Cisneros believes in D.R. luxury
The daughter of late legendary Latin entrepreneur Gustavo Cisneros and now CEO of the family’s Cisneros Group – owners of media, entertainment, real estate and consumer products – has been developing under Cisneros Real Estate the undulating, 1,353-acre beachside Tropicalia site since before COVID, and during her early days faced a lot of skepticism and resistance.
“It’s really hard to stay true to your vision when the market doesn’t want to believe that it’s possible,” Cisneros told Hotel Investment Today in a mid-March interview. “I knew what I wanted to do, and I knew that it was possible. But I really had to take my time educating a lot of people so that they could see that it was possible.”
Stamina, forethought
Maintaining value
Exciting moment
“That was sort of rare in the D.R. and I'm so happy that we were able to do that way before anybody started doing a master plan because I think if not, we would have ended up with huge buildings and high density. And that’s just not possible,” she said.
Club Med is one of the first resorts open in the community. “It’s full. It’s low key, green and full of French people,” Cisneros joked.
There is also a Zemi Miches Punta Cana All-Inclusive Resort, Curio Collection by Hilton opening in a few months with a price point of about $600 a night, according to Cisneros.
More are likely coming to the area, including more luxury brands such as Rosewood in other beach areas of the Dominican Republic.
When asked what message she would impart to the hotel investment community, Cisneros said the D.R. has everything in place already to become the number one luxury destination in the Caribbean.
“It is amazing that there’s still so much beautiful land available. It is a pleasure to be able to work with the government of the Dominican Republic, who are very straight, who are supporting responsible development with gusto, and who have made tourism their number one interest for economic development of the country,” Cisneros said. “There’s rule of law; it’s a proper country.”
Cisneros added that every time she visits, she goes swimming and said it cannot feel more remote. “And yet, we’re two hours from Miami or three and a half hours from New York. That’s amazing as you literally could feel that you are in the Maldives after an 18-hour flight. It has everything going for it that that should really make it into a number one destination.”
She continued with Rosewood and Ritz-Carlton coming to the D.R., there will be a luxury story to tell, as well. “It’s a pretty exciting moment.”
Steve Case now connects real world communities
WASHINGTON, D.C. – There’s some irony in the fact that AOL Co-founder Steve Case, a man who helped start the internet and online communication pre-social media with things like chat rooms that could keep people sheltered from the real world, is now developing experiential hotels like the recently launched Waldorf Astoria Costa Rica Punta Cacique. In fact, it seems he has always known that the more time we spend online, the more we need real and authentic experiences at hotels or multi-generational luxury vacation homes.
Case is very aware that his Washington, D.C.-based Revolution Places, the hospitality and travel investment arm of his bigger Revolution investment platform founded in 2005, is an extension of the things he loved about the internet when he started AOL some 40 years ago. He leans into that notion every chance he gets.
“The core of what we did in those early days of the internet was trying to build a sense of place, a sense of community,” he told Hotel Investment Today earlier this week. “Our most popular services were always the community features, what people think of now as social media. That connectivity, that community was always important... When I started making investments in this [hospitality] space, which actually goes back almost 25 years when I first stepped down as CEO of AOL, it was with [private, luxury vacation club] Exclusive Resorts. I just liked the idea that it was a way to connect people, and connect people to places.”
While Case is clearly still a fan of the internet, he also understands there’s a role for getting people together in the real world and have memorable experiences. That has led to hospitality-related investments in Hawaii and Costa Rica.
Revolution Places has also invested in Miraval (now part of Hyatt’s wellness portfolio), Twin Farms (Case has since exited one of the top luxury inns in the U.S.), Exclusive Resorts, Maui Land & Pineapple, and Grove Farm in Hawaii.
Revolution Places is also the majority owner of Punta Cacique, a 600-acre oceanfront property in Costa Rica that Case purchased in 2006 and has spent nearly two decades developing with the right partners and plans.
The Waldorf Astoria Costa Rica Punta Cacique—the first phase of a larger wellness-oriented luxury community—opened this past spring with a focus on authenticity. Its emphasis is on connecting to the surrounding region and broader cultural and ecological richness of Costa Rica. Case said further hotel development at Punta Cacique is going to be announced soon.
Case’s majority stake in Exclusive Resorts, a private vacation club for ultra-high-net-worth individuals launched in 2002 that offers access to a curated network of more than 400 luxury homes in 75 destinations worldwide. It includes a $1 billion real estate portfolio and is evolving into a fully integrated lifestyle platform. In July, Exclusive Resorts launched a branded residential vertical with the first set of properties branded under development at the Punta Cacique site.
The company in June announced the acquisition of a controlling interest from Accor in OneFineStay as a complement to Exclusive Resorts. The strategic agreement gives Exclusive Resorts members access to a curated selection of OneFineStay’s homes, while providing OneFineStay access to a new, affluent member base.
Case is the majority shareholder in Maui Land & Pineapple Co. (MLP), a publicly traded company and one of the largest private landowners on Maui. MLP is returning to its agricultural roots, including a new initiative around agave farming, which he said should produce a premium liquor business opportunity and bring economic diversification and sustainable land use to the island.
Case, born and raised in Honolulu with his father born on Kauai, is also a legacy landowner on Kauai with deep commitments to sustainable land stewardship and community-based agriculture. The Grove Farm company has supported programs that empower local farmers and protect native ecosystems.
The internet pioneer has further interest in the hospitality space and talked to Hotel Investment Today about a variety of timely topics. Here are some of the highlights:
Hotel Investment Today (HIT): What’s next for Revolution Place in the hospitality space?
Steve Case: We’ve been building Exclusive Resorts for over two decades, and the club operates more than $1 billion of real estate, with more than $750 million owned by the company. This is supplemented with some long leases and hotel partnerships. We started a partnership a couple years ago with Rosewood that they are pretty pleased with in terms of how many new customers Exclusive Resorts was able to bring to them. We’re talking to a lot of other folks in that space.
Exclusive Resorts also acquired a controlling interest in OneFineStay from Accor and believe that’s a nice complement to the core Exclusive Resorts club. OneFineStay is a luxury version of Airbnb, where there’s more curation of the properties, more services built into what people are getting. We’re looking at other opportunities in that space, including subscription products.
Exclusive Resorts also launched a branded residential business. We believe the company is uniquely positioned because we have nearly 5,000 High Net Worth families that we have a good relationship with. As we launch in new places, whether in Costa Rica or elsewhere, we can build small, boutique residential communities that will be appealing for at least some of our members to buy a home.
It was clear to us that Costa Rica was a market on the rise. When I first landed in Guanacaste, the airport was really only available for local prop planes. Now, there are more than 20 international airlines and nearly 3 million passengers. We've witnessed it transform from primarily an agricultural economy to one also heavily focused on tourism, much like Hawaii when I was growing up there.
We have a lot of plans over the next decade to expand Punta Cacique, including additional hotels, which we’ll be announcing shortly.
In Hawaii, more than 20 years ago I bought 40,000 acres of land on the island of Kauai--Grove Farm--a former sugar plantation. We’ve done a number of things with that land, including housing and retail development. We’re also rebuilding some of the main areas around the Lihue, the main town on that island, with a business park, a town center, and in the next few months we will announce a hotel near the airport there.
On Maui, via Maui Land and Pineapple, we also own the Kapalua resort, where there’s a Ritz-Carlton and a Montage. We are talking about expanding that in several ways.
HIT: What’s your opinion on current macro conditions and how it will impact the luxury hotel business in the next 18 months?
Case: There is still a lot of uncertainty in the economy, related to tariffs and the possibility of a recession. That uncertainty impacts how some people view some potential investments.
But from most of the data we’re seeing, the high end of the luxury travel market still seems quite strong.
Aggressive pricing surrounding ‘revenge travel’ is settling down a bit, but overall, it still seems to be pretty strong, particularly when people are accessing authentic, immersive experiences. We are seeing that with Exclusive Resorts where we’re having a really good year in terms of new memberships.
HIT: What were some of your biggest learns, takeaways from developing the Waldorf Astoria Costa Rica Punta Cacique?
Case: It did take a little longer than we thought. The construction cost was a little higher than we thought. So, there were some tweaks and value engineering, but we recognized that the Waldorf was anchoring Punta Cacique, and we really wanted to make sure it was done in a first-class fashion.
I’ve been visiting there every six to eight weeks since it opened this spring and it’s already off to a strong start in terms of the initial reviews and interest from groups. I know it’s going to emerge as a market leader over the next few years.
One of the things that was really appealing to me about Punta Cacique, which led me to purchase the land was a strong sense that Costa Rica was a rising market for visitors and owners. As I said earlier, in many ways, it reminded me of growing up in Hawaii going from agriculture to tourism, and you saw parts of the islands that just developed into great resort markets.
I had a sense that was going to happen with Guanacaste in Costa Rica, and what’s happened in the last five years exceeded my expectations. The Ritz-Carlton Reserve had about $400 million in real estate associated with the hotel, completely sold out. Discovery Land is building a project about 45 minutes from Punta Cacique and already sold $900 million in just lots. Costa Rica is really booming.
HIT: You are more of a developer. Would you consider buying hotel assets?
Case: I wouldn’t rule it out, but that’s not really our plan right now. I find it more interesting to take large parcels of land, and some would say, ‘how do you master plan it?’ I think of it more as a canvas you’re able to paint on and create something really special. Hotels are part of that canvas. But it's more interesting to me to build the whole community of which hotels are anchors, as opposed to just having the hotel.
HIT: How do you choose investment partners?
Case: I do have investors for core platforms. Then for particular properties like the Waldorf, we did bring in some investors who had industry-specific expertise, as well as local connectivity that we thought was important in terms of entitlements, etc.
It kind of varies depending on the business. It’s partly accessing that capital to yield some of our growth and expansion, but mostly bringing people who have unique expertise and value-add that can enable us to do something that we wouldn’t necessarily be able to do just on our own.
We take it very seriously. We bring more of an institutional mindset to this type of development work and we can afford to have a longer-term build and hold horizon... Now, there may be certain assets, like a particular hotel, where some investment partners will want to look for an exit sooner than we might. So, obviously, there’s always going to be an opportunity for that exit, or for us to increase our ownership, or somebody else to come in as a potential partner.
Last year, we brought in a minority investment partner, Kemmons Wilson Hospitality Partners, a private real estate firm and strategic investor, into Exclusive Investments LLC, the newly established holding company of Exclusive Resorts. They have broad platform experience in a lot of different sectors, and we thought they would be additive. They have been super helpful.
HIT: What is your broader message about building hospitality around community versus building community around hospitality?
Case: The best way to maximize the investment returns is to build a differentiated offering that people really value, and community is clearly a cornerstone of that. But it has to be real, authentic community – not just pretty pictures on a website... Building those authentic, connected communities are ways to maximize the differentiation and ultimately maximize the returns on investment.
ARUE, French Polynesia – The ESG movement isn’t exactly receiving a lot of support these days, but small luxury developers like Richard Bailey still see it as a road to greater profitability – not to mention doing the right thing for the environment and staying on trend as Millennials, Gen Z and Gen Alpha prioritize intentional transformative travel that creates a positive environmental and social impact.
Take Bailey’s approach to providing air conditioning at The Brando in Arue, French Polynesia. Built on the private island of Tetiaroa now owned by actor Marlon Brando’s family trust, the 36-key ultra-luxury resort was designed to be uber-sustainable. But traditional cooling of The Brando would prove to be too expensive and not very sustainable. In fact, when still alive, Brando said no fossil fuels will be allowed on the island or at the resort because he had another idea. Brando discovered through a scientist in Hawaii that they could use pipes to bring up the coldest deep ocean water, extract the cold and circulate it into a system to cool the property.
First used at one of Bailey’s resorts in Bora Bora as opposed to the local grid, the seawater air conditioning system at The Brando helps hold the resort’s annual energy bill to $700,000, or less than half of their competitors, according to Bailey. The system paid for itself by 2013 and now the resort has free air conditioning energy, which is normally accounts for three-quarters of all the resort’s energy costs.
In fact, The Brando is powered entirely by solar and coconut oil biofuel and has a zero-carbon impact. In addition, through Tetiaroa Society—the resort's long-term conservation partner and the nonprofit organization for all the sustainability initiatives—an on-site Ecostation is used as a research facility where scientists monitor local marine and birdlife and where many guests flock to learn more from the scientists on site.
The resort also funds cultural preservation projects and supports local employment and education programs.
Of the eight resorts Bailey’s Pacific Beachcomber group owns or manages in French Polynesia, they have first and foremost built their reputation by caring for their teams, said the Stanford and Harvard Business School graduate who was working at CitiBank in New York before meeting a woman in Tahiti who became his wife and changed the course of his life.
“Normally, we say, ‘take care of the guests and the P&L will take care of itself,’ right? But we say, ‘take care of your staff and your P&L will take care of itself.’”
So, it’s simple to Bailey: if you care enough about the environment and your team, you overcome obstacles.
The key word here, Bailey told Hotel Investment Today, is “caring.” Unfortunately, he said, especially in the corporate world, sustainability beyond reusing towels, removing plastic utensils, LED lighting and low flow showerhead is enough caring in most instance. While there are exceptions, there are not enough. There isn’t enough passion, he said, “and passion doesn’t always make money.”
But in Bailey’s case his passion does pay. He said his group that includes The Brando, three InterContinental-branded properties and four mid-market Maitai resorts is very profitable, and its sustainability quotient is part of the reason why.
He has the proof to show revenue teams that nature and cultural investments represent the intersection of business excellence and environmental responsibility.
“I refute the idea that that sustainability isn’t profitable,” he said. “I run a very profitable company, and my profitability depends on it. If I wasn’t running a sustainable operation and created a community around it, I wouldn’t have the things that they’re coming to see. It’s as simple as that.”
Admittedly, his approach at The Brando is applicable to small luxury eco-resorts in unique locations where environmental sensitivity is high and there is some prospect of interest by the scientific community. “Our model [at The Brando] includes a resort and a non-profit conservation/research field station that work in hand in hand. This separation gives the Field Station legitimacy and authority, while not placing the burden of conservation on the for-profit resort,” Bailey explained.
But he also knows where there’s a will there’s a way for any owner and operator who wants to invest as the ROI on sustainability initiatives is reachable in a shorter timeframe every year.
Expanding the concept
Looking ahead, Bailey has explored expanding the brand but to date has not found the right location with all the right traits, or the right investment partner.
What he might consider is creating a collection with like-minded owners and operators like his contemporary Mike Freed, founder of the Post Ranch Inn in Big Sur, California. They are already cross-market and if Bailey does expand, he sees working with Freed as a start.
“His [Freed’s] entire business model is based on some sacred assets [like The Brando], which includes the California coast,” Bailey said. “It’s about the resort, but it’s also about the location and what the resort is doing to be a part of that community, which is very environmentally sensitive. Everything that happens on that coast is carefully planned and Mike is fully on board with that.”
But evidently, not every developer feels the same and, in fact, Bailey thought for years that so many would jump on board his bandwagon without him having to export his model. “It just seems so obvious to me, but I haven’t really seen that happen,” he lamented. “I believe that there is a space that has not been occupied brand wise. Six Senses comes to mind, but it is mainly about wellness. Singita does amazing work on the African continent, but there’s no brand that come to stand for exactly what we are doing. I think there is potential demand there.”
Bailey thinks of places like the Red Sea, Galapagos and the Coral Triangle – places with very high biodiversity, environmentally fragile, susceptible to the dangers of overtourism and environmental degradation. “These are the natural points of entry for our business model. Costa Rica comes to mind where there is a higher level of sensitivity, and great things are happening. But bigger picture, the concept needs to be organized under a brand. So, yeah, I’ve been thinking about that.”
When asked about creating a collection with existing assets that pass an intensive review process, Bailey nodded affirmatively, but added he is not ready to discuss anything definitively.
Finding like-minded developers is his biggest challenge, perhaps.
“A project like this would be bottom up rather than top down. The people that do this kind of thing want to be part of a moral part of a cooperative rather than then pay for a brand. They want to share insights. They want to feel like they’re part of the part of the program, rather than just subscribing to set of principles.”
Think twice
“It starts with the spread of sustainable technologies and innovation starts in places where there’s a clear benefit of protecting those things which without we don’t have a business model,” Bailey said. “But then there are so many advances in construction technology with new types of concrete, cross laminated timber, and LEED quality construction has become compelling from an economic standpoint.”
However, Bailey added that most developers are not educating themselves about these technologies and frustratingly admitted it’s not trendy right now. “It’s almost trendy to be anti-ESG. Even capital providers look askance when you talk about things like that.”
But Bailey said developers should think twice because he is a businessperson and also needs to know if green systems will help make money. “We’re getting financially adequate returns on sustainable technologies,” he said. “Granted, we’re doing it in a very remote location where the alternative cost of energy is very high due to transportation and distance and isolation. But the technologies are promising and definitely possible of being employed elsewhere.”
“Everybody should do something,” Bailey said, and he suggest not to use the words ‘sustainability’ or ‘ESG.’
“Let’s talk about what matters to our guests, and what provides financial returns to our P&L,” he said. “Guests come to our resort because we do this, and if we don’t do that, we have less occupancy, or we have a lower ADR, and we have degraded RevPAR.”
For example, Bailey has worked diligently with a nonprofit to develop a system to eradicate mosquitoes at The Brando and it is now being explored in Singapore, Hawaii and Florida.
“Did we do this for the world? No. We did it for our guests,” Bailey explained.
Also at The Brando, conservation measures have resulted in increased nesting on the hotel’s island for sea turtles with some 1,400 laying eggs today versus maybe a dozen when they started developing the hotel.
“Guests flock to the resort to see them. The two are connected,” said Bailey, who added, “Travel, especially leisure travel, is the most natural point of penetration for sustainable innovations because that’s the only thing we have to sell.”
Comments
Post a Comment