First-time hospitality investor, the Navarro family, is all
in on reviving the once troubled Tamarack Resort.
DONNELLY, Idaho – It is one thing to invest in the
hospitality business for the first time by taking ownership of a struggling
condo-resort in Idaho with a lot of perceived upside. It is something
altogether different to also take over all operations of a four-season mountain
community near Lake Cascade with ski, golf and lake amenities, F&B, meeting
and event space, a retail village, as well as manage 500 sold homes where 30%
to 35% of owners utilize the rental pool.
That’s where the Miami-based Navarro family is today after
spending two years to acquire a struggling Tamarack resort in Donnelly, Idaho, with
a fractured ownership structure in 2018 at a steep discount. They have since
invested about $250 million of their own capital without any private equity or
institutional backing to rebuild and expand from the 200 units when they took
over.
The partners at MMG Equity Partners — brothers Gabe and Marcel Navarro and brother-in-law Martin Pico — also
strongly believe guests are looking for an easier, hassle-free experience and can
only deliver if they own the experience from A to Z.
In unison, managing partners Gabe and Marcel said, “We like
to be pretty involved. We’re not a passive capital partners.”
They also own some
40 shopping centers in Florida for the business formed after selling in 2007 a
60% stake in Navarro Pharmacies and a vitamin manufacturer to a PE firm. They
together sold both businesses outright – Navarro to CVS and Nutriforce
Nutrition to Vitamin Shoppe – in 2014.
The Master Plan Tamarack Resort spans approximately 4,200
acres — 2,124 acres of state-leased land and over 2,000 acres of private
property. The family has entitlements to build 2,200 more dwelling units over
the next decade, including single-family homes, townhomes, condominiums,
hotels, and conference facilities. Fifteen more units are currently under
development and the Navarros are also building an 80-unit condo-hotel that will
fly Marriott’s Autograph Collection flag in about two to three years in the resort
village. They will follow that up with a micro-hotel “Yotel-like crash pad”
condo-hotel concept and then a branded luxury condo-hotel.
Longer term, the family would entertain opportunities
outside Tamarack, but Gabe said they have more than enough to keep them
occupied right now.
The family has revived the Robert Trent Jones Jr. golf
course, completed the alpine village, built a Mid-Mountain Lodge and are
nearing completion on the first marina on Lake Cascade. Tamarack is also
planning 5,000 acres of new ski terrain, positioning it among the nation’s
largest resorts. It’s a good thing they have a long-term, generational hold
perspective.
Doing the right thing to have long-term success, maybe not short-term financial success, was really important.
Gabe Navarro
Under the Navarros ownership, the family said skier
visits are up 250% and real estate values have tripled. They expect the
resort piece of the business to be profitable in about 12 months and as
occupancy grows, the percentage of units going into the rental pool is expected
to break 50%.
Long-term play
No doubt, the learning curve for the family has been steep,
but they are still here to talk about it.
“We had challenges with just having people believe in us...
It was a very challenging asset that went through bankruptcy. We had to really
deliver on the things we said we’re going to deliver,” Gabe explained.
It was also tough to sell real estate when construction was
just getting started. “Most people sat back and said, ‘Hey, let’s see if these
guys from South Florida do what they say they’re going to do,’” Gabe added. “I
would say it was probably the same thing on the senior management side and getting
the right team in place took us a few years. We have that now.”
So, the hardest parts are behind the partners. They are past
the stigma of the property’s past and starting to demonstrate that they’re
delivering on their promises. “Now it’s really just a matter of developing the
resort at the pace that the market absorbs,” Marcel added.
As the Navarros looked to increase the pace of development, about
six months ago they did an EB-5 raise that was very well received. It was
originally planned for $80 million and increased it to $160 million. It is not
fully drawn, but it is fully subscribed.
What the family also seems to have on their side is patience
– a willingness and ability to have a long-term view.
“Doing the right thing to have long-term success, maybe not
short-term financial success, was really important,” Gabe said.
The right model
The condo-hotel model was the clear way to position the
property with Gabe suggesting recent hotel developments throughout the Mountain
West region are almost all for-sale condos under a flag.
“With the shoulder seasons, you’ll end up on an annualized
basis with a high-50s occupancy. So, for-sale condos are really the way to go
where they price in the $1,500 per square foot range,” he said.
What the Navarros are also learning is group and event
business is what will help drive them toward profitability. In the last 12
months, they have aggressively promoted Tamarack as an event venue for
corporates and groups in the Pacific Northwest.
With a full church/chapel at the resort, they do about 50
weddings a year. There are two more meeting and event spaces nearby as well as
a new 12,000 square foot Mid-Mountain Lodge and event space on the lot of the
golf course.
Folks are getting tired of the mega resorts. Being that fiercely independent resort that we are, and being able to focus on the guest journey, I think it resonates.
Marcel Navarro
On top of that, they expect the branded Marriott product
will further help drive midweek and group business. “We’re starting to see a
lot of growth in that segment, which in the ski resort business is important to
drive the midweek and the shoulder season,” Gabe explained, adding they anticipate
doubling weddings from the 45 they host during the summer/fall.
Staunchly independent
What the family continues to do with vigor is focus on the
customer and best meet the needs of what has increasingly become a family
experience.
Surprisingly, the Navarros have come to understand half of their
homeowners don’t ski or don’t ski enough to buy a season pass. That makes the
four-season piece of the offering extremely important.
“Bring golf back was really important. Our marina is
probably equally or more important,” Gabe said, adding that 100 slips will be
open for next summer.
What remains on the to-do list is working harder to drive
shoulder season business, which they said is an intense focus right now.
At the same time, the family believes being independent is only going to
further benefit the business as the build-out continues.
“People
are looking for that less-crowded experience that’s easy,” Marcel said. “Folks
are getting tired of the mega resorts. Being that fiercely independent resort
that we are, and being able to focus on the guest journey, I think it resonates.”