resorts and timeshares

Westin’s Luxury Timeshare Project Halted

Westin Luxury Timeshare Project
Open land ready for development at Palm Beach

Together with the purchase of Aruba’s largest tower, Starwood Vacation Ownership [Starwood’s timeshare unit] announced the development of The Westin Ocean Villas. This project was going to be one of the most exclusive timeshare resorts in the Caribbean region. Starwood prepared adjacent terrain to the Westin Resort for construction. The project included the cutting down of several decades old trees which became a controversy with some environmental organizations on the island. In November of last year I wrote about this project and provided a link to Starwood’s site, which now is dead.

Today I learned that Starwood has stopped all developments altogether. I would be speculating at this point as to why they decided to drop this project. In reality, Starwood posted its financial figures last month which wasn’t all positive. In fact, the resort chain lowered its forecast for 2008. Furthermore, in their annual report it expects a drop in demand for their timeshare units for upcoming fiscal year. Apparently it was hinted in December of last year in Aruba that the project was in jeopardy.

Constructing, selling, managing a timeshare resort is an investment for the long haul. Investors who put money into these projects need to understand that return on investment won’t be reached rapidly. In other words, when investing in timeshare resorts, you need to be able to go through with it, through economic expansion and contraction. Despite having an economic background I don’t understand this move completely. On the other side, I’m sure smart people within Starwood, who know much more about this, decided it is in the company’s best interest to stop the development. Perhaps the numbers didn’t add up for Starwood.

I’m a positive individual who likes to look ahead. There is a nice piece of open terrain right at (the entrance) of Palm Beach ready for development. As always Marriott’s name is mentioned as a possible developer. Marriott has managed to build many resorts and commercialize them highly successfully in Aruba. Reportedly Marriott has inquired about the possibilities on purchasing other pieces of terrains at Palm Beach or Oranjestad to develop more units. I’m not sure Marriott inquired about this particular terrain.

Another sector which is eagerly looking for prime land at Palm Beach is condo investors. Coming months is going to be interesting to learn whether Marriott or another party decides to acquire the terrain.

By Gabriel

Informing travelers about Aruba since 2007, and trying to provide value to Aruba visitors.

4 replies on “Westin’s Luxury Timeshare Project Halted”

[…] Take Startwood Hotels & Resorts for example. The minute it announced its arrival in Aruba the public relations department send out a statement with the plans for the property at Palm Beach. Currently The Westin Aruba-tower is receiving a redo of millions of dollars and south of that a high-end timeshare resort is going to rise soon: The Westin Aruba Ocean Villas. [UPDATE: Link is broken; Westin stopped project] […]

Hi Dee, thank you for your comment. Starwood (which owns “W” and The Westin) investments in Aruba didn’t always went according to plan. The building The Westin was located on Palm Beach has had a storied past. Just recently a new chapter was added when Riu Hotels acquired the building and is now under reconstruction and is scheduled to open a fully renovated all-inclusive resort.

Typically major international hotel chains don’t own the building they operate but rather work through a so called Hotel Operating Agreement (HOA) or Hotel Management Agreement which means that they only pay a fee (lease or rent).

As stated before Starwood’s efforts with The Westin in Aruba wasn’t all that successful. I’m sure they made money, but at the end of their tenure it ended with the building becoming bank owned (foreclosed) and in need of major renovations. Starwood wasn’t interested to fork over the asking price of $80 million for the building.

One thing I have learned is that you can never say never. Hotel chains have left and returned in the past, which is reportedly happening with Hilton Hotels coming back to Aruba.

Whether or not a hotel is going to establish itself in Aruba depends on a few things:

1) Are they able to secure a HOA with an existing building owner on Palm Beach? This is difficult, as most buildings have an iron clad agreement.
2) Are they willing to acquire the building and operations of an existing hotel and pay the tens of millions of dollars? Not many groups can or will make this commitment.
3) Can they acquire a piece of land from the government and develop their own building? Highly unlikely as there isn’t much more space on Palm Beach.

Dee (if you are still there), I can go on and on about this topic, but I won’t. This reply is way longer that it should have been. Either way, thank you for stopping by.

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