Fairmont Grows Resort Portfolio In Caribbean

TORONTO— Fairmont Hotels & Resorts is making aggressive moves in the resort business, with plans to build a luxury resort in Puerto Rico and to buy out the outstanding shares of its two Barbados resorts. Bill Fatt, chairman/CEO, Fairmont Hotels & Resorts, told HOTEL BUSINESS® that another big deal may be pending for the Toronto-based company, which operates 36 properties in North America. “We are working hard now on one additional, major resort which will take us into a new market in which we have not been active,” he said. A number of smaller deals are also in the works, he added. “Resorts are a major emphasis for us,” said Fatt, pointing out that they have revenue generators beyond room and food & beverage that extend to golf and spa offerings. The Puerto Rico property, located 25 miles east of San Juan, will be located on the island’s north shore area called Rio Grande, near the Westin Rio Mar. The $140 million, 400-room resort property will come about as a three-part joint venture that includes Fairmont, Boston-based Willowbend Development Corp.— which has an ownership position in the Westin Rio Mar— and Betteroads Asphalt, which is owned by the Diaz family of Puerto Rico. Willowbend will develop the property; Fairmont will own it, according to Thatcher Brown, Fairmont’s director of business development. Set for a fall 2003 opening, the resort will be positioned at the “highest end” of hotels in the Puerto Rico market, said Brown, noting that rooms will be 450 square feet in size, all with oceanview balconies. The resort will also have a 12,000-square-foot spa, 36 holes of golf and 30,000 square feet of meeting space. The time may be right for another entrant into the Rio Grande area; the nearby 600-room Westin Rio Mar has reported strong business at its property, which opened in 1996. In fact, thanks to better-than-anticipated results, that resort has added on 58 luxury Ocean Villas that will be rented out at a premium rate, according to Tishman Realty Corp., the co-developer and co-owner of the property, which is owned by Tishman Hotel Corp. John Rosen, development manager for Fairmont, said the company is exploring the possibility of putting a villa product in its property. The Barbados deal, meanwhile, involves Fairmont’s parent company acquiring the outstanding 51% ownership of the 75-room Fairmont Royal Pavilion and the 67-room Fairmont Glitter Bay from Michael Pemberton, the majority shareholder of Pemberton Princess Hotels. The properties, both located on the west coast of Barbados, are much smaller than the typical Fairmont resort, which tends to average 500 rooms, according to Fatt. But the “boutique resort” segment is one Fairmont would like to expand upon, he said. “That could be a big potential business for us,” Fatt noted. It’s likely Fairmont’s future resort expansion will remain within North America’s boundaries, according to Fatt, who noted that “anything within North America can be an opportunity to tuck in to our business. Anything outside of North America would require additional resources on our part to make sure it can perform, so North America is the path of least resistance.” As for whether or not Fairmont prefers deals that involve new-builds or purchasing existing properties, Fatt pointed out the benefits of each. “New-builds can take quite a long time to get them up and running, and, depending on where you are in your planning cycle, there are issues, typically, environmental, so to the extent that we can acquire a resort that is up and running is preferable,” he said. Fatt did note, however, that these same obstacles with new-builds can be benefits in that they create barriers to entry for competing brands. Fairmont “is quite happy to have partners” in its properties, said Fatt, “but where the assets are strategically located and enhance the image of our brand, we prefer to own 100%.” Fatt noted that Fairmont Hotels & Resorts has not done a real estate deal with Maritz, Wolff,