PHOENIX-Using capital from its sale earlier this year of six luxury properties to CNL Hotels & Resorts for approximately $2 billion, KSL Resorts is set to expand its portfolio both in the US and abroad, reveals Mike Shannon, president and CEO of KSL Resorts in an exclusive interview held during the Lodging Conference 2004 at the Arizona Biltmore in Scottsdale.
According to Shannon, the La Quinta, CA-based firm is seeking to either manage, joint venture develop or outright purchase luxury hotels that combine upscale amenities, such as full-service spas, specialty retail or golf, with business function capabilities and a residential component. "These campuses when successfully done can generate significant operating profits per room," Shannon tells GlobeSt.com, adding the firm's hotels on average produce approximately $100 million per year in revenues.
"We are looking for one-of-a-kind locations that lend themselves to expansion in areas such as rooms or condos, themed retail or a major spa component," Shannon says. KSL has targeted between 12 and 15 US geographic locations that "make sense" for such projects and expect to add two or three assets per year. It is also seeking to add at least one international property per year and is looking at key luxury tourism areas in Western Europe, Mexico, the Caribbean and a handful of Asian markets.
"We are talking to owners of unique sites that want to capitalize on valuable real estate but don't know quite how to do it," Shannon says. The firm plan to fund its activities with its own capital as well as through relationships with CNL, Kohlberg Kravis Roberts & Co. as well as major REITs, the CEO states.
Currently KSL is working on the expansion of two of its properties. Earlier this week, it received zoning approval from the city of Carlsbad, CA for the expansion of its La Costa Resort and Spa. At a cost of $60 million, it will add 197 luxury condo units to the 474-key property. Shannon says he anticipates breaking ground on the project in December. Also in the works is the addition of 87 units and a 20,000-sf spa and fitness center at the 688-room Hotel del Coronado in Coronado, CA. "We think the trend in resort real estate is going to grow," Shannon says.
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