A well-known Texas tourist hub is expected to get a little more relaxed in the coming years with the addition of its first Margaritaville resort — part of a global lifestyle brand inspired by late singer-songwriter Jimmy Buffett.
Dallas-based RREAF Holdings and Innisfree Hotels are teaming up to build a $250 million Margaritaville resort at 317 E. Beach Drive in Galveston as part of a larger, more than $700 million project. The 334-room, 300,000-square-foot resort is designed to include a 2.5-acre elevated water park overlooking the beach, as well as four restaurants and a ballroom. The resort is expected to have direct beach access once it's constructed, with work planned to begin in the near future and the city already green-lighting the project, which has been three years in the making.
"These development deals take a considerable amount of time," RREAF Holdings CEO Kip Sowden told CoStar News, who added that three government regulatory groups in Galveston must approve the project. "This will be the biggest development to get underway yet in Galveston," he said.
Along with the $250 million Margaritaville resort, Sowden said, the partnership also is developing 278 cottages, which aren't expected to be as quaint as they sound. The cottages, ranging from 750 square feet to 4,200 square feet, add to what is expected to be a more than $700 million development. Each cottage is expected to cost between $750 per square foot to $1,000 per square foot, he said.
This is RREAF Holdings' first Margaritaville development in its real estate portfolio — and it won't be the firm's last such resort project with this brand. Sowden told CoStar News he and his team were impressed by the Margaritaville brand's performance in Orlando and Panama City Beach, Florida, where the lodging company has similar projects already in operation.
RREAF Holdings is expected to begin working on another Margaritaville resort in Myrtle Beach, South Carolina, with a similar water park. This is part of even bigger plans for the real estate investment firm to invest $1 billion into its U.S. construction pipeline this year.
Galveston Plans
The Margaritaville resort in Galveston is planned to be built 25 feet higher than the coastline on a podium, which will house the water park designated for hotel guests with the ability in the off-season to be available to cottage visitors. The podium also gives the hotel 100% covered parking for its guests. The branded restaurants, such as Landshark, 5 o'Clock Somewhere, Joe's Merchant and the Salty Rim, will have a presence at the resort and offer visitors outside the hotel food and beverage options.
Other water park resort amenities will include pickleball courts, a family entertainment center and a lazy river with an adult pool.
The Galveston market has grown "exponentially" as its economy, like much of Texas, has been spurred by the state benefiting from net in-migration of thousands of new residents in recent years, Sowden said. The resort, which isn't expected to benefit from any state funding or economic incentives, is expected to employ upward of 500 workers once it is fully operational, and is estimated to bring in an additional 1 million visitors to the city, he said.
Galveston's popularity has grown in recent years, with the tourist hub not only attracting more visitors, but also more of their discretionary dollars. In 2022, the island brought in about 8 million visitors, a 25% increase in visitors from the prior year, according to the latest data from the Greater Houston Partnership. They also decided to shell out more money while visiting Galveston, with those 8 million visitors spending $1.2 billion during 2022, a 27% increase, according to the partnership's research.
The Margaritaville brand also is in expansion mode in Texas. The hospitality company's journey in the state began after it opened a Dallas office at Mockingbird Station in 2016. Jim Wiseman, president of development at Orlando, Florida-based Margaritaville Hospitality Group, said his goal is to bring that "fun, escapism and iconic state of mind" to more parts of the state.
The brand already has two existing resorts in South Padre Island and Crystal Beach, which sits in Galveston County, just north of Galveston Island. The lodging company has more than 40 locations in its real estate portfolio, with more than 20 projects in its construction pipeline. The brand recently announced a new Margaritaville resort along the shores of Lake Texoma between Texas and Oklahoma. The Margaritaville resort is planned to help anchor a $6 billion development.
Innisfree Hotels President and CEO Ted Ent said this is the lodging company's fifth joint venture and the ninth beachfront hotel it has developed in partnership with RREAF Holdings. Innisfree, which will operate the hotel, has co-invested in the resort with RREAF.
The cottages will be governed by an HOA with its own amenity pool area alongside the oceanfront views. Buyers of the cottages, which have at least six bedrooms and six-and-a-half baths, have the ability to lend or lease out the properties to beachgoers.
For the Record
Gensler's Houston hospitality design team will oversee the resort project. The McBride Co. is overseeing the Margaritaville's branded motif throughout the interior and exterior of the project.