism Authority. “Number one: ‘Where is Qatar?’ The Asian Games—as well as the controversial television network al-Jazeera—have put Qatar on the map, but question number two remains: ‘Is Qatar following in the footsteps of Dubai?’” The same question is relevant, to some extent, in nearby Bahrain and Oman, which have opted for a Dubai-style, build-it-now-and-demand-will-follow approach, with their own flash projects, theme parks, and plans for glittering new hotels. “Maybe it’s difficult to see, because everything is happening, is under construction all at once, and it’s all still the beginning,” Grendene notes. “But there is a plan, a good, well-thought-out plan. And it’s definitely not the Dubai plan.”

Trends and Outlook 429

Qatar’s Desert Boom

continued

Take tourism. Qatar is adding hotels at a mindboggling rate. Grendene says 40 new hotels are under construction. By 2010, Qatar will claim over 10,000 rooms, more than tripling its 2007 stock. Yet, capacity has been overtaxed for years. During the Asian Games, many visitors were forced to stay in Dubai, flying in daily. Although a 2004 master plan allocated $15 billion worth of investment through the rest of the decade, Grendene says tourism will never become a major industry in Qatar. That is by design. Dubai is frantically spending its oil money to finance new industries before the oil runs out in a few decades. But Qatar’s natural gas may be able to light Europe for centuries. As a result, Qatar does not face the same challenges as its oil-dependent neighbors. In fact, rather than compete with the neighboring emirates, Qatar can play a complementary role and reap the benefits as the region develops. Shipping gas is a costly, inefficient process. All the better if Qatar can count on modern, energyhungry customers close to home. Qatar does not yearn to become another Las Vegas of the Gulf. Instead, it looks to high-end, low-impact tourism. “Our target is 1.4 million visitors by 2010,” explains Grendene. “That’s a very humble goal compared with Dubai and Abu Dhabi. Qatar doesn’t want to be a massmarket destination.” Even so, that target would be almost double the 730,000 visitors who came in 2005—a more than 20 percent increase over tourism in 2004. Predicting the future of Qatar is difficult, since practically everything is theoretical at this stage. While clearly benefiting from the publicity and early speculation surrounding it, the Pearl remains little more than an offshore construction site. Plans for the Lusail project are also evolving. Yet, a look around the small kingdom provides a sense of a certain aesthetic that bodes well. The I.M. Pei–designed Museum of Islamic Arts is a smart modernist building that seems to float on the sea. France’s Jean Nouvel has designed the Qatar National Museum,

are not welcome in the United States appear to be responsible for the decline. Safety and Security The concern for safety and security changed dramatically on September 11, 2001. That and other attacks worldwide have made travelers increasingly nervous. Yet life—and travel—goes on. Although there were some indications immediately after 9/11 that people were “cocooning,” vacationing at home and nearby

430 Resort Development

while Japanese architect Arata Isozaki is working on a design for the National Library. The state photography collection is to be housed in another new museum designed by Spanish architect Santiago Calatrava. Such structures will not only help to reshape Qatar, but also the visitor’s perception of the 4,400-square-mile (11,400-sq-km) sheikdom. Already, the sellout crowds at the Asian Games had a taste of what is to come with Aspire Tower. Rising 1,043 feet (318 m), the iconic wire mesh–wrapped tower is the tallest building in Qatar—but won’t be for long. Soon, this distinction will pass to the Barwa Tower and the Dubai Towers Doha. All but one of Qatar’s 20 tallest buildings have been built since 2000. Such designs, along with the museums and marinas, will be instrumental in attracting the kind of international audience that Qatar craves. Perhaps most crucial are changes in the law, allowing foreigners to invest in some local markets and property. One of the key appeals of the Pearl is that purchase includes the right of residency, an invaluable asset for all the foreign companies hoping to cash in on the Qatar gas boom. “What attracts me to Qatar is the solid investment,” notes Ingrid Eckert Matthias-Prinz of Frankfurt, who has purchased a flat in the Pearl. “In Dubai, it’s like Alice in Wonderland. Qatar’s plans are well thought out, and I like the government involvement. That brings stability.” She says she and her husband are planning to buy a second apartment at the Pearl. “We expect fantastic returns,” she explains, noting that the value of the first flat has risen 30 percent in 16 months. At the nearby Ritz-Carlton Hotel, Thorsten Ries, the general manager, marvels at all the construction. “The area around here is becoming like Beverly Hills,” he chuckles. “When I arrived, five years ago, it was all desert. From the 23rd floor, you didn’t see one light. Now, it’s like we are downtown. Qatar is on the move.” Source: Ron Gluckman, “Qatar’s Desert Boom,” Urban Land, April 2007, pp. 90–94.

locations while avoiding large cities and international travel, the status quo largely has returned. Since 9/11, hotel and resort operators have taken significant steps to improve security, including installing security cameras, monitoring entrances and exits more rigorously, and training employees about danger signs and how to respond to them. Not surprisingly, few building owners and operators are willing to discuss this issue publicly. Not only do they want to avoid arousing excessive anxiety among their customers and residents

EDSA

In Dubai, United Arab Emirates, the 940-room Madinat Jumeirah includes a retail complex, conference facility, spa, and over 40 restaurants, bars, and cafés. Resort components are linked by a waterway with traditional Arabian boats used to transport guests.

but, as Jonathan Tisch, chairman and CEO of Loews Hotels, notes, “we also prefer to keep the exact nature of our security programs under wraps, so as not to tip off any would-be troublemakers about how we plan to thwart them.”16 Las Vegas is one example of a U.S. city that is dealing with heightened security levels while still attracting more than 40 million tourists a year. Las Vegas resorts have been leaders in adopting new security technology, and MGM Mirage, which owns eight properties on the Strip, is reported to have experimented with a facial-recognition system that could spot people traveling with fake IDs.17 More resorts and vacation-home communities will need to incorporate sophisticated security infrastructure in ways that make people feel safe without frightening them, which translates into ongoing but noninvasive surveillance, screening employees and visitors, and unobtrusive physical security measures.

Trends in Related Industries Because resorts require customers to travel, they rely to a great degree on all kinds of transportation but in particular on the airline industry. Other business sectors that affect resorts include the cruise industry, entertainment, and health and wellness.

The Airline Industry In the years following the events of 9/11, the industry lost more than $30 billion, and almost all of the major U.S. carriers either have filed for bankruptcy or narrowly avoided doing so. Airlines have responded by cutting their workforces and the numbers of large planes that they fly. These decisions—combined with higher incidences of severe weather and an antiquated air traffic control system—have resulted in more flight delays, more flight cancellations or overbookings, and more baggage losses. Despite all these headaches, more people than ever are flying, and airplanes are more crowded. In 2007, U.S. airlines filled 79 percent of their seats, compared with 65 percent in the mid-1990s. Some problems are being solved. The federal government is beginning to develop a next-generation air traffic control system that will rely on satellites rather than radar. The new system is expected to alleviate chronic flight delays by allowing planes to fly closer together and take more direct routes, which also will save fuel and reduce pollution. New airplanes, both large and small, also will help ease the pressure. Boeing’s 787 Dreamliner, with 200 to 300 seats and a flight range of more than 8,500 miles (13,700 km) , will enable airlines to offer direct flights that might otherwise have gone through hub airports. Airbus’s A380 can carry twice as many people as the

Trends and Outlook 431

EDSA

The Caribbean has long been a resort destination, and many properties that were built years ago are now being renovated and repositioned. Sandy Lane Hotel in Barbados was built in 1961 and renovated in 2001.

Dreamliner, making hub operations more efficient. Both planes also will be “greener” than traditional jets, using up to 20 percent less fuel and emitting correspondingly less CO2.18 On the smaller side, both European and U.S. airlines are increasing their orders for a new breed of turboprops, replacing regional jets with 42- to 90-seaters that burn from 30 to 40 percent less fuel and emit half the CO2.19 Less expensive private jets and new ways of purchasing private aviation services—including fractional ownership and prepaid charter flight time—also are changing the way people travel. Air access is a key factor in the viability of any major resort destination. By definition, a destination resort needs to be located near an airport that offers convenient service to major markets. If an airline adds or cancels flights, it can have an enormous impact on resort occupancy. When JetBlue added $99 one-way fares to Aruba and Bermuda in 2006, the impact on the islands’ resorts was immediate. In 2007, Delta added 20 new routes to the Caribbean and Mexico, including the first direct service to Martinique in more than 20 years.

432 Resort Development

Partnerships and synergistic relationships among the airline, car rental, travel, and hotel industries to promote travel to particular destinations is expected to continue. Such partnerships often are undertaken in association with coalitions of local or national government, business, and economic development interests. These partnerships and synergies are likely to strengthen in the future, as the travel and tourism industry becomes more integrated. The Cruise Industry Resort developers have been closely examining the cruise industry as both a competitor and a model worth emulating. Often described as “floating resorts,” today’s cruise ships feature many of the amenities commonly found at upscale resorts: comfortable accommodations, attentive service, a variety of restaurants and shops, pools, recreational activities, and day-to-night entertainment. But unlike those staying at a land-based resort, cruise passengers also can visit interesting ports of call without having to pack and unpack

The newest trend in high-end cruise vacations, the condominium cruise ship, began in 2002 with the launching by ResidenSea of the World, a new, 12-deck, 43,524ton (39,484-metric-ton) ship. Fully purchased by its residence owners in 2003, the World features 165 privately owned studio, one-, and two-bedroom apartments and carries only 150 to 200 residences and guests at a time, offering a different kind of cruise experience, including longer port stays (averaging 2.5 days), visits to a wider variety of ports, and extensive customized services. Two additional new condo ship projects are underway. Arizona-based Residential Cruise Line, Ltd., plans to launch its $750 million condo ship, the Magellan, in mid2010. Boasting 210 residential units, the 15-deck, 76,000ton (69,000-metric-ton) ship, which will be larger than any other existing or planned condo ship, will carry up to 1,100 passengers. Residences can be purchased in three ways: whole ownership, fractional ownership, or club membership. Also expected to launch in 2010 is the 13-deck, 48,600-ton (44,000-metric-ton) Four Seasons Oceans Residences. A huge attraction for buyers of the ship’s 112 private one- to four-bedroom residences is the fact that the ship will be managed for hospitality and nonmarine services by Four Seasons Hotels and Resorts. All units will be wholly owned, with no fractional ownership.20

WATG (WIMBERLY ALLISON TONG & GOO)

repeatedly. Synergies between cruise companies and other industry players also simplify the travel experience; most cruise lines contract with tour operators to offer cruisers excursions in the ports they visit, and a number of cruise companies now offer onboard airline check-in and luggage transportation services. These services can be expected to become even more extensive as the travel industry becomes more competitive. Cruise lines are expected continue expanding their offerings, with more cruise-tour options (such as combining a cruise with a land tour by rail or motor coach), pre- and postcruise offerings that enable cruisers to extend their vacations on land (and create synergies between cruise lines and hotel and resort companies), and more extensive themed voyages. A large proportion of cruisers can be considered frequent vacationers who cruise as part of a vacation mix. More than 85 percent of cruise passengers consider cruising an important vehicle for sampling destination areas that they may choose to revisit in the future. Nearly 50 percent of cruisers expect to return to the same destination or geographic area for another type of vacation. Thus, growth in the cruise industry does not necessarily drain dollars from land-based resorts; it can help promote these destinations, leading to future growth.

Urban resort hotels are attractive for conference business, drawing attendees who can mix business with pleasure. Emirates Palace in Abu Dhabi combines meeting facilities with recreational amenities near urban amenities.

Trends and Outlook 433

EDSA

Gaylord Hotels has carved out a niche of megaresort and conference hotels with most facilities enclosed within a landscaped glass atrium. Pictured: Gaylord Texan Resort and Convention Center, Dallas–Fort Worth.

Entertainment Industry Continuing reconfiguration, growth, and innovation in the entertainment industry simultaneously are creating new competition, new expectations, and new opportunities for resort development. Movies, the performing arts, amusement and theme parks, entertainment attractions in suburban malls, urban restaurants and nightclubs, cable and satellite television, computer games and portable multimedia players, and online music, videos, social networking, and gaming all compete, to some degree, with resorts for the discretionary dollars that people spend on leisure-time pursuits. Moreover, the availability of these convenient forms of entertainment can be a factor in reducing an individual’s or a family’s desire for a vacation getaway. The Internet, in particular, has become an immense and accessible entertainment medium. Industry experts suggest that the increasing collaboration between technology and entertainment—and the fact that people can now take virtual vacations without leaving home, by visiting online “worlds” and accessing on-demand music,

434 Resort Development

video, and gaming services—may not necessarily erode resort demand but will have an impact on it. The availability of these forms of entertainment within or near one’s home can raise expectations that resorts also will provide state-of-the-art entertainment options. Industry experts view the impact of technology not so much as an immediate threat but rather as an alert. Resort developers should consider addressing two opposite ends of the entertainment spectrum (as well as everything in between): providing guests with computer and Internet access and entertainment facilities similar to those available in their homes or, alternatively, offering facilities that enable guests to completely escape from the now-omnipresent cyberspace, with a completely different range of entertainment offerings. Large entertainment attractions also have the potential of creating increased demand for nearby resort and second-home development. For example, the casinos and live entertainment in Las Vegas, the theme parks and other attractions in Orlando and southern California, and the country music venues in Branson, Missouri, all

Urban Disney By the late 1980s, the Walt Disney Company faced a land use problem. It had little space to expand its aging Disneyland Resort in Anaheim, California, and the surrounded city needed revitalization. The solution would become the company’s largest single development in the United States: a $1.4 billion expansion of Disneyland Resort—the name given to all the area Disney attractions, including the original Disneyland Park. In addition to upgrading and expanding the namesake theme park, Disney has built a second theme park, Disney’s California Adventure, on Disneyland’s former parking lot, with three “districts”: the Hollywood Pictures Backlot, the Golden State, and Paradise Pier. Also included is the 750-room Grand Californian Hotel in Disney’s California Adventure, the first Disney hotel built within a theme park. The nearby Disneyland Hotel and the Disneyland Pacific Hotel, which has been renamed the Paradise Pier Hotel, also have been renovated. Connecting the two theme parks and the hotels is the new Downtown Disney, a 20-acre (8-ha) public esplanade of shops, restaurants, and entertainment venues. In addition, Anaheim and the Walt Disney Company have improved the infrastructure and streets within and adjacent to the Disneyland Resort as part of creating the pedestrian-friendly Anaheim Resort District, the name given to the 1,100 acres (445 ha) surrounding and including Disneyland and the Anaheim Convention Center. “What’s exciting about the Disneyland Resort expansion is how it copes with the fundamental planning and design differences between California and Florida,” says Timur F. Galen, senior vice president of Walt Disney Imagineering (WDI), the creative, design, development, and research arm of the Walt Disney Company’s parks and resorts division. “We wanted to use the Walt Disney World business model of adding theme parks to extend guest lengths of stay and create a multiday destination resort, but on one-sixtieth the land area, with the added financial burdens of structured parking and other infrastructure costs of high-density development; limitations to land assemblage at any cost, and conflicting adjacent uses; and in an environment of divergent political and community interests,” he explains. “Disneyland is the jewel in the crown of the company’s identity and brand, but by the late 1980s, it was facing a progressively more difficult set of circumstances,” Galen explains. “The best way to defend Disneyland was to partner with the city of Anaheim in a proactive redevelopment of not only the Disney property but also the Anaheim Convention Center and the balance of the surrounding commercial district.” The area surrounding Disneyland had come to represent some of the worst aspects of unplanned,

uncontrolled development and urban sprawl. Of even greater concern, part of the post–World War II prosperity that moved south out of Los Angeles kept moving south, bypassing Anaheim and tarnishing some of the neighborhoods surrounding Disneyland. The Anaheim Convention Center and the balance of the resort district also were facing increasing competition for visitors from San Diego, Las Vegas, and Los Angeles itself. To help transform the Disneyland Resort into a multiday destination, the Walt Disney Company decided to construct a second theme park, a new hotel, and a retail and entertainment esplanade. However, the size of the Anaheim project was an issue. “We needed to think in terms of square feet, not acres,” says Wing T. Chao, executive vice president of master planning, architecture, and design at WDI. While Disney owns 30,427 acres (12,314 ha) in Orlando and 5,000 acres (2,025 ha) in Paris, there were only 490 acres (200 ha) in Anaheim. For the first time, Disney brought in a municipal government as a partner. The city of Anaheim was facing significant challenges, starting with competition to its strong convention trade from flashier destinations such as San Francisco and Las Vegas that eventually could have led to deterioration in the city’s economic vitality and tax base. In 1990, Disney and the city began serious discussions about their mutual problems and goals. Disney’s concept was to transform the area around Disneyland and the Anaheim Convention Center into a pedestrian-friendly Anaheim Resort District through a program of street and sidewalk landscaping, redesigned roadways, and major infrastructure improvements, bringing the district up to the same quality as the Disneyland Resort. The Disneyland Resort plan, approved in 1993, included upgrading Disneyland and constructing the California Adventure theme park, the Grand Californian Hotel, and Downtown Disney. The plan also included streetscape and infrastructure improvements to the surrounding neighborhood—improvements that are expected to accommodate further expansion of the Disneyland Resort in the future—and construction of a six-story, 10,250-space guest parking garage. The Anaheim Resort plan, approved in 1994, encompassed the adjacent 610 acres (250 ha) and focused on additional infrastructure improvements, expanding the convention center, and using landscape materials to unify the resort district’s attractions, hotels, restaurants, and shops. The biggest issue in planning the pedestrian-oriented urban resort was transportation: how to get the people in and out, notes Douglas Moreland, senior vice president of predevelopment for WDI. “Caltrans [the California Department of Transportation] had already

Trends and Outlook 435

Urban Disney

continued

planned to widen Interstate 5 throughout Orange County, and we came along with the Disneyland Resort expansion. To get the added volume of traffic in and out of the Disneyland Resort, we needed new carpoollane exit ramps, which required additional rightsof-way. We had to act quickly to get those additions designed and into Caltrans’s plans before they went out for bids. If the freeway had been widened without the two new exits at Disneyland Drive and Disney Way, we probably could not have expanded the resort.” “To meet the new kinds of challenges presented by the Anaheim expansion, we fundamentally reorganized our capabilities,” Galen explains. In southern California, half of the newly merged organization managed the individual components of the development—the theme parks, hotels, Downtown Disney, and infrastructure. The other half managed those aspects that were common to all the projects, such as business planning, master planning, entitlement, real estate, community relations, logistics, procurement, and project controls. Anaheim was equally active in reorganizing itself to conduct this major undertaking, hiring contract employees to accommodate the increased workload, streamlining the approval process, and setting up a work area in city hall dedicated to the project. Both the city and the Disney company were involved in significant community outreach efforts. Community

input often affected Disney’s design and planning process, such as redesigning the guest parking structure to be less intrusive on the residential neighborhoods. Because of the project’s scope, Disney lacked sufficient staff to design and construct the expansion in house, so it hired design, construction, and management consultants and interwove them into its own teams. “We were sure of the overall design intent for the new Disneyland Resort attractions, particularly in regard to streetscape, lighting, and identity,” notes Tom Kozlowski, director of master planning and entitlements at WDI. “So, we established strong design criteria and development principles. We gave our consultants design flexibility, but within that very well-thought-out base.” A critical component in the overall design process was the company’s shift in philosophy from thinking of the resort as a separate world to making it a welcoming and open part of Anaheim. “This was almost an adaptive reuse of the Disneyland Resort,” says architect Jaquelin T. Robertson of Cooper, Robertson & Partners, a contractor to the project. “In a profound sense, [Disney CEO Michael] Eisner was becoming more urbanist.” The design and development of the new Grand Californian Hotel represented another shift in Disney’s thinking. In the past, the company had regarded its Disneyland Resort hotels as adjuncts to Disneyland—they existed to serve the theme park. When planning the

continue to provide numerous opportunities for resorts. RCLCO’s Gadi Kaufmann notes that people are buying property in several Colorado ski resort communities not only for the skiing and other seasonal activities but also because they are attracted by the entertainment and cultural offerings of the Aspen Institute, the Vail Valley Music Festival, and the Vilar Performing Arts Center in Beaver Creek. Synergies among traditional resort amenities—both natural and recreational—and new entertainment venues and technologies are certain to generate many other new opportunities for resort developers during the coming decade. Urban entertainment offerings also are attracting tourism, as well as vacation property sales. As Kaufmann observes, “People are buying homes and timeshares in New York, London, Paris. It’s no accident that companies like Exclusive Resorts maintain a healthy portion of their inventory in San Francisco, New York, London, Paris, Rome, and other major cities. Some people use these properties for business, but many

more use them for urban vacations that revolve around culture, entertainment, and sightseeing.”

436 Resort Development

Health, Wellness, and Well-Being Today’s spa industry is a solid player in the hospitality and leisure sector. According to Spa Finder, a New York–based spa travel and marketing company, the U.S. spa industry alone generated an estimated $15 billion in 2005, exceeding the revenue generated by other leisure activities such as moviegoing, visiting amusement parks, shopping, golfing, or skiing. Approximately one in four adults in North America has visited a spa.21 Several hospitality companies have branded their own spa concepts. Hyatt, for example, offers its trademarked “HyattPure” collection of “spas that blend harmoniously with their natural surroundings” at 20 properties in the United States and Canada. Others have moved beyond these offerings to more extensive lifestyle programming; the Peninsula Hotels and international spa consultants ESPA now offer “Peninsula

continued

Grand Californian, the company decided to transform all its hotels into destinations in themselves. WDI undertook extensive renovations to the Disneyland Hotel and to the renamed Paradise Pier Hotel to reflect this philosophy. WDI provided the thematic concept for the Grand Californian—a turn-of-the-century Arts and Crafts–style resort hotel—and a third-party architect, Peter Dominick (then at Urban Design Group of Denver), provided the design development and documentation. Downtown Disney evolved organically to meet several needs. In fact, Downtown Disney became the key to expanding the Disneyland Resort’s core market to include Anaheim residents and visitors to the convention center. WDI created the conceptual design, and a third-party architect, Boston’s Elkus/Manfredi Architects, handled the design development and documentation. Another critical planning and design issue was integrating the new resort development within the surrounding community. “The Disneyland Resort had to work within its own rules as a resort area,” says Robertson, “but it also had to meet the town in a number of ways, and it had to be seen as a natural extension of the town.” The five-year construction process introduced several challenges. The city had specified 148 mitigation measures to minimize the impact of construction on the surrounding community. WDI worked to minimize dirt and dust, managing the flow of delivery trucks. As

Wellness” programming at luxury spas in Tokyo, Hong Kong, and Bangkok, as well as in the United States. Spas and spa hotels in Asia have been drawing increasing numbers of guests. In addition to the famous relaxation hubs of Thailand and Indonesia, China is now home to a wide range of upscale spas—many of them located in luxury hotels and incorporating both Western and traditional Chinese treatments and products—designed to appeal to Chinese and foreign tourists alike.22 Spas are no longer just for women. The number of baby boomer couples taking spa-oriented vacations in 2006 accounted for one in every three spagoers, up from one in five just five years earlier. And a survey of boomer men found that 20 percent had visited a spa, up from less than 1 percent in 2001.23 Other new and upcoming spa trends include multigenerational spas to accommodate grandparents, parents, and children, as well as residential spas featuring large hotel rooms designed for in-room treatments. But the resort health and wellness connection extends well beyond spas. With approximately 85 mil-

a result, the construction had no significant impact on the number of Anaheim visitors. The 55-acre (22-ha) California Adventure theme park and hotel complex opened in 2001. Recognizing California’s environmental and cultural attributes, its history, and its diversity, the park offers rides, restaurants, stores, live shows, and Paradise Pier, which celebrates the great seaside amusement park piers of earlier decades. Downtown Disney—the retail, restaurant, and entertainment esplanade—stretches alongside Disneyland, the Disneyland Resort hotels, and Disney’s California Adventure, helping to unite the three destinations. A monorail system, trams, landscaped pedestrian walkways, and buses connect all of the attractions. In addition, Disney conducted a $257 million overhaul and expansion of Disneyland itself that included upgrading existing attractions, making major renovations, and constructing the Team Disney Building (the resort’s administrative offices). Although the new attractions have brought millions of additional visitors to Anaheim, the street improvements and Interstate 5 exit ramps actually have lowered traffic volumes on surface streets. “As soon as you come off Interstate 5,” says Robertson, “you sense at once: this is Disney, this is fun.” Source: Charles Lockwood, “Urban Disney,” Urban Land, November/ December 2001, pp. 54–59.

WATG (WIMBERLY ALLISON TONG & GOO)

Urban Disney

Asian spas have set the standards for spas in other regions. Pictured: The spa pool at the Conrad Bali Resort & Spa.

lion U.S. baby boomers “trying to figure out how to live forever,” as Peter Rummell puts it, is it any wonder that a new generation of wellness centers is incorporating progressive medical services aimed at prolonging life

Trends and Outlook 437

struction, acupuncture, women’s health, dermatology, and medical anthropology—and undergo specialized treatments as well as more traditional spa services. Murdock plans to open an auxiliary WellBeing Institute between two existing Four Seasons–managed resorts on the Hawaiian island of Lanai.25 AOL founder Steve Case also is investing heavily (up to $250 million) in resorts, wellness, and health care, through the boldly named Revolution, a private holding company he launched in 2005, which today is playing a pioneering role in these areas. Revolution now owns 70 percent of Miraval, the 400-acre (160-ha) Tucson destination spa resort and is planning to build wellness centers in up to 100 communities throughout the United States. The company has given Miraval a major makeover, adding guest rooms, residential villas, a yoga meditation center, and the Center for Life in Balance, a comprehensive medical institution headed by health author and physician Andrew Weil and housed in a LEED-certified annex.26 In 2007, Case launched Revolution Places, the company’s destination resort group, which is planning to develop an $800 million, 650-acre

MIRAMONTE RESORT AND SPA

and addressing mind/body connections and the spiritual dimensions of well-being, along with traditional resort and spa services? Existing resorts are repositioning themselves as destinations where people can enhance their well-being through expanded spa and wellness offerings, while developers of resorts, hotels, and residential communities are partnering with branded spas and health care providers to offer massages, facials, and body wraps; diagnostic tests and medical exams; consultations with nutritionists, exercise physiologists, and physicians who specialize in preventive care; biofeedback and hypnotherapy treatments; and workshops on healthy meal preparation, fitness, and spirituality.24 One of the most scientifically aggressive of these new facilities is the California WellBeing Institute (CWI), which opened in 2006. The brainchild of David Murdock, CEO of the Dole Food Company, CWI pairs a 270-room Four Seasons hotel and spa with a high-tech medical facility on a 20-acre (8-ha) property near Los Angeles. Guests may undergo a variety of diagnostic tests, consult with the attending staff of the “concierge clinic”—which includes specialists in dental recon-

At Miramonte Resort and Spa in Palm Springs, California, the Well Spa offers a broad menu of treatments and classes.

438 Resort Development

(260-ha) luxury resort with a Miraval–Life in Balance component in Costa Rica. Additional health and wellness trends—including “procreation vacations” and medical tourism—offer opportunities for hotel and resort developers. A number of hotels and resorts have begun offering themed packages to couples attempting to conceive—a huge prospective market, considering that an estimated 3 million women in the United States alone are trying to get pregnant each year. The concept is based on sound research: doctors and researchers believe that stress can pose a major impediment to fertility. “Conceptionmoons” at Caribbean resorts and suburban hotels combine traditional aspects of romantic getaways with fertility-enhancing products. More than three-quarters of those surveyed by the parenting Web site BabyCenter. com reported taking a conceptionmoon.27 As health care becomes more expensive in the United States, increasing numbers of people are traveling overseas to internationally certified hospitals and medical centers—many of which employ U.S.-trained doctors—for surgery and other medical procedures, a phenomenon known as medical travel. Medical travelers logged an estimated 19 million trips and spent $20 billion in 2005, and the numbers are expected to more than double by 2010, according to Tourism Research and Marketing, a London-based consulting firm. Medical tourists sometimes extend their trips by adding a vacation component to their medical travel. Americans are traveling to Mexico, Costa Rica, Brazil, Thailand, Malaysia, Singapore, and India for cosmetic, heart, and orthopedic surgeries as well as cancer treatment, dental care, and other medical services. Because these countries have much lower labor and insurance costs—and do not shoulder the burden of treating the uninsured—traveling overseas for treatment can result in significant savings, even when the costs of recuperating at a luxury resort and additional travel are factored in. And Americans are not the only medical travelers; Japanese patients increasingly are traveling to Korea, India, and the Philippines, while Middle Easterners more typically travel to India and the United Arab Emirates for treatment.28 On a much smaller—but no less meaningful—scale, hotel developers and operators are beginning to provide specially designed hypoallergenic rooms for the millions of prospective guests who suffer from allergies and chemical sensitivities. Companies like the Glen Ellyn, Illinois–based Environmental Technology Solutions and Pure Solutions, NA, in Buffalo take different

approaches, but their goal is similar: to eliminate materials that collect dust or emit volatile organic compounds, purify the air, and avoid bacterial buildup. The Hilton Chicago O’Hare Airport Hotel, Wyndham Peachtree in Atlanta, and JW Marriott Ihilani Resort in Ko Olina, Hawaii, are among the hotels that offer hypoallergenic guest rooms. This trend can be expected to continue, with more hotels and resorts instituting their own antiallergen programs to appeal to allergy sufferers.29 Health, wellness, and fitness facilities and programs will continue to play a progressively important role at resorts as facilities and programs become larger and more diverse. Rather than being offered as a secondary amenity, they are becoming primary attractions at many resorts and hotels. They also are becoming a major draw for residential communities. In a 2005 survey of more than 1,200 readers of Luxury Spa Finder magazine and users of Spafinder.com, 61 percent of the respondents indicated that they would be interested in living in a community built around a spa facility, and 53 percent classified a spa as a very important residential amenity, while another 18 percent indicated that a spa was a decisive buying requirement.30

Resort Real Estate Current trends in the resort real estate industry are centered around increasing synergies among various real estate and other vacation products, including—but not limited to—hotels, condominiums, timeshare properties, vacation ownership clubs, vacation and retirement homes, cruises, theme parks, restaurants and retail facilities. Hotel brands continue to proliferate and diversify, with each brand seeking new ways to differentiate itself from the rest of the market. The industry faces continuing challenges that include high prices for land and surging construction costs, as well as increasing difficulties in getting new projects approved, particularly in environmentally sensitive locations in the United States. Globally, hotel and resort development is growing at a dizzying pace, with U.S.-based designers, developers, and owner/operators extending their reach as far afield as China, Tibet, and the United Arab Emirates. Hotels The most significant trends for the hotel industry include an increase in chain affiliations and brand segmentation, as well as growing numbers of boutique hotels. One-size-fits-all “cookie cutter” megabrands

Trends and Outlook 439

EDSA

In Sotogrande, Spain, the San Roque Club includes singlefamily and multifamily homes in a golf resort setting.

SAROJIN

The Sarojin, near Phuket, Thailand, emphasizes individualized attention. The main pool has floating decks for lounging.

have lost ground; new lodging brands seek to develop emotional and long-term bonds with travelers by catering to their lifestyle preferences. New luxury brands, in particular, are being launched at a rapid pace, and typically place more emphasis on the experience they offer than on the facility itself. Hotel chain affiliation will continue to be a strategy by which owners seek to distinguish their resorts from those of competitors. Another continuing trend is the addition of more levels of service within a resort—such as the concept of a hotel within a hotel within a hotel—in which each level

440 Resort Development

offers better amenities, facilities, and services at correspondingly higher prices. Hotel design trends increasingly are being driven by shifting demographics and psychographics. As a result, lobbies are evolving into hip, multiuse clubs, some of which feature self-service check-in kiosks and smaller staffed desks. Hotels are taking a more residential approach to the selection of lighting, fixtures, bedding, amenities, and other guest room features. This trend is even creating new opportunities for cross-selling, as hotel guests become enamored of features they experi-

Going Corporate For many leisure travelers, a trip to the U.K. is not complete without a stay at an English country house hotel. At these centuries-old mansions with their vast grounds, visitors can step back in time to savor the idealized life of the English gentry—strolling through lush gardens, taking afternoon tea in antiques-filled drawing rooms, and feasting in formal dining rooms beneath the gaze of ancestral portraits. English country house hotels—a post–World War II phenomenon—traditionally have been owned and run by individuals and couples or by small companies that manage a handful of properties. This niche hospitality market, long ignored by large hotel companies, was entrepreneurial, often a touch idiosyncratic, and firmly rooted in England’s rose-colored past. The changes of the 20th century were kept at bay. Big changes currently are transforming the English country house hotel business. Several recently opened properties contradict the longstanding notion that a country house hotel should resemble a Merchant-Ivory film set. Large, deep-pocketed hospitality companies also have entered the field, creating new competition for privately owned properties and offering guests a wider—and more up-to-date—version of the country house hotel experience. Though traditional English country house hotels have focused on re-creating an idealized past, “they have always been a business, just like any lodging accommodation,” explains Martin Skan, who has owned and run Chewton Glen in New Milton (100 miles [160 km] southwest of London near the Hampshire coast) for the past 40 years. “They have always faced many challenges, including a relatively small number of rooms for income, the high costs of staff salaries and the maintenance of old buildings that were not built as hotels, the difficulty in marketing small properties in a world of chain hotels with large advertising budgets, and the fluctuating seasonal and daily business.” English country house hotels are always busiest during summer, followed by spring and fall, and on weekends more than on weekdays. To generate more business, as well as to address the fluctuating occupancy levels, many English country house hotels have hired top chefs to attract affluent locals to their dining rooms and to gain favorable press in travel and food publications. They have joined marketing organizations like Relais & Châteaux that promote small luxury hotels in worldwide markets. Most recently, they have added conference facilities for executive retreats and spas. Corporate visitors have become important to keeping country house hotels profitable. “The corporate trade

wants to go outside of London to country house hotels for meetings or for events like luxury car launches,” says Jonathan Thompson, general manager of the historic Hartwell House near Oxford. “That’s good, because it provides midweek business, and because it will generate later visits from businesspeople who come back as leisure visitors with their husbands or wives.” Despite all the challenges of running an English country house hotel, many English entrepreneurs and hospitality companies currently are entering the business, often bringing fresh approaches and new services to their properties and the industry. The 28-room Babington House in Somerset, for example, broke the mold in its interior design choices. From the outside, the 14th-century residence looks like a traditional country house. Inside, however, its decor is decidedly hip and trendy, designed to attract an affluent, younger, and more casual clientele than do most traditional country house hotels. The Grove, which opened in 2003 outside London, has reinvented the country house hotel on a grand, ambitious scale. “The owners, two brothers with private investments in real estate and hotels, recognized a gap in the U.K. hospitality market—the upscale resort property close to London,” explains general manager Matthew Dixon. “So they acquired a 300-acre [120-ha] estate once owned by the Earl of Clarendon less than an hour northwest of London and half an hour from Heathrow Airport. Next, they visited and studied fivestar resorts in the United States, like the Greenbrier in West Virginia, La Costa at Carlsbad near San Diego, and several Four Seasons resorts.” The resulting property was an entirely new genre for the U.K. hospitality industry: the upscale country megaresort. It has 16 suites in the main house and 211 rooms in newly built wings, along with four restaurants, an outdoor swimming pool, a day spa (with 13 treatment rooms, including a VIP suite for couples), an indoor pool at the spa, a children’s center with its own pool, and 23 flexible rooms for meetings and parties that can accommodate up to 1,000 guests. The grounds include an 18-hole golf course designed by Kyle Phillips, two restored lakes, a canal, a river, meadowlands, and a wetland, all linked by nature trails. Over 45,000 trees were planted on the property. The Grove’s sheer size—and range of services and amenities—dwarfs other English country properties. Some U.K. hoteliers insist that the Grove really is not a true country house hotel. Indeed, it is part country house hotel, part resort, and part conference center— all wrapped up in a highly contemporary package. The Grove clearly fills an untapped market need. The

Trends and Outlook 441

Going Corporate

continued

property sells out most weekends, and it hosts many midweek business conferences and weekend parties and weddings. Colette’s, its fine-dining restaurant, is fully booked many evenings, thanks to a strong local market. The British hospitality industry sat up and took notice when the Four Seasons entered the country house hotel business in 2005 with the opening of the Four Seasons Hampshire on a 500-acre (200-ha) estate known as Dogsmerfield Park, an hour southwest of London. The Four Seasons Hampshire, which has 133 guest rooms in the original 1728 Georgian-style manor house and two new wings, has a full range of resort amenities, including two restaurants, conference and event rooms, a spa in the former stables, horseback riding, fishing, clay pigeon shooting, and rides on the hotel’s 70-foot (20-m) canal boat along the tree-lined Basingstoke Canal. Large corporations are not the only new buyers and managers of country house hotels. In 2003, Londonbased Red Carnation Hotels acquired the Summer Lodge in the Dorset village of Evershot. The new owner closed the 18th-century Georgian-style property and undertook a top-to-bottom $9.5 million renovation. Today, the 24-room Summer Lodge, which sits amid four acres (1.6 ha) of walled gardens, includes a highly regarded restaurant, a spa, a swimming pool, tennis courts, and a croquet lawn. All of these changes in the English country house hotel business raise important questions. First, has the entry of large corporations into the market turned individual proprietors into an endangered species? “A good proprietor-run country house hotel will always succeed against the large corporate places because of the intimate scale and genuine personal touch,” argues Skan. “As long as those small hotels keep their facilities in good condition and up to date, they have nothing to fear from anyone big who comes along.” “A large property, no matter how extensive its facilities, cannot offer guests the personal service of a small country house hotel,” points out Thompson. “The true

country house lover may go to the new highly corporate establishments—to see what the media is writing about—but after the ‘wow’ factor has worn off, they return to the smaller places for the genuine experience.” Second, can the large hospitality companies expect to generate profits out of country house properties that have traditionally been the not-always-profitable domain of individual entrepreneurs? In 2003, the Savoy Group (now Maybourne Hotel Group) sold its Lygon Arms country inn in the Cotswolds so that it could concentrate on its larger London hotels like Claridge’s and the Connaught. However, the new model of “country estate resort” established by both the Grove and the Four Seasons Hampshire has so many guest rooms—and such extensive income-yielding conference and event facilities—that it can generate sufficient revenue to meet the owners’ profit goals. Third, are the large hospitality companies expecting to reap significant long-term profits by selling vacation homes on the large estates? This is highly unlikely. Local planning and zoning regulations typically would prevent such subdivision of the land. Furthermore, strict historic preservation regulations protect important country houses and their immediate grounds from any significant alterations. Finally, will the entry of large companies into this hospitality niche—and the subsequent development of large properties with 100 to 200 rooms—lead to the loss of the country house hotel ethos? Hardly. The new country resorts such as the Grove and the Four Seasons Hampshire differ considerably from a traditional 25-room country house establishment. Rather than stealing business from country house hotels, these new properties are broadening the market and attracting new guests. A nearly $1 million wedding held for several hundred guests at the Grove in 2005, for example, took business away from a London hotel, not from a small country house property.

ence during their visits and want to purchase them for their homes. For example, Starwood Hotels & Resorts reports that more than 700 guests purchase its Heavenly Beds each year.31 Designer hotels are on the upswing, with international couturiers Moschino, Versace, Armani, Vera Wang, and Missoni all breaking into the hotel industry. The first Armani hotel will open in 2008 in the Burj Dubai, the world’s tallest building, and the firm—in conjunction with

Emaar Properties, one of the Middle East’s largest developers—expects to unveil nine more by 2010. Missoni plans to develop more than 30 hotels in partnership with the Belgium-based Rezidor Hotel Group, starting with one in Kuwait City scheduled to open in 2008, followed by outposts in Edinburgh and Dubai.32 Another significant trend is the increasingly upscale, mixed-use, all-seasons resort, a place where guests can “have it all.” Resorts that once relied on golf, skiing, or

442 Resort Development

Source: Charles Lockwood, “Going Corporate,” Urban Land, August 2005, pp. 72–74.

the beach as their primary draw now find that their customers are looking for—indeed, demanding—full-service spas, fine dining, entertainment, shopping (beyond the typical gift shop and pro shop offerings), luxurious accommodations, and family-friendly facilities and services. The need to increase market presence to attract year-round business also has induced many resorts to affiliate with recognized hotel companies that offer the advantages of worldwide reservations, customer tracking systems, and sophisticated marketing networks. Many resort hotel developers and operators recognize that these multiuse, multiseason resorts offer opportunities and efficiencies that result from synergistic relationships among land uses. Resort hotels linked with residential products—which may be offered through a variety of ownership formats—are able to provide their guests with a larger variety of recreational, retail, restaurant, and convention and meeting facilities than standalone resort hotels. Because such multiuse synergy brings with it substantial rate and price premiums as well as property value appreciation, more resort hotels will be developed as components of larger mixed-use projects. Industry experts point out that traditional hotel accommodations—rooms that sleep two to five people (the typical nuclear family), with some connecting rooms and (fewer) suites to accommodate larger families—no longer meet the needs of many resort guests, who often gather at resorts in large, multigenerational family groups as well as groups of friends. “It is very difficult for a 2,000-room hotel to adjust to these trends,” notes Revolution Place’s Philippe Bourguignon, “which is why we want to start fresh. There is a clear taste for homes versus connecting rooms or suites. One of the trends is going to be homes with concierge service or other hotel services—where people can have all of the comforts and facilities and services of a hotel in a private home setting.” Other developers are taking advantage of unusual niche opportunities. The Viking Range company has transformed Greenwood, Mississippi, a derelict cotton town, into a culinary destination where cooking enthusiasts can stay at the Alluvian, the company’s boutique hotel, relax in the spa, learn cooking techniques, and “test drive” a range at the Viking Cooking School.33 Other niche hotel trends include spa suites (particularly popular in Southeast Asia), adaptive use projects that convert other types of structures into hotels (Mandarin Oriental has converted a 17th-century Prague monastery into its fourth European property), and ultraluxury

hotels that provide butlers and personal assistants, private swimming pools, and other experiences unavailable elsewhere. Finally, condominium hotels continue to thrive as an alternative to conventional hotels and an adjunct to the second-home marketplace. Condo hotels also have begun to pop up in major metropolitan areas such as New York, Chicago, and Las Vegas, as developers there find it easier to obtain financing for such projects than for traditional hotels. Units—either in standalone new projects, renovated hotels or other buildings, or as part of a traditional hotel complex—are sold like ordinary condominiums, although some may include fractional ownership options. The most successful of these, experts suggest, will be run by internationally known luxury hotel companies, boast respected brand names, and offer owners—who may rent their units while not in residence—hotel services and amenities.34 One issue for the operators of these condo hotels is how to ensure a sufficient inventory of available rooms, given the impossibility of predicting owner occupancy. Housing and Second Homes Although the housing market as a whole is, at this writing, in the midst of a major slump, ownership of second homes of all types remains one of the fastest-growing sectors in the U.S. real estate industry. Even as sales of primary residences fell in 2006, vacation home sales rose nearly 5 percent.35 The sector is poised to increase dramatically during the next decade, as the result of a confluence of demographic, socioeconomic, and cultural trends. The increase in ownership of second homes in the early part of the 21st century is being driven by a number of forces. Baby boomers are now in their peak earning years, and many have the financial wherewithal to invest in real estate. Tax law changes that took effect in 1997 also allowed home sellers to exclude up to $500,000 from capital gains taxation. This change made it appealing for some buyers to trade down to smaller primary residences and use the tax-free gains to purchase vacation homes. Jim Chaffin expects that the resort/vacation home industry will be the fastest-growing real estate market through 2020 or so, fueled by population shifts, wealth creation, and inheritance. Flexible work patterns and changing lifestyles mean that Americans may purchase 3 million second homes during this decade alone, with the number of households with second homes growing from 6.4 million to 9.4 million.

Trends and Outlook 443

© RICHARD SEXTON

Rosemary Beach, Florida, is a resort community prized for its walkable village environment.

The housing industry in general can be expected to influence future residential resort development in a number of distinct but interrelated ways. For example, major trends in primary-home residential design and construction include increased density, use of green building practices, incorporation of Web-based technology, universal design, and attention to safety and security. These trends also are influencing the design and construction of second homes. From a community planning perspective, the rise of New Urbanism, as well as what St. Joe’s Peter Rummell has termed “new ruralism” (the desire for low-density private retreats where residents can connect with nature as well as with their neighbors), likely will continue to have an impact on new resort communities. Secondhome buyers appear to be seeking comfort more than luxury, connections more than isolation, “place” more than product. Communities that appeal to these lifestyle preferences with pedestrian-oriented plans that include

444 Resort Development

village centers and other gathering places are likely to attract more buyers than those that simply offer luxurious homes. According to David Howerton, president of Hart Howerton, “Palmetto Bluffs, a luxury resort community in South Carolina, has demonstrated that there is a segment of the market willing to pay a premium to live in a village environment where everything is walkable.” Lots in the village are more sought after and have achieved higher prices than those edging the golf course. As technological advances make it possible for more people to conduct business from remote locations—and as the aging baby boomers put off full retirement while continuing to live flexible work lives—the lines between primary and vacation-home communities are being blurred, with many people choosing to live year-round in what were once seen as vacation communities, while others split their time among homes in two or even three different locations. Overall, four factors influence the geography of demand for second homes:

; accessibility to one’s primary residence; ; proximity to outdoor recreational features such as golf courses, oceans, lakes, and mountains; ; favorable weather, particularly warm weather in the winter; and ; familiarity (many people buy second homes in areas where they have previously vacationed).36

Other Types of Ownership Timesharing, in an evolving variety of forms, has become the preferred ownership choice for a substantial portion of the resort and second-home market. Its improved image and identity have benefited from more

INTRAWEST PLACEMAKING

While vacationers and retirees will continue to flock to traditional resort communities in Florida, Arizona, California, and elsewhere, many increasingly are attracted to less congested destinations that offer a different quality of life. These people are looking to vacation or live in or near towns or cities with a distinctive character and authenticity. Finally, hundreds of thousands of people are spending increasing amounts of time exploring virtual universes like Entropia and Second Life—and thousands of them appear to be establishing virtual second homes. Second Life’s

more than 1 million active users can choose from a multitude of regions or “sims,” including deserts, islands, and cities loosely based on real-world places. Although playing in most virtual universes is free, the real estate there is not: Second Life players purchase property and services with U.S. dollars from Linden Labs, the San Francisco–based company that introduced the virtual world in 2003, or from other players using “Linden dollars.” Virtual architects, homebuilders, and developers all are operating within these virtual universes, selling their services to those in search of a virtual home. While cyberspace certainly will not replace the real-world real estate market, it does offer an affordable “second-home” option for those who choose to spend time participating in these virtual networks.37

Many condo hotel properties are operated by major hospitality companies. The 242-unit Four Seasons Resort Whistler in British Columbia is the company’s first foray with this kind of product.

Trends and Outlook 445

consistent and reliable products, a commitment to ethically driven (and legally enforced) vacation ownership resorts, and the participation of major hospitality companies noted for their strength and credibility. Moreover, the timeshare market is expected to become increasingly sophisticated. People are much more knowledgeable today about the concept of timesharing than they were when it was introduced in the 1970s, and the trend is expected to continue and broaden. Sales of traditional timeshares continue to grow. According to an annual benchmark study conducted for the American Resort Development Association’s International Foundation (AIF) by PricewaterhouseCoopers, net sales of U.S. timeshare resorts grew by 14.3 percent in 2006. Point-based products have increased in prominence, with 57.7 percent of 2006 sales classified as interval week sales and 42.3 percent as points sales. The emergence of the point system as an alternative to use periods has caused a significant improvement in the marketability of timeshare products. Sales techniques also are changing, with increasing numbers of sales occurring off site. The Disney Vacation Club (a points-based timeshare product) opened its first off-site sales center in a suburban Chicago mall in 2007. The weighted average price of a one-week timeshare interval sold during 2006 was $17,620—an increase of 5.4 percent over 2005 prices, but still relatively affordable for middle-income households. AIF reports that, in 2006, nearly 4 percent of U.S. households owned timeshares, or about 4.4 million.38 Fractional ownership of second homes also has been growing. Even the wealthy are beginning to realize that paying full price for a property that they only use a few times a year makes little sense when they can purchase a portion of a much more expensive home or one in a more attractive location for the same price as full ownership of a modest home elsewhere. Major hospitality companies have been nurturing the fractional ownership concept since it began in the early 1990s, in part because it makes it easier (and more lucrative) for them to finance expensive hotel projects.39 Although these products are particularly popular at expensive resort destinations in the mountain states, the momentum for urban fractional projects is growing. Encouraged by the success of the first such project, the Phillips Club in New York, a new generation of fractionals is being developed in cities such as San Francisco, Paris, and London. These properties offer buyers a chance to take advantage of a city’s cultural offerings for a fraction of the price of a traditional pied-à-terre.

446 Resort Development

The destination or private residence club is a third variation on the timeshare theme. Instead of owning a share in a single property, club members share access to a portfolio of properties. The first destination club was launched in 1998, when Connecticut-based Private Retreats (subsequently renamed Tanner & Haley) enticed affluent buyers with the promise of the right to stay in multimillion-dollar homes in a variety of exotic settings worldwide. Destination club members pay a hefty one-time fee (generally refundable) and annual dues. The clubs have experienced robust growth, fueled by affluent baby boomers who prefer a choice of getaways to a traditional second home. As InterCommunications’ Toni Alexander notes, “people are becoming more nomadic in their vacation habits. They used to buy a cabin in Minnesota and go there every summer. Today, people want the excitement of being able to go from place to place, to have new and unique experiences. That’s one of the reasons why clubs like Exclusive Resorts have done so well. For a lot of people, it isn’t a matter of not having enough money to buy a second or third or fourth home. They’re attracted by the opportunity to try a lot of different places without being committed to any one place.” In addition to enabling people to vacation in different places, many residence clubs also enable them to vacation in different types of accommodations—for example, in a four-bedroom home when vacationing with the entire extended family, or in a one-bedroom condominium when a couple wants to get away on their own. Alexander adds that residence clubs may have a beneficial impact on the second-home market by helping people decide where to purchase a vacation home in the future. Residence clubs have been experiencing some shakeout. Tanner & Haley filed for bankruptcy in 2006, and its assets were purchased by another club, Ultimate Escapes. Other clubs have raised fees and dues, and some are shedding properties and instituting stricter reservation systems. The clubs, which first catered to affluent travelers, are expanding, now targeting both the ultrarich and the middle class. Exclusive Resorts—the largest club, with 300 properties— responded to availability issues by doubling its number of beachfront homes, starting a member waiting list, raising prices, and adding a budget membership level that restricts usage to nonholiday periods. There are now more than 20 residence clubs, a number that is expected to grow tenfold in the next few years. The industry can be expected to consolidate and diversify,

TIMBERS CLUB

The Timbers Club in Aspen, Colorado, is a residence club offering one-eighth interests in its 36 residences.

as some clubs merge and new niche groups focusing on a single type of property—golf, ski, fly-fishing, and even polo clubs—emerge. Some developers are combining fractional ownership projects with a club feature that enables owners to trade time in their own units for vacations at other properties. Vacation ownership products, which range from large, single-family homes to hotel-like rooms or suites, likely will remain one of the fastest-growing segments of the resort and vacation industry for some time to come and will become increasingly important components in both new and existing multiuse resort projects. Green Development In the land use industry as a whole, and particularly in the resort development industry, the question is no longer whether to “build green” but how to do so. Developers and investors increasingly are adopting a triple-

bottom-line business approach that measures success in terms of social, environmental, and economic value (or “people, planet, and profit”). As concerns about global climate change grow and energy costs rise, more resort developers are seeking to build projects that use fewer natural resources and less energy, produce fewer carbon emissions, and make a contribution to the surrounding environment. They also are discovering that doing so does not necessarily mean sacrificing profits, as more sustainable business practices can result in greater efficiency, cost savings, more cooperation from local jurisdictions, and greater market appeal. According to the U.S. Green Building Council (USGBC), 118 hotels have registered for LEED certification. In other parts of the world, hotels and resorts are adopting the environmental management standard set by the International Standards Organization, ISO 140001. And some resort developers are looking

Trends and Outlook 447

HORNBERGER & WORSTELL, INC.

The Park Hyatt Beaver Creek Resort and Spa in Colorado is a year-round resort offering skiing, golf, fishing, and other activities.

beyond LEED to a new pilot certification program, LEED for Neighborhood Development (LEED-ND). A collaboration among the USGBC, the Congress for the New Urbanism, and the Natural Resources Defense Council (NRDC), LEED-ND will evaluate projects based on smart location and linkage to the community at large, green construction and technology, and more. Major hotel operators, including Fairmont, Hilton, Hyatt, Kimpton, Marriott, Starwood, and others, all have embarked on environmental initiatives to build green, conserve resources, reduce waste, and incorporate environmentally responsible practices and products. Ski resorts also are becoming more environmentally responsible. In 1997, the Aspen Ski Company launched the industry’s first environmental division, a combination green management team, think tank, and consultancy as well as an in-house watchdog. Recognizing the impact that global warming is having on their industry, dozens of ski resort operators have followed suit, opening their own environmental divisions, and the National Ski Areas Association has partnered with the NRDC to lobby Congress on behalf of climate-change legislation. More than 20 ski resorts had offset all of their emissions with green-energy purchases by the start of the 2007–2008 season.40

448 Resort Development

As developable land becomes more scarce, restoring and enhancing degraded natural landscapes presents additional opportunities for resort developers. Degraded landscapes—often resulting from previous poor-quality development or from past agricultural, logging, or mining activities—can be found in many prime resort areas. Both the technology and scientific knowledge required to undertake restoration and enhancement are rapidly advancing, making these activities more cost-effective and likely to succeed. A region can increase its appeal as a tourist and recreational destination by encouraging resort development and redevelopment that results in a net improvement of the surrounding natural environment.

Recreational and Sports Participation Trends The popularity of various sporting and recreational activities changes substantially over time. The challenge for resort developers is to find ways to integrate a wide variety of activities into the resort experience, especially those that are gaining popularity. Board sports, mountain biking, sledding, rock climbing, kayaking and rafting, hiking, and other outdoor adventures are among the recreational activities that have grown in importance for

resorts. Just as important is recognizing which sports and activities have declined in popularity; the most prominent of these include tennis, golf, fishing, motor boating, and water skiing. According to the National Sporting Goods Association, which has tracked Americans’ participation in various sports since 1995, the fastest-growing sport in the past decade was skateboarding, in which nearly 10 million people over the age of seven participated at least once during 2006—an increase of more than 105 percent since 1996. Combining that with snowboarding—a sport that was unknown until 1980, but that had more than 5 million participants in 2006—conveys some idea of how popular board sports have become. Some of this increase has occurred at the expense of traditional skiing. Alpine skiing declined from 10.5 million participants in 1996 to only 6.4 million in 2006, while crosscounty skiing declined from 3.4 million to 2.6 million participants during the same period.41 Some fast-growing U.S. recreational activities include working out at a gym, aerobic exercising, running/jogging, exercise walking, hiking, biking, backpacking/wilderness camping, and other types of overnight camping. Resort and hotel developers and operators should recognize the value of providing the necessary facilities and equipment—as well as instruction—for these activities in the

coming decade and should be on the lookout for other changes in sports participation. Golf The slow but steady decline in golfers between 2000 and 2006 resulted in a 70 percent decrease in commissioned courses during that period. According to the National Golf Association, the number of core golfers— those playing at least eight rounds a year—dropped about 11 percent from 2000. Although only 22 percent of existing golf courses are part of a residential community, about 70 percent of the golf holes under construction in 2006 were. Real estate clearly is driving much new golf course development and is expected to continue to do so in the coming decade. The upper range of the residential golf market, which can afford multimillion-dollar homes and sixfigure membership fees, has proven to be more resilient than lower and midrange communities, which have tended to reflect the overall housing slump. The decreasing amount of land available for golf course construction and the restrictions on how that land can be developed are requiring golf course designers and developers to be more creative. Many are focusing on revamping existing courses or looking to several booming markets overseas. The hottest trend

GINN RESORTS

Golf remains a focal point for many resorts and resort communities. Pictured: Reunion Resort in Orlando.

Trends and Outlook 449

GRECOTEL S.A. ©2008

Grecotel Eva Palace is located in Kommeno, a resort community on the Greek island of Corfu. The 225room hotel was built in 1975 and renovated in 2005.

in U.S. golf architecture thus is the restoration of older courses, typically making the most of the terrain’s natural features and using drought-resistant grasses and other plantings that require less irrigation and upkeep.42 Many new and redesigned courses are being repositioned as environmental assets. With proper planning and management, golf courses actually can enhance the environment, particularly where the development site can be restored or enhanced. Although golf is declining in the United States overall, it retains considerable appeal in many markets. The bar, however, is being raised for new and redeveloped golf courses, both in residential communities and resorts. Courses must be more challenging, offering more options for occasional players as well as regulars. The trend of maximizing residential lots with golf frontage is fading in favor of paying more attention to the quality of the golf course itself. At the highest end of the resort community market, a course layout that minimizes golf course lots actually will produce higher lot values. Clubhouses are evolving to meet specialized demands. Sophisticated market research and planning will be required to determine the right mix of services, facilities, land uses, and architecture needed to attract high-end users and purchasers. In other parts of the world, new golf courses are popping up in places never before thought of as golfing destinations—including Ghana, Vietnam, Turkey, and Sweden (where the sport is particularly popular among young people), as well as in Mediterranean countries,

450 Resort Development

Eastern Europe, and the Middle East. Between 2002 and 2007, 1,055 new courses were built outside of the United States, and another 850 were planned for between 2007 and 2009.43 Skiing and Winter Sports Participation in both alpine and cross-country skiing has declined since the mid-1990s. By the early 2000s, U.S. ski areas were averaging about 40 million visits annually, with no signs of growth. Profits at larger, ski-oriented areas were beginning to melt away, but smaller ski areas focusing on younger snowboarders were prospering, largely because snowboarding—in dramatic contrast to skiing—remains a fast-growing winter sport.44 Now an Olympic sport, snowboarding has matured into a mainstream activity. Snowboarder visits to ski areas have expanded rapidly, from 12.8 million in 2000 to 17 million in 2003. Snowboarders themselves also have matured; while the sport remains popular with teenagers and twentysomethings, the first snowboarders are now in their mid- to late 30s and show no signs of stopping.45 Snowboarding has been instrumental in solidifying the position of ski resorts as family-friendly places where mom and dad ski and the kids snowboard (although, increasingly, grandparents are skiing, and everyone else is snowboarding). To adjust to the changing market, ski resorts are expanding their winter activities and facilities to attract more visitors. According to a survey of 138 U.S. ski resorts conducted by Closser & Associates of Mar-

Resort Trends in Europe Forecasts from the World Tourism Organization predict that in 2020 Europe will retain its position as a top international tourist destination, welcoming 717 million travelers each year, of which 25 percent will be from the Americas, Asia, and the Far East. In recent years, huge growth in low-cost airlines plus strong tourism demand and more disposable income have equaled large potential income streams for resort developers and operators. As a result, U.S. hospitality leaders such as Marriott International, Starwood Hotels & Resorts, Fairmont Hotels & Resorts, and Global Hyatt Corporation are stepping up for a piece of the action. Indicative of the trend is that Hilton-owned Conrad Hotels & Resorts will open its first resort hotel in Europe in 2010, on Portugal’s Algarve coast. The pace of development has increased to such an extent that industry observers now are warning of oversupply risks. “The developers and operators who will do well are those who study and respond to the market’s key drivers,” predicts Muriel Muirden, managing director of the London office of Economics Research Associates (ERA) and cochair of ULI’s European Resort Development Council. A new generation of consumers will be willing to spend much more, notes Muirden, but with consequently higher expectations regarding standards and service. She also foresees an increase in multigenerational family group travel, which will require larger accommodations and more diverse amenities, and growing demand that resorts be built and operated in ecologically sustainable ways. Tough legal controls in most European countries mean that developers and operators across the continent generally have anticipated the demand for greener operations and already are producing sustainable energy with solar and wind turbine generation, introducing water recycling schemes, and increasing the attention paid to soft landscaping and the use of local sources for materials. The impact of resorts on local housing markets largely has been mitigated in Europe by ensuring that the two are well segregated. Demands for developers to provide affordable housing as part of their projects, therefore, largely have been avoided. “I can’t think of any major resort project in mainland Europe that has been or is likely to be required to provide housing for the local community,” comments Mark Wynne-Jones, London-based chief executive for Europe, Middle East, and Asia at Jones Lang LaSalle Hotels. The fact that local residential areas can be located some distance from a resort brings its own problems, though. “Getting staff in from farther afield can have an impact in terms of operating costs and logistics,

as well as complying with working-time regulations,” explains Philip Camble, London-based director of Cushman & Wakefield Hotels. “But operators are aware of this and factor it into their costs.” Nevertheless, the distances involved are relatively short, and many resorts are built in the expectation that staff members will find accommodations in the local housing stock. Even at European mountain resorts, where nearby accommodations are often in shorter supply, concerns are primarily focused on reducing the impact on the local environment. Green campaigners are adding extra pressure to the Alpine resort market, which is still recovering from a 2006 report by the Paris-based Organization for Economic Cooperation and Development (OECD) that predicted that over one-third of Europe’s top ski resorts would disappear by 2050 as a result of low-lying slopes succumbing to higher temperatures and a rising snow line. Though many leisure industry experts believe the OECD estimates to be unduly pessimistic, many traditional winter resorts have accelerated plans to expand their facilities beyond winter sports facilities to include golf, tennis, rafting, canoeing, and hiking. Most new and refurbished Alpine resorts are now focused on a three- or four-season clientele. Arc 1950 is one of the newest ski villages in the Savoie region of the French Alps. The resort, which includes 466 residences as well as condominium hotel suites, was developed by Intrawest. The company is now working on two more ski resort villages in the French Alps—one, Flaine Montsoleil, being built near Flaine, France, and the other still in the planning stages. A village-style resort in Bordeaux, with vineyards and golf, is in the pipeline. “We intend to repeat the success of Arc 1950 in numerous locations across Europe,” says Intrawest chief executive Alex Wasilov. Mountainous areas have been the first to produce so-called ecoresorts—projects focused on environmental sustainability. Typically small-scale, ecoresorts offer a widely disparate menu of amenities. Larger developers and operators are watching them carefully to determine whether such facilities can be scaled up. Whitepod near Aigle, Switzerland, is an ecoresort offering an experience that approaches zero impact on the environment. Measures it has taken include use of furniture produced locally from sustainable wood and water from a rainwater recuperation system. “Now, more than ever, it is everybody’s responsibility to protect the environment, but even more so for ski resorts, which need to lead the way,” notes Sofia de Meyer, Whitepod’s founder. At St. Martin Chalets in Lungau, Austria, Europe’s first energy self-sufficient resort builders are avoiding artificial materials as much as

Trends and Outlook 451

Resort Trends in Europe

continued

possible, and the main structures use local larch and pine, insulated with sheep’s wool. Key Drivers of the European Resort Real Estate Market ; Baby boomers: a generation of spenders rather than savers. ; Green tipping point: growing demand for resorts that are built and operated with the environment in mind. ; Multigenerational travel: three or four generations of the same family taking holidays together, requiring larger units—three to five bedrooms—and more diverse amenities. ; Growth of the wealthy class: increasing numbers in the upper echelons of society demanding a high level of privacy, exemplary service, and attention to detail. ; Time poverty: people facing time constraints, resulting in an emphasis on ease of access, price transparency, and enhanced service. ; Connoisseur travel: individuals expecting to maintain their first-home leisure pursuits while away, increasing the importance of soft programming at resorts.1 Other ecoresorts include Whitewater Country Park near Llangollen in rural Wales, which claims to be the U.K.’s first ecoresort. Its homes have been built with solid logs from sustainable forests, supplied by Real Log of Vermont. At Poprad in southwest Slovakia, AquaCity is an eco-friendly spa resort that uses geo-

quette, Michigan, 41 percent offer snow-tubing hills, 38 percent offer cross-country skiing, and 36 percent offer snowshoeing. Fifteen percent provide sleigh rides, and 14 percent offer snowmobiling. Some also offer additional activities such as dogsledding, paragliding, heliskiing (skiing accessed by helicopter), bobsledding, ice climbing, and orienteering.46 Few if any new ski areas will be developed in the United States in the near term. In fact, the number of U.S. ski resorts fell from 591 in 1990 to 492 in 2005.47 The surviving areas are those that have evolved into three- and four-season resorts by filling beds during the off-season. Many resorts began this evolutionary process in the 1980s and 1990s, adding golf courses, tennis courts, and swimming pools. But more are evolving further, offering an even wider range of activities during the spring, summer, and fall. Water and alpine slides, lift-serviced hiking trails, mountain bike courses, zip-lines, mountain boards,

452 Resort Development

thermal water, solar power, and wind turbines to centrally heat the resort’s two hotels, spa, and water park, and to supply 80 to 100 percent of its electricity. In another trend, the spa concept has taken off. “Having a ski facility alone or a golf facility alone is fine for one or perhaps two members of a family, but you need a range of amenities, including spas, to keep everyone happy. And a spa has a certain cachet—it signifies a development is quite high standard,” says Mike Wellings of Winslow, developer of the Mountain Residences apartment and spa resort in Bansko, Bulgaria. Development opportunities still exist on the eastern and western flanks of the Portuguese Algarve, with several celebrity golfer-endorsed new and upcoming projects. Monte Rei Golf and Country Club has opened near Tavira in eastern Algarve. Vigia Group is building a golf village at Parque da Floresta. Near Silves, Oceanico Group has begun work on the Amedoeira Golf Resort, which will include two golf courses designed by Nick Faldo and Christy O Connor, Jr. Whether or not they are playing golf, an increasing number of travelers in Europe with a lot of disposable income are demanding smaller, more personal resorts with a higher level of service. Niche developers such as Carbondale, Colorado–based Timbers Resorts are well placed to respond to this demand. “We feel that the highend, luxury resort market is very sustainable, as it isn’t as fragile and related to market changes,” says Timbers president David Burden. The company already has com-

and mountain scooters all attract visitors to what were once only ski areas.48 Developing base areas as villages is a growing trend. Okemo Mountain Resort in Ludlow, Vermont, offers an example of a long-running resort that has added a village component called Jackson Gore (see case study, chapter 7) that includes a variety of ownership housing types, a hotel, and amenities. Boating and Water Sports An estimated 29 million people participated in powerboating in 2006, a year in which total boat unit sales were up over the preceding year, buoyed by growth in ski/wakeboard boats, personal watercraft, canoes, and kayaks, even as sales of traditional powerboats decreased by nearly 5 percent.49 The relative affordability of boat purchases as compared with other major recreational purchases, including second homes, makes boat ownership an economical alternative

pleted a development in Tuscany, Italy, and is looking at various sites in Switzerland, France, and the U.K. Many brands are looking to tap the high earnings from fewer but more profitable guests. The Verdura Golf & Spa Resort, the first Rocco Forte resort, will open in Sicily in 2009, including a high-end golf course and wholly owned villas as well as a signature hotel. “It makes sense to think about adding resorts. We’re keen to leverage our city success in resort destinations,” says David Munns, London-based group finance director for the Rocco Forte Collection. Fractionals, an increasingly popular option in the United States, are only starting to find a footing in Europe. The Organization for Timeshare in Europe estimates that the continent has fewer than 25 fractional developments, compared with nearly 200 in the United States. The entry of well-respected U.S. brands such as Marriott could boost what is still a new product for Europe, but industry experts doubt that this segment will see significant growth across the continent. Among the barriers seen for fractionals are a lack of demand from investors because of alternative products in Europe, and the likely limitation on the number of European resorts suitable for fractionals: high-end, three-quarter-season developments. Condo hotels are still in their infancy in Europe, and it is unknown whether this complex product will win much following there. But this has not deterred some wellknown operators that are planning to feature a condo

hotel as part of new projects. Club La Costa, for example, which owns 22 resorts in Europe, is opening its first condo hotel in 2010 near Marbella, Spain. “The time is right, as there is demand for something new,” notes Paul Smith, director of operations at CLC Estates, part of Club La Costa. “Without a doubt, many more condo hotels will be appearing in resort developments.” Also new in European resorts are branded residences, catering to high-end full-ownership customers. The Kempinski Private Residences La Heredia de Monte Mayor near Marbella, Spain, due for completion in 2010, will include 134 townhouses, all of which will receive high-quality services meeting Kempinski hotel group standards. Marbella is one of several European locations likely to benefit from the new stream of wealthy Russian investors in second homes, says ERA’s Muirden. “These buyers are aspirational followers, rather than leaders, who respond to animation, entertainment, and sophisticated retail on their doorstep.” They are much less likely to buy into resorts emerging in newer European Union member states because they lack not only top-notch shopping venues but also the glitz, glamour, and cachet of established western European locations.

for many; 75 percent of boat owners in 2006 had an average household income under $100,000.50 Because boat purchases are discretionary, however, the impact of sales and luxury taxes, economic recessions, fuel prices and moorage availability and fees is expected to influence ownership rates in the future. Boating is increasingly popular at the upper end. Super yacht products (those of 82 feet [23 m] and larger) are increasingly common in Caribbean, Mediterranean, and Australian coastal resort areas. David Howerton reports that “the demand for marinas that can handle very large yachts has grown, while the long entitlement periods and other difficulties have caused a shortage of berthing facilities for these yachts.” Boating and other water-related sports will remain important for some resorts. Those that can offer opportunities for guests to participate in growing water sports such as kayaking, surfing, and the use of personal watercraft will have a distinct marketing advantage.

Similarly, indoor and outdoor water parks have become more popular and more numerous since the 1990s. Once typically standalone facilities similar to small amusement parks, water parks have evolved into destination resorts that aim to quench America’s thirst for family activities. Indoor water park hotels have migrated from Wisconsin, where they offer a respite from bonechilling winters, across the nation and overseas. They typically contain 35,000 square feet (3,250 sq m) or more of raft rides, body slides, fountains, wave pools, and shallow kiddie pools. While expensive to build—typically more than twice the cost of an indoor pool—they can increase hotel occupancy and room rates by more than 10 percent a year. In 2000, there were only 24 indoor water parks in the entire United States, all located in the Midwest; by year-end 2006, there were more than 100 in locations as varied as Texas, Arizona, Kentucky, and California.51 Outdoor water parks have evolved beyond

Note 1. Economics Research Associates. Source: Mark Simmons, Urban Land, February 2008, pp. 78–83.

Trends and Outlook 453

WATG (WIMBERLY ALLISON TONG & GOO)

Atlantis, the Palm, is a 1,500-room resort in Dubai designed around water park themes, similar to its sister Atlantis resort in the Bahamas.

Wet’n’Wild—one of the first modern waterslide theme parks, which opened in Orlando in 1977—to resort-based parks like Aquaventure, the recently opened new section of Atlantis resort in the Bahamas. This 63-acre (25-ha), 3-million-gallon (11.4-million-l) waterscape adds a river ride with rapids and wave surges, special effects, and new slides to the beachfront resort’s already extensive water park offerings. Owner Kerzner International Holdings Limited is expanding the Atlantis brand globally with the development of Atlantis, the Palm, Dubai, a 1,500room, water-themed resort expected to open in late 2008 on the Palm, Jumeirah. Ecotourism, Soft Adventures, and “Voluntourism” Ecotourism is one of the most widely discussed areas of opportunity in the resort development field, both domestically and globally. With a $77 billion global market, it is experiencing double-digit gains that are likely to

454 Resort Development

accelerate in conjunction with concerns about the environment in general and global warming in particular.52 While it has the potential to offer relatively affordable resort experiences that will go a long way toward satisfying the increasing demand from middle-income markets as well as the rising desire for authentic, meaningful experiences, it is increasingly appealing to affluent, middle-aged, socially concerned vacationers who are eager to travel to remote locations and stay in comfortable accommodations while maintaining a small carbon footprint. No longer does ecotourism mean roughing it; many of tomorrow’s green resorts will be havens of luxury, as ecotourism concepts are incorporated into high-end luxury resorts throughout the world. Ecotourism—sometimes referred to as responsible or sustainable tourism—defies easy definition; it means different things to different people. For some, it means eavesdropping on nature from a luxurious hotel; for oth-

XALOC RESORT

ers, it means giving up most traditional resort amenities to experience nature and native people on their own terms. One of the most broadly accepted definitions, provided by the Ecotourism Society in 1990, is simply “responsible travel to natural areas that conserves the environment and improves the well-being of local people.” A more comprehensive definition, adopted by the World Conservation Union in 1996, describes it as “environmentally responsible travel and visitation to natural areas in order to enjoy and appreciate nature (and any accompanying cultural features, both past and present) that promote conservation, have a low visitor impact and provide for beneficially active socioeconomic involvement of local peoples.”53 In its purest

Xaloc Resort on the Mexican island of Holbox is a small ecotourism resort. The guest bungalows are designed in an indigenous, rustic style, using palm leaf roofs.

manifestation, ecotourism can be a powerful tool for the conservation of biodiversity, support of native peoples and their culture, and sustainable development.54 While varying definitions and standards make ecotourism difficult to measure, the International Ecotourism Society estimates that this form of travel is growing by 20 percent annually (compared with 7 percent for tourism overall). The ecotourism market traditionally has been served primarily by small boutique hotels and other modest lodging facilities and service providers that can guarantee high-quality experiences without damaging the surrounding environment. Among the first U.S. ecotourism resorts, Maho Bay Camps and Estate Concordia on St. John in the U.S. Virgin Islands, both developed by Stanley Selengut, have been recognized for recycling, energy conservation, and offering intimate environmental interaction. These small-scale projects, which offer modest accommodations in cottages, high-tech “eco-tents,” and studio apartments, also have been financially successful. As more and more traditional hoteliers and resort developers and operators adopt greener practices, ecotourism is moving into the mainstream. Costa Rica, a pioneer in the ecotourism field, is home to many small eco-lodges where guests can ride horseback through lush forests while learning about plants and wildlife from native guides, observe endangered sea turtles, snorkel among exotic fish, and take zip-line rides over the rain forest canopy. The country now is entering a new phase of luxury ecoresort development. Revolution Places seeks to redefine the luxury resort category by focusing on environmental preservation and cultural authenticity. The company’s first project—Cacique, scheduled to open in 2010—aims to create a new model for luxury ecotourism. Those who will visit the ecoresorts of the future will not all be green activists, notes Philippe Bourguignon, vice chairman of Revolution Places and CEO of Revolution Places Development: “Selfishly, people prefer to go to a place that preserves nature because they know that place is going to be better. And, more and more, those people also want to ‘do good’ while doing well. Over the next 20 years, this will become an irreversible trend.”55 U.S. resort communities also are incorporating opportunities for ecotourism experiences as the market demands them. For example, Balsam Mountain Preserve, a 4,500-acre (1,820-ha) recreational community with 350 private homesites in the Smoky Mountains of North Carolina, has been styled as “a community within

Trends and Outlook 455

Cacique Revolution Places, a unit of Steve Case’s Washington, D.C.–based Revolution, LLC, is seeking to redefine the luxury resort category by focusing on environmental preservation and cultural authenticity. The company’s first project—Cacique (pronounced “ka-SEE-kay”), which Case and Costa Rican President Óscar Arias Sánchez jointly announced at a press conference in August 2007—aims to create a new model for “casual luxury ecotourism” by transforming 650 acres (260 ha) on the northwest coast of Guanacaste, Costa Rica, into an $800 million environmentally friendly, culturally sensitive, and authentically Costa Rican luxury destination resort with a wide range of accommodations, amenities, and activities. The project, which is located 25 miles (40 km) from Daniel Oduber Quirós International Airport in Liberia, is scheduled to open in successive phases beginning in 2010. The developer is bringing together several hospitality partners and a range of innovative lifestyle brands to develop a new type of vacation experience that will retain the local environment and culture. Cacique will feature a One&Only Resort with 120 villas, each of which will consist of two connected 850-square-foot (80-sq-m) bungalows; a Miraval spa resort with another 120 villas; 30 four-and five-bedroom, 4,000-square-foot (370-sq-m) Exclusive Resorts homes; and 320 for-sale residences ranging in size from 2,000 to 4,000 square feet (185 to 370 sq m). Cacique’s family-oriented amenities and programs will include an extensive nature trail system, a beach club, an 18-hole Tom Doak golf course that will have a limited impact on the local terrain, the world’s first Agassi/Graf Tennis and Fitness Center—designed and programmed by Andre Agassi and Steffi Graf to make tennis and other fitness activities relevant and appealing to vacationing families— and an EcoExperiences center operated in partnership with Philippe Cousteau that will offer land and sea

nature adventures both on and off the property, which is near several volcanoes and a national park. All of Cacique’s built components will be designed and developed according to world-class architectural and master planning standards. The project will highlight intelligent, environmentally friendly designs that reduce energy and water demand and take advantage of spatial, wind, and solar patterns to maximize natural ventilation, shade, and daylighting. Cacique also will establish a comprehensive recycling and solid waste management program to minimize the resort’s impact on the surrounding environment. In addition, Revolution Places has committed to creating on-site treatment facilities to reuse wastewater and to purchase electrical power from renewable sources. The resort aims not to become a gated, manicured traditional resort community in the forest. No nonnative plants will be introduced; Revolution Places will work to sustain and facilitate the growth of existing plant and animal species, including native howler monkeys. A village featuring local retailers and restaurants, the EcoExperiences center, and small lofts and condominiums will be built to provide a transition between the local community and the project, whose name is itself a declaration of its authenticity and the site’s history—cacique means “chief” in the native language, and the resort will be located on a site where the local chiefs went to thank the god of the sea. Revolution Places also is investing in a series of local community initiatives, including the donation of 1 million trees to the government-chartered Foundation for the Balance between Conservation and Development; a $1 million investment to encourage and support the development of local nonprofit groups; and the donation of computer learning centers to four nearby towns. The development and ongoing operations of Cacique are expected to create more than 2,000 new local jobs.

CACIQUE

Master plan.

456 Resort Development

ADRIENNE SCHMITZ

The agriturismo (or agrotourism) movement began in Italy as a way for small family farmers to earn the income that enables them to keep their land in agriculture. Many of these farms now host boutique resorts with pools and tennis courts, and feature meals made from their produce.

a park, not a park within a community.” Developers Chaffin/Light Associates incorporated into the community 50 miles (80 km) of hiking, biking, and equestrian trails; fly-fishing on numerous pristine trout streams; and nature programs coordinated by staff naturalists. Approximately 2,500 acres (1,012 ha) have been set aside in a permanent reserve to be managed by the Balsam Mountain Trust, a nonprofit entity that also provides environmental, recreational, and cultural programming. In addition to ecotourism, two related tourism trends have arisen in recent years. As the baby boom generation ages, “soft adventure” tourism has become more popular among those who still want to experience the world in new ways but who may no longer have the stamina or time to backpack or hitchhike around the world. Many of these boomers—as well as numerous younger couples and families—now have the discretionary income to spend on briefer, more comfortable, but still adventurous trips that may include activities such as bicycle touring or walking (with overnight stays in rustic lodges or small hotels), farm stays (this trend, started in Italy as a state-supported institution known as agriturismo, is spreading to the Netherlands, the United Kingdom, and the United States), archaeological tours, African Photo safaris, race car driving experiences, and many more. Companies like Backroads (a Berkeley, California–based firm that bills itself as “the world’s

#1 active travel company”) and even the Walt Disney Company (with its “Adventures by Disney” program) are reaching out to a growing market of families that want to share active experiences in new and exciting destinations worldwide. Likewise, resorts are fulfilling guests’ desires for such experiences by hiring “adventure concierges” who either hire or contract with local naturalists, camping and fishing guides, rock-climbing instructors, and others to offer outdoor adventures. The second trend is volunteer tourism—or “voluntourism”—which involves shorter, more entertaining versions of the trips typically undertaken by Peace Corps volunteers, scientific researchers, and missionaries. For those who want to “make a difference” in the world—as well as to meet local residents and have authentic experiences in exotic locales—these trips offer a chance to spend a week or so teaching English to impoverished children, building homes, participating in a wildlife count, or delivering books, sewing machines, or other much-needed supplies to remote villages. Such trips generally combine a work experience with excursions to artistic, cultural, or recreational attractions. Volunteer vacations have become so popular and mainstream that the online company CheapTickets now enables customers to book volunteer activities along with their vacations, and numerous other groups, including Earthwatch, Ambassadors for Children, Habi-

Trends and Outlook 457

tat for Humanity, Globe Aware, and Relief Riders International, organize voluntourism trips. A Travelocity poll found that 11 percent of all vacationers in 2007 planned to volunteer as part of a vacation.56

RTKL ASSOCIATES, INC./DAVID WHITCOMB

Gaming The gaming industry is growing globally at a stunning pace. New development in Macao, China, has led to its overtaking Las Vegas as the world’s number-one gaming destination. Singapore has become another world leader in gaming. In addition, an increasingly diversified U.S. gaming market and the potential for increased gaming opportunities in the United Kingdom are creating sea changes in the international gaming business. Gambling has been a popular attraction in Macao, a former Portuguese colony (located an hour from Hong Kong by high-speed ferry) that is now, like Hong Kong, a special administrative region of China. The current development boom began in 2002, when the government decided to offer opportunities to outside casino operators, including the Las Vegas Sands Corporation and Vegas-based developer Steve Wynn. In 2003, China changed its tourism policy, allowing individuals to travel unescorted across the border to Macao for the first

time, thus creating an instant market for new casino hotels. In 2005, more than half of Macao’s 18.7 million visitors came from mainland China.57 The Las Vegas developer/operators brought to Macao the newfound respectability and over-the-top showmanship that they had used to reinvent the Las Vegas Strip in the 1990s. The Sands Macao, which has been operating since 2004, became the world’s largest casino after a 2006 expansion. The $1.2 billion, 600-room Wynn Macau, which opened in late 2006, is the city’s first Vegas-style casino hotel. These casinos already take in as much gaming money as Las Vegas, with about one-tenth the casino space. In 2007, Sands opened the 10.5 million-square-foot (975,450-sq-m) Venetian Macao resort hotel and casino, and more projects are in the planning stages.58 Singapore too is moving forward with several integrated gaming projects, although on a much smaller scale than Macao. Meanwhile, Las Vegas has embarked on another major growth spurt. MGM Mirage’s City Center, a $7 billion, 61-story, 76-acre (30-ha), four-tower vertical mixed-use resort, condominium, entertainment, and casino complex scheduled to open in 2009, will be a city within a city, a mini-Manhattan in the heart of the

Fantasy Springs Resort and Casino in Indio, California, is owned by the Cabazon Band of Mission Indians. The resort combines its casino with family-friendly vacation amenities, a conference center, and an Indian cultural center.

458 Resort Development

TAMARACK RESORT

All-season resorts have greater success and command higher prices than single-season destinations. Pictured: A single-family home at Tamarack Resort in Idaho.

Strip. One of the nation’s fastest-growing locations for timeshare resorts and resort communities for retirees, Las Vegas now is reaching out to a more sophisticated group of global travelers, creating new opportunities for upscale resort development. On the East Coast, developers and casino operators are plowing billions of dollars into Atlantic City in an attempt to transform it from a day-tripper destination to a Vegas-style resort destination. More hotel rooms, upscale restaurants, and additional entertainment and retail offerings are expected to increase nongaming revenues.59 And both Las Vegas and Atlantic City face growing competition from other U.S. gaming venues, including the Mississippi Gulf Coast (where gaming venues are expanding as the area continues to recover from Hurricane Katrina) and new and expanding Native American casino resorts in states from California to New York and Connecticut. All this new casino activity makes additional resort development more feasible in surrounding areas.

The Outlook for Resorts With growth in the resort industry highly cyclical and subject to broader economic trends, short-term prospects will vary substantially from year to year over the

next decade, although current projections call for excellent near-term net growth. The long-term (ten to 20 years) forecast also is quite favorable, largely owing to the advancing age of the baby boom generation and the expansion of new markets worldwide. As previously mentioned, earlier generations have represented strong market segments for second-home and retirementhome purchases—as well as for leisure travel—once they entered their 50s and 60s. This pattern, which is expected to hold for the baby boom generation, should bode well for the resort and second-home industry over the next ten to 20 years. A major challenge for today’s and tomorrow’s resort developers, according to RCLCO’s Gadi Kaufmann and Adam Ducker, will be to design places that will continue to be relevant and vital 20 and 30 years after they are built, continuing to attract new, younger visitors and buyers throughout the life of the property. This will require constant reinvention and reinvestment, not only in the physical plant but also in programming. “Resort operators will have to keep up with which amenities and activities are becoming more or less popular,” notes Kaufmann. “If the popularity of tennis is in decline, take the tennis out and replace it with something else. When tennis comes back—as it inevitably

Trends and Outlook 459

will—find a way to bring it back to life early enough to keep the tennis players happy. Resort operators will have to constantly balance functionality, design trends, and the needs and desires of the customer.” One productive response to this challenge, Kaufmann and Ducker offer, is to focus on developing resorts with multiple purposes and themes, places that offer yearround experiences. “Places like Vail and Aspen are much more successful and command much higher prices than single-season destinations for exactly this reason,” Kaufmann observes. “At Vail and Aspen, they’ve managed to create places where there is as much to do in the summer—maybe even more—than there is in the winter, when people traditionally visit to ski. They thought carefully about how to expand the experience.” Perhaps paradoxically, the other extreme approach— the single-activity, niche resort—also will be successful. In fact, the two approaches will develop side by side: as traditional ski destinations thrive by becoming more diverse, offering a broader range of activities and attracting a wider range of guests, other destinations will succeed by appealing to extreme microniches, offering a “pure,” specialized skiing (or surfing, mountain biking, or bird-watching) experience that can be found almost nowhere else. Toni Alexander comments that branding and cobranding will become more important for the resort industry “as more and more luxury brands—including interior designers, automobile companies, architects, athletes, and others—continue to be connected to the resort world in a big way. There’s a lot of brand fatigue out there; resort developers and operators need to be aware of that, and to figure out new ways to create unique and distinctive places. We counsel our clients to try to ‘break the mold,’ to try something new and different that reflects more on the place than the institutional brand.” In marketing, experience is becoming more important than product, adds Alexander. “It’s clear to me that the best way to sell real estate is through what we call experiential marketing. If I wanted to sell someone a house in Hawaii, the first place I’d take them wouldn’t be a house. Instead, I might take them in a canoe, paddle offshore, and let them experience what Hawaii is all about.” Financially, the model has changed fundamentally. Whereas for-sale real estate products used to be developed to support the hospitality offerings in a destination resort, today’s and tomorrow’s resort projects rely on for-sale real estate to provide upfront profits or

460 Resort Development

financing for the rest of the project, with the hospitality supporting that real estate. For-sale real estate thus is becoming the major driver for resort development. Leisure travel and resort real estate purchases are and always will be discretionary purchases; therefore, there can never be complete certainty about future markets. But the travel and tourism business is among the largest industries in the world, and as the world’s economy becomes more global each day, there is little doubt that travel and tourism will play a growing role. Nonetheless, the prospects for resort development and operation, both new and existing, will vary considerably depending on location and type of resort. In short, new destination resort development is expected to be strongest outside the United States. In the United States, the emphasis will be on hybrid resort/residential communities in a wide variety of locations, new forms of vacation ownership products, and the expansion, redevelopment, and repositioning of existing resorts and resort areas. The Prospects for New Resorts in the United States In general, opportunities for new large-scale destination resorts in the United States are more limited today than in recent decades. The reasons are fourfold: ; more stringent environmental regulations; ; increased development costs; ; lack of developable sites in attractive locations; and ; greater competition from established projects both domestic and abroad. Most industry experts believe that it is unlikely that many new pioneering large-scale destination resort projects (such as Sea Pines, Beaver Creek, or Pebble Beach) will be successfully initiated in the United States in upcoming years. What will be developed, they agree, will be smaller niche or boutique projects—often in nontraditional resort settings, including cities—designed to appeal to a specific market segment. Many of these projects will feature extensive amenities that will be supported by for-sale real estate products. They will be more densely built, with walkable, village-style development becoming the norm. And they will be created by partnerships among developers, hotel brands, and well-known spa, health care, recreation, and other service providers. All participants will benefit from these synergistic relationships. New U.S. resorts also will be outwardly rather than inwardly focused. These will not be gated, self-enclosed

DESTINATION RESORTS HAWAII

When Wailea Beach Villas in Maui was developed, it included 25 units of affordable housing for local residents. The luxury penthouses and villas are under condominium ownership, and many are part of the resort’s rental program.

facilities to which vacationers travel with the goal of escaping from the outside world; rather, they will benefit from and make the most of their connections to that world. “For the last 20 years, we’ve had a tendency to build insulated communities,” says Harry Frampton of East West Partners, “and we’re hearing from a lot of customers that that’s absolutely not what they want. What they want is a terrific lifestyle experience that’s integrated into the local culture, where they feel a part of the community. . . . Those projects and communities that do that best are likely to be most successful.” WilsonMiller’s Keith Morrow points out that many of the new resorts that will be built in the coming years will more closely resemble authentic communities, places with which vacationers can develop physical and emotional bonds, just as more primary and second-home communities will start to resemble resorts, with amenity packages that mimic those of a vacation destination. In terms of location, the southeastern United States—particularly coastal and “inland waterfront” locations (those adjacent to rivers, lakes, and

streams)—should continue to present opportunities for new resort and vacation community development because of its warm weather and its proximity to a large part of the U.S. population. The prospects are less optimistic for new development in the Southwest and West. Environmental restrictions, as well as an increasing scarcity of water resources, will continue to restrict resort development in California and the mountain states. Hawaii’s long-range outlook is more hopeful, with increasing numbers of tourists expected to visit the state from Asian countries. Another excellent market opportunity for resort developers, notes Frampton, is in U.S. cities that already have a wide range of the cultural, recreational, and retail amenities that can attract visitors. “We, as a company, decided to change our paradigm to think about cities as resorts, and we’re doing extremely well in downtown Denver,” he reports. “A huge number of people living in our resorts are moving into these condos in the cities. New York City is the biggest ‘resort’ in the United States right now, with the numbers of peo-

Trends and Outlook 461

LORETO BAY COMPANY

Once-remote parts of Mexico are becoming resort destinations. The Inn at Loreto Bay takes advantage of its dramatic site on the eastern coastline of Baja California Sur.

ple who are buying condominiums as second homes there. It’s another niche in the resort market.” The Prospects for New Resorts Worldwide Several factors favor international resort development; the most significant of these is the tremendous economic growth in many developing countries around the world. These countries are in a position today both to finance new resort development and to attract international and domestic tourists to new resort locations and properties. Almost every country in the world is now in the tourism business to some extent. Even countries with minimum resort infrastructure can tap into the new ecotourism trend by providing nature-based experiences and adventures that will attract visitors. Much of the new destination resort development activity during the next decade is likely to be concentrated in Asia, including Vietnam, Malaysia, and Indonesia. Parts of Latin America also are emerging as another

462 Resort Development

active area, with countries such as Costa Rica and Nicaragua already attracting larger numbers of tourists and retirees from the United States. Mexico, the Bahamas, and the Caribbean are augmenting California and Florida as popular vacation and resort development spots for U.S. residents. New laws that have made it possible for foreigners to own property in Mexico and much of the Caribbean have opened up these markets to new second-home development. The Caribbean, with its diverse cultures and recreational offerings, will remain a particularly popular destination for Americans and Europeans. Cuba already has become an attractive destination for Canadian and European tourists and—if and when its politics and economy evolve—it could become a setting for major new development in the next several decades. And oil-rich Middle Eastern nations such as the United Arab Emirates that traditionally have not been tourist destinations are in the midst of extensive building booms and marketing initiatives designed to

in parts of the world where travel is increasing. Many architecture and land planning firms already are heavily involved in international work. One important consideration for U.S. developers and other real estate professionals is the need to preserve and reflect the cultural integrity of the subject area. Because most international travelers seek out authentic cultural experiences, it makes good economic sense for developers to respect an area’s cultural integrity. Other benefits of doing so include fostering constructive connections with local people and the local economy. Overseas opportunities must be tempered by the risks inherent in conducting business abroad. U.S. developers and consultants must recognize and be equipped to deal with the political and operational issues involved in international development. They must be aware that unpredictable factors such as economic and political conditions, climatic and weather events, and natural disasters often affect global travel and tourism patterns. Furthermore, doing business in developing countries typically involves significant delays and

WILSON ASSOCIATES INTERIOR DESIGN

attract larger numbers of tourists from Europe and elsewhere. Overall, the Southern Hemisphere, which Gadi Kaufmann described as “underresorted,” will be the setting for much new development, as it becomes more accessible to those from the Northern Hemisphere. Kaufmann sees Africa as “the sleeping giant opportunity. It’s probably the least-discovered continent for tourism and second homes, the one that has the most virgin opportunity. I think we’ll see a lot of development in Africa.” Ease of access will be an important factor in determining where new overseas resort development will thrive, although people seem to be willing to go farther than in the past. According to Toni Alexander, Americans are beginning to follow the lead of Europeans, who have been buying second homes in places like the Seychelles and Mauritius for years. Americans in particular also are willing to travel farther—and pay more—to vacation in countries they perceive as being safe. Worldwide, U.S. developers are in a good position to export their expertise and undertake joint ventures

Mauritius is a popular destination for Europeans buying second homes. The Telfair Golf & Spa Resort has added 20 for-sale villas that have access to the hotel’s amenities, such as the spa pictured.

Trends and Outlook 463

uncertainties. The best advice is to involve local experts as members of the project team whenever possible. The Prospects for Repositioning Existing Resorts in the United States In the continental United States, as opportunities for new resorts decline, opportunities to expand, redevelop, or reposition existing resorts abound. Although existing resorts control most of the prime vacation locations, many of these venues have aged, offer a limited range of facilities and amenities, and hold diminishing appeal for today’s and tomorrow’s vacationers. To remain competitive, these established resorts will need to be revitalized and repositioned on a regular basis. The costs of acquiring and redeveloping an existing resort property can be less than the costs of new construction. More important, the benefit of a convenient and established location often makes redeveloping and repositioning existing resort hotel properties considerably more advantageous than new construction. Regional resorts are particularly ripe for redevelopment because of the strong demand for convenient and affordable resort experiences. Repositioning also is necessary to adapt to changing recreational patterns. Those redeveloping resorts should pay as much attention to the project’s soft infrastructure (cultural and educational offerings, social events, children’s programs, and so forth) as to its hard infrastructure. In many cases, a redevelopment effort may lead to the transformation of a single-purpose resort into a mixed-use resort village. The addition of ownership products to resort hotel properties, of resort hotels to second-home communities, and of new recreational, retail, and cultural amenities to all of the above will expand the options available to visitors at many existing resorts in the coming years. Resorts are, by definition, interesting and attractive places. To maintain their attractive qualities, astute resort developers and operators must continue to reinvent and redefine their properties in an effort to satisfy the constantly evolving demands of the various market segments they serve in a highly competitive domestic and increasingly global marketplace.

Notes 1. U.S. Census, Census 2000 Summary File 1, PCT12, “Sex by Age [209] - Universe: Total population.” 2. Sandra Block, “Off to Work They Go, Even after Retirement Age,” USA Today, August 31, 2007, pp. 1B–2B.

464 Resort Development

3. Keith Morrow, personal communication, July 13, 2007. 4. Harry H. Frampton, “What’s in Store for the Industry: Resort and Second-Home Markets, Products, and Trends” (panel discussion, ULI Developing Resort, Second Home, and Golf Course Communities Conference, Tampa, Fla., March 14–15, 2007). 5. Christopher Farrell, “No Need to Hit the Panic Button,” BusinessWeek, July 26, 2004, www.businessweek.com/magazine/ content/04_30/b3893401.htm. 6. James Chaffin, personal communication, August 22, 2007. 7. Gadi Kaufmann, personal communication, July 26, 2007. 8. Toni Alexander, personal communication, August 1, 2007. 9. John Leland, “Off to Resorts, and Carrying Their Careers,” New York Times, August 13, 2007, www.nytimes. com/2007/08/13/us/13steamboat.html. 10. Emily Flynn Vencat, “Window Seats,” Newsweek (Atlantic edition), May 14, 2007, p. 83. 11. Peter Rummell, personal communication, July 16, 2007. 12. “Tourism Highlights: 2007 Edition,” World Tourism Organization, p. 4; available online at www.unwto.org/facts/menu.html. 13. “U.S. Travel and Tourism Satellite Accounts: First Quarter 2008,” U.S. Bureau of Economic Analysis, www.bea.gov/ newsreleases/industry/tourism/tournewsrelease.htm. 14. Adam Ducker, personal communication, July 26, 2007. 15. Stirling Kelso, “China Rising,” Travel+Leisure, January 2007, p. 64. 16. Jonathan M. Tisch, Chocolates on the Pillow Aren’t Enough: Reinventing the Customer Experience (Hoboken, N.J.: John Wiley & Sons, 2007). 17. Steve Friess, “A Question Recurs: How Safe Is Las Vegas?” New York Times, August 3, 2007, www.nytimes. com/2007/08/03/us/03security.html. 18. “Travelling Green Tonight,” Economist, June 16, 2007, pp. 16–19. 19. Coco Masters, “Props to the New Turbos,” Time, September 3, 2007, pp. 42–45. 20. Susan J. Young, “Condos at Sea: A World Apart,” CruiseMates, July 16 and 18, 2007, www.cruisemates.com/articles/ feature/condoships-071607.cfm and www.cruisemates.com/ articles/feature/condoships-071807.cfm. 21. Mick Matheusik, “The Next Wave,” Urban Land, August 2006, pp. 65–69. 22. Joshua Kurlantzick, “Let a Hundred Decadent Spas Bloom,” New York Times, September 16, 2007, travel.nytimes. com/2007/09/16/travel/16journeys.html. 23. Laura Koss-Feder, “A Spa for Him Too,” Time, January 17, 2006, www.time.com/time/magazine/article/ 0,9171,1149385,00.html. 24. Shane Mitchell, “Reinventing Longevity,” Travel+Leisure, January 2007, pp. 68–76. 25. Ibid. 26. Ibid. 27. Liz Wolgemuth, “Baby-Making Vacations that Deliver,” Entrepreneur.com, July 24, 2007, www.entrepreneur.com/startingabusiness/businessideas/article181772.html.

28. Cindy Loose, “Operation Vacation,” Washington Post, September 9, 2007, pp. P1–P5. 29. Jayne Clark, “Hotels Make Clean Sweep vs. Allergies,” USA Today, August 31, 2007, p. 8D. 30. Matheusik, “Next Wave.” 31. Howard J. Wolff, “The Room Morfs,” Urban Land, November/ December 2003, pp. 89–94. 32. Alexandra Marshall, “Hotel Couture,” Travel+Leisure, October 2007, pp. 102–104. 33. Melba Newsome, “Viking Simmers a Strategy,” Time, September 3, 2007, www.time.com/time/magazine/article/0,9171,1655710,00.html. 34. Marilyn Adams, “It’s a Hotel, It’s a Condo. No, It’s Both!” USA Today, September 28, 2005. 35. Paul C. Bishop, Shonda Hightower, and Harika Bickicioglu, 2006 National Association of Realtors Profile of Second-Home Owners (Washington, D.C.: National Association of Realtors, 2006). 36. Jeanette Rice, “Second Homes,” Urban Land, February 2005, pp. 74-77. 37. Seth Kugel, “A House that’s Just Unreal,” New York Times, August 9, 2007, www.nytimes.com/2007/08/09/garden/09second.html. 38. State of the Vacation Timeshare Industry: United States Study 2007 (Washington, D.C.: ARDA International Foundation, 2007). 39. Bob Diddlebock, “Fun with Fractionals,” Time, January 25, 2006, www.time.com/time/magazine/article/0,9171,1151780,00.html. 40. Douglas McGray, “The Downhill Battle,” Travel+Leisure, March 2007, pp. 118–124. 41. National Sporting Goods Association, “Ten-Year History of Selected Sports Participation,” www.nsga.org/files/public/TenYearHistoryofSportsParticipation4web080313.pdf. 42. Kristina Dell, “Teeing Up a New Game,” Time, June 15, 2007, www.time.com/time/magazine/article/0,9171,1630536,00.html. 43. Ibid. 44. Jeff Coy and Bill Haralson, “Expanding Horizons: Ski Resorts Target Year-Round Revenues,” Resort + Recreation, May/June 2007, pp. 36–37. 45. Ibid. 46. Ibid. 47. Table 1216, “Selected Recreational Activities: 1990 to 2006,” Statistical Abstract of the United States: 2008, U.S. Census Bureau, www.census.gov/compendia/statab/tables/08s1216.pdf. 48. Marshall S. Berdan, “Summer Highs at Ski Resorts,” Newsday, June 24, 2007, p. D8. 49. “New Industry Report Shows More Boaters Hitting the Water While Boosting Local Economies,” National Marine Manufacturers Association press release, May 22, 2007. 50. Ibid. 51. Maryanne Murray Buechner, “Getting Splash Happy,” Time online, July 2, 2006, www.time.com/time/magazine/ article/0,9171,1209966,00.html. 52. “Ecotourism Is Booming,” Kiplinger Letter, April 27, 2007. 53. Andy Drumm and Alan Moore, Ecotourism Development: A Manual for Conservation Planners and Managers, vol. 1, An Introduction to Ecotourism Planning (Arlington, Va.: Nature Conservancy, 2002), p. 13.

54. Kerry Lorimer, Code Green: Experiences of a Lifetime (Victoria, Australia: Lonely Planet Publications, 2006), p. 9. 55. Philippe Bourguignon, personal communication, October 16, 2007. 56. Laura Fitzpatrick, “Vacationing like Brangelina,” Time, August 6, 2007, pp. 49–51. 57. Karrie Jacobs, “Gambling on the Future,” Travel+Leisure, January 2007, pp. 90–99. 58. Ibid. 59. Barbara Kiviat, “Vegas East,” Time, July 2, 2006, www.time. com/time/magazine/article/0,9171,1209950,00.html.

Trends and Outlook 465

Appendix

Summary Table of Resorts Built/Last Renovated

Resort Name

Location

Country

Ahwahnee Amelia Island Plantation American Club Arizona Biltmore Arizona Grand Resort Aspen Highlands Atlantis Paradise Island Bandon Dunes Banff Springs Hotel Banyan Tree Lijiang Bay Harbor Beaver Creek Biltmore Biltmore Black Butte Ranch Boulders, The Brays Island Plantation Breakers, The Breckenridge Ski Resort Broadmoor, The Broken Top Callaway Gardens Caneel Bay Canyons Resort Carambola Beach Resort Carmel Valley Ranch Carneros Inn Casa de Campo Championsgate Coco Palm Dhuni Kolhu Currituck Club Deer Valley Desert Highlands Devil’s Thumb Ranch Dewees Island Doonbeg Golf Club Fairmont Scottsdale Princess Fisher Island Resort Fontainebleau Four Seasons Hotel Four Seasons Resort Emerald Bay Four Seasons Resort Hualalai Gainey Ranch Gaylord Palms Resort Glacier Club Grand Cypress Resort Grand Resort Lagonissi Grand Traverse Resort Greenbrier, The Hacienda del Mar Hammock Beach Hampton Lake Harbour Ridge Hilton Hawaiian Village

Yosemite, CA Jacksonville, FL Kohler, WI Phoenix, AZ Phoenix, AZ Aspen, CO Nassau Bend, OR Banff, AB Yunnan Province Traverse City, MI Avon, CO Coral Gables, FL Santa Barbara, CA Sisters, OR Scottsdale, AZ Beaufort, SC Palm Beach, FL Breckenridge, CO Colorado Springes, CO Bend, OR Pine Mountain, GA St. John Park City, UT St. Croix Carmel, CA Napa, CA La Romana Orlando, FL Dhuni Kolhu Corolla, NC Park City, UT Scottsdale, AZ Tabernash, CO coastal SC Doonbeg Scottsdale, AZ Miami, FL Miami Beach, FL Westlake Village, CA Great Exuma Kailua-Kona, HI Scottsdale, AZ Kissimmee, FL Durango, CO Orlando, FL Athens Traverse City, MI White Sulphur Springs, WV Cabo San Lucas Palm Coast, FL Bluffton, SC Palm City, FL Waikiki Beach, HI

US 1927 US 1974 US 1942/1993 US 1929 US purch. 2006 US 2000 Bahamas 2000/2007 US 1999 Canada 1888/2003 China 2006 US 1994 US 1980 US 1926/2005 US 1927/2006 US 1970 US 1985 US 1990 US 1925/1990 US 1961/2002 US 1891/2006 US 1993 US 1952 US Virgin Islands 1955 US 1968 US Virgin Islands 1986/2006 US 1977 US 2003 Dominican Republic 1975 US 2002 Maldives 1998 US 2000 US 1981 US 1997 US 1972 US 2001 Ireland 2002 US renovated 2008 US 1970s US 1954/2008 US 2006 Bahamas 2003 US 1996 US 1984 US 2002 US 1993 US 1985/1996 Greece 2001/2006 US 1980 US 1778 Mexico 1995 US 2003 2006 US US 1984 US 1955/2007

466 Resort Development

Residences x x x x x

x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x

Lodging x x x x x

Fractionals x

Golf x x x x

Beach x

x x x x x x x x x x x

x x x x

x

x x x

x x

x x x x

x x x

x x x

x x x

x x x x x x x x x x

Ski

x x x x

x

x x

x

x x

x x x

x x x x

x x x x x x x x x x x x x x x

x x x x x

x x x x

x x x

x x

x x x x

x

x x x

x x

x

x

Acres

Hectares

n/a 1,350 1,060 39 160 60 97 1,200 n/a 14 1,200 1,825 150 20 1,200 1,300 5,500 140 25 3,000 200 13,000 170 3,500 28 400 27 7,000 1,500 12 600 1,825 850 5,000 1,200 388 450 232 18 20 225 865 560 63 750 1,500 618 900 6,500 28 140 909 885 22

n/a 545 428 16 65 24 39 485 n/a 6 485 737 61 8 485 525 2,222 57 10 1,212 81 5,252 69 1,414 11 162 11 2,828 606 5 242 737 343 2,020 485 157 182 94 7 8 91 349 226 25 303 606 250 364 2,626 11 57 367 358 9

Built/Last Renovated

Resort Name

Location

Country

Hilton Waikoloa Village Homestead, The Horseshoe Bay Resort Hotel Del Coronado Hotel Del Monte Hotel Terra Hyatt Huntington Beach Hyatt Regency Cerromar Beach Inn at Spanish Bay, The Inn on the Biltmore Estate Jackson Gore at Okemo Mountain Jardins Victoria, Vilamoura JW Marriott Starr Pass Kapalua Resort Kauai Lagoons Kiawah Island Kicking Horse Mountain Resort La Quinta La Valencia Lake Las Vegas Lapa Rios Little Nell Loews Ventana Canyon Resort Loon Mountain Luxor Mammoth Lakes Mandalay Bay Massanutten Resort Maui Prince Hotel Makena Resort Mauna Kea MGM Grand Hotel Mirage Montage Resort and Spa Northstar at Tahoe Old Greenwood Palmas Del Mar Palms Resort Casino Pelican Bay Pelican Eyes Phoenician Resort Pinehurst Resort and Club Promontory Radisson Aruba Resort Rendezvous Reserve at Indian Wells River Dunes Roaring Fork Club Rosewood Little Dix Bay Royal Palm Resort Royal Palm Resort Sagamore Hotel Salishan Sea Island Sea Pines Seaside Semiahmoo Setai Resort & Residences Sheraton Wild Horse Pass Silverado Country Club and Resort Smugglers’ Notch Vermont Resort South Seas Island Resort Spruce Peak at Stowe and Stowe Mountain Lodge Sun Valley Resort Sunrise Ridge at Yellowstone Club Taj Green Cove Tamarack Resort Venetian Macao Venetian, The Wailea Resort WaterColor Westin Resort and Spa Whistler Blackcomb Resort Wigwam Resort Winter Park Resort Wintergreen Resort Wit’s End Ranch and Resort

Waikoloa, HI Hot Springs, VA Horseshoe Bay, TX San Diego, CA Monterey Peninsula, CA Jackson Hole, WY Huntington Beach, CA Cerromar Beach Monterey, CA Asheville, NC Ludlow, VT Algarve Tucson, AZ Maui, HI Kalapaki, Lihu‘e, HI coastal SC Golden, BC Palm Springs, CA La Jolla, CA outside Las Vegas, NV Osa Peninsula Aspen, CO Tucson, AZ Lincoln, NH Las Vegas, NV Mammoth Lakes, CA Las Vegas, NV McGaheysville, VA Maui, HI Mauna Kea, HI Las Vegas, NV Las Vegas, NV Laguna Beach, CA Truckee, CA Truckee, CA Humacao Las Vegas, NV Naples, FL San Juan del Sur Scottsdale, AZ Pinehurst, NC Park City, UT Palm Beach Fraser Valley, CO Indian Wells, CA Oriental, NC Basalt, CO Virgin Gorda Scottsdale, AZ Miami, FL Lake George, NY Gleneden Beach, OR coastal GA Hilton Head, SC Seaside, FL Blaine, WA Miami Beach, FL Phoenix, AZ Napa, CA Smugglers’ Notch, VT Captiva Island, FL Stowe, VT

US US US US US US US Puerto Rico US US US Portugal US US US US Canada US US US Costa Rica US US US US US US US US US US US US US US Puerto Rico US US Nicaragua US US US Aruba US US US US British Virgin Islands US US US US US US US US US US US US US US

1988/1993 1766 1971/1996 1888/2005 1880/1951 2008 2003 1971 1987 2002 2003 2008 2005 1978/2006 1987/2008 1976 2000 1926 1926 2003 1993/2002 1989/2007 1984/2005 1966/2007 1991/2007 1984 1999/2007 1971 1986 1965 1993/2005 1989 2003 1970 2004 1978 2001 1978 2004 1988 1898/2005 2002 1959/2000 2002 2001 2006 1999 1964/2007 1929/2007 1955/2008 1883/1983 1965 1927/2006 1956 1982 1985 2002 2002 1870s 1956 1942/2006 2003

Sun Valley, ID Big Sky, MT Trivandrum Tamarack, ID Macao Las Vegas, NV Maui, HI Santa Rosa Beach, FL Los Cabos Whistler, BC Phoenix, AZ Winter Park, CO Wintergreen, VA Durango, CO

US US India US China US US US Mexico Canada US US US US

1936 2008 2005 2004 2007 1999/2007 2001 2004 1994 1997 1929 1940 1974/2004 1893/2005

Residences

x

x x x x x x x x x x x x x x x x x x x x x

Lodging x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x

Fractionals

Golf

x x x x x x x x x x x x x x x

Ski

x x x

x x

x x x

x x x x x

x x

x x

x x x

x x

x

x x x

x x x

x

x x x

x

x

x x

x x x x

x

x x

x

x x x

x x x

x x

x x x x x x

x x

x x x x

x x x

x x x x x x

Beach

x x

x x

x x

x x x x x x x x x x x x x x x

x x x x x

x x x

x x x x x

x x x x x

x x x x x x x x x

x

x x x

x x

x

x x

x

x x

x x

x x x

x x

x x x x x x x

Acres

Hectares

62 3,000 7,000 28 25 0.5 15 1,000 236 4 171 19 50 1,500 520 10,000 2,750 1,400 6 3,592 1,000 6 93 324 47 3,500 60 5,200 1,800 1,800 7 25 30 2,490 600 2,750 32 2,100 28 250 5,500 7,000 14 750 254 1,300 282 600 9 7 72 750 1,235 5,000 80 1,100 2 242 1,200 1,000 330 2,235

25 1,212 2,828 11 10 0.2 6 404 95 2 69 8 20 606 210 4,040 1,111 566 2 1,451 404 2 38 131 19 1,414 24 2,101 727 727 3 10 12 1,006 242 1,111 13 848 11 101 2,222 2,828 6 303 103 525 114 242 4 3 29 303 499 2,020 32 444 1 98 485 404 133 903

6,300 123 10 n/a 98 100 40 499 21 81,000 500 3,000 11,000 550

2,545 50 4 n/a 40 40 16 202 8 32,724 202 1,212 4,444 222

Bold type indicates case study (see chapter 7)

Appendix 467

Index

Note: Italicized page numbers refer to photos, illustrations, and figures. Bold page numbers refer to feature boxes and case studies. ■ Abu Dhabi, 57 Accessibility issues, 285 Acqualina Resort and Spa, FL, 3 Activity programming, 249–53, 259 Adache, Daniel, 277, 280 Adache Group Architects, Inc., 277 Adventure Sports Center International, 163 Advertising, 259 Affinity marketing, 271 Affluent market. See Wealthy market segments Affordable housing, 219 Africa, ecotourism in, 427–28 Africa Foundation, 428 Agassi/Graf Tennis and Fitness Center, 456 Ahwahnee Hotel at Yosemite National Park, 25 Airline industry trends, 431–32 Alexander, Toni, 255, 423, 446, 460 Allison Ramsey Architects, 411 Alta Resort, UT, 239 Altman Hospitality Group, 134 Ambassadors for Children, 457 Amedoeira Golf Resort, Portugal, 452 Amelia Island Plantation, FL, 30, 184 Amenities: feasibility analysis, 73–75; Hampton Lake (case study), 320; Jackson Gore at Okemo Mountain Resort (case study), 329; Jardins Victoria (case study), 339–40; Lake Las Vegas Resort (case study), 356–57; management of, 229–46; Roaring Fork Club (case study), 383–85; shared, 231–32; Taj Green Cove (case study), 402–3; WaterColor Inn (case study), 412–13. See also specific amenities American Affluence Research Center (AARC), 49 American Association of Advertising Agencies, 48 American College of Sports Medicine, 58 American LIVES, 176 American Resort Development Association (ARDA), 15, 54, 55, 269, 446 Americans with Disabilities Act (ADA), 206, 285 Anaheim Resort District, CA, 435 Ansari, Nasser Hassan Al, 429 Approval process, 88; Jackson Gore at Okemo Mountain Resort (case study), 328; Montage Laguna Beach (case study), 364; and regulatory issues, 137; Reserve at Indian Wells (case study), 371–72; Roaring Fork Club (case study), 386–87

468 Resort Development

AquaCity, Slovakia, 452 Aquatic facilities, design of, 180–84 Aquaventure, 454 Aquila Elounda Village, Crete, 149 Architecture, authenticity principles for, 119 Architrave Design and Planning, 290 Arizona Biltmore Resort & Spa, 25, 26, 26, 188, 250 Armani hotel, Dubai, 442 Army Corps of Engineers, 382 Arnold Palmer Design Company, 340 Asia Asia Hotel, Dubai, 12–13 Asian market: and casinos, 195; middle class in, 41–42, 428; and spas, 179, 437 Aspen, CO, 45; historical development of, 28 Aspen Institute for the Humanities and the Music Associates of Aspen, 28, 436 Aspen Ski Company, 260, 448 Association groups, 60 Association of Marina Industries, 240 Athens Group, 362, 363, 367 Atlantic City, NJ, 130, 247–48 Atlantic City Expansion Fund, 248 Atlantis Paradise Island, Bahamas, 13, 13, 39, 54, 183, 183, 192, 283, 284, 454 Atlantis the Palm, Dubai, 454 Attached residential products, design of, 199–201 Audubon Cooperative Sanctuary Program, 170 Audubon International, 170 Authenticity, planning for, 119–22 ■ Babcock, Elisha, 18 Babington House, Great Britain, 441 Baby boom generation, 40; and spas, 176, 176, 178 Baby bust generation, 40–41 Backroads (adventure travel company), 457 Badrutt, Johannes, 23 BahamaCraft Centre, 192 Bahamas National Trust, 283 Bahamas Reef Environment Education Foundation, 283 Bailes, Marc, 267 Balsam Mountain Preserve, NC, 455 Balsam Mountain Trust, 457 Bandon Dunes, OR, 169 Banff Springs Hotel, Canada, 24 Banyan Tree Lijiang, China, 11, 12, 32, 179, 288–95, 289–94 Banyan Tree Spa Academy, 179 Barth, Roy, 180

Bauer, Wolfgang, 22 Bay Harbor, MI, 151, 152, 185, 196, 197 Bay Tree, SC, 234 Beaches: erosion of, 130; ocean resorts, 7; and water amenities, 150–51. See also Coastal sites Beaver Creek, CO, 21, 30, 148, 156, 163, 184, 448, 460 Bechtel Group, 429 Begawan Giri Estate, Bali, 120 Bernstein, Alan, 427 Bicycling: design for, 186. See also Mountain biking Biennial memberships, 272–73 Big Sky Resort, MT, 239 Big Springs Realty, 396 Bighorn River Resort, MT, 8 Biltmore, FL, 25 Biltmore in Santa Barbara, CA, 25 Black Butte Ranch, OR, 185 Blixseth, Tim and Edra, 392 Boating: design of facilities, 150–56; trends in, 452–54 Boca Raton Resort and Club, FL, 116, 204 Boeddeker, Ronald F., 352, 356 Boespflug, Jean-Pierre, 35 Bonita Bay Group, 189 Borgata Hotel and Casino, NJ, 207, 247 Boulders Resort and Golden Door Spa, AZ, 135, 246 Bourguignon, Philippe, 443, 455 Boutique resort hotels, 11 Boyce, James, 207 Branding and positioning, 269–70 Brays Island Plantation, SC, 134, 145 The Breakers, FL, 25 Breckenridge, CO, 85, 90, 146, 163, 236 Bridgeland Development, LLC, 58 Brighton, Great Britain, 67 Brill, Peter, 239 The Broadmoor, CO, 27, 27–28, 96 Broken Top, OR, 174, 189 BSA Architects, 327 Burden, David, 452 Bureau of Land Management (BLM), 352 Burwash International, 245 Business and leisure travel, 285; trends in, 425–26 Byrd, Warren, 412 ■ Cabin Partners program, 385 Cabo San Lucas, Mexico, 46, 86, 86, 109, 151, 206 Cacique, Costa Rica, 455, 456, 456 Caesar’s Palace, NV, 117 Caixa Catalunya Property Group, 335 Calatrava, Santiago, 430 California Coastal Commission, 148, 364 California Health and Longevity Institute, 179 California WellBeing Institute (CWI), 438 Calistoga Ranch, CA, 111 Callaway Gardens, GA, 189, 194 Camble, Philip, 451 Canadian Tourism Commission, 176 Cancún, Mexico, 86, 109 Caneel Bay, St. John, 30 Cannes, France, 23, 67 Canyon Ranch spas, 58, 176, 176, 177, 178 Cap Juluca, Anguilla, 277–80, 278, 283 Cape May, NJ, 23 Capgemini, 48 Capricorn Ventures, 428 Carambola Beach Resort, St. Croix, 30

Caribbean: casinos in, 195; timeshares in, 54. See also specific resorts Caribbean Hotel Association, 54 Caribbean Tourism Organization, 54 Carlisle, Les, 427, 428 Carmel Valley Ranch, CA, 30 Carneros Inn, CA, 11, 15, 21, 32, 77, 84, 119, 126, 199, 284, 296–305, 297–303 Carryback financing, 112 Casa de Campo, Dominican Republic, 192 Case, Steve, 438, 456 Case studies: Banyan Tree Lijiang, 288–95; Carneros Inn, 296– 305; Doonbeg Golf Club, 306–15; Hampton Lake, 316–25; Jackson Gore at Okemo Mountain Resort, 326–33; Jardins Victoria, 334–41; JW Marriott Starr Pass Resort and Spa, 342–51; Lake Las Vegas Resort, 352–61; Montage Laguna Beach, 362–69; Reserve at Indian Wells, 370–79; Roaring Fork Club, 380–91; Sunrise Ridge Phase II, Yellowstone Club, 392–99; Taj Green Cove, 400–407; WaterColor Inn and Resort, 408–17 Cash flow statements, pro forma, 90–107 Casino Capital Construction Fund, 248 Casino Reinvestment Development Authority, 247 Casinos: design, 195; in Las Vegas, 31; resorts for, 9; trends, 458–59; tribal, 195 Castello di Casole, Italy, 57 Cayman Islands, 57 Cecil B. Day Butterfly Center, 189 Center for Life in Balance, 438 Center for Resource Management, 170 Chaffin, James, 40, 380, 422, 425, 443 Chaffin/Light Associates, 380, 422, 425, 457 Championsgate, FL, 182 Chandnani, Raj, 156, 195 Charleston, SC, 116 Chateau at Heavenly Village, CA, 219 Chautauqua Institution, NY, 23 Chewton Glen, Great Britain, 441 Chickering, Robert, 91 China: sacred places in, 23; travel in, 428. See also specific resorts Chiva Som Resort, Thailand, 424 Civilian Conservation Corps, 28 Clark, Tom, 264 Clean Water Act, 122 Cliffs at Keowee Springs, SC, 58 Cliffs Communities, 58 Cloister Inn, FL, 25 Closser & Associates, 450–52 Club at Hammock Beach, FL, 201–2 Club Corporation of America, 225 Club La Costa properties, 453 ClubCorp, 24 Coast Guard, 241 Coastal and Estuarine Land Conservation program, 137 Coastal sites: erosion of, 130; planning considerations, 129–34 Coco Palm Dhuni Kolhu, Maldives, 118, 119 Coconut Beach Rainforest Resort, Australia, 120 Coffin, Howard, 29 Collateral marketing materials, 259 Colony at White Pine Canyon, UT, 190 Colony Capital, 22 Colorado Wildlife Commission, 383 Commercial facilities: design, 190–93; feasibility analysis, 77–81; hotel and guest market analysis, 61; market analysis, 65–68; recreational facilities as, 225–26 Communications: technological trends, 423–24; for vacation ownership operations, 227 Communiqué Group, 264

Index 469

Community associations: for community operations and management, 220, 220–23; Reserve at Indian Wells (case study), 373; Roaring Fork Club (case study), 386; roles and responsibilities of, 221–22; WaterColor Inn (case study), 414–15 Community operations and management, 216–23; community associations for, 220–23; and governmental bodies, 216–18; nonprofit tax-exempt organizations for, 218–20; and regulatory issues, 137–38. See also Operations phase Competition, market analysis of, 43–44 Composting toilets, 142 Concept planning, 139–41; Reserve at Indian Wells (case study), 370–71; Roaring Fork Club (case study), 380–82 Condo Hotel Center, 237 Condominium hotels, 78–80, 159; defined, 18–19 Condominiums, 13 Coney Island, NY, 24 Conference business, 60 Congress for the New Urbanism, 448 Conrad, Joseph, 22 Conrad Bali Resort & Spa, Indonesia, 41, 437 Conservation Corporation Africa, 427 Conservation tourism, 427–28 Construction financing, 112–13 Construction phase: Banyan Tree Lijiang (case study), 290–91; defined, 36–37; Hampton Lake (case study), 318–20; Jackson Gore at Okemo Mountain Resort (case study), 327–29; Jardins Victoria (case study), 335–39; Lake Las Vegas Resort (case study), 353–56; Sunrise Ridge Phase II, Yellowstone Club (case study), 395 Contract property management, 227 Cooper, Robertson & Partners, 408, 412, 436 Cooperative use agreements, 82 Coral Gables, FL, 25 Corbett, Pat, 176 Cordevalle Resort, CA, 268 Cordobês Prasa Group, 335 Core course format, 171–72 Corporate groups, 60, 441–42 Corrough, Jim, 241 Costa del Sol, Spain, 28 Costner, Jerod, 134 Country clubs: historical development of, 28. See also Golf and golf facilities Cousteau, Philippe, 456 Coward, Noël, 22 Created amenities, 73 Crested Butte Mountain Resort, CO, 163 Cross-country skiing, 156–57, 162 Cross-marketing, 270 CrossHarbor Capital Partners, LLC, 392, 395 Cruise industry trends, 432–33 Cultural facilities: authenticity principles for, 119; and demographics, 42; design, 193–95; Jardins Victoria (case study), 339–40; resorts for, 9 Currituck Club, NC, 81, 166, 225, 225, 261 Cyber resorts, 424 ■ Dagher, Roger, 429 Dagot, Antonio, 269–70 Dancing Bear Lodge, TN, 187 Database marketing, 271 Daufuskie Island, SC, 147 David Weekley Homes, 319 Davis, Robert, 117, 408 Deer Valley, UT, 30, 85, 145, 159, 194, 266 Demand: estimating, 43; macro, 62–63; micro, 63

470 Resort Development

Demographics: market analysis, 40–43; trends, 420–23 Denney, Scott, 266 Desert Highlands, AZ, 135 Desert Inn, NV, 28 Desert sites, 134–36 Design, 144–209; aquatic facilities, 180–84; attached residential products, 199–201; Banyan Tree Lijiang (case study), 291–93; for bicycling, 186; boating facilities, 150–56; casinos, 195; commercial facilities, 190–93; cultural facilities, 193–95; Doonbeg Golf Club (case study), 306–9; of ecolodge, 125–26; entertainment facilities, 193–95; equestrian facilities, 184–85; fitness centers, 176–79; gardens, 189; golfing sites, 165–75; for green development, 133; Hampton Lake (case study), 318–20; hotel products, 202–7; Jackson Gore at Okemo Mountain Resort (case study), 327–29; Jardins Victoria (case study), 335–39; JW Marriott Starr Pass Resort and Spa (case study), 344–48; Lake Las Vegas Resort (case study), 353–56; for lawn and field sports, 187–88; marina sites, 151–56; Montage Laguna Beach (case study), 364–67; mountain amenities, 156–65; multifamily residential products, 201–2; nature-based recreation, 189–90; open space, 189; patio houses, 197–99; Reserve at Indian Wells (case study), 374–75; residential products, 195–202; retail facilities, 190–93; roads and streets, 145–46; Roaring Fork Club (case study), 380–82; single-family detached housing, 197; for skating, 186–87; ski facilities, 156–65; spas, 176–79; Sunrise Ridge Phase II, Yellowstone Club (case study), 395–96; Taj Green Cove (case study), 402–3; tennis and racquet facilities, 179–80; timeshare products, 207–9; transportation, 144–50; utilities, 144–50; vacation ownership products, 207–9; wastewater, 148–50; water amenities, 150–56; water supply, 147–48; WaterColor Inn (case study), 410–12; waterfronts, 156; wellness centers, 176–79; zero-lot-line houses, 197–99 Destination clubs, defined, 17 Destination Hotels and Resorts, 122, 260 Destination Kohler, WI, 31, 31 Destination Resorts, HI, 87 Deutsch, James and Deborah, 267 Dev-Con Associates, 342, 344 Development process: Banyan Tree Lijiang (case study), 290; Carneros Inn (case study), 297–99; Hampton Lake (case study), 316–18; Jardins Victoria (case study), 334; Lake Las Vegas Resort (case study), 352–53; Montage Laguna Beach (case study), 362–64; overview, 32–37; stages of, 34–37; Sunrise Ridge Phase II, Yellowstone Club (case study), 393–95; Taj Green Cove (case study), 400–401 Development team, 32–34 Devil’s Thumb Ranch, CO, 162 Dewees Island, SC, 20, 130, 145, 147, 253 Diamond Creek, NC, 92 Discounted cash flow analysis (DCF), 91 Disney, Walt, 28 Disney Development Company, 204 Disney Grand Floridian Hotel, FL, 117 Disney Institute, 252, 253, 424 Disney Old Key West, FL, 65, 145, 181, 205 Disney Pleasure Island, FL, 253 Disney Swan and Dolphin hotels, FL, 119, 205 Disney Vacation Club, 209, 446 Disney Village Marketplace, FL, 253 Disney World, FL, 86, 146 Disneyland, CA, 28, 435 Disneyland Pacific Hotel, CA, 435 Disney’s California Adventure, 435, 437 Division of Coastal Management, NC, 137 Dixon, Matthew, 441 Dodson, Tom, 414 Dominican Republic, 57

Dominick, Peter, 437 Doonbeg Community Development Company, 306 Doonbeg Golf Club, Ireland, 32, 45, 117, 130, 166, 174, 200, 208, 306–15, 307–13 Doonbeg Links Society, 310–11 Dorado Beach, Puerto Rico, 30 Double-fairway, nonreturning, continuous course format, 172 Double-fairway, returning-nines course format, 172 Downtown Disney, CA, 435, 436, 437 Duany, Andrés, 117, 408 Dubai, 57. See also specific resorts Dubai Creek Golf and Yacht Club, Dubai, 74 Ducker, Adam, 426, 459, 460 Dunn, Chris, 157, 159, 164, 165 Dye, Pete, 267, 318 ■ Eagle Crest, OR, 260 Eagles Nest Cottages, CO, 45 Earth Spa, Thailand, 422 Earthwatch, 457 East West Partners, 85, 267, 421, 461 Ecolodges, 125–26 Economics Research Associates, 91, 451 Ecotel certification, 123 Ecotourism, 120–21, 190, 454–58; in Africa, 427–28 Ecotourism Society, 455 Educational trends, 424–25 Electronic marketing, 271–72 Elkus/Manfredi Architects, 437 Ellerbe Becket, 251 Emaar Properties, 442 Emirates Palace, Abu Dhabi, 433 Endangered Species Act, 122 Entertainment facilities: design, 193–95; resorts for, 9; trends in, 434–36 Entropia, 424, 445 Environmental Institute for Golf, 171 Environmental issues: authenticity principles for, 119; Doonbeg Golf Club (case study), 307–8; Hampton Lake (case study), 320– 21; in hotel design, 203; Lake Las Vegas Resort (case study), 359; planning for preservation, 122–26; Reserve at Indian Wells (case study), 376; Roaring Fork Club (case study), 382–83; and site selection, 84 Environmental Performance Measurement Program, 170 Environmental Technology Solutions, 439 Equestrian facilities: design, 184–85; residential communities, 184–85; resorts for, 8 Equinox in Manchester Village, VT, 187 Esperanza Resort, Mexico, 46, 86 Estate Concordia, St. John, 142, 142–43, 455 Ethnicity and household structure, 42 Europe: demographics in, 40; income trends in, 42; resort development in, 26, 28, 30; sacred places in, 23; timeshare market in, 57; trends in, 451–53; village center resort design in, 67. See also specific resorts Ever Vail, 162 Exchange programs, 273 Exclusive Resorts, 56, 446 Exercise walking, 43, 190 Exit strategy: feasibility analysis of, 83–84; marketing and positioning, 272–73 ■ Fairmont Raffles Hotels International, 22 Faldo, Nick, 452 Fantasy hotels, 13

Fantasy Springs Resort and Casino, CA, 458 Fazio, Tom, 169, 266, 357 Feasibility analysis, 33, 34–36, 70–108; amenity program and strategy, 73–75; commercial use program, 77–81; of development program, 72–89; financial, 89–107; phasing and timing, 81–84; residential and lodging program, 76–77; site selection, 84–89 Federal Historic Preservation Tax Incentives Program, 6 Fee simple ownership, 54, 55 Felicita Resort, PA, 189 Fertilizer, 133 Fiddler’s Creek, FL, 88, 204 Fiji Island Resort, Fiji, 252 Financial analysis, 89–107; hypothetical example, 91–96, 97–107; model for, 90–91 Financing, 108–13; Banyan Tree Lijiang (case study), 294; challenges for resorts, 109–10; of condominium hotels, 78; construction, 112–13; Doonbeg Golf Club (case study), 308; guidelines for, 110–13; Hampton Lake (case study), 316–18; infrastructure, 112–13; Jackson Gore at Okemo Mountain Resort (case study), 329–30; JW Marriott Starr Pass Resort and Spa (case study), 348; Lake Las Vegas Resort (case study), 352–53; land acquisition, 112; Montage Laguna Beach (case study), 367–68; Reserve at Indian Wells (case study), 372–73; Roaring Fork Club (case study), 387; site improvements, 112; with special districts, 224; Sunrise Ridge Phase II, Yellowstone Club (case study), 396; Taj Green Cove (case study), 404; workouts, 113 Finished floor elevation (FFE), 134 Fisher Island, FL, 30 Fishing: design for, 189; resorts for, 8; Roaring Fork Club (case study), 383–85; trends in, 43 FIT (free independent traveler) market, 59 Fitness centers, design of, 176–79 Flagler, Henry Morrison, 25 Flaine Montsoleil, France, 451 Florida Forever program, 137 Florida Haus architecture firm, 411 Fly-fishing. See Fishing Fontainebleau, FL, 12 Fort Lauderdale, FL, 130 Foundation for Balance between Conservation and Development, 456 Fountains, 133 Four Seasons Great Exuma, Bahamas, 138 Four Seasons Hampshire, Great Britain, 442 Four Seasons Hotel, CA, 179 Four Seasons Oceans Residences, 433 Four Seasons Resort, Costa Rica, 122 Four Seasons Resort Whistler, Canada, 445 Fractional Interest: Leisure Real Estate Market Report (Ragatz), 17 Fractional ownership, 159, 159; residential market analysis, 55–56; resort types, 16–17 Frampton, Harry H., III, 85, 267, 421, 461 Fraser, Charles, 115–16 Free independent traveler (FIT) market, 59 Friedland, Dion, 277 ■ Gaia Napa Valley Hotel & Spa, CA, 134, 202 Gainey Ranch, AZ, 30, 167 Galen, Timur F., 435, 436 Gallup, Joan Whaley, 251 Gaming industry, 247–48; trends, 458–59 Garden of the Gods Club, CO, 230 Gardens, design of, 189 Garl, Ron, 233 Gartz, Bill, 146, 162, 191 Gaylord Palms Resort and Conference Center, FL, 189

Index 471

Gaylord Texan Resort and Convention Center, TX, 418, 434 General Growth Properties, 192 Generation Y, 422 Geographic information system (GIS), 140 Glacier Club, CO, 200 Glazier, Robert, 176 Globalization, 32, 428 Globe Aware, 458 Golf academies, 175 Golf and golf facilities: clubhouses, 174–75; course types, 171–73; defined, 7–8; desert courses, 134; design, 165–75; Doonbeg Golf Club (case study), 306–15; environmental guidelines for, 123; and health trends, 58; historical background, 23; income sources, 234; maintenance issues, 234–35; marketing and positioning of, 275–76; operations and management of, 232–36; programming for, 235–36; putting courses, 187–89, 188; Reserve at Indian Wells (case study), 374–75; Roaring Fork Club (case study), 385; St. Andrews, Scotland, 10; site design, 165–75; trends in, 43, 233–34, 449–50 Golf Course Superintendents Association of America, 171 Golf Research Group, 234 Gona-re-Zhou National Park, Zimbabwe, 121 Governmental bodies and community operations, 216–18 Grand Boulevard at Sandestin, FL, 192 Grand Californian Hotel, CA, 435, 436–37 Grand Canal Shoppes, NV, 191–92 Grand Cypress Resort, FL, 60, 149, 151, 185 Grand Hotel on Mackinac Island, MI, 24 Grand Resort Lagonissi, Greece, 145 Grand Timber Lodge, CO, 90 Grand Traverse Resort, MI, 30 Grand Wailea Resort, HI, 119 Graves, Michael, 119, 205 Graywater, 132 Great Barrier Reef, 121 Grecotel Club Creta Sun, Crete, 251 Grecotel El Greco, Crete, 40 Grecotel Eva Palace, Corfu, 83, 450 Greek isles, 26 Green development, 131–34, 285; trends, 447–48 Green Globe, 123 Green Imperative Fund, 288 Green roofs, 133 Greenbrier, WV, 23 Grendene, Daniela, 429, 430 Grossman Company Properties, 26 Group market, 59–61 Grove Isle Hotel & Spa, FL, 9, 140 Guide to the Creation of WaterColor: Patterns for Place-Making (St. Joe Company), 414 Gunterman Tennis School, 180 Gustafson, Will, 233 ■ Habitat for Humanity, 457–58 Hacienda del Mar, Mexico, 151 Halprin, Lawrence, 124 Hammock Beach Resort, FL, 151, 173, 174, 182, 201, 201–2, 203 Hampton Lake, SC, 32, 51, 83, 182, 189, 316–25, 317–23 Harborside Resort, Bahamas, 54 Harbour Ridge, FL, 30, 152 Harmony Studios, St. John, 121 Harrah’s Atlantic City, NJ, 247 Harriman, Averell, 28, 204 Hart Howerton Planners, 393 Hartwell House, Great Britain, 441 Health and wellness, 58; trends, 176–77, 436–39

472 Resort Development

Health Fitness Dynamics, Inc., 243 Health spas. See Spas Heavy-equity financing approach, 111 The Heights Phuket, Thailand, 47 Heritage resorts, 9 Hidden Creek Ranch, ID, 120, 121 Hill, John, 149, 203, 206 Hill, Todd, 152, 154, 192 Hills Guest Ranch and Spa, Canada, 176, 177 Hilton Chicago O’Hare Airport Hotel, IL, 439 Hilton Grand Vacations Club, NV, 208, 270 Hilton Grand Vacations Company, 269 Hilton Hawaiian Village, HI, 12, 284 Hilton Sanya, China, 75 Hilton Vancouver Washington Hotel, WA, 202 Hilton Waikoloa, HI, 189, 250 Historic attractions, 9 Historic hotels, 5–6 Historical background of resort industry, 22–32 Historical Concepts architecture firm, 411 HOK (Hellmuth, Obata + Kassabaum) architecture firm, 429 Homeland Security Department, 241 Homeowners associations. See Community associations Homestead in Hot Springs, VA, 23, 116, 184 Horseshoe Bay Resort, TX, 147, 149, 189 Hospitality Valuation Services (HVS), 123 Hot Springs, AR, 25 Hotel & Leisure Advisors, 182 Hotel condominiums. See Condominium hotels Hotel del Coronado, CA, 18, 18, 24 Hotel Del Monte, CA, 24 Hotel Jerome, CO, 24 Hotel Monteleone, LA, 5 Hotel Terra, WY, 203 Hotels: commercial market, 61; design of, 202–7; expenses, 215; feasibility analysis, 76–77; FIT market, 59; food facilities, 206–7, 215; group market, 59–61, 441–42; guest room design, 204–5; LEED certification for, 202; management selection for, 213–15; market analysis, 59–65; market segments, 59–61; marketing and positioning, 257–58, 259–60; meeting facilities, 206–7; occupancy, 215; operations phase, 212–16; rates, 215; restoration of, 108; revenue centers, 215; siting of, 203–4; supply and demand analysis, 61–65; trends in, 439–43; wholesale market, 59 Household structure, 41–42 Housing and Urban Development, Department of, 30 Howerton, David, 444, 453 Hualalai Resort, HI, 145, 181, 204 Hulbert, Richard, 249 Hulbert Group International, 249 Hurdzan, Michael, 171 Hutchcraft, Mitch, 175 Hyatt, Wayne S., 284 Hyatt & Stubblefield, PC, 284 Hyatt Regency Cerromar Beach, Puerto Rico, 182 Hyatt Regency Huntington Beach Resort & Spa, CA, 62, 138, 191 Hyatt Regency Waikoloa, HI, 13, 30–31 ■ Ice-skating facilities, 186 In-house property management, 227 Income levels, 41–42, 421 Independent operation of recreational facilities, 224–25 Indian Ridge Country Club, CA, 30 Inflation and project costs, 91 Infrastructure: design, 145–46; financing, 112–13 Inn & Spa at Loretto, NM, 281 The Inn at Biltmore Estate, NC, 116, 117

Inn at Eagle Crest, OR, 260 Inn at Loretto Bay, CA, 462 Inn at Palmetto Bluffs, SC, 261 InterCommunications, Inc., 255, 423 InterContinental, 5 Internal rate of return analysis (IRR), 91 International Cruise and Excursions, Inc., 273 International market: residential market analysis, 56–57 International Society of Ecotourism, 120 International Spa Association, 49, 176, 242 Internet: marketing, 264–65; and virtual worlds, 424, 445 Interstate Land Sales Full Disclosure Act of 1969, 13 Interval International, 273 Intrawest, 157, 191, 284, 318, 451 Investment and Vacation Home Buyers Survey (NAR, 2007), 45–46 Ireland Golf Tour Operators Association, 312 Irrigation, 169 Irrigation Design Group, 131 Isozaki, Arata, 430 ■ Jackson Gore at Okemo Mountain Resort, VT, 21, 157–59, 326– 33, 327–31, 452 Jackson Gore Development, LLC, 326 Jardins Victoria, Portugal, 21, 334–41, 335–40 Jekyll Island Club, GA, 25 Joint ventures, 112 Jones, Robert Trent, 27 Jordan, André, 334, 335, 339 Jumby Bay, Antigua, 275 Justice Department, 285 JW Marriott Ihilani Resort, HI, 439 JW Marriott Phuket Mandara Spa, Thailand, 176, 207, 243 JW Marriott Starr Pass Resort and Spa, AZ, 13, 135, 182, 186–87, 204, 342–51, 343–46, 348–49 ■ Kakum National Park, Ghana, 121 Kamal, Yousef Hussain, 429 Kananaskis Village, Canada, 8 Kandalama Hotel, Sri Lanka, 202 Kane, Bill, 165 Kane-Berman, Chris, 427 Kapalua Resort, HI, 19, 30, 150, 151 Kauai Coast Resort at the Beachboy, HI, 282 Kauai Lagoons, HI, 30 Kauai Marriott Resort & Beach Club, HI, 250–51 Kaufmann, Gadi, 422, 425, 436, 459, 460, 463 Kelly, Kevin, 176 KemperSports, 232 Kempinski Private Residences La Heredia de Monte Mayor, Spain, 453 Kerzner International Holdings, Ltd., 283, 454 Kerzner Marine Foundation, 283 Keswick Hall, VA, 117 Keystone Resort, CO, 109, 239 Kiara Designs, 411 Kiawah Development Partners (KDP), 306, 307 Kiawah Island, SC, 30, 45, 151, 180, 276 Kicking Horse Mountain Resort, Canada, 68, 68 King Pacific Lodge, Canada, 187 Kipling, Rudyard, 22 Klein’s Camp, South Africa, 428 Koelbel & Company, 117 Kohler, Walter J., 31 Kohler Company, 10, 31 Kopta, Emry, 26 Kosaido Company, 10

Kozlowski, Tom, 436 Kruger National Park, South Africa, 427 Kusumadi, Dharmali, 291 ■ La Playa Beach & Golf Resort, FL, 167 La Quinta Resort & Club, CA, 25, 31, 267 La Valencia, CA, 25 Lakdas/Yohalem Engineering, Inc., 279 Lake and river resorts, 7 Lake Geneva, WI, 25 Lake Las Vegas Resort, NV, 20, 20, 21, 32, 61, 67, 82, 82, 117, 127, 147, 151, 249, 352–61, 353–58 Lake Placid, NY, 28 Lake Tahoe Development Co., 219 Lakeshore, Philippines, 126, 265 Lakewood Golf Club, LA, 233 Land acquisition: financing, 112; Hampton Lake (case study), 316–18; Jardins Victoria (case study), 334–35; Lake Las Vegas Resort (case study), 352–53 Landscape design: gardens, 189; for green development, 131–34; Reserve at Indian Wells (case study), 374 Lapa Rios, Costa Rica, 125 Las Vegas, historical development of, 31 Las Vegas Sands Corporation, 458 Las Ventanas al Paraiso, Mexico, 211 Launch marketing, 264–65 Lawn and field sports, design for, 187–88 Leadership in Energy and Environmental Design (LEED), 123, 134, 202, 447–48 Leading Hotels of the World, 260 LEED for Neighborhood Development (LEED-ND), 448 Leisure time, trends in, 425–26 Lennkh, Max, 289 Lennon, Ted, 370, 371 Lifelong learning, 424–25 Lifestyle trends, 420–31 Lifestyles of health and sustainability (LOHAS), 176–77 Lighthouse Services, 225 Linden Labs, 445 Links golf courses, 312 Lisu Lodge, Thailand, 120, 121 Little Dix Bay, Virgin Gorda, 30 Little Nell Hotel, CO, 162, 191, 260 Little Palm Island Resort & Spa, FL, 131–32, 132 Lodges, 8, 11 Loews Hotels, 431 Loews Portofino Hotel, FL, 420 LOHAS (lifestyles of health and sustainability), 176–77 Londolozi game reserve, South Africa, 427 Loon Mountain, NH, 163 Looney Ricks Kiss architecture firm, 411 Lorillard, Pierre, 25 Lot sales, 76, 77, 199 Lowe, Bob, 370 Lowe Enterprises, Inc., 370, 371 Lumbermen’s Investment Corporation, 217 Lundgren, Todd, 182, 195, 202, 203 Lusail, Qatar, 429 Lusotar, 335 Luxor, NV, 31 Luxury Spa Finder magazine, 176 ■ Macao, 195, 458 Macro demand, 62–63 Madinat Jumeirah, Dubai, 431

Index 473

Mahenye Safari Lodge, Zimbabwe, 121 Maho Bay Camps, St. John, 120, 142, 455 Mahogany Run, St. Thomas, 138 Mammoth Mountain, CA, 191 Management phase. See Operations phase Mandalay Bay Resort and Casino, NV, 207 Mandela, Nelson, 427 Mandurah Ocean Marina, Australia, 154, 240 Marbella Club, Spain, 28 Marcus Hotels and Resorts, 108 Margate Hotel, NY, 24 Marina Bay Sands, Singapore, 195 Marina Operations Manual (Association of Marina Industries), 240 Marina sites: design, 151–56; historical development of, 28; operations and management of, 239–41 Market analysis, 38–69; commercial real estate, 65–68; conducting studies of, 43–50; demographics, 40–43; factors to examine, 43–44, 44; hotel and guest markets, 59–65; market segments, 45–50; psychographics, 40–43; residential markets, 50–57 Market segmentation, 270–71 Marketing and positioning, 254–85; advertising, 259; affinity marketing, 271; biennial memberships, 272–73; branding, 269–70; Carneros Inn (case study), 302–3; and cross-marketing, 270; database marketing, 271; Doonbeg Golf Club (case study), 311–13; for ecotourism, 143; electronic marketing to individuals, 271–72; exchange programs, 273; exit programs, 272–73; of golf facilities, 275–76; Hampton Lake (case study), 321–22; to hotel guests, 257–58; on Internet, 264–65; Jackson Gore at Okemo Mountain Resort (case study), 330–31; JW Marriott Starr Pass Resort and Spa (case study), 349–50; Lake Las Vegas Resort (case study), 359; launch marketing, 264–65; market segmentation, 270–71; materials, 259; measuring effectiveness of, 265; Montage Laguna Beach (case study), 367–68; off-site selling, 271; promotion, 256–59; and redevelopments, 282–85; referrals, 271; reloads and upgrades, 271; and renovations, 276–82; rental programs, 275; and repositioning, 282–83; resale programs, 273–74; Reserve at Indian Wells (case study), 375–76; residential products, 261–67; resort hotels, 259–60; Roaring Fork Club (case study), 387; sales management, 261–62; sales organization, 262–64; sales techniques, 268–69; strategy preparation, 256; Sunrise Ridge Phase II, Yellowstone Club (case study), 396; Taj Green Cove (case study), 404–5; of tennis facilities, 275–76; timeshare/vacation ownership products, 268–75; tools for, 255–59; trial memberships, 272–73; and visitor information centers, 269; volume requirements, 269; WaterColor Inn (case study), 413–14 Maroon Creek Club, CO, 229 Marriott Beach Resort, Grand Cayman, 72 Marriott Harbor Reach, FL, 244 Marriott Inn and Conference Center, University of Maryland University College, MD, 202 Martha’s Vineyard, MA, 23 Massanutten Resort, VA, 186 Matrix Online, 424 Matthias-Prinz, Ingrid Eckert, 430 Maugham, Somerset, 22 Maui Prince Hotel, HI, 203 Mauna Kea, HI, 30 McArthur, Albert Chase, 26 McMahon, Edward, 123 Medical spas, 176 Meeting space requirements, 61 Megaresorts, 13, 30 Mehta, Hitesh, 125 Mendelsohn Media Research, 48 Merrick, George, 25 Merrill Lynch, 48

474 Resort Development

Metz, Clive, 277, 278, 279, 280 Meyer, Sofia de, 451 MGM Grand Hotel, NV, 12, 193, 207 MGM Mirage City Center, NV, 431, 458 Micro demand, 63 Middle class, travel by, 41–42, 428 Middle East, 23, 57, 428. See also specific resorts Mina, Michael, 207 Mineral Basin, UT, 239 Mirage, NV, 31 Miramonte Resort and Spa, CA, 438 Miraval, AZ, 438 Mizner, Addison, 25 Mol, Caspar, 297 Monorail system, 146 Monroe, Nicholas, 297 Mont Tremblant, Canada, 157–58, 158, 186, 284 Montage Laguna Beach, CA, 12, 32, 64, 71, 117, 126, 127, 181, 181, 203, 207, 284, 362–69, 363–68 Monte Rei Golf and Country Club, Portugal, 452 Monteson, Patty, 243, 244 Moonlight Basin, MT, 239 Moreland, Douglas, 435 Morita, Hideo, 187 Morrish, Jay, 374 Morrow, Keith, 421, 461 Mountain biking, 156, 186–87 Mountain Lodge at Telluride, CO, 199 Mountain sites: defined, 7; design for, 156–65; planning considerations, 127–29; real estate development at, 157–59; trends affecting, 237–39 Mueller, Tim and Diane, 326 Muirden, Muriel, 451, 453 Multifamily residential design, 201–2 Multiuse resorts: defined, 21–22; operations and management of, 246–49 Municipal bonds, 112–13 Munns, David, 453 Murdock, David, 438 Museum of Islamic Arts, Qatar, 430 Muth, Allan, 372 Muthoot Pappachan Group, 404 ■ Nanayakkara, Lakdas, 279, 280 Naples Philharmonic Orchestra, 194 Naples Tennis Club & Resort, FL, 180 National Association of Realtors (NAR), 45 National Environmental Policy Act (NEPA), 122 National Golf Association, 449 National Golf Course Owners Association, 233 National Golf Foundation, 123, 233 National Park and Wildlife Department (Ireland), 130, 308 National Park Service, 25 National Register of Historic Places, 6 National Ski Areas Association (NSAA), 236, 238, 448 National Sporting Goods Association, 43, 165, 179, 186, 449 Native Americans and casinos, 195 Natural amenities, 73 Natural pesticides, 133 Natural Resources Defense Council (NRDC), 448 Nature-based recreation, 120–21, 175; design, 189–90; resorts for, 8 Nelson, Susan, 412 Net present value analysis (NPV), 91 New Markets Federal Tax Credit program, 6, 108 New Orleans Firefighters Pension Fund, 233 Newlyn Developments, Portugal, 335, 337

Newport, RI, 23 News releases, 259 Ngiam Tong Boon, 22 Nicklaus, Jack, 266, 267 Noble House Hotels, 131 Nonprofit equity clubs, 225 Nonprofit tax-exempt organizations, 218–20 Norman, Greg, 267, 306 North Lake Tahoe, CA, 85 Northstar at Tahoe, CA, 30, 53, 160, 164, 246, 255 Nouvel, Jean, 430 ■ The Oaks resort, FL, 185 Ocean City, MD, 51, 130, 136 Ocean Hammock Resort, FL, 170 Ocean resorts, 7 Oceânico Developments, 335 O’Connor, Catherine, 108 O’Connor, Christy, Jr., 452 O’Connor, David, 185 Off-site selling, 271 Office of Interstate Land Sales Registration (OILSR), 30 Offshore owners, 56 Okemo Mountain Resort, VT, 159, 200, 452 Oklahoma Publishing Company, 28 Old Course Hotel at St. Andrews, 10 Old Faithful Inn at Yellowstone National Park, 25 Old Greenwood Inn, CA, 150, 267 Olmsted, Frederick Law, 24, 117 Onshore owners, 56 Open space, 175, 189 Operations phase, 210–53; and activity programming, 249–53; amenities management, 229–46; Carneros Inn (case study), 302–3; communities, 216–23; defined, 37; Doonbeg Golf Club (case study), 308–9; feasibility analysis of, 83–84; golf amenities, 232– 36; Hampton Lake (case study), 321–22; Lake Las Vegas Resort (case study), 359; marina sites, 239–41; Montage Laguna Beach (case study), 367–68; multiuse resorts, 246–49; recreational facilities, 223–26; Reserve at Indian Wells (case study), 373–74; resort hotels, 212–16; Roaring Fork Club (case study), 386; ski amenities, 236–39; spas, 241–45; Taj Green Cove (case study), 404; tennis and racquet facilities, 245–46; vacation ownership properties, 226–29; WaterColor Inn (case study), 414 Options, land purchase, 112 Orchard Garden Hotel, CA, 202 Organization for Timeshare in Europe, 453 Osentowski, Jerome, 382 ■ Paepcke, Walter, 28 Palm Beach, FL, 25 Palm Beach Polo and Country Club, FL, 30, 187 Palmas del Mar, Puerto Rico, 30 Palmer, Arnold, 27, 334 Palmetto Bluffs, SC, 444 Palms Casino Resort, NV, 193 Paradise Pier Hotel, CA, 437 Paris Las Vegas, NV, 117 Park Avenue redevelopment, CA, 273 Park City, UT, 113, 146 Park Creek, UT, 163 Park Hyatt Beaver Creek Resort and Spa, CO, 448 Parking areas, 145, 164, 347 Parolari, Luciano, 14 Parrot Jungle, FL, 133 Partners in Development, 108

Partnerships, 112; JW Marriott Starr Pass Resort and Spa (case study), 342–44 Patio houses, 197–99 Pebble Beach, CA, 7–8, 151, 460 Pelican Bay, FL, 30, 194 Pelican Eyes, Nicaragua, 182 Penrose, Spencer, 27 Permit process, 88 Pesticides, 133 PGA National Palm Beach Gardens, FL, 231, 231, 232 PGA West, CA, 56, 94 Phasing and timing, feasibility analysis, 81–84 Phillips, Kyle, 441 Phillips Club, NY, 446 Phinda Forest Lodge, South Africa, 121 Phinda Private Game Reserve, South Africa, 427 Phoenician Resort, AZ, 187, 189, 250 Pinehurst Resort and Country Club, NC, 24, 24, 25, 116 Pivotal Group, 264 PKF Consulting, 215 PKF Hospitality Research, 64 Planning, 115–44; for authenticity, 119–22; Banyan Tree Lijiang (case study), 290; Carneros Inn (case study), 299–302; coastal site considerations, 129–34; for creation of sense of place, 115– 19; desert site considerations, 134–36; for environmental preservation, 122–26; Hampton Lake (case study), 318–20; Jackson Gore at Okemo Mountain Resort (case study), 327–29; Jardins Victoria (case study), 335–39; JW Marriott Starr Pass Resort and Spa (case study), 344; Lake Las Vegas Resort (case study), 353– 56; Montage Laguna Beach (case study), 364–67; mountain site considerations, 127–29; process, 33, 34–36; for regulatory issues, 136–38; Reserve at Indian Wells (case study), 370–71; Roaring Fork Club (case study), 380–82; site planning issues, 115–36; site planning process, 138–44; for sustainability, 122–26; Taj Green Cove (case study), 400–401; WaterColor Inn (case study), 410–12 Plater-Zyberk, Elizabeth, 117, 408 Pleasant Hill Plantation, SC, 187 Plotnick, Mike, 429 Plumpjack Group, 303 Point South Mountain Resort, AZ, 183 Points and points conversion programs, 17 Ponce de Leon hotel, FL, 24 Ponte Vedra Racquet Club, FL, 276 Pools, 133, 180–82 Portofino, Italy, 67 Pourtales, James, 27 Preretirement-home buyers, 49–50 PricewaterhouseCoopers, 446 Primary-home buyers: market analysis for, 45; residential market analysis, 50 Private residence clubs, 17, 56, 266–67 Private Retreats, CT, 446 Pro forma cash flow statement, 90, 111 Pronghorn, OR, 266 Property owners associations, 224. See also Community associations Psychographics: market analysis, 40–43; in market analysis, 40–43; and recreational/leisure preferences, 42–43; trends, 420–23 Public financing, 109, 112–13 Public policy issues, 136–37 Public/private partnerships, 368; JW Marriott Starr Pass Resort and Spa (case study), 342–44 Public transit, 238 Puente del Mar, Mexico, 200 Puerto Banús, Spain, 28 Puerto Rico, 57, 109 Pure Solutions, 439

Index 475

■ Qatar, 57, 429–30 Qatar National Museum, 430 Qatar Tourism Authority, 429 Qatari Diar, 429 Quabbin Resort Spa, MA, 58 Quinta Do Lago, Portugal, 335 ■ Racquet sports. See Tennis and racquet facilities Radisson Aruba Resort, Aruba, 181 Raffles Hotel, Singapore, 22, 22 Ragatz, Richard, 17, 266 Rasmussen, Rhonda, 203 Recreational facilities: commercial operations, 225–26; independent operation of, 224–25; nonprofit equity clubs, 225; operations phase, 223–26; property owners associations and, 224; special districts for, 223–24; trends, 448–59 Recreational vehicle club membership plans, 19 Red Carnation Hotels, 442 Redevelopments, marketing and positioning, 282–85 Reed, John, 316, 318 Reed Development, 316–17, 321 Referral marketing, 271 Regulatory issues: and approval process, 137; and community needs, 137–38; Jackson Gore at Okemo Mountain Resort (case study), 327; planning for, 136–38; Reserve at Indian Wells (case study), 373 Relief Riders International, 458 Reloads and upgrades marketing, 271 Renaissance Aruba Resort & Casino, Aruba, 148 Rendezvous, CO, 117–19, 195 Renovations: of historic hotels, 5; marketing and positioning, 276–82. See also Restoration Rental programs: Lake Las Vegas Resort (case study), 359; marketing and positioning, 275 Repositioning, 282–83, 464 Resale programs, marketing and positioning, 273–74 Reserve at Indian Wells, CA, 20, 135, 370–79, 371–77 Residence Club at PGA West, CA, 267 ResidenSea of the World, 433 Residential Cruise Line, Ltd., 433 Residential market analysis, 50–57; fractional ownership, 55–56; international market, 56–57; market segments, 45–50; preretirement-home buyers, 49–50; primary-home buyers, 50; secondhome investors, 46–47; second-home users, 47–49; timeshare/ vacation ownership, 53–55; vacation ownership buyers, 49 Residential markets: equestrian communities, 184–85; feasibility analysis, 76–77 Residential products: design, 195–202; Doonbeg Golf Club (case study), 311; Jackson Gore at Okemo Mountain Resort (case study), 328; marketing and positioning, 261–67; marketing to hotel guests, 257–58; Reserve at Indian Wells (case study), 375; Roaring Fork Club (case study), 385–86; trends in, 443–45 Resolution Trust Corporation (RTC), 30 Resort at Squaw Creek, CA, 129, 168 Resort Condominiums International, 273 Resort hotels, 10–13 Resort industry, historical background, 22–32 Resort Timeshare Consumers: Who They Are, Why They Buy (ARDA, 2006), 55 Resort types, 4–22; by market, 6–7; by residential/lodging types, 9–22; by setting and amenities, 7–9 Resorts World at Sentosa, Singapore, 195 Restoration: of historic hotels, 5, 108; from hurricane damage, 277–80 Retail facilities, 65–66; design, 190–93 Reunion Resort & Club, FL, 166, 172, 449

476 Resort Development

Revolution (resort holding company), 438, 455 Revolution Place, Costa Rica, 438–39, 443, 456 RevPAR (revenue per available room), 64 Rezidor Hotel Group, 442 Rico, Cynthia, 233 Ries, Thorsten, 430 Rio Bravo Conservation and Management Area, Belize, 121 Ritz-Carlton at Bachelor Gulch, CO, 269 Ritz-Carlton Bali Resort & Spa, Bali, 421 Ritz-Carlton Club at Aspen Highlands, CO, 208 Ritz-Carlton Highlands, CA, 267 Ritz-Carlton Lake Las Vegas, NV, 61 River Dunes, NC, 127 Roads and streets, 145–46 Roaring Fork Club, CO, 16, 32, 85, 125, 126, 145, 189, 195, 196, 218, 256, 380–91, 381–84, 386–87, 389; fly-fishing at, 8 Roaring Fork Conservancy, 386, 388 Roaring Fork Transit Agency, 238 Robert Charles Lesser and Company (RCLCO), 422, 426 Robertson, Jaquelin T., 408, 412, 436 Rocco Forte Collection, 453 Rockwell, David, 412 Rogal, Keith, 297, 298, 303 Rosemary Beach, FL, 117, 130, 223, 444 Rosewood Resort, Mexico, 206, 211 Ross, Donald, 24 Roy Barth Tennis Center, 180 Royal Desert Camp, India, 122 Royal Palms Resort & Spa, AZ, 242 Royal Phuket Marina, Thailand, 155 Royal Poinciana Hotel, 25 Rummell, Peter, 408, 414, 425, 444 ■ Sabi Sand Game Reserve, South Africa, 427 Sacred places, 22–23 Safety and security trends, 430–31 Sagamore Hotel, NY, 23, 24, 31, 116 Sagamore Lodge, NY, 25 St. Andrews, Scotland, 10, 10, 23 St. Joe Company, 408, 414, 425 St. Lucie River, 152 St. Martins Lane Hotel, Great Britain, 205–6 St. Moritz, Switzerland, 23, 26 Sales management, 261–62; Sunrise Ridge Phase II, Yellowstone Club (case study), 396 Sales organization, 262–64 Sales techniques, 268–69 Salishan, OR, 30 Saltwater pools, 181–82 San Roque Club, Spain, 235, 440 Sandestin Resort, FL, 80, 192, 272 Sands Macao, 195, 458 Sandy Lane Hotel, Barbados, 432 Sangree, David J., 182 Santorini, Greece, 122 Sarojin, Thailand, 114, 214, 440 Sasaki Associates, 145 Sasakwa Lodge, Tanzania, 425 Savid-Buteler, Pablo, 145, 180 Savoy Group, 442 Sawgrass Marriott Resort & Spa, FL, 216 Schoeder, Todd, 169 Scottsdale Princess, AZ, 182 Sea Island Resort, GA, 29, 29, 212 Sea Pines Plantation, SC, 119, 123, 124, 186, 197, 424, 460 Sea Ranch, CA, 30, 123

Seabrook, WA, 20 Seahaven at Panama City Beach, FL, 146 Seaside, FL, 30, 117, 130 Seaside Charter School, 408, 413 Seaside Institute, 408 Seaside Mariana, Nicaragua, 139 Seasonal homes, 48 Seay, Ed, 27 Second-home developments: defined, 10, 19–21; historical development of, 29, 32; market analysis for, 45, 46–49; trends in, 443–45 Second-home investors: residential market analysis, 46–47 Second Life, 424, 445 Securities and Exchange Commission, 79; on vacation ownership, 18–19 Selengut, Stanley, 142–43, 455 Semiahmoo, WA, 30, 40 Seminole Hard Rock Hotel & Casino, FL, 193 Senior, Jeff, 5 Sense of place, 115–19 Setai Resort & Residences, FL, 208 Seven Canyons, AZ, 266 Shannon Development, 306, 308 Sheraton Bal Harbour, FL, 182 Sheraton Internacional Iguazú, Argentina, 119 Sheraton Sanya Resort, China, 213 Shopping, 65. See also Retail facilities Short, Yvonne, 427, 428 Silverado Country Club and Resort, CA, 117 Silverton Mountain, CO, 160 Singapore, 195 Singer, Paris E., 25 Single-fairway, nonreturning, continuous course format, 172 Single-fairway, returning-nines course format, 172 Single-family detached housing, 197 Site access, 119 Site improvements, financing of, 112 Site mapping, 140 Site planning: Banyan Tree Lijiang (case study), 290; Hampton Lake (case study), 316; issues, 115–36; Jackson Gore at Okemo Mountain Resort (case study), 326–27; Jardins Victoria (case study), 334; JW Marriott Starr Pass Resort and Spa (case study), 342; Lake Las Vegas Resort (case study), 352; Montage Laguna Beach (case study), 362; process, 138–44; Sunrise Ridge Phase II, Yellowstone Club (case study), 392–93; Taj Green Cove (case study), 400; WaterColor Inn (case study), 408–10 Site planning process, 138–44 Site selection, 84–89, 85; feasibility analysis, 84–89; location analysis, 85–86; physical analysis, 87–88; regulatory analysis, 88–89; sample checklist, 89; setting analysis, 84–85 Six Senses Hideaway, Thailand, 422 Skan, Martin, 441 Skating, 186–87 Skiing sites: base areas, 162–64; design considerations, 159–62; and digital mapping, 239; expenses, 238; historical development of, 28; income sources, 236–38; insurance and risk management, 238–39; operations and management of, 236–39; trail design, 164–65; trends in, 43, 450–52 Skirvin, William, 108 Skirvin Hotel, OK, 108 Smith, Paul, 453 Smith Travel Research (STR), 64, 349 Smolian, J. S., 408 Smugglers’ Notch Resort, VT, 149, 186 Snowbird Resort, UT, 239 Snowboarding, 157 Snowmaking, 160–61 Snowmass Village, CO, 129

Snowshoe Mountain Resort, WV, 128, 191 Snyder, Lauren, 283 Social trends, 420–31 Sociedade de Jogos de Macau (SJM), 195 Soft adventures, 454–58 Solar power, 133, 143 Sonntag, Richard, 264 Source markets, 43 South Africa, 427–28 South Seas Island Resort, FL, 124 Spa Finder, 176, 436 Space banking, 16 Spain, resort development in, 28. See also specific resorts Spanish Bay Resort, CA, 8, 151 Spas: Banyan Tree Lijiang (case study), 293; defined, 8; design, 176–79; JW Marriott Starr Pass Resort and Spa (case study), 347; metrics for operations evaluation, 245; operations and management of, 241–45; trends in, 176–77, 436–39 Special districts for recreational facilities, 223–24 Special interest groups, 60 Special programs and events, 259 Sporting expedition lodges, 8 Sports: trends, 448–59. See also specific sports Spring Island, SC, 30, 40, 187, 261 Squaw Valley, CA, 66 Star Resorts, LLC, 266 Starck, Philippe, 206 Starr, Richard, 343 State of the Vacation Ownership Industry—United States (ARDA, 2007), 54 Stern, Robert A.M., 208 Stone, Edward D., Jr., 138 Story, H.L., 18 Stowe Mountain Resort, VT, 148, 164 Stratton Mountain Resort, VT, 164, 180 Summer Lodge at Evershot, Great Britain, 442 Sun City Las Vegas, NV, 145 Sun Valley, ID, 28, 186, 204 Sunrise Ridge Phase II, Yellowstone Club, MT, 392–99 Sunriver Resort, OR, 171 Sunset Island, MD, 51, 136 Supply and demand, 61–65 Supply factors: lodging, 63–65; macro, 64; micro, 64–65; residential market analysis, 51–53 Sustainability: planning for, 122–26; recommendations for, 123 Swimming pools, 43. See also Pools Synergy Golf Partners, 233 ■ Tahoe Mountain Club, CA, 267 Tahoe Regional Planning Agency, 239 Taj Green Cove, India, 11, 32, 179, 259, 260, 400–407, 401–6 Taj Resorts and Palaces, 404 Tamarack Resort, ID, 35, 35, 110, 157, 459 Tanner & Haley, CT, 446 Tax-free exchanges, 78 Tax issues, 78 Tax Reform Act of 1986, 46 Telfair Golf & Spa Resort, Mauritius, 82, 463 Telluride, CO, 146, 161, 199 1031 exchanges, 78 Tenancy in common ownership, 78 Tennis and racquet facilities: design, 179–80; expenses, 245; marketing and positioning of, 275–76; operations and management of, 245–46; resorts for, 8; revenue sources, 245 Teton Mountain Lodge, WY, 60 Theme park resorts, 9, 32

Index 477

Thompson, Jonathan, 441, 442 Tihany, Adam D., 28 Timbers Club at Snowmass, CO, 164, 447, 452 Timeshares: in Caribbean, 54; design, 207–9; marketing, 268–75; residential market analysis, 53–55; in resort developments, 13; resort types, 15–16; sales techniques, 268–69 Tisch, Jonathan, 431 Tivoli Hotels, 337 Topography, 166–67 Le Touessrok, Mauritius, 205 Tourism trends, 426 Transcontinental Properties, Inc., 352, 359 Transportation, 86; design, 144–50; for mountain resorts, 238 Trash to Treasure program, 143 Travel: trends in, 426, 428, 430 Treasure Island, NV, 31 Treasure Island Associates, 362 TREC International, Inc., 176 Trends, 418–65; airline industry, 431–32; boating, 452–54; communication technologies, 423–24; cruise industry, 432–33; demographics, 420–23; ecotourism, 454–58; education, 424–25; entertainment industry, 434–36; gaming industry, 458–59; golf industry, 449–50; green development, 447–48; health and wellness, 436–39; hotels, 439–43; housing and second homes, 443– 45; mountain resorts, 237–39; ownership types, 445–47; psychographics, 420–23; real estate, 439–48; recreation and sports, 448–59; safety and security, 430–31; ski industry, 450–52; social and lifestyle, 420–31; soft adventures, 454–58; travel and tourism, 426, 428, 430; voluntourism, 454–58; water sports, 450–54; wealthy market segments, 48–49; work and leisure, 425–26 Trial memberships, 272–73 Tribal casinos, 195 Trisara, Thailand, 227 Tropicana Hotel and Casino, NJ, 247 Truex Cullins & Partners, 327 Trump Taj Mahal Hotel Casino, NJ, 247, 248 Tucker’s Point Club, Bermuda, 76, 226, 263 Tucson Mountain Park, AZ, 187 Tufts, James Walker, 24 Turtle Bay, HI, 151 Turtle Island, Fiji, 125 Tuxedo Park, NY, 25 Twinpalms, Thailand, 4 ■ ULI European Resort Development Council, 451 ULI Recreational Development Council, 420 Ultimate Escapes, 446 UniDev, LLC, 219 United Development Company, 429 Universal City Walk, CA, 192 Upfront costs, 81, 82–83 UpperCross Partners, LLC, 392, 395 Urban Renewal Authority, 108 Urban resorts, 9 Urban Revitalization Program (Atlantic City, NJ), 247 U.S. Green Building Council (USGBC), 134, 202, 447 Utah Symphony Orchestra, 194 Utilities, 144–50 ■ Vacation ownership: design, 207–9; homes, 48; marketing, 268–75; and property management, 226–29; rental programs, 228–29; residential market analysis, 49, 53–55; resort types, 13–16; sales techniques, 268–69 Vail Beaver Creek, CO, 85 Vail Valley Music Festival, 436

478 Resort Development

Varty, Dave, 427 Venetian Las Vegas, NV, 117, 192 Venetian Macao, 195, 458 Ventana Canyon Resort, AZ, 135, 135, 136, 204 Ventana Inn, CA, 148 Verdura Golf & Spa Resort, Italy, 453 Vigia Group, 452 Viking Cooking School, 443 Viking Range Company, 443 Vilamoura, Portugal, 30, 36 Vilar Performing Arts Center, 436 Villa Cima, Italy, 14 Villa d’Este, Italy, 14, 14, 180, 188 Villa Malakoff, Italy, 14 Village at Baytowne Wharf, FL, 80, 272 Village at Mammoth Lakes, CA, 191 Village Realty & Development, 31 Visitor information centers, 269 Vista Clara Ranch Spa Resort, NM, 177 Volume requirements, 269 Voluntourism, 454–58 ■ Wah, Edmund Ho Hau, 195 Waikoloa, HI, 30 Waikoloa Women’s Golf Challenge, 250 Wailea Beach Village, HI, 52, 198, 461 Wailea Resort, HI, 146 Walsh, Richard, 297 Walt Disney Company, 435–37, 457 Walt Disney Grand Cypress Hotel, FL, 13 Walt Disney Imagineering, 435, 437 Wasilov, Alex, 451 Waste reduction, 143 Wastewater, 148–50 Water amenities, 150–56 Water harvesting, 132 Water sports, 450–54 Water supply: Carneros Inn (case study), 299; design for, 147–48; Hampton Lake (case study), 320–21; Lake Las Vegas Resort (case study), 359 WaterColor Inn, FL, 11, 21, 32, 45, 67, 117, 130, 194, 217, 249, 408–17, 409–15 Waterfronts, 156 Waterman, Leroy and Martha, 380 Wealthy market segments, 48–49 Web site marketing, 264 Weekend homes, 48 Weil, Andrew, 438 Weiskopf, Tom, 374, 392 Weldenfield LifeStyle Group, 319 Wellings, Mike, 452 Wellness centers, 176–77, 176–79 Wen-I Chang, 134 Wesleyan Grove retreat, MA, 23 West Beach Tennis Club, SC, 180 Westin Casuarina, Grand Cayman, 42 Westin Resort and Spa, Los Cabos, 119 WestRock Resort, ID, 35 Wetlands, 134 Whistler Blackcomb Resort, Canada, 156, 157, 159, 163, 445 Whitepod, Switzerland, 451 Whitewater Country Park, Great Britain, 452 Whitewater course, 163 Wholesale market, 59 Wigwam Resort, AZ, 187 Wijaya, Made, 403

Wilcox, Willie, 27 Wild Dunes, SC, 153, 228 Wild Horse Pass Resort and Spa, AZ, 194, 195 Wild Wing Plantation, SC, 234 Wilderness Safaris’ North Island, Seychelles, 120 Wilhelm, David, 380 Wilhelm Family Limited Partnership, 380 William Rawn Associates, 300 WilsonMiller, Inc., 421, 461 Wimberly Allison Tong & Goo (WATG), 151, 335 Wind energy, 133, 329 Winter Park Resort, CO, 156 Wintergreen Resort, VA, 11 Wisp Resort, MD, 161, 163, 186 Witkin Design Group, 279, 280 Wit’s End Guest Ranch and Resort, CO, 185 Wolff, Howard J., 151, 154, 181 Woods, Tiger, 233 Workouts, financing, 113 World Conservation Union, 455 World Tourism Organization, 120, 451 World Wealth Report (Merrill Lynch), 48 Wright, Frank Lloyd, 25 Wyndham Aruba Resort, Aruba, 54 Wyndham Peachtree, GA, 439 Wynn, Steve, 458 Wynn Macau, 195, 458 Wynne-Jones, Mark, 451 ■ Xaloc Resort, Mexico, 455 Xeriscaping, 133–35 ■ Yacht clubs, 28 ■ Zero-entry pools, 181 Zero-lot-line houses, 197–99

Index 479

xii

xii

xii