Courtesy of The PalmyraAuction.com
A view of Palmyra's club house from the main resort pool.
Psst. Want to buy a luxury resort with 280-plus rooms overlooking a sandy beach in Montego Bay, Jamaica — once valued at $150-million — for pennies on the dollar?
It’s called The Palmyra Resort and Spa and it’s going on the auction block on March 28. It needs a little work — one of its three towers is still a shell and the spa is only partially completed — but, according to John Cuticelli, CEO of Racebrook Marketing Concepts, which is handling the auction, the resort offers “the most compelling opportunity in the global hospitality market right now.”
It also offers a snapshot of what happens when developers conceive grand plans and then run smack into the realities of the Great Recession. Touted as one of the top 10 most exciting real estate developments in the world by Travel & Leisure in 2007, the half-built resort has been in receivership since July of last year.
“There are a substantial number of hotels that are currently lender-owned and there are a substantial number that are on their way to being lender-owned,” said Bruce Ford, senior vice president of sales at Lodging Econometrics, which tracks the commercial real estate industry. “But there are also plenty of buyers who are ready, willing and able to pick up those assets at a discount.”
Consider some of the recent deals:
- According to the South Florida Business Journal, the 340-room Gansevoort South Hotel in Miami Beach, Fla., was sold and renamed The Perry South Beach in early February, two years after the hotel was taken over by its lenders after the previous owner defaulted on an $89 million loan.
- On February 22, MyDesert.com reported that the Two Bunch Palms Resort & Spa in Desert Hot Springs, Calif., — long a popular hideaway for Hollywood stars — was sold, almost two years after it went into receivership.
- United Capital Corp. recently purchased the 254-room Ocean Place Resort & Spa in Long Branch, N.J., a year after the previous owner filed for Chapter 11 bankruptcy to avoid foreclosure, according to the Atlanticville newspaper.
While the particulars vary by property, these and countless other hotels and resorts were victims of the same economic forces — easy credit, the belief that real estate values could only go up and the subsequent freeze on commercial lending — that wreaked havoc on the residential real estate market.
“Going back to 2007, everybody was getting all that easy money,” said Glenn Haussman, editor in chief of HotelInteractive.com. “Then, all of a sudden, the market went bust and all these payments started coming due. The banks would ‘extend and pretend,’ hoping they’d get their money back, but eventually they realized that wasn’t going to happen.”
The good news for travelers is that when new owners pick up properties at a good discount, they tend to spend money on renovations and other improvements.
“This is just what the doctor ordered to get these properties healthy again,” Haussman said.
Presumably, that’s what will happen with The Palmyra once it’s auctioned off. According to Cuticelli, “Thousands of people have visited the auction website, a good percentage have asked for more information and a smaller percentage have registered to participate.” He declined to provide more details on minimum bids or an estimated sale price.
Of course, if you miss out on that deal, rest assured there will be others. In fact, just last month, it was announced that the posh Cap Juluca resort in Anguilla, British West Indies, where rooms average more than $900 a night, is to be sold at auction on May 2.
To get in on the action, all you need is a cashier’s check for $250,000 and the ability to bring the total deposit to 10 percent of your winning bid within 24 hours.
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Rob Lovitt is a longtime travel writer who still believes the journey is as important as the destination. Follow him at Twitter.