Author of www.HotelLawBlog.com
11 December 2006
Hospitality Lawyer Baja Mexico. He’s done it again if you believe the AP Wire reports. On Saturday, December 9, 2007, the Associated Press reported that, “Donald Trump’s new luxury hotel-condominiums on Mexico’s booming Baja California coast registered about $122 million in sales Friday, potentially heralding a resurgent development boom along the Pacific shoreline, just south of the U.S. border.”
I’ve noted in prior postings that Baja is red hot, and that Trump has become a brand. So what is noteworthy about this latest development?
Trump Baja report from the Associated Press
The AP report was fascinating. It reported $122 million in presales for the Trump Baja California project in Mexico. That has to be great news for Irongate, a west Los Angeles development partner of Trump in the project. According to Irongate, construction of the $200 million-plus Trump Ocean Resort Baja Mexico is expected to begin by the end of March 2007, with the first of three towers to be completed by the end of 2008.
And the units aren’t cheap. Prices range from the mid-$200,000s to more than $1 million. A giant screen in the ballroom of the hotel where the sale process was conducted, showed that 188 of the first tower’s 232 units — worth about $46 million — were spoken for by noon, including five of six penthouses in the 27-story building. Names were called one by one, with each person given only a few minutes to decide. The screen displayed the names of four people next in line.
What’s interesting about all this?
This is interesting for a number of reasons.
First, if you have not noticed, there is a huge housing slowdown that is so significant that it threatens the nation’s economy. It has hit almost every sector of residential housing, including condo hotels in many areas.
Second, although some purport to dislike the man and many admire him as their personal hero, Donald Trump — whether a star, a real estate mogul, or a brand — has become something transcending his name. He has become a brand. And although many incorrectly believe that he is the developer of all the Trump projects, his “involvement” or “partnership” in many projects is probably best described as something much closer to a franchise or licensing arrangement. He is, I submit, a brand.
So what?
Brands have become more important in hospitality, mixed-use and residential products– and brand extension from one component of a mixed-use project (say a hotel) to other components (such as residential condominium, fractionals or time share).
More than ever, brands … or successful brands anyway … have really shown their power in the recent months. And Trump is among the power houses.
As we noted in earlier articles, Trump projects have achieved a level of success beyond many of their peers, and at a time when a number of comparable projects — particularly mixed-use projects — seem to be struggling more than they have in prior boom years. See the posting on his 8 hour sell out in Hawaii.
This would seem to suggest some combination of factors, including the other major brands’ reticence to become involved in this hotel mixed-use product type, Trump’s selection of superior product, better partners, great location, incredible relevance and value of the Trump name to provide brand-like values for consumer comfort in consistency, quality and value, and so on.
In other words, among all the other things he may have become, “The Donald” is now a brand, and apparently a very successful one for hospitality product that is highly sought after and difficult to obtain.
Some further thoughts
So, what’s in a brand? And what does it mean?
Well, whether it is Trump, Four Seasons, Mandarin, Shangri-La, Hilton, Hyatt, Starwood, Marriott, InterContinental or whatever, the brands seem to be on the upswing. How far has the pendulum gone? What does it mean to have a brand? When is a brand relevant? What makes a good brand? What does that all mean?
That is the subject of a posting to come soon. . .
Hotel Management Agreement resources
If you found this article helpful, you may also find of interest these other articles on Hotel Management Agreements and related brand topics on www.HotelLawBlog.com:
Hotel Lawyer: The 5 questions every owner should ask before selecting a hotel brand
How to get a great hotel operator
Hotel Management Agreements 201
How to terminate a hotel management agreement when an operator really deserves it!
Hospitality Lawyer Baja Mexico — So what’s a brand? How did Trump get into this conversation?
Terminating hotel management agreements when things don’t work? Not easy, but not impossible either.
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Our Perspective. We represent developers, owners and lenders. We have helped our clients as business and legal advisors on more than $125 billion of hotel transactions, involving more than 4,700 properties all over the world. For more information, please contact Jim Butler at jbutler@jmbm.com or 310.201.3526.
Jim Butler is one of the top hotel lawyers in the world. GOOGLE “hotel lawyer” or “hotel mixed-use” or “condo hotel lawyer” and you will see why.
Jim devotes 100% of his practice to hospitality, representing hotel owners, developers and lenders. Jim leads JMBM’s Global Hospitality Group® — a team of 50 seasoned professionals with more than $87 billion of hotel transactional experience, involving more than 3,900 properties located around the globe.
Jim and his team are more than “just” great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them. They are a major gateway of hotel finance, facilitating the flow of capital with their legal skill, hospitality industry knowledge and ability to find the right “fit” for all parts of the capital stack. Because they are part of the very fabric of the hotel industry, they are able to help clients identify key business goals, assemble the right team, strategize the approach to optimize value and then get the deal done.
Jim is frequently quoted as an expert on hotel issues by national and industry publications such as The New York Times, The Wall Street Journal, Los Angeles Times, Forbes, BusinessWeek, and Hotel Business. A frequent author and speaker, Jim’s books, articles and many expert panel presentations cover topics reflecting his practice, including hotel and hotel-mixed use investment and development, negotiating, re-negotiating or terminating hotel management agreements, acquisition and sale of hospitality properties, hotel finance, complex joint venture and entity structure matters, workouts, as well as many operating and strategic issues.
Jim Butler is a Founding Partner of Jeffer, Mangels, Butler & Marmaro LLP and he is Chairman of the firm’s Global Hospitality Group®. If you would like to discuss any hospitality or condo hotel matters, Jim would like to hear from you. Contact him at jbutler@jmbm.com or 310.201.3526. For his views on current industry issues, visit www.HotelLawBlog.com.