Resort investment companies are major players in the tourism and hospitality industry. They develop, own and operate resort properties and provide vacation experiences to tourists. The resort business is capital-intensive but can generate high returns if managed properly. Resort companies invest heavily in acquiring land and developing properties in attractive destinations. They design hospitality experiences, manage operations, market to customers across the world and bring in travel agents as distribution partners. Here are some of the key business models, major players, investment strategies and performance drivers for resort investment firms.
Popular resort investment business models
Many resort developers like Marriott and Hilton primarily manage and franchise resorts while leaving property ownership to real estate firms. However, some companies undertake integrated development and ownership. These firms acquire land, design and construct resort properties, manage hospitality operations and also own the real estate. They lease individual units to investors while retaining overall ownership. Their income comprises lease rentals, hospitality revenues and gains on property sales. Companies like Disney develop theme park resorts integrating entertainment with lodging. Others like Sun City focus on age-restricted residential resorts with golf, health facilities etc exclusively for older adults.
Major players among public resort investment companies
Marriott Vacations Worldwide (VAC) is a leading resort development and management company. It owns many brands including Marriott Vacation Club, Sheraton Vacation Club, Westin Vacation Club and Grand Residences by Marriott. VAC develops, markets and operates vacation ownership resorts globally. Hilton Grand Vacations (HGV) develops, manages and operates vacation ownership resorts under brands like Hilton Grand Vacations Club and Hilton Club. It provides ownership opportunities and club programs to almost 400,000 owners. Bluegreen Vacations (BXG) is another major vacation ownership company with over 60 owned and managed resorts under brands like Bluegreen Vacations, Ascend Resort Collection and Bluegreen Wilderness Club.
Key investment strategies and value creation levers
Resort developers pursue ‘capital light’ strategies by reducing real estate ownership and shifting to franchised management contracts. This generates higher returns on capital invested. Many lease resort properties from real estate firms through long-term triple net leases. They grow by expanding their management platform through brands and geographic reach. Companies like Sun Communities (SUI) have built large portfolios of manufactured housing and recreational vehicle communities. Their strategy focuses on acquiring properties below replacement cost and gradually improving cash flows.
Importance of customer acquisition and marketing
Resort companies rely heavily on marketing to drive sales. Brand strength and promotional offers play a major role in attracting potential customers. Companies use incentives like bonus time, exchange privileges and referral rewards to drive sales. They leverage customer relationship management (CRM) systems and data analytics to target marketing efforts. Distribution partnerships with travel agents and aggregators like booking.com also help acquire customers.
Resort investment firms use their sector expertise, brands, hospitality capabilities, operating leverage and marketing muscle to deliver attractive investment returns. However, the sector is sensitive to economic cycles and external events. Investors should analyze revenue stability, debt levels, cash flow resilience and growth prospects while evaluating these companies.