Buyer’s market in the resort zone

By Jeffrey Thomas Marchesseault

As Guam’s visitor industry continues to retool for mounting airlift capacities and organic growth, a promising buyer’s market for mature, low-occupancy resorts and attractions has emerged. 

Post-pandemic purchasers are exchanging reasonable offers for properties with lighter foot traffic, lower occupancies, and deferred maintenance before local tourism returns to full accommodation once more. 

This cost-effective strategy opens the way for phased competitive upgrades, diminishing vacancies and improving returns with an aim to make discounted asset purchases well worth the gambit. 

Undoubtedly, these investors foresee the local visitor industry rebounding in due course to repopulate our destination resort zone, our islandwide attractions and our eco-cultural experiences with sustainable footfall again. And yet the venture capitalists aren’t alone in their outlook. 

No, not every preferred hotel, major retailer, or hospitality group is tossing in its chips, calling it quits and selling to the highest bidder. A stroll through Tumon, Tamuning or central Hagåtña suggests to any close visitor-industry observer that many owner-operators of time-honored assets have dug in their heels and refurbished their properties, leased up once-empty retail spaces, upgraded their service offerings and hired qualified job seekers. Or that they’re in the process of doing so.

Yes, many local proprietors are leaving the worst of Covid-19 and Typhoon Mawar behind, measuring the quickened pulse of the travel-hungry regional tourism economy, adjusting their offerings to fit demand and preparing for better times ahead.

For further evidence that now may be the moment for qualified players to buck up, lay it on the line and prepare for industry gains, consider a few of the bigger closures in the deal-flow pipeline over the last few years.

Recently, Sono Hospitality Group bought Onward Mangilao Golf Course and Onward Talofofo Golf Course. It is rebranding them as Sono Felice Country Club Mangilao and Sono Felice Country Club Talofofo, respectively.

SHG also acquired the low-cost carrier T’way Air in a bid to firm up its place among regional carriers. Over this past spring, T’way’s Guam inbound seat capacities alone were nearing 6,000 per month.

Last month, the federal District Court of Guam approved the $33 million sale of the shuttered Pacific Star Resort & Spa to Eastern Contractors, a major Georgia-based contractor.

In April 2022, Hoshino Resorts group of Japan bought the Onward Beach Resort for a reported $73 million. The new owner rebranded the property under its Resonare moniker, with an eye toward current cash flows, gradual upgrades, long-haul appreciation, and net present value. 

After purchasing the Verona Guam Resort & Spa at the tail end of 2021, Tyche Acquisition Guam LLC says it still intends to refurbish and reopen the property as a hotel within the foreseeable future.

These and other structurally sound, premium-location assets still retain years of useful life. Given needed upgrades, repairs and a facelift, each has attractive upside earnings potential. 

Seasoned investors see hope on the horizon for Destination Guam USA and are voting for our visitor industry with their capital. Experience has taught them the value of diversification, calculated risk and that history actually does repeat itself. And that sometimes a repeat performance does even better than a past performance.

In April, travel industry watchers learned from public testimony that as much as $100 million or more in anticipated aeronautical and non-aeronautical projects could be injected into the A.B. Won Pat Guam International Airport campus within the foreseeable future. Enormous capital outlay is reportedly awaiting the lawful opportunity for tenants to negotiate longer leases directly with airport administrators as soon as a new bill granting that authority is passed into law. We just have to take the chance.

Empowering the managers of hub-port Guam’s aeronautical gateway to broker longer, win-win leases directly with lessees is likely to hasten the level of air traffic that will make refurbishing Guam’s infrastructure, retail, resorts, attractions and experiences well worth the effort.

Jeff Marchesseault is a lifelong multimedia careerist and former real estate broker and property manager. He now serves as a researcher, publicist and management analyst for the president and CEO of the Guam Visitors Bureau. You can reach Jeff at mediamaxguam@gmail.com.

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