Remington Revives Development for Condo Hotel Play

Two contracts are being negotiated for development sites on the West and East coasts, but details won't be available until deals are done. The condo hotel initiative has been on Remington's drawing board nearly 18 months. The fine-tuned version puts Remington in full control of the finished product. "The idea is we would be the primary developer and equity partner on new developments," Jack McHugh, Remington's senior vice president, tells GlobeSt.com.

Remington's model for the niche play relies on its ability to build resort hotels, sell condo units and then manage them for the private owners, a target market of vacation and second-home buyers. Robert G. Haiman, Remington's leader for the newly formed condo hotel development and management division, say the strategy is vastly different from the residential and hotel mixes being developed by the Chevy Chase, MD-based Ritz-Carlton Hotel Co. LLC and the W Hotels, a division of the White Plains, NY-headquartered Starwood Hotels & Resorts Worldwide Inc.

"Our condo hotel in every way will be an operating resort hotel," Haiman says, adding that from all outward appearances guests "will not know it's a condominium hotel structure." Even interiors, including fixtures, will be the same in all units.

If the projects pan out as planned, Remington's buyers will place their units into a developer-controlled rental pool, which will be overseen by McHugh, Sonny Sra and Jeff Dallas. Remington also is toying with an idea to set up a brokerage arm for unit sales. McHugh says the plan is to sell all units, with no corporate holdbacks.

The condos will qualify for 1031 exchanges and mortgages. "We are using the condo feature primarily as a financing vehicle," Haiman explains. Likewise, buyers stand to gain because "there is every reason to expect that you'd have a traditional hotel occupancy rate and RevPAR," he says. "If properly managed, it should almost outpace the occupancy and rate of a traditional second home property."

In all cases, the project's size, cost and design will be predicated on the synergies of the locale, i.e. beachfront or mountaintop. But, all development sites will be resort spots. As a result, Remington isn't limiting itself to the US. Preliminary discussions have begun for two locations in Europe although it's anticipated that most development will take place in North America and the Caribbean, McHugh says.

Besides ground-up projects, Remington's team also is scouting for likely conversion candidates. Meanwhile, the hospitality group will hold true to its past as a third-party manager, adding condo hotel properties to the menu as it's done with the 612-room World Quest Resort near Disney World in Orlando.

Remington's last foray into a development program was in the late 1990s with a downsized Embassy Suites model. The 150-room hotels went up in Dallas, Austin, Houston, Las Vegas and the Dulles Airport in Washington, DC before Japan's banking giant, Nomura Capital Investment Co. Ltd. pulled the financing plug.