When Alan Fuerstman founded Montage Hotels & Resorts in 2002, he wanted to create an artistic collection of ultra-luxury properties in stunning settings that would serve affluent travelers with a comfortable style of elegance.
Today, Laguna Beach, California-based Montage has a portfolio of three properties — Montage Laguna Beach, which opened in 2003; Montage Beverly Hills, which opened in 2008; and Montage Deer Valley in Park City, Utah, which opened last December — in addition to a project it is planning for Los Cabos, Mexico.
HOTELS spoke with Fuerstman about how his hotels have fared in a difficult economic climate and where he sees the company going forward.
HOTELS: What trends have you observed in the luxury market since Montage launched almost 10 years ago?
Alan Fuerstman: We have seen more families traveling together with their extended families and friends than ever before, with a substantial demand for multiple rooms and suites. Our guests plan and book their stays with a great amount of research and reviews available to them. With today’s technology and mobile devices, guests have instantaneous access to our websites to make short-term room, dining or spa reservations, which creates new pressures on forecasting, execution and service delivery.
HOTELS: How has your newest property, in Deer Valley, performed since its debut?
Fuerstman: Montage Deer Valley has enjoyed a terrific first year of operations. Having just opened in December 2010, the hotel achieved an incredible 112% RevPAR index during its opening ski season, including a US$750+ ADR. This success has continued over the summer months, with the hotel sustaining its 100%+ RevPAR index.
In addition to this phenomenal opening operational performance, Montage Deer Valley has garnered significant consumer and industry recognition, including Robb Report’s prestigious “Best of the Best” award and Virtuoso naming it the best family resort in the world. We are delighted with the overall performance of the Deer Valley property and our team there.
HOTELS: What can you tell me about the financial health of your Beverly Hills property?
Fuerstman: Montage Beverly Hills is enjoying a truly remarkable boom in business this year. Revenues have increased approximately US$10 million, and the hotel’s financial outlook is extraordinarily bright. Although we could not have opened at a worse time in the economic cycle, the strength of the Montage product, service and brand have been a real recipe for success in Beverly Hills. With 30% RevPAR growth, an average rate just shy of US$600 and the exciting addition of the Scarpetta restaurant, 2011 has been a breakthrough year.
The other tremendous success story at Montage Beverly Hills is the Montage Residences offering. Of the 20 Montage Residences for sale at Montage Beverly Hills, 12 have sold and closed at pricing of about US$2,400 per square foot, including four units priced at more than US$10 million apiece. This is double the per-square-foot pricing achieved by other competing product in the Beverly Hills/Los Angeles marketplace.
HOTELS: What is the status of the property you’re planning for Los Cabos?
Fuerstman: Our site in Cabo, which overlooks the Santa Maria Bay and offers one of Cabo’s only swimmable beaches, is absolutely exceptional. We control some 1,300 acres (526 hectares) there, with a master plan including our 150-key Montage Los Cabos, multiple home sites, a beach club and a Fred Couples-designed championship golf course.
We have slowed down the development activity in Cabo until we are confident that the residential and resort markets are healthy enough to support the additional inventory. Long term, we remain very excited about Cabo and believe our site is the premier location on the Baja peninsula.
HOTELS: What other markets are you exploring for possible expansion?
Fuerstman: We are interested in growing our Montage portfolio into the leading luxury destinations around the world, both urban and resort. At the moment, we are particularly focused on the major gateway cities of the United States and Europe, including cities like New York, Washington, Boston, Miami, London and Paris. We are also working on a couple of strategic relationships in Asia, which would allow for wider expansion of our brand there, especially into China.
HOTELS: How challenging has it been to develop and finance projects in the recent and current economic climate?
Fuerstman: There is no doubt that new development of luxury hotels and resorts over the last couple of years has been extremely challenging. At least in North America, available capital for new hotel development, both debt and equity, has either been non-existent or extremely expensive. As a result, we have seen a relative dearth of new development activity in this part of the world and greater activity abroad, especially in Asia.
Having said that, we do see the North American capital markets opening up a bit for hotel development, particularly where there is a compelling development case, including a strong developer, top-notch location and a strong brand/operator; to date, we’ve been very pleased at Montage’s ability to add value to this proposition.
HOTELS: Where would you like to see Montage in five years?
Fuerstman: Our overarching goal is to be the luxury hotel company of choice for travelers, the travel industry, investors, the communities in which we operate and our associates. Over time, we expect to be present in the world’s leading luxury destinations, but will be highly selective in how we approach them. We look only for premier locations within each market, and we look only for opportunities that allow for a market-leading hotel or resort as it relates to room size, key counts, amenities, et cetera. I anticipate adding another two to four Montage properties to our portfolio over the next five years, with at least one or two of those new properties being located outside the United States.