When the hotel market began to recover, domestic luxury—which fell the fastest—bounced back first, followed by assets in core, urban markets, then secondary locations. Now it's the resort sector's turn to shine, according to CBRE Hotels SVP Andy Wimsatt. (And to celebrate, we're putting a tiny umbrella in our coffee.)
We snapped Andy, center, with Katten Muchin's Rori Malech and Trust Hospitality's Richard Millard at this year's Bisnow Lodging Investment Summit. He and colleagues Lewis Miller and Doug Henkel were the exclusive advisor to Real Resorts, which recently JV'd with Playa Hotels & Resorts for four luxury, all-inclusive, beachfront resorts in Cancun and Playa del Carmen, Mexico: the 288-room Royal Cancun, the 487-room Gran Caribe Cancun, the 507-room Royal Playa del Carmen, and the 287-room Gran Porto Real Playa del Carmen. Equity is now following discretionary travel, which has returned to resorts in Mexico and the Caribbean, he says. Investors are also looking for a less-crowded space than found in other hotel sectors. This transaction was particularly striking, because there are still US investors nervous about acquiring hotel assets offshore or in Mexico due to perceived political risk—yet Cancun "has come back with gusto," Andy says, and low workforce costs compared to other resort areas means higher margins.
Expect more activity in Mexico and the Caribbean, Andy says, especially as deals like Real and Playa's JV draw attention to all-inclusive, high-end hotels (above is the Gran Caribe Cancun). In September, Playa snapped up what was formerly the Ritz-Carlton Golf & Spa Resort Rose Hall in Montego Bay, Jamaica, which is undergoing an enhancement and expansion project (including adding 125 suites to the current 427 rooms; it's opening in spring as the Hyatt Ziva Rose Hall). Playa also then launched subsidiary Playa Resorts Management, which will exclusively operate Hyatt's new Zilara and Ziva resort brands in five Carribean and Latin American countries through 2018. Another notable deal is Thayer Lodging Group and MetLife's JV buy of the 365-room Hilton Los Cabos Beach & Golf Resort in Cabo San Lucas, Mexico last month.
On the homefront, Carey Watermark Investors also announced yesterday that it's acquired the 177-room Hawks Cay Resort—the largest destination resort in the Florida Keys—for over $149M. Pyramid Resort Group will manage the property. CWI has a capital improvement plan that includes renovations of guest rooms and public spaces, the redevelopment of the marina restaurant, and the creation of 16 family suites, among other upgrades. (We'll do exhaustive research and product testing and get back to you.) CEO Michael Medzigian pointed to a limited number of existing resorts and restrictions on new development, making the Keys one of the strongest lodging markets in the country. Andy also notes an epic rebound in South Beach, "which has gone through a renaissance after an absolute nadir in 2009."
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