Developer’s Niche Offers Luxe Life For Guests, Revenue To Owners

LOS CABOS, MEXICO—Houston developer Ron Hatfield is carving a niche within his residential resort, Villas Del Mar at Palmilla, opening up the exclusive gated community on the tip of the Baja Peninsula to destination travelers seeking a taste of the luxe life. Within the confines of the sprawling 1,000-acre master-planned Palmilla Resort, Hatfield, with his business partner, the late Ken Schnitzer, thus far has built 80 luxury residences with plans for 80 more over the next five years, and has created a pool of resort rentals to help owners maximize their investment and bring returns to the developers. The venture is a new one for Hatfield, a commercial real estate developer of 35 years, who has been developing Villas Del Mar for some seven years, and who expects it to build out at a total cost of $170 million-$180 million. “Other than a large project in Colorado—Storm Meadows in Steamboat Springs—this is really my first big resort development,” Hatfield told HOTEL BUSINESS®, who noted of the residences sold, 77 have been to Americans, two to Canadians and one to a New Zealander. Estate villas, luxury villas and mountainside casitas, which run from $2.5 million to $5 million, make up the community. “Out of the 80 homes we have about 18 that are part of a rental program,” said Sean Emmerton, president of California-based Destination Marketing International, who is tandeming with Hatfield to get the word out. Speaking at the Four Seasons here, Emmerton told HOTEL BUSINESS®, “We do a revenue share with the owners, we do all the marketing for it, mostly though travel agents, and bring in a high-quality caliber of clientele to come in and enjoy the homes. It’s very much like a five-star resort environment: all the homes have private butlers, chefs, maids for housekeeping, golf carts to get around, amenities like that.” In addition, both guests and residents can take advantage of the facilities at the adjacent Palmilla Hotel, including the hotel’s 27-hole golf course and restaurant. “We started the rental program for several reasons: it’s a very high level experience…there is the opportunity now [for guests]to come and have a residential type of setting with resort services.” Emmerton noted the homes, with rates ranging (per night) from approximately $1,300 for a one-bedroom casita to approximately $5,000 for a five-bedroom beachfront villa, are mostly second, third and fourth homes for the owners, who occupy them for only short periods of time during the year. A $400 service fee also is charged off the top for the service personnel. “Out of the 18, we have about 12 where we have a ‘free sell’ on them, so I can rent them at any given time. They (the owners) give us a calendar of when they’re going to be down, we black those dates out…then if I get a call from a travel agent or directly from a guest, I can say: ‘Yes, we have this and we take their credit card [for reservations]just like you would at a hotel.” Owners valuables and personal keepsakes either are stored by the property managers or the owners themselves, but for the most part, said Emmerton, the accommodations are as the owners intended. Peak periods, such as the Christmas holidays, require a seven-night minimum, other times guests may stay as briefly as two nights. Owners retain 70% of the revenue. “We just rented a home for 10 nights at Christmas at $5,400 a night, so the owner will get $35,000 for letting someone use their home over Christmas. For owners who are looking to generate revenue, they can certainly do that,” said Emmerton. “I think one reason our project in Cabos has been so successful is that we really took a lot of commercial ideas to our homes and really built them a little bit better and a little bit nicer than most residential developers do, so that’s been the secret to our success, I believe,” said Hatfield. He added the relative proximity to U.S. airline hubs, e.g., Dallas, Los Angeles, Houston, San Diego, Atlanta, Phoenix, San Franci