MILL VALLEY, California—2013 proved to be a successful year for Auberge Resorts in myriad ways, particularly performance of Auberge properties and company growth.
In the early part of the year, the company broke ground on its first Caribbean resort, Malliouhana, on the island of Anguilla in the British West Indies. Later in the year, Auberge acquired the Calistoga Ranch in Napa Valley, California, for what was reportedly the highest price-per-key transaction in 2013. And, in December, Friedkin Capital Partners invested in Auberge, which will help spur global development moving forward.
Incoming CEO Craig T. Reid said 2014 will take Auberge to the next level.
“It's an exciting time,” Reid said in an email. “We have access to capital, a brand that is postured for growth and a team with the expertise to take the brand to the next level.”
Reid, formerly president of hotel operations in the Americas region for Four Seasons Hotels and Resorts, joined Auberge on Tuesday as president and CEO. He’ll lead Auberge’s global expansion plans and report to former CEO and founder Mark Harmon, who will assume the role of managing partner.
Reid’s immediate goals are to “build upon our reputation and expand our recognition as the premier operator of boutique hotels and resorts in North America,” he said.
“The opportunities are abundant; we need to ensure we prioritize and deploy our growth strategy thoughtfully,” Reid said.
Today, Auberge has nine properties in its management portfolio, three of which it fully owns. While the long-term goal is to develop and acquire assets in key resort areas around the world, Harmon said Auberge’s growth will be calculated and deliberate.
“The plan is to be patient and find properties that fit our portfolio and spend a long time doing that,” he said. “We’re in and want to be in the best locations of the world.”
The investment of an undisclosed amount from Dan Friedkin will spur Auberge’s global growth as Friedkin brings experience in Africa, where he owns several safari attractions.
“Dan comes to us with the same point of view, a generational point of view. We never want to sell a property,” Harmon said. “He’s also a guy of a wonderful family like ours.”
“I have long admired the Auberge brand as the premier provider of luxury travel experiences,” Friedkin said in a statement. “Through the management and development of our high-end safari operators in Africa, we have developed an appreciation for the niche luxury travel industry, aspiring always to positively impact the industry in our work.”
To ensure global growth is done right, Auberge is building its resources and bringing in “key talent.” “We’re really excited to take our North American presence global,” Harmon said.
However, that growth will come slowly. “We’re after some of the best properties in the world,” Harmon said. “That’s a relatively short list.”
Also, Auberge will be careful not to spread itself too thin.
“It’s all about quality and, with the experience we deliver, that has to be carefully curated and always maintained at the highest level,” Harmon said.
Reid said growth will come by way of acquisition and management contracts.
“But the filter will be that each new property is complementary to the brand as a whole,” he said. “We want to deliver optimal experiences for our three key constituents: employees, guests and investors.”
Long time coming
Auberge’s history goes back to 1981, when Chairman Robert Harmon helped oversee the construction and management of Auberge du Soleil in Napa Valley. The family hospitality business branched out from there—the Harmons began developing properties as well as managing properties for others—and in 1998 Auberge’s management division was created to manage the assets.
The company had been managing the 50-room Calistoga since it opened in 2004 and, when the opportunity to purchase it arose, they jumped.
“We were there from the very beginning. We came up with the concept, designed the property and put a lot of love and care into it,” Harmon said. “We’ve been in Napa over 30 years; we know where it has come from and where it’s going.”
Napa Valley is a high-barrier-to-entry market where local governments have set out to preserve the area’s grape production; a new hotel hasn’t been built in the wine country since the late 1960s. That, in addition to the Calistoga’s legacy as an ultra-luxury resort, led to the high price tag. The sale netted a purchase price of up to $1 million per room, according to a news release.
“Yes, the price per key was very high, but these properties seldom trade and when they do they’re highly sought after,” Harmon said.
In addition to developing globally and building management partnerships worldwide, Harmon said Auberge will evaluate purchasing other properties in the Auberge collection that it manages for third-party owners. As it grows, Auberge will continue to operate its properties independently but under the Auberge collection.
“We are a brand but we’re a little less visible than a brand like Four Seasons,” Harmon said. “Each of our properties are independently named but are known as Auberge Resorts. That reflects the one-of-a-kind character that each of our properties have. There are a lot of similarities in the size and the focus on spa and service and spectacular settings, but ultimately we’re a collection of unique properties based on the locale.
“It’s nice because we have guests say, ‘This really feels like an Auberge,’ which is wonderful and a brand personality, if you will.”
From his experience at Four Seasons, Reid will bring knowledge on cultivating top talent to opening new projects, he said.
“Auberge has an incredibly strong brand reputation in the hospitality industry; for a small organization, they compete with the larger brands and have effectively been punching well above their weight class,” Reid said. “Our intention is to expand the portfolio while preserving the culture and experience for which Auberge Resorts is so beloved. I appreciate the fact that Auberge has a very strong culture, loyal clientele and long-term employees who are passionate about service.”
Back in business
Some of Auberge’s high year-over-year performance numbers can be attributed to the fact today’s numbers are being compared to post-recession rebound numbers. The economic downturn hit Auberge hard, partly because of where it sits in the luxury segment and the stigma luxury resorts received during the downturn.
“We saw that AIG effect,” Harmon said, noting that President Obama’s comments about cutting back corporate travel didn’t help.
“I think Obama regretted his comments,” he said, “because to me there’s nothing more important to business than relationships. These companies can afford it; they can contribute to the economy with their spending.”
While the cutbacks did “put a cramp on things,” Harmon said business is back in full swing.
“That’s nice to see because there were some lean years,” he said. “I think the luxury market took a little bit longer to recover than other markets. Luxury has a little bit further to go.”
Auberge’s business mix is primarily transient, but about a quarter of the business is group-related. Most of the group business revolves around social activities, such as weddings and family reunions, although the company does book some incentive travel and high-end board of director meetings for Fortune 500 companies.
Harmon said even during the downturn Auberge’s core guests remained loyal.
“We have small properties and we cater to a clientele that has a lot of loyalty and loves what we do,” he said. “One of the areas where they didn’t want to cut back was reconnecting with a spouse, a partner or family. Unlike material things, those are the things that count.”