Simon Hallgarten remembers the first time he stepped into the lobby of the Sanderling Resort and Spa in North Carolina’s Outer Banks.
“It was late, and we had a long day of meetings and travel,” he says. “There was a little, pokey front desk to the side, and no one was around.”
At that time, almost the entire lobby was filled with a massive staircase to the second floor, so it was difficult to find someone to help him check in. Once Hallgarten did, he asked where he could get a drink and was told there wasn’t anyone available to serve him one.
It was early 2012, and Hallgarten and David Zeuske, both partners at Westport, Conn.-based Northview Hotel Group (NVHG), had traveled to the Outer Banks to see if the Sanderling would make a good acquisition for their company, which manages 14 properties (of which it owns 11) across the country, ranging from a small ranch-resort to a 400-room suburban Marriott. “We had received the offering from the broker and immediately jumped on it,” Hallgarten says. Sitting on a narrow stretch of land between the Atlantic Ocean and Currituck Sound on the northern half of the Outer Banks, the Sanderling is one of only three destination resorts in the area. With its natural setting and 14-acre footprint, the Sanderling is a popular wedding spot: More than 20 couples chose to get married there in June alone.
“We had been looking for more coastal properties because we had gained some expertise in that space from operating the Hawks Cay Resort in the Florida Keys,” he says. Running Hawks Cay was like managing a small village, with some days that had 2,000 people on the property, along with revenue in excess of $300,000. “With where we are in the cycle, there are a lot of resort properties that are in need of a major repositioning, and this is an area where we have a lot of expertise.” He points to other high-end resorts that NVHG owns, like the Brasada Ranch in Bend, Oregon, and the Hotel Madeline in Telluride, Colo., which the firm purchased earlier this year.
But NVHG’s portfolio isn’t all about resorts. The firm is agnostic in terms of market and product type, instead looking for properties in high-barrier-to-entry markets where there are significant value-add opportunities from better management, Hallgarten says. In the case of the Sanderling, there were some obvious fixes that his team addressed immediately through a major renovation that, among other things, added eight guestrooms to the 88-room, he says. “There is often a lot of low-hanging fruit with the types of resort assets that we seek to acquire. For instance, you had this oceanfront resort in a spectacular setting, and there was no outdoor swimming pool.”
Besides adding the pool, the team opened up the lobby and added an upper level to allow guests to look out over the ocean.
“Just having that spectacular view was a key part of the strategy here,” Hallgarten says. “We also added a small bar in the lobby, so when you walk in whatever time of day, you can get a drink.”
And the views remain top of mind for the next stage of the renovation, says Dick McAuliffe, the Sanderling’s general manager. “The addition to the north wing will allow us to add rooms that have views both of the ocean out of one side and of the sound out of the other.”
The Queen and Crescent, another property NVHG recently acquired and put through a top-to-bottom renovation, is set to reopen by the end of the year. “The guestrooms have been totally recreated with all new bathrooms and FF&E and exposed historic wood floors,” says Hallgarten, of the 196-room boutique hotel in New Orleans. “We have transformed the lobby of the main building from a tired two-diamond space to a dynamic and exciting lobby, restaurant, and bar.”
NVHG also recently acquired the Hotel Madeline, a 100-room independent ski resort, and plans to transform the hotel’s public space and finish developing its 60 condo units.
When the resort relaunches, it will be the best-in-class ski-in and ski-out location in the area, Hallgarten says. “There’s still a lot of heavy lifting in terms of repositioning the assets correctly. We need to figure out how to improve the value of the product, make the service commensurate with it, and then appropriately market the hotel and experience to guests and buyers.”
While NVHG’s portfolio strategy has been heavy on acquisition and development over the past few years, that could shift in the near future.
“It’s all about market timing, finding the best time to exit, having created the most value,” Hallgarten says. “We’ve added the significant barrier. In our minds, we’d rather leave some money on the table for the next guy and exit now and not be greedy.”
Editor’s Note: Carey Watermark Investors recently acquired the Sanderling Resort for $38 million. Northview Hotel Group continues to manage the resort.
