One of the most significant trends affecting the design of luxury hotels and resorts right now involves a substantive change in the way hotels are being developed.

For decades, the strategy in developing a luxury resort property has been to first develop the hotel and amenities to create an identity and draw buyers, and then build any residential units included in the resort concept. Essentially, the hotel and amenities functioned as a sales tool for the residential.

After the longest economic expansion in decades, the hotel development industry is facing a more restrained economic era. With financing for hotel development more difficult to capture, due to challenging economic times, a resort property's focus is shifting.

We now are seeing resort residential (whether wholly owned, fractional, or timeshare) designed and built first – often as a vehicle to help raise equity funds to build the hotel and amenity package. While this approach may be financially necessary for the development of the resort, it can create some difficult design and development challenges down the road.

The Issues & Challenges

In building the residential components first, developers face two significant challenges: establishing and maintaining a strong overall resort identity and character, and balancing the often differing needs of the residential and resort target markets. Certainly, these challenges exist in either development approach, but the risks of imbalance between the resort and residential tend to be greater when the residential is developed first. The struggle common to all properties designed and developed in this manner is to define exactly what is being contemplated on the residential side of the development equation. Who is the target market, and how might it differ from the target market for the resort? How will you ensure that the character and identity of the resort is established and carried through? Many times, these questions are not answered in the beginning.

Rushing the Residential

The temptation is often to rush to design and build the residential portions in order to raise money – without first working out the program and design concept for the remainder of the resort. Some developers go so far as to design the residential portions independently from the hotel, saving the "primary" design team for the hotel property alone. In most cases, this will prove to be a fatal flaw in the resort.

"It is of paramount importance that each integral element of any resort be designed under one umbrella," states Michael Matthews, Development Director for St. Regis Hotels & Resorts. "Otherwise, you jeopardise the integrity of the overall resort and, by extension, your bottom line. Guests and residential buyers don't just buy or visit their piece of the resort – the entire development is your product."

There needs to be a thread of continuity in the design of all portions of the resort. Without a cohesive approach, you the developer risks short-changing the hotel by utilizing the site's best locations, underutilising potential shared amenities, diluting the exclusivity and desirability of both residential and resort portions, and diminishing the overall design.

It is easy to avoid this disaster by having the entire design and development team on board from the outset, keeping the team together for the design of the entire resort, and committing the necessary resources to develop the overall program and conceptual design before anything is built.

Designing in Piece

Another temptation is to design one resort component at a time to balance the costs and finances delay costs. Although it is not easy in reality, developing the program and conceptual design for the entire development up front results in higher per square foot values for the residential components and a more financially successful hotel component-significant factors for a long-term pay off. An upfront design effort allows each component to support the eventual success of the others -- at one resort property in Mexico, the developers built the presidential bungalow of the eventual resort alongside the golf course, allowing them to show potential resort home buyers the quality of the hotel that was to come.

A Comprehensive Approach

First, a marketing consultant the team must work out the program for the entire resort – both residential and hotel – so that the team can understand the target markets for each, how they overlap and how they differ. For two of our resort clients in the Caribbean – both St. Regis properties – the developers consulted with leading residential brokerage houses (– Saville's and Sotheby's) – to enabling them to better understand their residential buyers. Market research and a professional marketing consultant are critical at this programming stage.

"Given the cost to produce this type of asset, there is not a lot of room for error," says Richard Warnick, President of Warnick & Company, a consulting, investment banking and asset management firm that specialises in the resort industry. "Smart developers will look to optimise the synergy between resort and residential uses. They will also design to the market, not market a design."

Second, if the project will be a flagged resort, the development team should establish the relationship with the hotel operator up front. This will help institute programmatic control and create the necessary continuity between the residences and the hotel –in terms of sales and marketing efforts, design, and service. This also allows the resort residences to be affiliated with a recognised brand from the beginning, quite important for expanding the rental pool for times when the vacation ownership units are not at full occupancy.

The final critical element is to have the design team -- land planner/landscape architect, architect and, if possible, the interior designer -- design both residential and hotel portions of the resort. Great importance should lie in distinctively differentiating the two uses, yet providing continuity and complimentary attributes among them. This strongly ensures that the program and identity you have created with your marketing consultant and hotel operator is carried through. For this, you must have residential and resort components, should be distinct and differentiated, yet seamlessly complementary. A team that is well versed in the design of both resort and residential properties – preferably in combination – can accomplish this.

Design to Maximise Value

In order to maximise the value and impact of both the residential and hotel pieces, there are a few critical design elements that must be addressed:

achieving the proper balance between shared and private amenities;
creating individuality and exclusivity (for both residents and hotel guests);
attaining the highest actual density with the lowest perceived density.

A key to value maximisation lies in finding – and designing to achieve – the right balance for each resort between the cost efficiencies realised by shared amenities, and the value created by providing a sense of exclusivity for both owners and hotel guests. If shared and separate amenities are conceptualised and designed at the same time, the chances of achieving that exact balance are far greater – and the benefit will far outweigh the cost of the design effort.

For Mark Harmon, CEO of Auberge Resorts, this balance is essential to creating the overall sense of peace and harmony with the surroundings that are a trademark of the company's resorts. The company's newest venture, Calistoga Ranch, will be a cluster of cottages in a secluded valley, one of the last large parcels of available land in the renowned Napa Valley.

"We started our design process by imagining all the possibilities for the land, but keeping the real restraints in mind. The results were surprising: our restraints became the possibilities. Only by approaching this project with an overall design vision were we able to come up with innovative solutions." In the new resort, the owners' and guest lodges are housed in single-story, indoor/outdoor structures, set in clusters for minimum disturbance of the site, with its ancient trees, lake, streams and vineyard. Amenities such as the spa, restaurant and private winery are smaller in scale, and are accessed by outdoor footpaths and trellised walkways, making the journey and the site itself a primary amenity. Spacious courtyards, or "outdoor living rooms" create highly private amenities, diminishing the need for large-scale public ones.

Here are just a few ways to help achieve the right balance, and the sense of exclusivity that privacy and low perceived density provide:

Coordinate the scale of the residential and resort pieces to match or complement each other.
Separate residents as soon as possible – not only with private exterior entries, but pathways that diverge early, and doorways out of sight of one another.
Make travel to and from the shared amenities an easy, logical and enjoyable experience – make the journey part of the amenity.
Emphasise private outdoor space with a private amenity such as a plunge pool, outdoor shower or fireplace – it is less expensive than indoor space and lends a sense of exclusivity.
Remember that the more private amenities provided for each unit, the less public amenities will be needed on the residential side – both a cost and design trade-off.

Smart Upfront Decisions Impact the Bottom Line

Conclusion

In an era of tighter financing, we need to shift our ideologies to accommodate the current environment. Consistency is crucial, and the time and money must be invested in the beginning to create a cohesive, comprehensive resort program and design. Many exclusive resorts have already turned to all-inclusive design teams (both residential and resort), to begin development on their new resort/residential projects. These smart decisions, made at the outset, guarantee a cohesive layout and ensure will have a positive impact on the financial success offer both the residential and hotel elements.