My Dominican Life

It has been a little while since I last was on my blog.  Why, well I have been doing research for my latest venture, a luxury property rental management company called Caribbean Premium Villas.  I have partnered with some old friends here in the Dominican Republic.  Javier and Cesar are brothers and they are like my brothers, just Dominican.

Anyway, the research was spending time reviewing our villas and condominiums here in Cap Cana and Punta Cana.   Our properties are just amazing.  In fact, the research was so grueling I had to stay another day researching, or was I at the spa?  Seriously, the properties are just phenomenal.  The prices are up there relative to the all-inclusive properties, but then again it is luxury and the properties are all 3 bedrooms or more.  So, look us up, www.caribbeanpremiumvillas.com, and bring the extended family.  It will be worth it.  Tell them Guy sent you.

Now, the site needs a lot of work, so your feedback is appreciated.  We are working on a plan of attack so that the web site can reflect the true beauty of these resort properties.

Happy Travels.

In Resort Real Estate, Is A Major Hospitality Brand Worth The Expense?

I will start out with the answer and then break aspects of the decision process apart.  The answer is, "It depends."

There are many factors - who is your competition, how much real estate are you trying to sell, what can you afford to pay in terms of real estate fees to the brand (yes, the brand gets a fee on each real estate sale for attaching their name to the property), is the brand's client right for your destination/property, can you afford to build and operate a hotel and residences that conform to the brand's standards, can you even get the hotel financed, are you looking to sell the hotel at a later date or will it stay in your portfolio and lastly, can the end-users afford the rates charged by the brand?  All good questions that must be answered by the developer and the brand that will ultimately be chosen.

Hospitality brands are like most other brands.  They offer us a perception of quality, fashion, being different than the masses (status), leading to increased perceived value, increased usage of the product, and increased emotional attachment.  This strong attachment develops brand loyalty and the ability for the brand to charge a premium over similar products.  Every developer wants the above benefits when looking for a hotel operator/management company.  The question we are asking is, are the ultimate benefits worth it?

Some of the wealthiest families from the United States and around the world own hotel brands - example - Hilton/Hilton; Pritzker/Hyatt.  So, there is very good money in hotels, but their fortunes were made decades ago, not in these times.  The industry has changed, many new brands have emerged from the US, Canada, Mexico, Europe and Asia.  The advent of the boutique hotel brand (Morgan's, KOR Hotel, Ian Schraeger) has also added some much-needed flavor to the industry.  And, now you build the hotel and the brand just manages it for a fee + a share of revenue.  And, the contracts span decades.  The risk is all the developer's.  Still interested?

OK, now that you have agreed on terms with your chosen brand, the real negotiating begins.  Agreement after agreement to be negotiated point by point.  It is very tedious but extremely important, as the brand will take every advantage.  Once done and you have recovered from that hangover, they now want a hand in all hotel, amenity and residential designs, marketing programs, sales programs, pr, you name it they want to have approval rights.  No matter if that is the best thing for your property or not.  Don't get me wrong, everyone has the same goal in mind, however the developer and hotel brand often go at the goal in opposite directions as each has different interests along the way. Still interested?

If so, now you get to start selling real estate and building the hotel.  When you sell real estate, don't forget to price in another 3-7% to cover brand fees.  To put that in perspective, it adds $3-7million dollars onto every $100 million in sales, and most properties sell-out value today are estimated between $300 million and $1 billion dollars.  That means $9 million on the low end and $70 million on the top end.  Still interested?  I know a few hotel brands, which are interested.

Long story short, much work needs to go into the decision to pick a brand - more than just the clientele it can bring.  The decision is the developer’s as to the brand, and the buyers will ultimately decide if the product is worth the cost.

Let me know if you need help selecting a brand.

www.resorttopia.com

My Experiences Marketing and Selling Resort Real Estate in the Caribbean.

To say the least, my experiences selling and marketing luxury resort real estate in Anguilla and the Dominican Republic were life changing.  So much so, that I now live in Punta Cana, Dominican Republic.  And, I would live in Anguilla as well if there was enough work.

Yes, there were crazy times in both locations, but more so in the Dominican Republic.  I did not speak their native tongue, Spanish, so that lead to many interesting "conversations", if you can call them something other than a comedy / tragedy.  Luckily, there are many bilingual and trilingual people that I worked with that helped me through these episodes.  I wish I could tell you these stories, but I do not want to embarrass anyone, particularly myself.  Suffice it to say, if you come here and spend anytime in Santo Domingo, Higuey, San Pedro, Bavarro or Samana,  you will know what I mean.  Just crazy.  A good crazy though.

I spent 2.5 years in the Dominican Republic, eating great food, meeting wonderful and gracious people, going to some amazing beaches and just enjoying the latin lifestyle.  Did I mention I tried my hand at dancing merengue...for a gringo I did OK.  Or so I was told.  Even with the frustrations, I enjoyed every moment and would not trade it for the world.  I met my wife here.  She is fantastic, one of those trilingual people, and we now have 2 kids...who are quite special.

After leaving my rice, beans and merengue, I headed to the island of Anguilla in the British West Indies.  Here, life and work were much more laid back.  Not less productive, but much more island like and matter of fact.  An, "it is what it is, so deal with it" kind of place.  Once I got over that, it was just an amazing little island with phenomenal restaurants, some of the world's best beaches, super nice people if they were inclined to liked you, and a wonderful spirit.  So much to do on such a small island.  Should you need time off, St. Martin was a quick 20 minute boat ride away.  And, there we had more restaurants, gambling, shopping, the french and the dutch.  What a time.  If I didn't mention it, Bankie Banx and Moon Splash were always fun, Picante "Mexican" restaurant was a life saver, and Mango's was a must have at least twice a week.  Oh, and we met several wonderful Dominicans in Anguilla.  Quite a small world.

I gained about 20 pounds in Anguilla, and am trying to get back to that weight.  Fat and happy is a good thing.

So, now that I have given you a peak at my life, what does this have to do with resort real estate.  Well, everything really.  While in these places, I happened to be part of selling $400 million dollars worth of great properties and learned some very valuable things about people, about life and about living.  Once you learn these things, it enables you to have a good time no matter where you are (doesn't hurt that I am in always in amazing Caribbean settings) and who you are with...because life is short and it begs to be lived to the fullest.

So, live life and visit these countries...and buy some real estate while there.  That will keep you coming back year after year...and improve your overall outlook on the world.  It surely worked for me.

www.resorttopia.com

The Benefits Of "Green" Resorts

Today's catch phrase in every area of our life is, "Going Green".  And, for good reason. There is nothing wrong and absolutely everything right with doing the same old things in a new and better way.  Sometimes it costs more, sometimes less, but overall Going Green is always better for our planet.

As it relates to my area of expertise, resort real estate, Going Green is a relatively new concept that is garnering favor with developers, buyers, vacationers and the press. Resorts are springing up in all corners of the globe, and usually in environmentally sensitive locales. This happens as these sites are always the most beautiful and tranquil places where we can go to reconnect with ourselves, our families and nature. Secluded beach cottages. Island escapes. Mountain-top retreats. Mega-Yachts (yes even these are going as green as they can).

So why are these luxury lifestyle resorts Going Green?  What are the benefits to the developer, the resort guests, the real estate owners, and those in the local community?  I am a list guy, so here is my TOP TEN list of the benefits to Going Green:

1. Long term energy and water savings
2. Reduced maintenance costs
   
3. Retaining the pristine nature of the location - water, air, flora and fauna
   
4. Maintaining clean water and soil levels, or even improving them in many cases
5. Marketing advantage over non-green competition
6. Showing the local community the importance of the environment in which they live.  Helping them strive for these goals betters the community in the short and long term resulting in a better quality of life
   
7. Less greenhouse emissions resulting a better air quality (no matter how you feel about global warming, this is a good thing for all of us)
8. Reduced solid waste
9. Potentially higher resale values / appreciation
10. Preferential mortgage programs from Green Homes

These benefits have an immediate impact today and when maintained throughout the life of the project have benefits that reach well into the future.

With this list of benefits in mind, let's hope that all developers bring Green properties to the market.  And while that does away with any competitive advantage and makes my TOP TEN list a TOP NINE list, we all win under this scenario. 

Resort Real Estate - When Buying, Do You Need An Agent?

I am thinking of buying some resort real estate in the Dominican Republic, for example. Do I need a real estate agent? I think I know where I want to buy already. Here at RESORTTOPIA we are asked this question all the time. The answer really depends on a few factors.

1. Are you buying internationally or domestically? If internationally, it is most likely a good idea to have an agent.
2. What language is the purchase agreement in? If not your native tongue, best to have local representation.
3. Is the price negotiable? If not, there certainly is no harm in having representation. If yes, the agent most likely knows the market better than you. So any bargaining power you give up by having representation will be more than made up during final negotiations.
4. You think you know where you want to buy, but do you really? A local agent can show you some alternatives. At the very least it will give you comfort that you made the right decision.

When in doubt, always go for representation. The knowledge they can pass along is well worth the fee they receive.

The High Cost Of Not Having To Choose.

It is hard to choose sometimes...Italy or Greece; Fillet or Lobster; Bentley or Rolls Royce; Golf Course or Marina. A chalet in Telluride. An oceanfront villa in Anguilla . A loft in New York. All of these are wonderful. And each asks you to make a choice. All tough decisions.

Now, as it relates to resort real estate, many luxury resort communities have decided to make life easier on prospective purchasers and offer every amenity imaginable within their gates. Golf Course(s). Marina. Beach Club. Fitness Center. Spa. Equestrian Center. Tennis. Basketball Courts. Chapel. Fishing Guides. Concierges. Fitness Instructors. Valets. Planes. Boats. Wave Runners. Kid's Camps. Restaurants. Retails Shops. Fire Station. Medical Offices. Grocery Store. Business Center.

You get the idea. All of these amenities make life a pleasure, but all come at a very high price. Thus, only the ultra-wealthy and elite can afford a home there. Resort home prices have sky rocketed from the late 1990's to today - some of it based on supply and demand, but most of it is related to the level of services and amenities reaching once unimaginable heights.

With the state of affairs today, I am asking you to choose. Please take the survey on the right side of this blog to see how key amenities rank. Thank you in advance.

What's Next For Resort Real Estate - 2009 and Beyond!

On the surface, the question is rather simple to answer. In the past, real estate has followed cycles that go something like this - in the short term, prices drop, the number of second homes purchased decline, many communities/properties go into bankruptcy, real estate supply and demand fall back in-line and, in the longer term, the market returns back to the normal excesses.

However, the cycle is most likely going to change. A different cycle may start. Why?

Banks will be more hesitant to loan up to 90%LTV, provide no documentation loans, or allow a developer to build a condominium building with only 60% sold. Builders will rarely build spec homes, thus existing homes become more valuable - to the extent they have deflated in price already. And lastly, a new trend RESORTTOPIA feels will take hold is that purchasers will once again look for value properties. Yes, I said VALUE.

In other words, they may still spend $1 million for an oceanfront property, but it will be for a 3-4 bedrooms, not a studio suite. And that studio suite will be $250,000 - $400,000 and have realistic rental income opportunities. These value properties will be found in all sorts of markets. They may be renovation properties, foreclosures or fire sales. The properties may be new, but if so they will be in emerging markets such as the Grenadines, St. Kitts, Dominican Republic, Costa Rica and Panama.

And, what would seem to go opposite of logic, these properties will not be part of large resort properties, but rather small resort properties with non-branded or boutique branded hotels, clubs and spas. Why? Well, larger properties have all amenities imaginable. Thus they are expensive to construct, nearly impossible to finance, and their financials depend too much on a large volume of cash flow (ie sales). Smaller properties will still have great amenities, usually better locations and they will be much easier to finance and ultimately build - hence easier to sell.

That is the short and long term as RESORTTOPIA sees it. If you have any questions or comments, feel free to let us know.