The Mariner Group of Affiliated Companies
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Mariner Resort Condominium Development

Introduction

This profile summarizes the activities of The Mariner Group with regard to the Resort Condominium Industry – a concept that is reemerging in the new millennium in response to the rising costs and complexities of high end resort development and has, or is about to become, an important business element of any progressive, broad based hospitality company.

History

Mariner initiated its first resort condominium development in 1972 on a beachfront parcel of land on Sanibel Island, Florida. The concept of second home ownership combined with a comprehensive property management and rental management program was anticipated to be a good match for anyone who wanted to invest in a second home residential property (for both personal use and anticipated property value appreciation) and cushion the costs of ownership with reliable rental income.

Mariner continued this program with a variety of additional projects on Sanibel Island, eventually organizing one of the largest independent condominium rental programs in Florida. It was the first program of its kind to utilize traditional hospitality industry distribution systems including a travel agent network, rep firms, and incentive travel companies.

Simultaneously, in 1974 Mariner began a series of resort condominium developments associated with its resort hotel division. Two types of rental programs were offered to prospective purchasers:

  1. A Best Efforts Rental Program with a revenue sharing arrangement associated with actual rentals achieved.

  2. A Guaranteed Lease Program with a fixed monthly payment to unit owners (irrespective of actual rentals achieved) and an annual override calculation based on total rentals achieved (if applicable).

The latter program was particularly popular with unit owners as it assured them of a minimum rental income and provided upside potential if annual revenue goals were exceeded. It was attractive to the operator as it enhanced unit availability as a result of owner use restrictions in return for the guarantee.

During the 31 year period from 1972 to 2003 the company developed and sold approximately 2,000 homes and resort condominium units for both its independent and resort-hotel rental programs.

Over the years the company refined its rental and lease program agreements to better facilitate unit refurbishing, owner use options, and other related issues.

Success Factors

Mariner’s success is attributed to its skill in the following areas:

Development: Pick appropriate project locations, gain the necessary permits and entitlements, and design and build cost effective product.

Marketing & Sales: Identify and attract qualified prospects in a cost effective way, successfully convince them of the merits of resort condominium ownership, and achieve the sale.

Financing: Minimize equity requirements as to the development process, and insure lending arrangements that facilitate the development program.

Management: Insure customer satisfaction (leading to repeat and referral business) through effective upkeep of the physical property, provision of high quality hospitality services to owners, and achievement of satisfactory rental income.

The rapid expansion of this industry in recent years has placed a premium on people and organizations with experience in these areas. Lack of qualified management is the “surprise” barrier to entry often not considered by companies prior to their decision to undertake projects of this nature.

Future Plans

Resort Condominium development, bolstered by the entry of the brand name hotel companies in recent years, is currently experiencing continued growth. Given the ever escalating costs of high end resort development, this is likely to continue. The maturing of the “baby boom” generation is providing significant new markets for this product.

Mariner is uniquely experienced and positioned to take advantage of this opportunity. In doing so it will place the highest priority on projects that are both unique and attractive to the company’s customer base and which offer significant property appreciation potential. Success in this field provides development profits that can be used to reduce the cost basis of the hotel, provide capital for needed expansion or renovation, and / or improve cash flow distribution for the hotel owner(s).