High-Altitude Resort to Get High-Quality Upgrades

By Scott Baltic, Contributing Editor

The 292-room Vail Cascade Resort and Spa in Vail, Colo., will be undergoing a $35 million complete renovation and repositioning, according to a recent announcement by Laurus Corp., a CRE investment and development company that just bought the resort, and affiliated real estate private equity firm Ethika Investments. The latter has invested in the property and will allocate additional capital in connection with the renovation, which will begin in the second quarter of 2016.

The acquisition price was about $90 million, though the total capitalization is significantly higher because of the $35 million renovation and closing costs, Andres Szita, chairman of both companies, told CPE

“Ethika is the lead investor and invited fund contributors and co-investors to invest at the asset level as well,” he added. “The exact amount cannot be disclosed, but we can say that Ethika controls the capital stack.”

Scheduled to be completed during next winter’s ski season, the renovation aims at positioning Vail Cascade, currently a 4-star operation, as the ski town’s only Five Diamond resort. That jump will entail, according to the buyers, significant upgrades to the ski valet, enhanced outfitting services, “refreshed culinary alternatives” and substantial updates to the resort’s 45,000 square feet of meeting space and 78,000-square-foot athletic club. Upgrades will also include luxury bedding, new four- and five-fixture bathrooms, and a new onsite spa.

“The investment thesis is to renovate and reposition the asset in a higher-tier market,” Szita told CPE. “Current ADR is slightly less than $300, and we plan to close the gap with the upper-tier market that is currently around $500.”

The transaction follows Ethika’s strategic approach during this cycle, “acquiring assets in high-barrier-to-entry markets at substantial discounts to replacement cost, implementing a modernization plan to deliver the best quality offerings in the market and executing key operational improvements to extract value,” Austin Khan, Ethika’s chief investment officer, said in a prepared statement.

“This is a unique opportunity for our investors to acquire a resort that would be nearly impossible to replicate from a cost and location perspective, one of the only true ski-in/ski-out resorts in a top destination market,” Szita added.

He cited strong hospitality fundamentals in Vail, in that ADR has increased 32.8 percent over the past six years, even while occupancy improved nearly 10 points.