Ohana Real Estate Investors see increased interest in ‘destination resorts’

James Cole, partner at Ohana Real Estate Investors, highlights trends in the current travel market.

Video transcript

ADAM SHAPIRO: Many of us want to get up and out despite the pandemic. Ohana is a company that invests in high quality hotels, resorts and spas. I thought about an acquisition they just made, La Cantera Resort and Spa in San Antonio, and thought about how I would love to sit in a hot tub right now.

Let’s bring in James Cole of Ohana Real Estate Investors. He’s a partner there. And James, we hear a lot of negative news about people delaying travel. And yet I can’t talk to any friend of mine who doesn’t say I’ll get out of here for at least a week. And much of it is for hotel destinations like yours. Are you optimistic that it will continue?

JAMES COLE: Naturally. First of all, Adam, thank you for having us with you. Ohana is very excited to have just completed the acquisition you were talking about. And what we are seeing is an enormous demand for summer travel, especially among our leisure guests. We see a slight softening in our group segment by the end of the year. But just to put that into a small context, we’re only looking at a range of zero to 10% for cancellations or postponements, especially for our group room stays. Although there is some softening in the group, we are able to replace this with temporary immediately. So we were lucky.

– And James, you’re investing in hotels from Beverly Hills to Dana Point, California to Boston and now, of course, San Antonio. Where do you see most of this demand geographically?

JAMES COLE: We see a high demand especially for destination resorts. I think last summer’s story was something like the ride to the market and the ability to get there without getting on a plane. And I think the story of this summer is that that thought has loosened up a bit. People are ready to get on a plane and, for example, fly to Mexico or visit us in Deer Valley, where I am sitting in Montage Deer Valley today.

The story goes on

ADAM SHAPIRO: If we talk about resorts and hotels, there are a lot of hotels here in New York City. But obviously they are suffering from the pandemic. When looking for properties to buy, are you looking at the entire resort situation? Or do city hotels have a future?

JAMES COLE: I think city hotels absolutely have a future. We don’t necessarily look at one market at a time. We look for specific resorts that offer a specific business plan that we believe we can successfully implement. So whether this is bringing in new capital, or maybe just a fresh perspective on a business plan, this is what we are really looking for. The high-end nature of the resorts we invest in and the hotels we invest in are often complex which allows us to hopefully work at a higher level based on our industry expertise and focus.

ADAM SHAPIRO: We showed the video of the resort, the Monarch Beach Resort in Dana Point, California, and I got jealous. We also had guests talking about how willing people are to spend a lot more on their getaways. Do you expect this to continue over the next few months and into the next few years?

JAMES COLE: Yes. I think we would expect a return to normal spending in three to five years. But I think that given that some of these experiences have been taken away from people for a period of time, people will appreciate them on a higher level at that point in time. So if they can return and spend quality time with friends and family, according to our data, it’s not uncommon for them to be willing to spend a little more on an upgrade to a suite, a little extra a little more for a nicer bottle of wine, or simply just an interesting experience, maybe outdoors, that historically they would not have had.

– We have of course talked a lot about the return of leisure travel. But what about the business travel front? When do you expect a stronger recovery there?

JAMES COLE: That’s a great question and it’s timely, that’s for sure. We have been following business travel very closely because a large portion of our revenue is actually required to account for these business travel as a component of total revenue.

I also think travel has a normal resting place and we will see business travel return. I would hesitate to call when this trip will return. But I believe it will come back, and it will likely come back with an increase in the way the temporary trip did return.

ADAM SHAPIRO: We’d like to thank you for being here and tempting us with the videos we were able to show from your resorts. James Cole is a partner at Ohana Real Estate Investors. And we wish you all the best and look forward to your next purchase, because these recordings are very tempting and tempting.