News for the Hospitality Executive
|By Jack Snyder, The Orlando Sentinel, Fla.
Knight Ridder/Tribune Business News
Apr. 22--No Davids in this fight. This one is Goliath vs. Goliath.
Alongside Interstate 4 on the far side of Walt Disney World, two giant resort developments -- Reunion Resort and ChampionsGate -- are rising from the earth.
Not since Disney and Universal Studios both announced movie-studio attractions a few miles apart have twin developments of such size been launched in Central Florida. And this time the would-be competitors are right down the street from each other -- the "street" being I-4.
Yet the developers of these two mega-developments express little concern about the head-to-head competition. They insist the two projects -- comprising vacation-oriented hotels, time-shares, condos, villas, apartments and single-family homes, as well as retail and office space -- will complement each other and perhaps lead to an I-4 resort corridor second only to Disney itself.
Combined, the two developments total nearly 4,000 acres -- about the size of Hunter's Creek, the south Orange County community that's considering incorporation as a town or city.
Development costs for the two are expected to approach $3 billion altogether -- roughly what Universal Orlando paid to build its Islands of Adventure theme park, several hotels, two giant parking garages and the CityWalk entertainment complex.
Resort developments come in all sizes and forms, from Disney's 27,000-acre complex, with its own theme parks, to Vistana, which is strictly a time-share resort. Both Reunion Resort and ChampionsGate are designed to appeal to a wide range of customers, from vacationers and business travelers to investors and year-round residents.
Both projects have golf courses designed by high-profile designers. Both will have hotels, time-shares, permanent and part-time residents, and both retail and office space. Both expect to feed off their proximity to Walt Disney World, fronting I-4 in Osceola County between Disney's southern gateways and the Polk County line.
Reunion Resort is being developed by The Ginn Co., which recently shifted its focus to Central Florida. Bobby Ginn, president, has extensive experience in resort development, including operations in Hilton Head Island, S.C., and Palm Coast north of Daytona Beach.
ChampionsGate is being developed by Apollo Real Estate Advisors of New York and RIDA Development Corp. of Houston.
Are the two giant developments going after the same customer?
"There's room for both of us," said Ira Mitzner, RIDA's chief operating officer. "We're very bullish about the next five to 10 years."
Mitzner said the two projects will likely each seek subtle niches for their development. For instance, he expects Ginn's Reunion Resort to have more permanent residents than ChampionsGate.
Ginn said the presence of ChampionsGate -- it was already under construction when he bought the land for Reunion Resort -- was actually a factor in his decision to proceed.
The biggest factor was that the land was "the perfect location" for the large resort community he intended to develop, he said, "but when we do a big development, we [also] want to control our environment. The worst thing is the unknown."
With ChampionsGate already under way, he said, "I know what's around me."
Reunion Resort is bordered by both ChampionsGate and Disney's Celebration community, which is filled mostly with year-round residents. The overall character of the area is "top quality," Ginn said.
So far, the two developers have each invested more than $100 million in their projects.
ChampionsGate already has two golf courses open -- both designed by professional golfer Greg Norman. The development is also home to a David Leadbetter Golf Academy. Leadbetter is one of the biggest names among golf instructors in the country.
Golf also looms large in Ginn's plans for Reunion Resort. Two courses -- one designed by Tom Watson, the other by the legendary Arnold Palmer-- are now under construction on the east side of I-4. A third, designed by Jack Nicklaus and his son, is planned for Reunion land on the west side of the highway, just north of ChampionsGate. That course should be under construction by the end of this year, Ginn said.
At 2,300 acres, Ginn's development is the larger of the two. It is planned for 3,000 single-family houses; another 4,145 residential units, ranging from apartments to condominiums, time-shares and villas; 1,200 hotel rooms; and 2.1 million square feet of commercial space.
ChampionsGate's 1,204 acres are planned for a little more than 1,600 residential units, ranging from condominiums and time-shares to single-family homes; three golf courses; more than 4,000 hotel rooms; and 574,000 square feet of commercial space.
Similarities aside, the developers view their resorts differently.
Mitzner says ChampionsGate is a "seasonal playground" that will appeal to winter residents, some permanent residents and affluent people drawn by the project's many golf-oriented amenities.
He said the development is very close to securing a 732-room Omni resort hotel that would rival the Ritz-Carlton now under construction in south Orange County and the Four Seasons Hotel proposed for nearby Celebration. The hotel would be located so that it served the golf courses.
Ginn doesn't dispute Mitzner's prediction that Reunion Resort will end up with more permanent residents than ChampionsGate. Initial reservations and sales indicate that about half the development's buyers could be year-round residents.
He sees Reunion Resort as a "family resort town that will bring together the elements of suburban seclusion, small-town America and hotel-quality vacationing in ways unmatched by any Central Florida vacation destination."
Michael Beyard, a senior resident fellow at the Urban Land Institute in Washington, D.C., said that, when developers go head-to-head in the same market, it's because they think demand will be great enough for both projects to succeed.
"Sometimes, that's not the case," Beyard said. "Sometimes both languish."
The bottom line, he added, is that developers are risk takers. "The up-front costs in resort development are huge, and the risk is big, too," Beyard said.
The presence of all those high-class hotel rooms in Osceola County, with meeting rooms and some exhibit space, doesn't concern Tom Ackert, executive director of the Orange County Convention Center. He said he views the resorts as a plus for his facility.
For instance, he said, exhibitors using Orange County's sprawling convention center on International Drive may want to organize events at the resorts because of the golf amenities.
Abe Pizam, a University of Central Florida tourism professor, thinks the industry will have to not only recover from the recession and last year's terrorism but also start a strong expansion for the two resorts to do well.
He noted that time-share units compete with regular hotel rooms. "You build more time-shares, you need more demand," he said.
Pizam does see tourism-related development moving southwest along I-4 from Orange and Osceola into Polk County.
"There aren't too many places [near Disney] where you can do those things," Pizam said, adding that the two resorts were "smart" to grab locations so close to Disney's theme parks.
Both Reunion Resort and ChampionsGate want to tap into the second-home investor market, which is very big on the relatively undeveloped southwest side of Disney World. Investors, many foreign, have been buying thousands of single-family homes in northwest Osceola and northeast Polk County in recent years. Buyers tend to use a home part of the year and rent it out the rest of the time.
Big home builders like Centex Homes are putting in entire subdivisions targeted to this market.
The trend is so strong in Polk that 30 percent of the county's $3.8 million in resort taxes last year came from rentals of single-family vacation homes instead of hotels, said Lynn Collins, executive director of the county's Central Florida Visitors & Convention Bureau.
The Western Beltway is scheduled to connect with I-4 at the properties when it's built. Ginn hopes to build an overpass over the interstate to connect the east and west portions of Reunion Resort.
Mitzner said RIDA has been interested in the area since it bought its first parcels of what now is ChampionsGate in the mid-1980s.
"We always knew we wanted to be in the south I-4 corridor," he said. "That's where the activity is going to be."
Ginn said Reunion Resort's location fit what he had spent 15 years looking for in a major resort destination.
Both say they're ready for the competition.
"How much better can it get?" Ginn asked. "It's the free-enterprise system at work."
-- Ginn Co. (Reunion Resort) is run by President and Chief Executive Officer Edward Robert "Bobby" Ginn III. Ginn is a third-generation South Carolinian whose father was in construction. The Ginn family also has ties to timber and agriculture operations in South Carolina. Ginn's mother is an artist known for paintings of Charleston scenes. Ginn, 53, was born in Hampton, S.C. Two sons work with him in Ginn Co. and a daughter is still in high school.
He has developed projects at Hilton Head Island, S.C., and Palm Coast north of Daytona Beach but recently shifted his development focus to Central Florida. His Central Florida holdings include Reunion Resort and Club, 2,300 acres; the Pine Island area in Lake County, nearly 1,700 acres; a planned business park on the GreeneWay near Orlando International Airport, 1,700 acres; and a development in Port St. Lucie, 1,400 acres.
-- Apollo Real Estate Advisors LP and RIDA Development Corp. (ChampionsGate) are, respectively, a New York investment company and a Houston developer. Apollo manages capital for four real estate investment funds; since its formation in 1993, it has invested approximately $3 billion. RIDA is run by David Mitzner and his sons, Jacob and Ira.
Founded in the 1970s, the company has developed retail centers, office buildings, distribution centers, homes and mixed-use projects. It developed Renaissance Center adjacent to Altamonte Mall in Altamonte Springs. David Mitzner is a native of Warsaw, Poland, who escaped the Holocaust during World War II by coming to the United States. He recently started developing real estate in Poland in addition to his U.S. projects.
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