Paramount turns condo hotels into opportunity
Posted 8/21/2011
By Stefani C. O'Connor
ORLANDO—For most hoteliers, a condo-hotel is somewhat akin to Disco in the '70s: It had its moment, its moment's gone and what were we thinking? For those hoteliers who flung themselves into the frenzy surrounding the de-stigmatized segment in the last decade, many came away disillusioned, unable to make the numbers pencil or to get their arms around Home Owners Associations, what was in the inventory pool and myriad other issues.
Many got out of the game. Many, but not all.
Marco Manzie, president of Paramount Hospitality Management, LLC, is one of the ones who stuck with the concept and made it work, and is now looking to reprise his success.
With two condo-hotels in this super-tourist market, Paramount lays claim to having the number one resort in the area—Floridays—as ranked by TripAdvisor. Its sibling, Point Orlando Resort, is ranked number five.
Manzie—a hybrid of hotel executive and vacation ownership industry veteran—is proud of the rankings, but the CHA in him is more excited about the STAR report for Paramount's first six months this year. The two properties had a combined RevPAR Index increase of 49 percent year-over-year, achieving a RevPAR Index of 106.2 percent versus their competitive set.
Much of the improvement stems from the repositioning of the Point Orlando over the past two years during which Manzie and his team brought all their industry skill sets into play, something he said contributes to the company's success with condo-hotels.
Manzie came to hospitality in 1980, working for Stouffer Hotels and Resorts. He subsequently worked at the first Park Hyatt in Chicago, ITT Sheraton, Hilton and TCC-The Continental Companies. In 1992, Kevin Sheehan -- who owned a vacation-ownership marketing company -- Vacation Break USA, was looking to branch out, buy resorts and convert them to vacation-ownership operations and needed someone to run a management subsidiary. He brought Manzie on board as co-founder/president of Vacation Break Management. Vacation Break USA later went public and was bought by Fairfield Communities. Manzie stayed on to run Florida and the Caribbean for Fairfield.
Manzie launched Paramount in 2001 with Sheehan. The company began handling Floridays in 2002/03 when the 432-room condo-hotel went under construction on International Drive. It originally was slated to be a timeshare operation but the developer, Angus Rogers, decided to go the condo-hotel route instead, opening the property in 2005. (Interestingly, Rogers bought out Sheehan and is now a partner in Paramount.)
As has been the firm's approach, Manzie wanted to ensure Floridays got off to a good start after opening, and although the condo-hotel market was very hot, he held off picking up another contract right away.
"We devoted time without really looking for more projects because we wanted to make sure the property was up and running successfully and, as a condo-hotel, there were several complexities," he said.
Today, said Manzie, "the project's extremely financially healthy, from both an (homeowners) association and a rental side." He considers Floridays' comp set Embassy Suites, Marriott, Gaylord Palms, Carib Royale and Lake Buena Vista Resort and Spa. "These are some large properties in the marketplace; these are not some little mom-and-pops," emphasized Manzie.
He noted of Floridays 432 rooms, 420 units are in the rental pool. Rates range from $145 to $423 (the latter for a three-bedroom) and the condo-hotel draws a major portion of its business from the family market for an average 4.8- to five-night stay.
While Floridays may have had a few "complexities," its sister property, The Point Orlando Resort, "was quite a challenging project for us," said Manzie, noting Paramount took over the property in September 2009 in "a very hostile environment" allegedly created by the prior operators.
The 242-unit property had been open for two years but few owners had their units in the hotel rental pool when Paramount came on the scene. With a team of hospitality industry veterans that includes Mitch Berman, director of revenue optimization; Robert Haywood, director of finance; and William Chyle, director of facilities management, the company wrestled the situation toward the positive on several levels.
"We started building demand by spending our marketing dollars in the right place. We took a major part in e-commerce marketing: pay-per-click campaigns, e-mail blasts. Getting the guest-service scores up so the project starts to get noticed such as on TripAdvisor. There was a lot of training, a lot of hands-on involvement and guidance. There was day-to-day manipulation of our rate strategies and structure. We redid the Web site so the consumer understood the product better. It was a total repositioning of the project," said Manzie. Paramount added food and beverage, a business center, bar and lounge, and catering for social events. It also repositioned its contracted business, shedding 50 percent of it. "We were very aggressive in replacing business," said Manzie, who noted the company has "an excellent working relationship with the OTAs," as well as the Convention and Visitors Bureau. The property also is a Universal Studios Partner Hotel.
Currently, Point Orlando draws a mix of couples and business travelers—the Orange County Convention Center is nearby—who average a 3.5-night stay.
"We have an owner base at the Point that is so happy and satisfied with the progress. Our meetings with our homeowners couldn't go any better for us. They've been very impressed with the distribution turnaround that they've received from the rental program. I put it that way because at the end of the day owners measure your success based upon how well their property is being rated by its customers—for us it's TripAdvisor. We're number five. They were ranked in the thirties when we took over. That's a big turnaround for them," said Manzie, noting 210 of the resort's units are now in the hotel rental pool.
A phase two for Point Orlando is in the pipeline, dependent on financing. It would include a third tower of 240 king and double-double rooms; 9,000 to 10,000 additional square feet of meeting space; and another food and beverage outlet.
The executive felt the company has been able to successfully wrangle the condo-hotel concept due to its business model. "Most of the management companies that do condo-hotels do it on a split-fee basis. My whole business model is built on 100 percent of the revenues to the owners, less operating expenses. My owners average a distribution anywhere between 54 percent and 57 percent annually and they capture 100 percent of the revenues."
With both condo-hotels performing well, Manzie is now looking outward for other opportunities.
"Our company today is positioned for growth. We're very comfortable with the direction the properties are going in and we're looking to expand in or outside the Orlando marketplace. We are actively looking at projects. We're looking at South Florida, the west coast of Florida, the Sarasota area. We've also looked at some projects in the Chicago area. We're positioned very well for growth right now," said the executive.
Would he stick with the condo-hotel model exclusively?
"We're ready to take on whatever we believe fits our portfolio as we move forward. We're looking for quality properties, 200-plus rooms in the upscale, upper-upscale or luxury market," said Manzie.
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