INVESTIGATION
small. “We usually take the number of resort units and then add a maximum of 50 per cent in residen- tial units,” he says. “We get a very healthy premium with our brand and it would be impossible to achieve 50 per cent sales in this climate, with that premium, if we were selling 200 units rather than 15 or 20.” In terms of what the residences arm brings to the
Four Seasons has 21 properties offering full-ownership private residences, and more with fractional ownership
resort business, the capital generated by real estate sales is one advantage, says Taugwalder: “Financing is harder to come by and the costs of building a five- or six-star resort are going up and up, so it’s definitely a factor.” Beyond that, the residences help create a community feel, he says, while the rental programme means there’s a greater variety of rooms to offer hotel guests. Te rental programme also helps attract buyers by promising a return on investment, says Taugwalder, although he stresses the company only sells “to lifestyle buyers who want to be part of the community.” Another spa real estate model that appears to have weathered the downturn relatively well – both in the US and elsewhere in the world
– is the golf-cum-wellness community, with examples including Cliffs Communities and Cooper Life at Craig Ranch in McKinney, Texas, in the US and Mission Hills Shenzhen in China.
Mixing it up It perhaps comes as no surprise to learn that, when it comes to weathering an economic downturn, some of the hardiest models have been the hybrids. But does this mean that dedicated spa com- munities in the Canyon Ranch vein – where real estate combined with extensive wellness programming is the primary focus – are indeed ahead of their time? Ray Payne, managing director of Champneys, thinks not: Champ-
neys Marbella, a 72-villa residential development centred around a wellness centre comparable with the company’s destination-spa offerings in the UK, is already two-thirds sold, despite the fact that
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other luxury housing developments in the region “have either stopped completely or are lying empty.” Originally scheduled for completion this year, the property is now due for a 2012 launch, but only because of construction delays linked to unprec- edented rainfall in Spain. Although he admits they are selling at the “worst possible time in Europe” – especially with the weak-
ening of the pound against the euro – Payne believes that in a strange way the downturn may actually have helped to attract buyers. “We’ve marketed very much to existing Champneys’ users who know the brand [and who see this as] a lifestyle opportunity where they can also get a return on their investment. Opportunities to invest money and get a return are few and far between at the moment and although this is a new opportunity, and there is a risk attached to it, our track record of UK occupancies [gives our investors confidence].” Importantly, the development includes a rental programme for
owners, and Marbella is only a 45-minute drive from Malaga Air- port, a hub for budget airlines flying from the UK. Te spa will also be open to day guests and memberships may be considered, depending on occupancy. Looking ahead, Payne believes the model could be a very effec-
tive way to expand the Champneys brand internationally. “Really it’s about finance and development,” he says. “Creating a facility the size of what we have in the UK requires a huge amount of invest- ment and the climate at the moment is not the best one in which to acquire that, [whereas this model] appears to be a very attractive business proposition.” On the other side of the Atlantic, Milner shares this confidence for
Canyon Ranch, revealing that the company is already in talks with a number of international developers regarding taking the Living con- cept overseas. “Te only thing that held us back is the macro-economic climate,” he says. “We’re expecting to have a record season.” l
SPA BUSINESS 1 2011 ©Cybertrek 2011
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