| By Sophia Banay, Fobes.com
23 September 2005
Glorious sunsets, pristine beaches and sweet
evening breezes may be naturally free, but
they can sure cost a lot of money.
The irony attached to many of the world's
most beautiful resorts is that they are
in places so remote that for centuries they
were known primarily to their indigenous
people, pirates and castaways. For non-natives,
these were places to escape from, not travel
to. And certainly, if any unlucky seaman
found marooned in the Maldives in the 18th
century was told that in the 21st century
people would be willing to pay $10,000 to
spend the night there, not to mention thousands
more to travel there, he would have thought
you had been spending too much time at the
grog barrel.
|
Raina,
a new luxury resort that launched
this September in the Maldives |
But that's the nightly high-season rate
at Raina, a new luxury resort that launched
this September in the Maldives. The five-figure
rate entitles guests to several hours of
travel daily in the resort's yacht, unlimited
treatments at the on-site spa, and all the
meals and drinks they care to consume at
the two gourmet restaurants. Oh yeah--and
for another $750 (each), they can bring
their friends along. Planning a visit in
April? Great--it's not high season, but
you'll still pay $8,000 a night.
Or take the newest property from One&Only
Resorts, the One&Only Maldives at Reethi
Rah, which was developed in conjunction
with Kerzner International (nyse: KZL -
news - people ), a five-star hotel and resort
operator. Here, guests enjoy the 109-acre
island resort and its 12 private, white-sand
beaches, and take their pick of the 130
guest villas. Some are on the beach, some
over the water and some have their own pools--but
each one comes with a "villa host"
available around the clock to make sure
the Champagne is properly cooled, or to
test the pool water before anyone takes
the plunge. Nightly room rates here start
at a comparatively reasonable $930 during
the holidays. But to avoid the riff-raff
entirely, plunk down $1 million, which buys
five days of room, board, Champagne, wine,
tennis, diving and one spa treatment each
for you and your 200 nearest and dearest.
Despite the lofty prices charged (and paid)
at resorts like this, they account for an
absolutely tiny proportion of overall global
hotel revenue, according to Sean Hennessey,
who runs New York-based hotel consultancy
Lodging Investment Advisors. "It's
clearly under 5% and probably less, for
several reasons," Hennessey says. For
one reason, there aren't that many properties
charging $10,000 a night. In addition, "the
properties that do exist operate with a
relatively low number of rooms, meaning
they generate less revenue overall,"
says Hennessy. "Finally, a lot of properties,
even if they do have high-room rates, aren't
profitable in the end because of the high
cost of maintaining them."
And while holiday-season rates may look
like big Christmas presents to the resorts'
owners, there is more to the story than
those once-a-year rates, according to Brad
Garner, the director of client services
at Smith Travel Research, a Tennessee-based
travel research firm. "They may get
$10,000 a night a few nights out of the
year, but when you boil it down to a monthly
average, the daily rate is often closer
to $500," says Garner. While Raina
still hauls in a healthy $8,000 per night
during the off-season, its policy of limiting
bookings to groups of just nine guests at
a time means that there may be long periods
when the resort is empty, or only partially
booked.
The cost of owning and operating a luxury
resort like the ones on our list can vary
considerably depending on factors such as
location, staff-to-guest ratio and the number
of rooms, but Hennessey estimates it could
cost a minimum of several million dollars
a year. While most commercial hotels are
able to squeak by with an average of 0.8
or 0.9 employees per guest room, the high-end
resorts on our list probably employ closer
to three or four people per room, which
spikes labor costs upward dramatically.
In addition, for properties in remote locations,
the cost of importing food and supplies
necessary to maintain a certain standard
of luxury could easily triple compared to
what an urban hotel would pay.
|
Newest
property from One&Only Resorts,
the One&Only Maldives at Reethi
Rah, which was developed in conjunction
with Kerzner International |
While a standard Marriott (nyse: MAR -
news - people ) or Hyatt property operates
with profit margins of between 24% to 28%
annually, the margin for a small-upscale
resort is typically in the mid- to upper
teens. "These properties are operated
as a labor of love as opposed to an economic
option" for the owners, Hennessey concludes.
However, the owners aren't all hopeless
romantics with stars in their eyes instead
of dollar signs. Savvy business ploys, like
offering all-inclusive room rates, help
to keep their guests on-property during
their stay, and paying for incidentals,
such as top-shelf liquor or an additional
spa treatment, which aren't always included
in the package. "It's called incremental
revenue," explains Garner. "Keep
the guest on the property, spending money
on-site, helping out the resort's bottom
line." While some resorts, like Turtle
Island, in Fiji, include Champagne and spirits
in their inclusive rates, others don't.
In the end, Garner believes it is a matter
of simple economics. "The resort has
amenities guests want to consume--excellent
weather, sporting activities. Resorts command
a higher price by virtue of where they are
sitting, so they can charge more for it,"
he says--up to $10,000 a night, in some
cases.
In addition to outrageous rates, what did
we look for while compiling our list of
the World's Most Expensive Resorts? First
of all, we excluded urban hotels (even if
their service and amenities were top-of-the-line).
The Mansion at the MGM Grand, in Las Vegas,
where room rates start at $5,000 a night,
and which ranked first on our list of the
Most Expensive U.S. Hotels, was out because
of its city-center location. Then we sampled
high-season rates for standard rooms at
resorts all over the world. If a resort
had a minimum-stay requirement during a
particular season, or sold rooms only in
weekly blocks, we factored that into our
calculation of the nightly cost. Then, to
facilitate your trip, whether you hail from
New Delhi, Singapore or London, we indicated
the prices in a variety of international
currencies.*
Not coincidentally, the resorts we came
up with have a lot more in common than their
weighty rate list. Ridiculously attentive
personal service (like the staff-to-guest
ratio at Altamer, in Anguilla, where a butler,
chef and staff of eight come with each villa),
stunning scenery (like Eden Rock's cliff-top
location, in St. Barts) and fabulous amenities
(Laluna, in Grenada, imports its own soaps
and lotions from a monastery in the Italian
Alps) would set these destination resorts
apart, even if their price tags were less
noticeable. But if the rates were any less
noticeable, would a visit feel somehow less
special?
As it turns out, you can put a price on
luxury, and it's a big one.
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