How seasonal resorts draw guests year-round
11 JANUARY 2016 8:18 AM
The concept of the seasonal resort has changed in recent years, with some hotels offering wider varieties of activities to lure guests during traditionally slow occupancy periods.
REPORT FROM THE U.S.—What was once a challenge many seasonal resort operators have turned into an opportunity: How to attract and serve guests during traditionally slow periods of occupancy. The answer, sources said, is to provide a wide variety of unique experiences and activities that go beyond a property’s core profile.
When done well, the results can be impressive.
“In some of our ski resorts, we’ve actually seen a lot more revenue now coming from the summer season, which we used to call the offseason but has really become our peak season,” said Sean Mullen, president of acquisitions for Noble House Hotels & Resorts. “The winter season has become secondary in some cases.”
Mullen said some ski resorts the company operates generate higher revenues during the summer than they do during the winter ski season.
“Our occupancy is generally 10 points higher in the summer than in the winter, and our (average daily rate) premium is between 5% and 7% in summer versus winter,” he said. “Part of it is volume, because our summer activities appeal to a lot more people. And when you’re skiing, room rate is only a part of the expense: There’s also lift tickets, rentals and equipment. In the summer, guests have fewer expenses so they can afford to pay a little more in (room) rate.”
The Noble House portfolio includes several resorts in the mountain areas of the western United States, including the Mountain Lodge at Telluride in Telluride, Colorado; and the Teton Mountain Lodge and Hotel Terra, both in Teton Village, Wyoming. Each of the properties offers horseback riding, mountain biking, hiking and more.
Today’s leisure guests tend to have broader views of what they seek from a resort. Providing activities and facilities such as hiking, climbing and biking can help resort operators attract people looking for new things to do.
“Guests are seeking an experience, not simply sunshine and beautiful beaches,” said Danna Holck, VP and GM of the Turtle Bay Resort on the island of Hawaii. “For many guests, it’s the activities that really make the difference in a good stay in Hawaii. And while these activities we offer aren’t necessarily profit makers, if they enhance the guest experience our mission is accomplished. They will return.”
Turtle Bay is a beachfront resort on the north shore of the island of Oahu that in addition to sun-and-surf activities provides a range of active sports options, including mountain biking, horseback riding, fishing, Segway tours and cultural experiences.
“Typically, our guests love the outdoors, sports, culture and adventure,” Holck said. “They’re seeking more than a luxurious hotel room or an award-winning restaurant; they’re in search of a memorable experience they can talk about when they go home.”
Providing active sports options can also help resort operators limit the effects of fickle weather patterns, said Bob Sassani, regional VP of Gemstone Hotels & Resorts, which operates 18 hotel and resort properties, including the Topnotch Resort in Stowe, Vermont.
“Topnotch (is) a four-season recreational destination, so whether it is hunting, fishing, skiing or bike riding, we have something to keep people busy all year long—from families to couples to individuals, from little kids on up,” Sassani said, noting these options have helped the property during periods of little or no snow, such as during the last months of 2015. “It’s a matter of extending the offseason for us because there is no snow yet. Instead of being down in the dumps about a lack of snow, we’re able to offer guests alternatives.”
Sassani said even during the winter some guests are looking for activities in addition to—or instead of— skiing. The resort has indoor tennis, which the operators have combined into a “ski and serve” package.
“Fat-tire biking is another option,“ he said. “Some people are into biking, and they don’t want to give it up, so here they can still bike in the winter. Other people come for the hiking in all seasons so they don’t mind layering up for an opportunity to walk around in the woods with a different kind of scenery.”
Noble House’s Mullen said guests who come in the summer in particular want to do more than just soak in the natural beauty.
“That’s why hotels have focused on improving their programming,” he said. “The luxury customer wants curated experiences. They want to know who is the local fishing guide and where do the local fishermen go. Guests who do mountain biking also want to know where is the local skate park or where are the trails the locals use.”
Operators also have upgraded food and beverage to better serve experience-seeking guests.
“Everybody loves campfires, but you need to take it to the next level with a storyteller or local cowboy guide,” Mullen said. “A chef can be there doing a barbecue or grilling class. This kind of programming has become a more-intense, curated type of situation.”
Underwriting seasonal resorts
In addition to the operational challenges of four-season resorts, investors need to apply a different set of criteria in evaluating whether to build or develop a property.
“From an underwriting perspective, it requires a lot more due diligence—not only from the pure numbers but also some of the supporting factors,” Mullen said. “You must consider entitlement issues for surrounding lands. What are the future growth possibilities? Many of these resorts are in areas where it’s important to protect the land, and there are often a lot of strong feelings in the local market about what should be done with this resource.”
Mullen also cited labor and housing for labor as other things to consider in an investment decision.
“Most labor forces in ski mountain and beach resorts require some type of seasonal labor pool—whether it is university students in the offseason or foreign workers who require H-2B or J-1 visas. You must examine both the local and national labor pools.”