The fast-food chain will open “The Bell: a Taco Bell Hotel and Resort,” which it describes as a “Tacoasis in the desert,” for a limited time in Palm Springs, Calif. in August. The discount airline, which purposely named itself Allegiant Travel Company, is building a $470 million resort in southwest Florida that will include access to a private golf club.
Taco Bell has announced that it will open “The Bell: a Taco Bell Hotel and Resort,” on August 9th in Palm Springs, Calif., Adweek reported.
Described as a “Tacoasis in the desert,” the fast-food chain said the destination will only be open for a limited time as “an official and ambitious celebration of the Taco Bell aesthetic,” Adweek reported. The brand’s announcement said its venture into hospitality will be part of “reimagin[ing] what a hotel stay can be, [by] unveiling a destination inspired by tacos and fueled by fans.
“Everything from guest rooms to breakfast and poolside cocktails will be infused with a Taco Bell twist, making this the flavor-filled getaway of 2019,” the chain announced.
The resort offering will also include an on-site salon that will offer “Taco Bell-inspired nail art, fades and a braid bar,” Adweek reported.
“’The Bell’ stands to be the biggest expression of the Taco Bell lifestyle to date,” said Marisa Thalberg, Taco Bell’s Global Chief Brand Officer. “It will be fun, colorful, flavorful and filled with more than what our fans might expect. Also, just like some of our most sought-after food innovation, this hotel brings something entirely new for lucky fans to experience and enjoy.”
Few details, including exact location and pricing, have been announced about the resort so far, Adweek reported. Reservations will open online in June for “Taco Bell super-fans” ages 18 and up.
In Florida, the Tampa Bay Times reported that discount airline Allegiant, which built its business shuttling tourists between small cities and secondary airports and is now the ninth-largest U.S. airline, based on passenger counts, will build a $470 million resort in southwest Florida that it expects to fill with those flyers.
Called Sunseeker Resorts Charlotte Harbor, the three-tower, nine-story hotel will have roughly 500 standard rooms and 180 extended-stay suites, charging an average rate of more than $200 a night, the Times reported. The hotel, which Allegiant expects to position as an “upper upscale” property similar to a Hilton, will include meeting and conference space, a dozen or more bars and restaurants, a scenic boardwalk and a marina, along with access to a private golf course a short shuttle ride away. (The Times’ report did not identify the club operating the course.)
Rising on a narrow slice of land where the Peace River empties into the Gulf of Mexico, the Sunseeker Resorts hotel will be the tallest building in Charlotte County when it opens in 2020—and the largest resort in a part of the state still best known as the place Hurricane Charley came ashore in 2004, the Times reported.
And Sunseeker isn’t a one-off, the Times reported. Allegiant executives envision it as a beachhead in a cross-country network of Allegiant-owned or managed hotels, golf courses and Dave & Busters-style family entertainment centers, all fed with customers from their core airline business.
Investors hate that direction, the Times reported. Since Allegiant announced Sunseeker Resorts nearly two years ago, growth in its share price has lagged competitors like Spirit Airlines and the broader airline industry as a whole, even though Allegiant’s core airline business has performed well. Daniel McKenzie, an analyst at Buckingham Research Group, estimated that Allegiant’s share price should be about $10 higher than it is today, calling the company “a good, albeit controversial story.”
But Allegiant’s leaders are defiant, criticizing what they’ve characterized as tunnel vision and short-term thinking on Wall Street, the Times reported. The company has spent $50 million buying and clearing land, and expects to spend another $420 million to complete Sunseeker Resorts Charlotte Harbor. It also says it is prepared to lose as much as $17 million this year from its non-airline operations.
“It’s critical for us to get this project right,” says Micah Richins, whom Las Vegas-based Allegiant hired last year from MGM Resorts International to run its new Sunseeker Resorts division. “There’s no question we would like to do more. But putting this property in the ground, bringing it up, executing on it, showing the margins that we think we’re able to obtain—those are the things that will be the drivers of anything that we do in the future. It gives us credibility.”
Allegiant now carries nearly 14 million passengers a year—and more than 8 million of them to and from Florida—on a fleet of more than 80 jets flying nearly 450 routes, the Times reported. Yet it still only faces mainline competition on 25% of its routes. Of the seven airports that it used in Florid, it is the only regularly scheduled domestic carrier at three: Orlando-Sanford, St. Pete-Clearwater and—most important for Sunseeker Resorts—Punta Gorda, whose airport is just 10 minutes from the Sunseeker site.
Company executives often note that they chose to name their company Allegiant Travel Company, rather than Allegiant Airlines, as a sign that they’ve always intended to do more than fly planes, the Times reported. But the plan for Sunseeker didn’t really begin taking shape until the fall of 2016, when the company brought on John Redmond as President. The former president and CEO at MGM Grand Resorts, who had been serving on Allegiant’s board for eight years, had never been to Florida before. He then spent a month in the state, driving up and down the Gulf Coast scouting potential locations.
Company executives say they chose to plant their flag in Port Charlotte for several reasons, the Times reported. For one, it’s in a relative backwater where most existing hotels are older and smaller—echoing the airline’s strategy of targeting smaller markets with little competition and lower costs. More important is the proximity to Punta Gorda Airport, where Allegiant flies more than 1.5 million passengers each year. Sunseeker Resorts also is just a 90-minute drive from St. Pete-Clearwater International Airport, where Allegiant flies another 2 million passengers a year. In fact, Allegiant says it could fill Sunseeker just by capturing one out of every 15 inbound travelers it brings into Punta Gorda and St. Petersburg.
Allegiant says it is emulating the strategy of Florida’s most successful tourist business, the Times reported. “All of the airlines fly millions of people in and out of Orlando, and Disney sits there on the end and collects 90% of the leisure customers’ spend, and the airlines get 10%,” Redmond said. “We’ve been looking at that for some time and saying, ‘Well, that makes no sense.’ We want to have the other 90% of that.
“We’re now the Disney of Southwest Florida,” he added.
But even Disney has run into trouble trying to build beyond its theme parks, the Times noted. More than a decade ago, the company unveiled an ambitious plan to build standalone hotels, niche parks and retail centers in outposts far beyond its signature theme-park resorts in Florida and California. But the company abandoned that plan after building an $850 million hotel and timeshare in Hawaii that didn’t perform as well as Disney executives expected.
Investors are also troubled by Allegiant’s decision to redraw its Sunseeker plans on the fly, the Times reported. The company initially pitched the resort primarily as a real-estate play that wouldn’t involve as much of its own capital. The original vision called for a much smaller hotel, with fewer than 300 rooms, and more than 800 condos.
Allegiant executives say that as they continued to dig more deeply into the plans, the math was so compelling that it made more sense to own the project outright and run it as a pure hotel, the Times reported. The federal tax cuts passed in late 2017, which Allegiant says will save the company $500 million over the next five years, was another compelling factor for the change.
“You’re looking at over $500 million in cash flow relating to tax benefits that weren’t present when we announced this resort a year ago,” Redmond says. “All of a sudden, the IRS, the government, is helping us finance this project interest-free.”
Allegiant executives also say that having an airline gives them an ace up their sleeves, the Times reported. Eighty-five percent of its customers purchase their plane tickets before anything else when planning their vacations, Allegiant says, and because it does not make its flights available on third-party websites like Expedia or Priceline, Allegiant is the first point of sale for those customers. which should be an edge when it comes time to market its own hotel.
Allegiant also says it can offer chartered air service to Punta Gorda for convention members or other large groups that book events at Sunseeker Resorts, the Times reported. And it can waive the charge for checking golf bags for passengers who book a stay at its resort.
And the hotel and airline can protect each other, should another airline start flying into Punta Gorda, Redmond told the Times.
“You could never compete against us down there,” he said. “When that opens up, there’s no fare wars, because no one else has the ability to do that. Anyone who stays at the resort, we can offer airfare for free, and it’s game over because I get the other 90% of their spend to give up the 10%. Everyone else, they don’t have anything else to pull that lever.”
If Sunseeker Resorts is a hit, the Times reported, Allegiant says it will transform the entire company. The company wants to own only a handful of hotels itself, but hopes to operate an entire portfolio of Allegiant-branded properties whose owners would hire the company to run them via management contracts.
While many investors remain skeptical, others are buying in, the Times reported. In March, TPG, a private-equity firm, agreed to invest an initial $175 million in Sunseeker Resorts. The deal could grow to $1 billion if Allegiant’s hotel brand grows beyond that first resort.
Allegiant’s management doesn’t lack confidence, the Times reported.
“When you look at it like Netflix, when they announced they were going to start streaming versus sending a disk in the mail, their stock went down 80%. Everyone said this is the dumbest thing we’ve ever heard of,” Redmond says. “So you could point to these examples all over—people who don’t get the story at the outset.”
Tell Us What You Think!
You must be logged in to post a comment.