Grace Bay’s Advani loves the Caribbean life

Once a globetrotting hotelier, Nikheel Advani has found his home and happiness in the Caribbean. Now 20 years in as co-founder and COO of Grace Bay Resorts in Turks and Caicos, Advani now believes “everybody needs a little bit of Caribbean in their life. And only when you go there and experience it can you understand what that means.”

Today, at age 50, after first spending 10 years with Ritz-Carlton in markets ranging from New York to Singapore and Osaka, Japan, the past 20 years on the island has brought him something new every day. “It’s exciting. I love the development aspect of it. I love the brand building. I love meeting our guests,” he said. “I’m extremely grateful to my partners who have been so supportive of this growth process.”

Growth includes jumping from top line total revenue of maybe $4 million during his first year in 2004 to an expected $100 million-plus this year and a projected $200 million within five years. The development now spans the initial flagship 21-suite resort Grace Bay Club, which today has expanded to 136 units; the 28 cottage-style Point Grace suites recently renovated by celebrity designer Young Huh; the 46-oceanfront, Mediterranean-inspired, villa-style Rock House, which opened in May 2022 on Providenciales and is now in the second phase of development to add another 10, spa-inspired units; 11 luxury villas dubbed The Private Villa Collection with oceanfront locations throughout Providenciales and further growth ahead; and the South Bank, developed by Windward and slated to start opening some 30 villas in phases early next year featuring luxury residential resorts and marinas in seven waterfront neighborhoods along 31 acres of shoreline on Long Bay promoting indoor/outdoor living.

There are an additional 40 acres at South Bank that Advani said at some point could be developed into a boutique hotel, while The Point at Point Grace has already sold about 50% of an additional 11-acre development. “We put the Point Grace units out for sale in December last year and have done [sale] stops a couple of times because the pace at which the real estate is selling is just incredible,” Advani said.

All units across the now 30-year-old development are sold to individual owners who place them back into a rental pool. Many these owners also must know Caribbean happiness because 2022 was, and 2023 is, exceeding 2019 results. At Rock House, for example, Advani said they doubled the budget projections in the first year – likely due to COVID-induced, pent-up demand.

Advani also referenced one owner of two units at Rock House who has seen in excess of $100,000 in returns for each. “As a real estate buyer, you’re thinking, ‘wow, this is great.’ And because it’s a new property there’s a lot of excitement, as well. We see that demand carrying on into the next two, three years.”

In fact, over the last two years, Grace Bay Resorts witnessed some of its best performances. Grace Bay Club alone was up 20% to 30% in 2022 versus 2019, even as leadership was very cautious and sensible about rate increases.  “In Europe today, especially in Italy, they are just putting in astronomical rate increases. We don’t think that’s sustainable. We don’t think that’s the right way,” Advani said. “We have 30% to 40% regular clientele that come back all the time. So, we prefer to play the long game… Increasing rates 10%, 15%, 20% – it’s reasonable, and we’re very comfortable. But we’ve paid some crazy rates in Miami and Europe, for example, and we’re not feeling good about it.”

Fear factors?

But with all the foreboding about macroeconomic conditions and higher interest rates, is Advani concerned about the investments and their debt levels? With only about 20% of the overall capital stack sitting with local Canadian banks, he said he sleeps well at night. Another 20% come from investors and 60% is generated by real estate sales. “That’s generally how we raise funds for a real estate project here, anywhere from $100 million for Rock House to $300 million for South Bank – they all fit a similar profile,” he said.

The other fear factor in the development equation could be Caribbean hurricanes. But again, Advani said Grace Bay is strategically positioned as most hurricanes first tend to strike the Dominican Republic and only give a glancing blow to the Turks and Caicos. Even in 2017 when two category 5 hurricanes struck, planning and organizing with the local government has paid off, he said. “We’ve learned about the power of the private sector working with government. In 30 days [in 2017], we had all utilities back up and running. In 60 days, we had all resorts, except for two that wanted to do renovations, back online. And in 90 days, we were up and running properly,” he said. “People who invest in real estate want to know that even after a disaster they can come back to their residences and get a great level of service. And that was instrumental to our positioning of how we handled the COVID situation, too.”

The other challenge is operating costs, especially for utilities, and it gives further purpose to the developer’s passion and vision for sustainable practices. They recycle all the water because Advani said Grace Bay pays the highest rates in the world for both water and electricity. “We pay close to 55 cents a kilowatt hour versus the U.S. which pays 7 to 11 cents,” he explained. “So, we’ve had to adopt sustainability for business practices because otherwise the model just doesn't make sense.”

As for additional growth opportunities for the group, and for the Caribbean in general, Advani said he is seeing a lot of activity in Dominica and suggested that St. Lucia is doing extremely well. He said his team loves Anguilla and Antigua and almost had deals there. “Every time we look, there is an opportunity in our backyard,” he said. “We feel really comfortable here and we will have six businesses, making us the largest luxury provider here and maybe even in this region someday… We’re still open, we’re still looking, we’re not going to say ‘no.’ But every time we look, something comes up in our backyard.”

Normalizing now

When asked to look into his crystal ball about the near-term future of luxury hotel performance, Advani said he is seeing some “normalizing” in travel patterns as the rest of the world opens up after an incredible two-year rebound in the U.S., Caribbean and Mexico.

“We will have an incredible winter, as usual. Then our high-end clients will go to Europe, and then further away to locations like Africa and Asia as things begin to open up,” Advani said. “In the next few years, we see that circuit coming back to what 2019 was – that’s what a high-end client does. Everyone will have to adjust.”

To make the Turks and Caicos more than a December-to-March island destination, Grace Bay has worked with local tourist authorities to lobby the airlines to increase lift and has had success. As a result, Advani said the island is running 70% to 80% occupancies, albeit with more reasonable ADRs in shoulder seasons, with March and July running above 90%. During shoulder seasons, markets like Atlanta, Chicago and Texas keep them very busy until September with October and November bringing in groups and weddings, he added.

“The shoulder season has really made Turks and Caicos unique, and many other destinations are looking at this model,” Advani said.

The biggest challenge: staffing. “We’ve tapped out our population and at some point we need to grow with the right people that can support the vision of the government and the island and still preserve what is so unique in Turks and Caicos. There’s no simple answer to that. I wish I could say we figured it out. We haven’t, and that keeps me up at night.”

But just maybe staying up at night hearing the surf versus Midtown traffic is something that everyone needs a little bit more often.