Multifamily giant Waterton is launching the Outbound Hotels brand, with plans to open boutique hotels for outdoors-focused guests near mountains, national parks, ski towns and beaches throughout the country and, eventually, around the world.
Chicago-based Waterton unveiled the new brand after recent years spent selling off Hilton- and Marriott-flag hotels in large U.S. markets and replacing them with local properties in places such as Jackson Hole, Wyoming, and Stowe, Vermont.
“It’s a different direction strategically than the hospitality space we’ve invested in historically,” Matt Mering, vice president of hospitality at Waterton, told CoStar News. “We made a conscious decision in 2019 to focus more on lifestyle hotels. These projects are fun. It’s how I prefer to travel.”
Waterton’s shift in hotel strategy came before the arrival of COVID-19 and the devastation of occupancy at urban hotels.
Many current trends were already emerging before the pandemic, such as younger travelers’ interest in authentic and Instagram-worthy destinations, Mering said. Evolving travel habits have led to changes such as a shift to year-round outdoor amenities and the emergence of pet-focused properties.
It will face competition. Another recent entrant to the outdoor-centered hotel sector is Field & Stream Lodge, a partnership of Starwood Capital Group and AJ Capital Partners that is named after the outdoor clothing brand.
“We’re big believers in the trend and we think there are a lot of tailwinds,” Mering said. “We want to go to areas where nature is the demand generator.”
There are also potential challenges inherent in moving in a new direction and, as the pandemic showed, in an industry where consumer demand can change.
Near Yosemite
Waterton’s rebranding comes when it owns just 566 total rooms, including new ones it is about to create in the expansion of a property it owns near Yosemite National Park.
That project is on a 17-acre site in Oakhurst, California, just south of the main gate into Yosemite. In partnership with Argosy Real Estate Partners, the Waterton venture plans to expand the 13-room hotel on site now into Outbound Yosemite Resort, adding 108 vacation rental cabins and 14 more hotel rooms nearby, above a 12,500-square-foot clubhouse.
Construction is set to begin in about three weeks, after buying the property in July, Mering said.
Since 2020, Waterton also bought The Virginian Lodge in Jackson Hole, the former Sierra Nevada Resort in Mammoth, California, and the Town and Country Stowe in Vermont.
What those properties have in common with others the company plans to buy and develop are outdoor attractions and large sites that include outdoor courtyards or other areas where guests can gather around amenities such as hot tubs and fire pits after a day of adventures, Mering said. Current properties range from 6 to 17 acres.
“It’s about getting out during the day and enjoying the iconic destinations, then coming back to the hotel to sit around a campfire, have some drinks, make some s’mores and listen to music,” he said. “It’s really all about connection.”
Outbound plans to expand by hundreds of rooms per year, taking on three of four new projects annually in places like Asheville in North Carolina, the Oregon coast, Hawaii and the Monterey area of California, Mering said.
The firm has about 50 target markets domestically, Mering said. Most projects will be 120 rooms or more. The firm will avoid areas where travel is “hyper-seasonal” and sites that lack enough space to provide extensive amenities, he said.
“We think there are legs to take us internationally. When we get enough scale, there’s no reason we can’t go to Patagonia or Costa Rica or great ski towns in Europe.”
Waterton owns about 30,000 apartment units throughout the country, including the massive, four-tower Presidential Towers complex in its home city. The firm last year sold a minority stake in the company to Almanac Realty to grow existing business lines and its new push into single-family rental homes.
Waterton now owns real estate valued at $10.8 billion, the company said.
“Local ambiance is often lost in today’s lodging products so we’re flipping the script to create authentic, experience-based destinations in select markets where contemporary, boutique options don’t exist,” Waterton CEO and Chairman David Schwartz said in a statement.
Waterton looks to expand the Outbound brand after more than a year of interest-rate hikes and other economic factors that have slowed property sales and developments throughout the country. It also comes as major-city hotels regain their stride, once again attracting the attention of some deep-pocketed investors.
“It’s tougher to get deals across the finish line than it was a few months ago, but there’s been a lot of interest in our space since COVID,” Mering said. “What we’re seeing now is some investors shifting their focus back to the urban recovery play, so we feel there will be less competition in the areas where we’re focused.”