pdf - James Andrew International

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MELIÁ CABO REAL • LOS CABOS • MEXICO
UNIQUE HOTEL
OPPORTUNITY
IN SPECTACULAR
BEACH FRONT
SETTING
00
MELIÁ CABO REAL • LOS CABOS • MEXICO
INTRODUCTION
James Andrew International has been exclusively retained
to offer for sale The Meliá Cabo Real Hotel, which occupies
a unique and stunning location in one of Mexico’s most
vibrant international tourist areas.
The Meliá Cabo Real was built in 1989 to an
outstandingly original and arresting design by renowned
Spanish architect Alavaro Sans (ASAH). The hotel occupies
a prime sea-front position at Cabo Real, one of the finest
beaches in Los Cabos, which is situated at the southern
tip of the 1,000-mile-long Baja California Peninsula.
The hotel benefits from its own extensive private beach
and lies adjacent to Cabo Real Golf Course, which is
probably the finest PGA golf course in Mexico.
The Meliá Cabo Real Hotel offers investors an outstanding
re-branding and re-positioning opportunity, allowing for
the re-establishment of this fabulous hotel as a luxury
international destination of distinction.
The hotel is currently operated under management by
Meliá Group and this arrangement can be terminated
upon completion of sale, offering significant operating
flexibility for potential purchasers. In addition, expansion
rights are achievable.
MELIÁ CABO REAL • LOS CABOS • MEXICO
EXECUTIVE SUMMARY
01
INVESTMENT HIGHLIGHTS
02
LOCATION04
ACTIVITIES07
HOTEL DESCRIPTION
10
TENURE AND LAND DETAILS
18
MARKET HIGHLIGHTS
22
COMPETITION24
CAPITAL EXPENDITURE 28
BASIS OF SALE
30
OPERATING ARRANGEMENTS
30
HOTEL PERFORMANCE 32
FORECAST ASSUMPTIONS
34
PROPOSAL36
CONTACT INFORMATION
36
DISCLAIMER36
MELIÁ CABO REAL • LOS CABOS • MEXICO
EXECUTIVE SUMMARY
Hotel Facilities
LOCATION
Hotel Performance
•349 rooms - (307 rooms and 42 time-share units)
•The hotel is situated on the ‘Los Cabos Corridor’
(Corredor Turistico), a coastal area on the southern tip of
the Baja California Peninsula, facing the Gulf of California
and the Sea of Cortez.
•The average daily room rate for luxury hotels in Los
Cabos is approximately US$720, with occupancy of
selected luxury destinations averaging over 70%.
•Lagoon-style swimming pool and 10-person sea-front
jacuzzi
•4 Restaurants - Kujira, La Palapa, La Terraza
and El Quetzal
•El Mirador snack bar
•3 bars
•2 tennis courts
•Conference/meeting rooms: 7 units, ranging from
an 11,022.24 sq ft (1,024 sq m) ballroom to a
516.67 sq ft (48 sq m) function room.
•Retail area - 4 retail units at beach level; these are a
mix of hotel-run and separately leased operations.
•Kids’ Club - includes a club (with playground) for children
aged 5-12 years old and a further club for toddlers from
4 months to 4 years old.
•Cabo Real Golf - designed by Robert Trent Jones II,
golf architects, the course is located adjacent to
Cabo Real PGA golf course.
•The Los Cabos Corridor contains many luxury hotels
and resorts and is considered the most sought-after
destination in the region, due to its fabulous beaches,
excellent choice of golf courses, popular sports fishing
and other outstanding tourist amenities.
•The hotel enjoys a prime sea-front location in the Cabo
Real area of Los Cabos. Cabo Real is one of the best
beaches in Los Cabos and is home to some of the
area’s very best luxury hotels and a superb golf course.
•The hotel is ideally located just 20 minutes from Los
Cabos International airport; furthermore, it is only 15
minutes from the restaurants and shops of the resort
centres of Cabos San Lucas and San Jose del Cabo.
Operating Arrangements
•The hotel has been considerably under-performing
due to significant capital expenditure requirements.
•Although turnover has risen to US$14.542 million,
earnings before interest, taxes, depreciation and
amortisation remain poor. This is principally because
the market demands exceptional standards of luxury,
which the hotel currently cannot meet.
•It is estimated that US$20-25 million is required to bring
the hotel to the required luxury standards that the market
demands; this would include the re-positioning of retail
and restaurant/bar areas, as well as the creation of
a new spa and corresponding facilities.
•Rebranding and investment in the hotel, together with the
creation of a new spa, would significantly enhance the
profile of the hotel and would also ensure considerable
improvement of achieved net operating income.
•The hotel is currently operated under a Management
Agreement by Meliá Group. The operation is subject
to a fixed structure fee.
•The management agreement can be terminated
upon completion of purchase.
01
INVESTMENT HIGHLIGHTS
IN A HIGH-PERFORMING
AREA
AN ICONIC HOTEL IN A
KEY LOCATION
CAPABLE OF BECOMING A STAR
LUXURY ATTRACTION
Los Cabos is now one of the world’s most outstanding
tourist locations and achieves the highest average room
rates in the whole of Mexico (approximately US$720),
with occupancy of selected luxury hotels averaging
over 70%.
The Meliá Cabo Real is an iconic hotel dominating a
substantial and unique stretch of beach-front real estate in
an unparalleled location and on a significant site extending
to 14 acres (5.66 hectares). With exclusive access to
the beach extending to 8.15 acres (3.29 hectares) on
a section of the Sea of Cortez that is calm due to
a natural rock formation.
Having been ranked as one of Mexico’s Top 20 hotels, the
Meliá Cabo Real received the coveted AAA 3 Diamonds
Award for 2011-2012 and was ranked by Travel and
Leisure magazine as being in the top 250 hotels worldwide.
Revenue per available room is still below 2007 levels,
and the outlook for the future of Los Cabos is strong
and encouraging.
In particular, Los Cabos is one of the top destinations
for US travellers, especially from the West Coast.
The area’s provision of high-quality hotels, plus extremely
favourable exchange rates, adds to its attractiveness
for US and other visitors.
Los Cabos visitor arrivals, occupancy rates and room
rates are currently showing strong signs of growth,
with strong year-on-year improvement.
These statistics should be viewed in the context of the
fact that international and domestic arrivals in Los Cabos
began to demonstrate truly impressive growth from 2005
onwards, at 38% (international) and 23% (domestic).
This was due to hurricane-related redirected demand
from Cancun and the evolution of Los Cabos as a
popular group destination.
After dipping slightly in 2009, numbers increased again,
improving significantly in 2010 and continuing to increase
since then - which serves to reassure investors in the
region of the area’s strong and growing appeal as
a tourist destination.
02
A POTENTIAL MEETINGS AND
EVENTS DESTINATION
The hotel contains extensive conference and meeting
facilities, which provides an excellent opportunity to
establish the hotel as a major meeting, conference
and event destination, in addition to its role as an
outstanding tourist resort.
EXPANSION RIGHTS TO THE
BEACH-FRONT
The hotel has (currently unused) expansion rights,
covering 8.15 acres (3.29 hectares) of beach front land.
An estimated 20% of this beach-front area could be
further developed subject to local approvals.
Therefore the name of the hotel, as well as its iconic
location and amenities, have considerable intrinsic
reputation, value and worth, which can be capitalised
on and grown with the appropriate enhancements
to the hotel’s infrastructure and functions.
The hotel has not been subject to major capital
expenditure in recent years and is in need of complete
refurbishment. A full list of capital expenditure is available
and US$20-25 million is the estimated figure required to
complete the required programme, so that it is capable
of maintaining a competitive position against market
competition in the area.
The hotel thus offers an outstanding opportunity for major
repositioning, so as to become a star attraction within
the area’s luxury hotel market. This segment is currently
performing significantly better than the middle to lower
tier of hotel destinations.
MELIÁ CABO REAL • LOS CABOS • MEXICO
03
00
LOCATION
Situated at the southernmost end of Mexico’s Baja
California Peninsula, the hotel and its surrounding resort
area are approximately 900 miles south-east of San Diego,
Southern California. There is a local population of
around 240,000.
The municipality of Los Cabos encompasses the towns
of San Jose del Cabo and Cabo San Lucas, which are
connected by a 20-mile, four-lane highway known as the
‘Tourist Corridor’ that stretches along the Sea of Cortez
coastline. This is now a prime stretch of real estate
attracting the very best amenities and hotels, including
the Meliá Cabo Real. By air, Los Cabos is located
approximately two hours from US cities such as Dallas,
Phoenix and Los Angeles and it is between three and five
hours from Denver, Atlanta and New York. Los Cabos has
one of the best micro-economies in Mexico and was
the location of the 2012 G-20 Summit.
A MAJOR TOURIST DESTINATION
The Los Cabos area contains one of the world’s few
‘tropical deserts’- an area of exceptionally low rainfall,
which creates a unique landscape of outstanding
landscapes, flora and fauna. Annual rainfall is less than
10 inches, there is no rainy season - plus there is virtually
all-year-round sun. The additional factors of low humidity
and a cool Pacific breeze ensure a delightfully comfortable
and attractive 10-month holiday season. Unsurprisingly,
the area is experiencing continued and increasing
popularity for visitors from all over the world.
04
REYKJAVIK
ANCHORAGE
OSLO
CALGARY
MONTREAL
CHICAGO
SAN FRANCISCO
NEW YORK
WASHINGTON D.C.
MADRID
LOS ANGELES
ROME
TRIPOLI
NEW ORLEANS
MIAMI
HONOLULU
MOSCOW
BERLIN
LONDON
PARIS
VANCOUVER
TOKYO
HELSINKI
ISTANBUL
KABUL
CAIRO
RIYADH
MEXICO CITY
MUMBAI
DAKAR
PANAMA
BOGOTA
MONROVIA
NAIROBI
DAR ES SALAAM
LIMA
LA PAZ
RIO DE JANEIRO
JOHANNESBURG
BRISBANE
BUENOS AIRES
SYDNEY
WELLINGTON
CAPE TOWN
05
NEW YORK
CHICAGO
SALT LAKE CITY
DENVER
UNITED STATES
LAS VEGAS
WASHINGTON D.C.
Santa Anita
ALBUQUERQUE
ATLANTA
HOUSTON
SAN ANTONIO
CHIHUAHUA
GULF OF
MONTERREY
CALIFORNIA
NORTH ATLANTIC OCEAN
NEW ORLEANS
HERMOSILLO
ORLANDO
MIAMI
GULF OF MEXICO
Bahamas
MEXICO
Cuba
GUADALAJARA
Haiti
MEXICO CITY
Guatemala
CARIBBEAN SEA
Honduras
El Salvador
PACIFIC OCEAN
Dominican Republic
Puerto Rico
Belize
Leeward Islands
Winward Islands
Nicaragua
Costa Rica
Panama
Venezuela
El Paraje
Guyana
Colombia
La Fortuna
AEROPUERTO
INTERNACIONAL
DE LAS CABOS
ES
TE
DALLAS
O
PHOENIX
SAN DIEGO
LIBRAMIENTO A L A
EROPUERTO
LOS ANGELES
ST. LOUIS
San Jose Viejo
La Laguna
1
Lomas
Del Rosarito
San José del Cabo
Suriname
Brazil
1
19
AN
TR
1
EN
SP
IN
SU
LA
R
HI
GH
W
AY
1
19
PACIFIC OCEAN
06
SEA OF CORTEZ
O
IN
M
CA
B
CA
MELIÁ CABO REAL • LOS CABOS • MEXICO
ACTIVITIES
Sports
•Golf - Cabo is recognised as one of the world’s
preferred destinations for golf enthusiasts, due to its
phenomenal courses designed by some of the sports’
greatest golf course designers. Particularly outstanding
courses include the Robert Trent Jones II course adjacent
to Meliá Cabo Real, as well as Palmilla, Querencia
and El Dorado golf courses.
•Sports fishing - Los Cabos offers an unmatched variety
and concentration of marine fish species and is known
as ‘the Marlin Capital of the World’.
•Sailing - with its open waters and largely untouched
coastline, Los Cabos is a highly popular resort for sailors
of yachts and other ocean-going craft.
•Sea-kayaking - given the largely calm waters and
abundant diversity of marine wildlife, sea kayaking
is popular in the area.
Wildlife
•Sea turtle season - several species of sea turtles, such
as Olive Ridley and Leatherback, come ashore on local
beaches to make nests, where they produce, incubate
and hatch their eggs. The baby turtles must then make
hazardous journeys from nest to ocean, during which
many are taken by predators. Working closely with the
local tourist industry, there are several well-run hatchling
nursery programmes in Los Cabos, which help to
ensure that the baby turtles safely make it to the sea.
The sea turtle season stretches from June through
to March and April.
•Whale-watching season - each year in early autumn,
there is an offshore migration of hundreds of whales
from the Arctic to the warm waters surrounding the Baja
Peninsula. From December to March, Los Cabos is the
finest location the world to observe this natural event.
In addition, Los Cabos provides an ideal climate,
shallow waters and abundant marine life, with the bays
and lagoons north of Los Cabos providing the perfect
place for whales to give birth and rear their young.
Of the 11 species of whales found worldwide, eight
species can be found in the waters off Los Cabos,
including Minke, Bryde, Fin, Sei, Humpback, Grey and
Blue. The six-month, round-trip sojourn from the Arctic
to Mexico and back is the longest trip made by
any animal in the world.
LEISURE
•Restaurants - Los Cabos boasts a world class selection
of restaurants and nightlife in both Cabo San Lucas
and San Jose del Cabo. There is an excellent mix of
cuisine ranging from some of the greatest sushi to a true
gastronomic Mexican experience. Cabo San Lucas has
a mix of fine restaurants, lively bars, live music in a truly
dynamic environment.
•Beaches - There are many secluded beaches of
the East Cape to explore, located along the eastern
shoreline of the Sea of Cortez. This is a vast area with
white sand beaches, crystal clear waters, providing
excellent diving. Home to some of the world’s best
sport fishing, world class windsurfing and kiteboarding.
The area also has a living coral reef with mile after mile
of exceptionally beautiful and well hidden beaches.
•Shopping - the rich cultural heritage of Los Cabos
offers exceptional opportunities for shopping, including
a variety of hand-made and artisanal items such as
jewellery, clothing, ceramics and traditional Mexican
decorations.
•Nightlife - Cabo San Lucas is known worldwide for
its amazing nightlife, with a variety of bars, nightclubs
and live music on offer.
07
BEACH-FRONT LOCATION AND SAFE
OCEAN SWIMMING
The Meliá Cabo Real is situated on a prime location on a
stretch of beach overlooking the Sea of Cortez. The sea
directly in front of the hotel is protected by a natural rock
formation that ensures calm seas and safe swimming.
A NATURAL CHOICE FOR THE AREA’S
MAJOR EVENTS
Los Cabos hosts many international conventions and
sports events and the hotel’s excellent conference
facilities (plus its location close to Cabo Real golf course
and marina) ensure that it is a natural accommodation
choice for event participants.
08
BENEFITING FROM A WIDE RANGE OF
YEAR-ROUND ACTIVITIES
The unique location and geography, weather and
natural environment of the Los Cabos area make it the
ideal location for a range of events, activities and attractions
that stimulate a year-round tourist season and provide the
opportunity for on-going high hotel occupancy throughout
virtually all months of the year.
KEY Events
•Bisbee’s Black & Blue - one of the world’s major
(and richest) competitive game fishing tournaments.
•Cabo Marine Show - Mexico’s leading International
Boat Show, Marine Products and Services Fair.
•Los Cabos Open of Surf - Mexico’s and Latin America’s
largest surf and music festival.
•Los Cabos International Film Festival - a major annual
collaborative event between Mexican and American
film-makers.
•The annual Mercedes-Benz Trophy Golf Tournament part of a prestigious global golf event sponsored by
the famous German luxury car-makers.
09
HOTEL DESCRIPTION
PROPERTY OVERVIEW
The hotel occupies a site of over 14 acres
(5.66 hectares) and comprises a u-shaped building
as the centre of the resort complex.
Within the building is an impressive reception area
surmounted by an impressive pyramid structure of
considerable height and arresting visual impact.
The hotel is surrounded by 6.3 acres (2.5 Hectares)
of well-manicured lawns and gardens, containing
shade-giving palms, as well as fascinating displays
of tropical desert cacti and other indigenous plants.
The gardens extend from the hotel right down to
the beach, encompassing the large lagoon-like
swimming pool.
10
MELIÁ CABO REAL • LOS CABOS • MEXICO
AMENITIES
• Lagoon-style 24,757 sq ft (2,300 sq m) swimming pool
overlooking the ocean, surrounded by lush garden areas
• Ocean-front 10-person jacuzzi
• 2 tennis courts
• Rock-climbing wall
• Gift and souvenir shops
• Fitness and massage centre
• Access to Cabo Real golf course (designed by Robert
Trent Jones II, the renowned international golf course
architectural firm)
• Sunbeds and sunshades in the gardens, around
the pool and on the beach, with Bali Bed rental
overlooking the ocean
• Children’s clubs
• Immediate access to private beach, with safe swimming
• Business centre
11
12
MELIÁ CABO REAL • LOS CABOS • MEXICO
FOOD AND BEVERAGE
The food and beverage outlets at the Meliá Cabo Real
are summarised opposite:
La Palapa
International and Mexican cuisine restaurant providing
approximately 190 covers. The restaurant is situated
with wonderful ocean views.
EL AGAVERO
Larger restaurant offering breakfast, lunch and dinner
and providing a mixed cuisine of both Mexican and
international flavours. The restaurant has approximately
143 covers and often is used for events, parties
and themed nights.
RESTAURANTS, CAFÉS AND BARS
RESTAURANT
CAPACITY
SQ FT
SQ M
La Palapa
190
12,593.77
1,170.0
El Agavero
120
5,686.68
528.3
84
1,885.84
175.2
110
3,659.73
340.0
CAPACITY
SQ FT
SQ M
60
489.76
45.5
SQ FT
SQ M
Lobby bar
−
4.332.26
402.5
Pool bar
−
1,076.39
100.0
Beach bar
−
232.96
22.2
Kujira
La Terraza
SNACK BAR
El Mirador
BARS
KUJIRA
Asian fusion restaurant providing 84 covers.
The restaurant offers various Asian cuisines including
Tepanyaki and Sushi. This restaurant is only open for dinner.
LA TERRAZA
A la carte restaurant based on Mediterranean and
international cuisine and provides approximately 120
covers. The restaurant is situated outside the main
building and fronting the gardens, under a pergola.
EL MIRADOR SNACK BAR
Buffet with hamburgers, hot dogs, pizzas, nachos, salads
and chips. Next to the hotel pool with fantastic views of the
sea, ideal for informal meals as you enjoy a day by the pool
or on the beach.
LOBBY BAR
Great choice of drinks, cocktails, long drinks, gin and
tonics, located in the main building, opposite reception.
POOL BAR 1/POOL BAR 2
Located in the pool area with a great choice of Mexican
and international drinks, cocktails and long drinks.
BEACH BAR
Located on the hotel beach serving drinks and opening
when hotel is 80% full.
13
GUEST ACCOMMODATION
There are 349 rooms, comprising 307 hotel rooms and 42
time-share units. Of the hotel rooms, 31 offer exceptionally
luxurious accommodation, as follows:
Standard Rooms
M experience - ocean front view: 436 sq ft (40.5 sq m)
Standard room with Kitchenette
• 16 rooms
Junior Suite
ROOM TYPE
NO. OF ROOMS
AREA
SQ FT
SQ M
319
Bedroom
247.57
23.0
8
• Upgraded amenities
Junior Suite - M Experience: 560 sq ft (52 sq m)
7
• 8 suites
• King-size beds
• Full ocean view
TOTAL
• Upgraded amenities
Timeshares
Master Suite - M Experience: 1,256 sq ft (116.65 sq m)
• 7 suites
• King-size beds
• Upgraded amenities
• Private jacuzzi
• Living room
• Exclusive use of ‘Bali Beds’ (outdoor four-posters
for sunbathing and relaxation)
• VIP service
SERVICES
• Concierge service
• Golf desk
• Car rental
• Bilingual babysitters
• 24-hour medical attention available
• Laundry
• Taxi service
• Parking
• Wi-Fi
• Full activity and entertainment programmes;
parties, shows and live music
14
64.58
6.0
71.04
6.6
Bedroom
279.86
26.0
Terrace
64.58
6.0
15
• Full ocean view
Master Suites
Terrace
Bathroom
349
42
Bathroom
100.75
9.4
Living Room
545.73
50.7
Bedroom
242.19
22.5
Terrace
180.62
16.8
Bathroom
129.49
12.0
MELIÁ CABO REAL • LOS CABOS • MEXICO
15
CONFERENCE AND BANQUETING
There are 7 function rooms ranging from 516.67 sq ft
(48 sq m) to a 11,022.24 sq ft (1,024 sq m) ballroom Gran Cabo Real. Given the other wide-ranging amenities
of the hotel, this portfolio of rooms allows for the efficient
and effective staging of:
•Conferences
•Exhibitions
•Product launches
•Club and society meetings
•Public events
•Private parties
•Weddings
•Special celebrations
ROOM
Gran Cabo Real
Foyer Area
Ixtapa
CAPACITY cocktail
CAPACITY theatre style
CAPACITY banquet
SQ FT
SQ M
1,000
1,140
800
11,022.24
1,024.0
550
−
400
7,319.46
680.0
80
90
60
850.35
79.0
Cancun
100
100
80
1,162.50
108.0
Vallarta
150
200
120
3,498.27
325.0
Director's (10 person boardroom)
516.67
48.0
Ambassador's (10 person boardroom)
516.67
48.0
16
17
TENURE & LAND DETAILS
James Andrew International are advised that the hotel
and gardens are owned as effective freehold.
TRANSPENINSULAR HIGHWAY
CABO SAN LUCAS
SAN JOSÉ DEL CABO
MAIN ENTRANCE
The approximate land area is shown on the adjacent
site plan outlined in red.
PARKING
LOBBY
THEATRE
QUETZAL
BAR
RECEPTION
KUJIRA
BUILDING 4
La Terraza
Restaurant
BUILDING 2
The full title documents are available on request via
the website access details on request.
CONVENTION
CENTRE
PARKING
BUILDING 1
The beach area outlined in red dots is the subject of
an agreement giving exclusive possession to the hotel
owners from the Secretaria de Medio Ambiente
y Recursos Naturales.
BUILDING 3
Central
Garden
MINI
CLUB
Pool
La Palapa
Restaurant
Pool
Bar
Bar Palapa
Towels
Snack
El Mirador
Jacuzzi Activities Club
Beach Bar
Turtle
protection
area
Beach
Turtle pr
otection
area
SEA OF CORTEZ
18
19
TENURE & LAND DETAILS
Timeshare
The current ownership has sold 888 weeks in 30 year
timeshare agreements. Please see the attached table.
These timeshares are subject to an annual maintenance
charge. The timeshare properties are either studio, one
bedroom or two bedroom apartments located in building 4.
We believe the timeshare apartments could be relocated
to another part of the property to enable creation of a spa
and treatment rooms in building 4.
STUDIO
1 BED
Active Contracts
888
270
367
251
Current Contracts
540
149
226
165
Delinquent Contracts
348
121
141
86
527
702
847
Maint. Fee ($) 2014
2 BED
UNIT TYPE
CONTRACTED WEEKS
STARTING YEAR
STUDIO
1 BED
2 BED
TOTAL
TOTAL WEEKS
LAST YEAR OF USE
30
1993
4
1
5
10
300
30
1994
22
23
17
62
1,860
2,024
30
1995
22
42
24
88
2,640
2,025
75
184
5,520
2,026
2
120
2,026
237
7,110
2,027
10
600
2,027
2
180
2,027
2,028
30
1996
39
70
60
1996
0
2
30
1997
61
97
60
1997
0
10
90
1997
0
2
79
0
2,023
15
1998
13
0
1
14
210
30
1998
75
86
43
204
6,120
2,028
60
1998
2
1
1
4
240
2,028
15
1999
4
0
2
6
90
2,029
30
1999
25
32
1
58
1,740
2,029
60
1999
3
3
6
360
2,029
15
2000
1
0
1
15
2,015
367
251
888
31,470
TOTAL
DELINQUENT BY YEAR
270
STUDIO
1 BED
2 BED
TOTAL
TOTAL
1
53
61
43
157
103,991.45
2
14
12
8
34
45,655.75
3
15
20
8
43
88,722.29
4
14
17
7
38
100,164.02
6
14
20
12
46
182,620.31
8
4
4
4
12
62,693.58
9
3
5
3
11
62,104.00
10
4
2
1
7
TOTAL
Contracts with more than 2 years overdue maintenance fees are susceptible to cancellation
Currency: US Dollars
20
39,074.00
685,025.40
21
MARKET HIGHLIGHTS
•Superb opportunity to acquire a substantial beach front hotel located in a
prime position in the heart of Los Cabos.
•The Meliá Cabo Real occupies an impressive site area of approximately
14 acres (5.66 hectares).
•Comprising 349 guest rooms and amenities including 5 restaurants, 3 bars,
7 conference and banqueting rooms, the property was built in 1998 and has
undergone US$12 million of capital expenditure since that time. The hotel is in
need of complete refurbishment.
•The immediate vicinity provides some of the finest hotels situated in Los Cabos
as well as being close to many of the new luxury hotels being developed.
The hotel is within a 15 to 20 minute drive of the main tourist towns of Cabo
San Lucas and San Jose del Cabo.
•The Los Cabos hotel market has grown exponentially with significant advancement
in the luxury sector, boasting average room rates and occupancy levels amongst
the highest in Mexico.
•The hotel is offered with vacant possession and therefore provides a unique
opportunity to reposition the hotel to provide luxury beach front operation.
22
MELIÁ CABO REAL • LOS CABOS • MEXICO
DEMOGRAPHIC OVERVIEW
Thanks to its superbly desirable beach location,
Los Cabos (population 240,000) is one of the most
important, most popular and fastest-growing tourist
destinations in the whole of Mexico. Annual growth
of visits to Los Cabos measure 13.01%; this is well
above Cancun, which reports only 6% by comparison.
Los Cabos also enjoys similar popularity over and
above other comparable locations in Mexico.
ECONOMIC OVERVIEW
Given these statistics and the resort’s clearly growing
popularity, the Mexican government appreciates the need
for expansion of the local infrastructure and there has been
considerable national and foreign investment in the resort
over the past three years. For example, the new Terminal
2 at San Jose del Cabo International Airport has received
financial support from the Grupo Aeroportuario del Pacífico,
with an investment of US$80 million.
Los Cabos Visitation Statistics Tourist Arrivals (2005 - YTD 2013)
YEAR
DOMESTIC
% CHANGE
INTERNATIONAL
% CHANGE
TOTAL
2006
2007
237,748
−
240,667
1.2%
2008
270,646
2009
2010
% CHANGE
834,981
−
1,072,729
854,710
2.4%
1,095,377
2.1%
12.5%
1,020,013
19.3%
1,290,659
17.8%
263,430
-2.7%
937,930
-8.0%
1,201,360
-6.9%
317,314
20.5%
803,669
-14.3%
1,120,983
-6.7%
−
2011
336,362
6.0%
900,921
12.1%
1,237,283
10.4%
2012
350,286
4.1%
917,739
1.9%
1,268,025
2.5%
YTD 2012 (1)
269,876
−
674,368
−
YTD 2013 (1)
262,382
-2.8%
804,672
19.3%
(1) YTD figures through September 2013
Tourist arrivals represent the number of tourists registered by lodging establishments in the destination
Source: Los Cabos Hotel Association and SECTUR
Currency: US Dollars
944,244
1,067,054
−
13.0%
TRAVEL AND TOURISM OVERVIEW
San Jose del Cabo International Airport is the country’s
sixth busiest airport and can accommodate both large
and long-haul aircraft. The airport now has two terminals,
is served by 22 airlines - and has seen a year-on-year
increase of 14.5% in passenger numbers, with a total
increase in international visitors of 19% from same
period last year.
There are a reported 1,600 rooms being added to the
Los Cabos lodging market, creating an estimated 12.5%
addition to the existing hotel sector. These additions include
the 124-room Ritz-Carlton Reserve, which will be located
within the 2,000-acre resort of Puerto Los Cabos.
This resort also includes a planned JW Marriott hotel,
as well as the newly-opened 500-room Secrets Puerto
Los Cabos (with a reported investment of US$130 million),
plus a 200-room Arroyo Grande Resort & Spa with an
estimated investment of approximately US$160 million.
The 157-room Hyatt Palace, in San Jose del Cabo,
has plans for the development of a 196-room Park Hyatt,
including 36 branded residences to be located within a
master-planned golf resort community. In the limited-service
segment, Grupo Hotelero is to be a 90-room Holiday Inn
Express in Cabo San Lucas.
23
COMPETITION
Santa Anita
•Dreams
•Hola Grand Faro/Barcelo
•Royal Solaris
•Holiday Inn
El Paraje
Despite this competition, the Meliá Cabo Real Hotel is in
a strategically strong location on the Tourist Corridor and
its position directly overlooking the ocean also works
strongly in its favour.
La Laguna
Marina
Golf Club
Puerto
Los Cabos
Lomas
Golf
Del Rosarito Course
San José del Cabo
HYATT ZIVA LOS CABOS
NO
MI
CA
B
CA
VILLA ESTERO
EL GANZO
BEL AIR COLLECTION RESORT & SPA CABOS
El Dorado Golf
& Beach Club
Cabo Real
Golf Club
LAS VENTANAS AL PARAISO
DREAMS LOS CABOS SUITES GOLF RESORT AND SPA
ONE & ONLY PALMILLA
THE WESTIN RESORT AND SPA LOS CABOS
HILTON LOS CABOS BEACH & GOLF RESORT
Cabo San Lucas
Country Club
HI
GH
W
AY
1
19
PUEBLO BONITO SUNSET BEACH
SECRETS MARQUIS LOS CABOS
1
SEA OF CORTEZ
ESPERANZA AN AUBERGE RESORT
SP
EN
IN
SU
LA
R
THE GRAND MAYAN LOS CABOS
CABO AZUL RESORT AND SPA
1
Palmilla
Golf Club
FIESTA AMERICANA GRAND LOS CABOS GOLF & SPA
SHERATON HACIENDA DEL MAR
HACIENDA ENCANTADA RESORT & SPA - PREMUIM ALL INCL
VILLA DEL ARCO BEACH RESORT AND GRAND SPA
PLAYA GRANDE RESORT & GRAND SPA
CAPELLA PEDREGAL RESIDENCES
PACIFIC OCEAN
24
HOTEL CASA NATALIA
1
Querencia
Golf Club
AN
TR
In addition, the Meliá Cabo Real Hotel was ranked by
Travel and Leisure magazine as being in the top 250 hotels
worldwide - and with judicious investment, plus strong,
visionary management, it could quickly retain and exceed
this invaluable market positioning.
San Jose Viejo
INTERCONTINENTAL PRESIDENTE LOS CABOS RESORT
Other factors, such as safe sea bathing and the proximity
of local amenities, give it a major competitive advantage as does its nearness to the international airport.
19
Above all, the Meliá Cabo Real name carries with it an
excellent reputation as a world-class hotel, as evidenced
by the fact that, in the recent past, it was ranked as one
of Mexico’s Top 20 hotels and has received an
AAA 3 Diamond Award for 2011-2012.
ES
TE
•The Barcelo/Hyatt Zeva
La Fortuna
AEROPUERTO
INTERNACIONAL
DE LAS CABOS
O
LIBRAMIENTO A L A
EROPUERTO
The Meliá Cabo Real Hotel has a number of competitor
hotels in the immediate area, such as:
HOTEL RIU PALACE CABO SAN LUCAS
MELIÁ CABO REAL • LOS CABOS • MEXICO
NEW HOTELS PLANNED (2013-2015)
HOTEL NAME
PARENT COMPANY
DEVELOPMENT STAGE
ROOMS
(ANTICIPATED) OPENING DATE
AM Resorts
Under Construction
500
Open 2013
Secrets Puerto Los Cabos
El Ganzo
N/A
Under Construction
70
Open 2013
Intercontinental Hotels Group
Under Construction
90
Q1 2014
Hampton Inn & Suites Los Cabos
Hilton Hotels & Resorts
Under Construction
101
May 2014
The Arroyo Grande Resort & Spa
Independent
Final Planning
200
Jun 2014
Holiday Inn Express Cabo San Lucas
Delano Cabo San Lucas
Morgans Hotel Group
Planning
114
Dec 2014
JW Marriott Los Cabos
Marriott International
Planning
300
May 2015
Ritz Carlton Reserve Los Cabos
Marriott International
Planning
124
Jun 2015
Hyatt Hotels & Resorts
Planning
196
Dec 2015
Park Hyatt Los Cabos
Source: Smith Travel Research and A & M
Los Cabos Lodging Market
Supply and Demand Trends (2006 - YTD 2013)
YEAR
AVAILABLE
ROOM NIGHTS
% CHANGE
OCCUPIED
ROOM NIGHTS
% CHANGE
OCCUPANCY %
% CHANGE
ADR
% CHANGE
REVPAR
% CHANGE
2006
2,913,532
−
1,991,934
−
68.4%
−
201
−
137
−
2007
3,058,122
5.0%
1,995,191
0.2%
65.2%
-4.6%
200
-0.5%
130
-5.0%
2008
3,525,399
15.3%
2,001,692
0.3%
56.8%
-13.0%
199
-0.5%
113
-13.4%
2009
3,878,524
10.0%
2,027,724
1.3%
52.3%
-7.9%
160
-19.6%
84
-26.0%
2010
4,273,394
10.2%
2,425,391
19.6%
56.8%
8.6%
161
0.6%
91
9.2%
2011
4,308,417
0.8%
2,541,332
4.8%
59.0%
3.9%
172
6.8%
101
11.0%
2012
4,410,352
2.4%
2,733,891
7.6%
62.0%
5.1%
175
1.7%
108
6.9%
YTD 2012 (1)
3,299,835
−
2,051,622
−
62.2%
−
175
−
109
−
YTD 2013 (1)
3,361,047
1.9%
2,229,621
8.7%
66.3%
6.7%
212
21.1%
141
29.3%
(1) YTD figures through September 2013
Source: Los Cabos Hotel Association and SECTUR
Currency: US Dollars
25
MELIÁ CABO REAL • LOS CABOS • MEXICO
26
27
CAPITAL EXPENDITURE
In recent years, the hotel has required major capital
expenditure in order to bring it up to standards that will
return it to the status of a major international hotel.
It is estimated that around US$20-25 million is required
to complete the required programme, so that the hotel
is capable of returning to the market as a luxury offering.
The hotel is in need of complete refurbishment
and requires work on buildings and the surrounding
landscape. In addition, its services, décor, furnishings and
amenities need updating and refreshing in order to position
it as a clear leader in an area of considerable competition
amongst hotels.
This would include the re-positioning of retail and
restaurant/bar areas, as well as the creation of a
new spa and corresponding facilities.
SUMMARY OF FIXED ASSET ACQUISITIONS
(WITH BALANCES AT 30 APRIL 2014)
PERIOD
1987 A 2003
LAND
BUILDINGS
FURNITURE
3,728,018.88
94,645,770.83
17,091,534.16
COMPUTER EQUIPMENT
498,819.14
TRANSPORT EQUIPMENT
TOTAL
327,782.83
116,291,925.84
163,636.36
2,409,668.03
Exercise 2004
66,829.77
676,604.73
19,285.56
Exercise 2005
359,325.43
1,481,158.03
405,548.21
Exercise 2006
4,963,609.00
9,548,944.02
103,507.00
1,331,711.54
1,040,945.80
0.00
2,372,657.34
256,152.83
222,884.91
0.00
1,086,102.75
451,304.34
2,051,910.63
Exercise 2007
Exercise 2008
607,065.01
Exercise 2009
1,540,597.94
60,008.35
Exercise 2010
526,076.31
437,578.54
762,720.06
14,616,060.02
963,654.85
Exercise 2011
0.00
Exercise 2012
462,934.67
796,641.77
1,259,576.44
Year 2012 active low
Exercise 2013
5,299,563.89
Year 2013 active low
Exercise 2014
TOTAL
Currency: Mexican Peso
28
-154,454.55
-154,454.55
243,240.00
5,542,803.89
-225,652.17
-225,652.17
805,856.81
147,189,133.20
212,160.07
3,728,018.88
101,105,534.71
38,761,145.29
212,160.07
2,788,577.51
29
BASIS OF
SALE
OPERATING
ARRANGEMENTS
Whilst currently operated under management by Meliá Group,
subject to a fixed structure fee, this arrangement can be terminated
upon completion of sale, offering significant operating flexibility
for potential purchasers.
The hotel is currently operated under management by the
Meliá Group. The operation is subject to a fixed structure fee.
30
MELIÁ CABO REAL • LOS CABOS • MEXICO
31
HOTEL PERFORMANCE
The average daily room rate for luxury hotels in
Los Cabos is around US$720 and certain luxury
destinations in the area can be expected to average
over 70% occupancy rates.
The Meliá Cabo Real Hotel has been significantly
under-performing in recent years due to the need for
major capital expenditure on buildings and infrastructure,
furnishings, décor and amenities.
Although turnover has risen to US$14.542 million, earnings
before interest, taxes, depreciation and amortisation remain
poor. This is principally because the market in this area
demands and expects exceptional standards of luxury and
service, which the Meliá Cabo Real Hotel currently cannot
meet until refurbishment has taken place.
It is estimated that US$20-25 million is required to bring
the hotel to the required luxury standards that the market
demands. Such re-investment (including the creation
of a new spa) would greatly enhance the profile of the
hotel and would also ensure considerable improvement
of achieved net operating income.
32
33
FORECAST ASSUMPTIONS
AN OUTSTANDING REPOSITIONING
OPPORTUNITY
Thorough renovation of the property will enhance
the quality, ambience and attractiveness of the building
to bring it up to a universally high standard. In addition,
the re-positioning of retail and restaurant/bar areas,
as well as the creation of a new spa and corresponding
facilities, will provide additional opportunities to increase
the revenue and profit potential of the hotel. Moreover,
there is considerable flexibility with regard to the hotel’s
operating arrangements, giving investors the opportunity to
work alongside their preferred choice of operating partners.
34
CORPORATE, ENTERTAINMENT
AND EVENT DEMAND
The hotel has an impressively wide range of conference
rooms and facilities, giving it the potential to become
a significant corporate, entertainment and event venue.
The Los Cabos area is an important destination for a range
of sporting and other activities and given its proximity to the
USA, plus ease of access via the local international airport,
the hotel could generate a major reputation as the area’s
leading event destination.
SEGMENTATION
SHIFTS
Hotel renovation would re-balance its demand profile,
increasing its Meetings, Incentives, Conferences and
Exhibitions (MICE) capabilities and leisure demand, while
reducing to more manageable levels its discounted group
tours and leisure requirements. The shift in the hotel’s
market mix and subsequent re-positioning would also
result in higher spend per room on food, beverages
and other services.
35
PROPOSAL
James Andrew International are instructed to seek offers subject
to contract for our clients interest in the Hotel and beach front.
Our clients are investigating whether there is any benefit in selling the
shares in the Panamanian Holding company or the Mexican subsidiary.
CONTACT INFORMATION
All enquires and requests for further information must be
addressed solely to the exclusive advisors, James Andrew
International in London.
Inspections of the Meliá Cabo Real Hotel shall be strictly
by appointment only, to be arranged in advance through
James Andrew International.
JAMES ANDREW INTERNATIONAL
72-75 Marylebone High Street
London W1U 5JW
www.jamesandrew.co.uk
NICHOLAS MARKS
T +44 (0)20 7317 1582
M +44 (0)7850 258 338
[email protected]
JEREMY GREY
T +44 (0)20 3141 6603
M +44 (0)7973 327 753
[email protected]
Misrepresentation Act 1967 and Notice
James Andrew International Limited, for themselves and for the landlords of this property who’s Agents they are, give notice that: (i) These particulars do not constitute, nor constitute any part of, an offer or a contract;
(ii) All statements contained in these particulars as to this property are made without responsibility on the part of James Andrew International or persons in it’s employment, nor the Landlord; (iii) None of the statements
contained in these particulars as to this property are to be relied upon as statements or representations of fact; (iv) Any intending purchaser must satisfy themselves by inspection or otherwise as to the correctness of each
of the statements contained in these particulars; (v) The Landlord does not make or give and neither James Andrew International, nor any person in their employment, has any authority to make or give any representation
or warranty whatsoever in relation to this property. August 2014. Designed and produced by Cooper Rose 020 3440 5160.
36
MELIÁ CABO REAL • LOS CABOS • MEXICO
UNIQUE HOTEL
OPPORTUNITY
IN SPECTACULAR
BEACH FRONT
SETTING
00
00