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

Ohana Real Estate Investors Partner James Cole breaks down trends in the current travel market.

Video Transcript

ADAM SHAPIRO: A lot of us are eager to get up and get out despite the pandemic. Ohana is a firm that invests in high property hotels and resorts and spas. I was thinking about an acquisition they just made, La Cantera Resort and Spa in San Antonio, thinking how much I’d like to go sit in a Jacuzzi right now.

Let’s bring in James Cole from Ohana Real Estate Investors. He’s a partner there. And James, we’re hearing a lot of negative news about people delaying travel. And yet I can’t talk to any of my friends who don’t say, I’m getting out of here for at least a week. And a lot of it is to hotel destinations like yours. Are you optimistic it will continue?

JAMES COLE: Of course. First and foremost, Adam, thank you for having us on. Ohana is very excited to have just made that acquisition you talked about. And what we are seeing is a tremendous amount of demand for summer travel, particularly with our leisure guests. We are seeing a bit of softening in our group segment between now and the end of the year. But just to put that in a little bit of context, we’re only looking at a range of zero to 10% in cancellations or movement, specifically in our group room nights. So although there is some softening in group, we’re able in the immediate term to be replacing that with transient. So we have been fortunate.

And James, you invest in hotels from Beverly Hills to Dana Point, California to Boston, and now, of course, San Antonio. Where are you seeing geographically most of this demand is actually happening?

JAMES COLE: We’re seeing a lot of demand specifically for destination resorts. I think the story of last summer was kind of the drive to market, and being able to get there without getting on a plane. And I think the story this summer is that that thought has loosened a little bit. People are willing to get on a plane and go to Mexico, by way of example, or to visit us in Deer Valley, where I sit today at the Montage Deer Valley.

ADAM SHAPIRO: When we talk about resorts and hotels, here in New York City, there are lots of hotels. But obviously, for the pandemic, they’re suffering. When you look at properties to acquire, do you look at the complete resort situation? Or is there a future for urban hotels?

JAMES COLE: I think there’s absolutely a future for urban hotels. We don’t look necessarily market by market. We’re looking at specific resorts that lend a specific business plan that we think we have a strength in executing on. So whether that is an insertion of new capital, or perhaps even just a new perspective on a business plan, that’s what we’re really looking for. The high end nature of the resorts that we invest in and the hotels that we invest in often lend themselves to complexity, which lends itself to us being able to execute, hopefully, at a higher level given our sector expertise and focus.

ADAM SHAPIRO: We were showing the video of the resort, the Monarch Beach Resort at Dana Point, California, and I was getting envious. We’ve also had guests on to talk about people are willing to spend much more for their getaways. Do you expect that to continue in the next several months to next couple of years?

JAMES COLE: Yes. I think we would expect a return to normal type of spending in three to five years. But I do think that given the fact that some of these experiences were taken away from people for a period of time, that people value them at a higher level at this point. And so when they are able to return and spend time with friends and family, it’s not unusual, in what we’re seeing in our data, that they are willing to spend a little bit more to upgrade to a suite, to spend a little bit more on a nicer bottle of wine, or just have an interesting experience, perhaps outdoors, that they wouldn’t have had historically.

We’ve been talking a lot about the return of leisure travel, of course. But what about the business travel front? hen do you expect to see more of a rebound there?

JAMES COLE: That’s a great question, and it’s of the moment, that’s for sure. We’ve been tracking business travel very closely considering that a lot of our revenue, really, is required to have that business travel as a component of the overall revenue.

I think that, again, travel has a normal resting place, and we will see that business travel return. I would be hesitant to make a call as to when that travel will return. But I believe that it will come back, and it will come back probably with a surge in the way the transient travel also returned.

ADAM SHAPIRO: We want to thank you for being here and tempting us with the videos that we were able to show of your resorts. James Cole is Ohana Real Estate Investors partner. And we wish you the best and look forward to your next acquisition because those shots are very tempting and enticing.