Margaritaville targets new guests with Compass brand
Margaritaville targets new guests with Compass brand
06 JUNE 2018 8:27 AM

Compass by Margaritaville Hotels & Resorts will fit in the upscale select-service segment, according to company executives.

NEW YORK—Margaritaville Holdings is blending an upscale lifestyle concept with a select-service business model for what its executives hope will be a concoction that developers and consumers consume with gusto.

The Compass by Margaritaville Hotels & Resorts brand, which was officially launched during the 40th annual NYU International Hospitality Industry Investment Conference, will give the company another unique outlet to market the Jimmy Buffett-inspired line of products, according to executives.

“It’s all about escapism—this is boutique, and it’s also select service,” said Rick Cunningham, VP of hotel development. “Consumers told us (select-service brands) are all starting to look the same. We want to make sure Compass reflects a fun, light, airy feeling … a feeling like you’re at a friend’s house.”

The hotel industry’s shift to experiential and lifestyle products is right in Compass’ wheelhouse, according to Jim Wiseman, president of Margaritaville Development.

“That’s why this is going to be successful—we already have a lifestyle,” he said.

Compass by Margaritaville Hotels & Resorts has a target-market list that includes various types of destinations. (Photo: Jeff Higley)

The company spent a year conducting research on consumers and developers to determine the direction it wanted to go with the concept.

“(What) we realized was that people love Margaritaville, and they love the DNA,” Cunningham said. “They want more locations.”

That research included focus groups in Atlanta, Nashville and Chicago, the executives said.

The consumer group was comprised of corporate business travelers, and their overwhelming response was that they love Margaritaville but they’re not sure if they could put a stay at one of the properties on a business expense form, Cunningham said.

“We had to think of an alternative, and Compass consistently came out on top,” he said.

The prototypical Compass property will be a distinctive five story, 131-room, 83,000-interior-square-foot building sitting on approximately three acres of land, according to a company news release.

Hallmarks for Compass properties include a welcome center, an open living lounge, a branded indoor/outdoor food-and-beverage outlet and a backyard, the executives said. Each property will include a signature Margaritaville-designed bar and grill concept—most often the “It’s Five O’clock Somewhere” brand, but possibly others, Cunningham said.

The company took some cues from its Hollywood, Florida, Margaritaville property—which features a swinging bench and cabana-like areas in the living lounge—to bring unique elements to the prototype, Cunningham said.

Elements that the brand suggests be included in Compass properties include: laminate flooring in the guestrooms, an oversized (800 square feet) fitness center, and shower-only setups in the bathrooms.

“The guestrooms are about 375 square feet, which gives you a lot of leeway to value engineer,” Cunningham said. “Plus, we know we’re going to get families for longer periods of stays.”

Properties will require four or five management-level employees and up to 35 hourly employees, a “typical select-service workforce,” according to Cunningham.

Breaking down the costs
Initial estimates call for developers to spend approximately $138,000 per key (without land) for a Compass property, Cunningham said. The five-story structures can be L-shaped or horizontal-shaped. New-build properties will have wooden frames to keep construction costs low.

“This broadens our spectrum of places we can go and things we can do,” Wiseman said. “It’s keeping the integrity of a resort with the Margaritaville name, but Compass can pretty much go anywhere.”

Cunningham said Compass gives the company a chance to branch out into markets it currently can’t touch, such as college towns.

“We own the baby boomer market, and they have kids in these towns,” he said. “We’re using the college ambassador program (to attract new customers). You can’t put a big Margaritaville resort in a college town so this gives us the option to be in that market.”

The initial push for growth will come in mixed-use, urban locations. Properties can be adaptive-reuse, conversions or new builds, Cunningham said.

“Right now, most people have come to us with new builds, which is very surprising,” he said. “As the brand evolves, we will have conversion and adaptive-reuse projects.”

Wiseman said the eventual mix will include 50% new-build hotels.

Other prime location targets for the brand include city-center urban locations, near regional convention centers, and smaller destination resort locations on beaches, lakes and mountains.

“It’s the same places we sell beer, where we sell concert tickets. … We know where our target markets are,” Wiseman said.

Executives were expecting to launch the brand primarily in the Southeastern U.S., but Cunningham said that plan has already been altered.

“During this conference, we’ve gotten requests for the West Coast already,” he said.

The first Compass is being developed by Floridays Development Company on Anna Maria Sound, Florida.

Wiseman said the strength of the Margaritaville brand provides developers and owners with an added benefit.

“We can be competitive with the price of construction and development, but at the same time we can be flexible with the product,” he said. “It will give the developer and the owner a lot of upside in rate potential.”

The company is in the process of adding a reservations system and a customer relationship management system—those should be in place by the end of the year, Wiseman said, adding that 65% of Margaritaville’s bookings are through its website.

There is no official loyalty program, but Margaritaville rewards it loyal guests with things such as concert tickets, Wiseman said.

“Our loyalty program … you’re going to see a lot of value by staying there with all the other stuff we can give you,” he said. “It’s all about experience.”

Margaritaville Hotels & Resorts currently has 12 lodging locations in its portfolio, with more than 20 additional projects in the pipeline.

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