Other resorts are on the auction block. In Ontario, the Deerhurst Resort was put up for sale this month just weeks after playing host to the Group of Eight summit. The 221-room Rosseau Resort, just west of Deerhurst, is in the hands of its creditors.
Lack of access to capital is a major problem for many resort owners, said Sheldon Esbin, the managing general partner of Romspen Investment Corp. in Toronto, which provides short-term lending to operators in the sector. He said owners who take on too much debt can be wiped out when sales slow.
“Most of the people we see do not have patient money and they think they finance with debt and everything will work out,” he said. “Well, anything is possible. But just because you have a beautiful piece of land with a nice waterfront doesn’t mean people will want to buy property. It’s all wonderful, until nobody is showing up in your sales centre.”
Some owners are adopting new approaches to unloading their inventory of condos. The Residences at Fairmont Ridge in Fairmont Hot Springs, B.C., once hoped to sell townhouses to families to use as second homes, but is now focusing its efforts on selling prospective tenants tiny slivers of ownership for much lower prices. The original business plan offered buyers full or quarter ownership in a unit. Now, customers can buy as little as 1/16th ownership.
Marketing manager Jay Hardy, who is also director of the real estate development program at the University of Calgary, said allowing those looking for a vacation property to buy for less has helped the company survive the recession, if not prosper.
“Recreational property is the first to go in the tank and the last to come back,” he said. “We’ve been moderately successful, but the real key to prosperity is patience. This market will come back, but I think it won’t be until some time in 2011.”
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NO HOLIDAY FOR RESORTS
In the wake of the recession the resort industry has been in upheaval. Among the high-profile properties affected:
Whistler Blackcomb: The B.C. resort’s owner, Intrawest ULC, defaulted on its debt last December, just before Whistler was to play host to the Winter Olympics. Intrawest has since refinanced its debt.
The Rosseau: The landmark resort in Ontario’s Muskoka region was placed on the auction block in January after lenders pulled financing. The sale was cancelled in April, leaving the property in the hands of creditors.
Deerhurst Resort: The prestigious resort in Ontario cottage country was put up for sale this month, weeks after playing host to the Group of Eight summit. Owners say they want to take advantage of the resort’s increased profile.
Staff
