Resort Development

by Adrienne Schmitz

Overview

Packed with photos and site plans, this practical how-to-guide for developing resorts—such as hotels, timeshares, and second-home, retirement, and planned communities—provides an inside look at the challenges faced and lessons learned by actual practitioners in the industry.

Product Details

ISBN-13:	9780874200997
Publisher:	Urban Land Institute
Publication date:	11/01/2008
Series:	Development Handbook series
Edition description:	Second Edition, Second edition
Pages:	400
Product dimensions:	8.80(w) x 11.00(h) x 1.10(d)

About the Author

Adrienne Schmitz is a research director at the Urban Land Institute, the world's leading real estate and land use education and research institute. She lives in Washington DC.

Read an Excerpt

Resort Development

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By Adrienne Schmitz

Urban Land Institute

Copyright © 2008 ULIâ"the Urban Land Institute
All rights reserved.
ISBN: 978-0-87420-099-7

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CHAPTER 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 families 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 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 likely to affect the development of resort and second-home 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; Cancun, Mexico; or Marseille, France — is a resort. For others, a resort is a second-home 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 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.

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 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 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 second-home 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. Golf-focused 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 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.

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, 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 music-oriented 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. Time-shares and other partial ownership products require a moderate, usually one-time cash investment, plus annual 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 mid-range 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 communities, 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.

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Excerpted from Resort Development by Adrienne Schmitz. Copyright © 2008 ULIâ"the Urban Land Institute. Excerpted by permission of Urban Land Institute.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

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Table of Contents

Contents

1 Introduction,
2 Market Analysis,
3 Feasibility Analysis and Financing,
4 Planning and Design,
5 Operations and Management,
6 Marketing and Repositioning,
7 Case Studies,
8 Trends and Outlook,
Appendix,
Index,