New England Hotel Chain Purchase Underscores Reach of Leisure Travel Trends

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Take the change

South Florida and California are not the only permanent leisure hotel markets in the United States. Expect more investors like EOS to look for opportunities outside of the more popular traditional destinations with hotel funds.

Cameron Spirans

The rush of a New York-based hotel investor into the New England entertainment markets has implications for the industry’s greater focus on where to allocate capital.

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EOS Investors has acquired the Red Jacket Resorts chain of six properties, the company announced exclusively to Skift Tuesday. The boutique hotel chain’s portfolio is split between five resorts in Cape Cod and one in the White Mountains of New Hampshire.

A group of six resorts totaling 650 rooms might not look like much compared to other deals that closed this week like Hyatt’s $2.7 billion acquisition of Apple Leisure Group. But the rush into a highly seasonal market like Cape Cod shows just how hungry investors are to amass supply in what appears to be an increasingly expanded leisure travel climate emerging from the pandemic.

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“When we evaluate these investments and their financial opportunities, we really expect seasonality. We are not going to be fooled,” Tom Burns, line manager at EOS Investors, said in an interview with Skift. historically weaker. As people spend more time away from the office, we believe there is a real long-term opportunity for super seasonal markets to become less seasonal.”

The thinking goes to flexible work trends with more people able to spend at least a few days of the work week away from the office, making way for more leisure travel. Leaders of Wyndham Hotels and Resorts on the company’s third-quarter earnings call last week reported an increase in four-day weekend travel until after Labor Day when kids go back to school.

Even adding 30 to 45 days to the Cape Cod or White Mountain travel season would provide a “meaningful impact” on Redjack’s resort portfolio, Burns said. However, these markets are difficult for hotel investors, because seasonality does not affect lenders or investors considering an initial project.

The acquisition of EOS may be a strategy for other hotel investors who have spent months looking for opportunities to emerge across hotels and resorts.

Acquiring and renovating existing properties is still the wiser way forward for investors considering a leisure market like Cape Cod than year-round destinations like Miami. Competitors in the region such as Lark Hotels are similarly known for their adaptive reuse projects in the local hospitality industry.

“Because of seasonality, it has been difficult to make money building new hotels in those markets because they do not generate enough revenue to justify the construction costs,” Burns said. “While we find it difficult to build a new hotel, you can do exciting things with partnerships and branding.”

EOS is best known for its important East Coast properties such as Kingston Resorts in Myrtle Beach, South Carolina, as well as the Kennebunkport Resort Collection in Maine. The investment group also owns luxury hotels in major cities such as the Hamilton Hotel in Washington, DC, and L’Ermitage Beverly Hills in Southern California.

It wouldn’t be out of the question for an investor like EOS to buy a portfolio like this and not do much with the assets. Most of the Cape Cod purse overlooks Nantucket Sound while this New Hampshire estate is located in the White Mountains. Both regions could achieve high rates in their travel seasons which only seem to increase in light of more leisure car travel and domestic travel during the pandemic.

EOS is still planning major renovations to guest rooms and public areas and to enhance its food and beverage offerings. Both EOS and a representative with Davenport Cos declined. , the former owner of Red Jacket Resorts, bid on the deal since they are both private companies.

The company also doesn’t expect to be the only investor watching markets like Cape Cod, especially in the current climate where buyers have plenty of capital to pour into investments but are priced in areas like the Sun Belt.

“There is still a lot of competition in those markets [like South Florida and California]. “Everyone knows them, and they’re considered less dangerous,” Burns said. “But we still really like to explore markets that we’ve known as consumers for a very long time. They don’t have the same exposure to the capital markets.”

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