Kerzner International is using the “asset light” approach espoused by hotel companies such as Accor and Starwood to expand the presence of its Atlantis and One&Only resorts.
Financial realities have forced the company, headed by South African hotel and casino mogul Sol Kerzner, to eschew the development and real estate ownership route.
Instead, since Kerzner International sol
d its stake in its two Atlantis resorts last year to cut debt, the company has focused strictly on the branding and management side.
The most recent example of this strategy is Kerzner International’s plans for its first Atlantis resort in China (photo at left). The 1,300-room Atlantis Sanya Hainan, announced earlier this month, will total more than 150 acres and will include a water park and marine exhibits as well as the Atlantis “rising out of the sea” design motif.
The project will be developed by China-based Fosun International Ltd. In late May, Fosun teamed with AXA Private Equity to place a bid worth about $700 million for Club Med, in which both companies are already shareholders. That bid remains under regulatory review.
“I have been working with the designers to come up with something that captures all the wonders of Atlantis, with its magnificent sense of discovery, while also introducing new experiences specifically for Sanya,” Kerzner said in an Oct. 10 statement. “I can’t wait to unveil this resort to the world.”
Kerzner International continues to team with development partners to expand its brands. Last month, the company said it would assume management of Hayman Island, a resort on the Great Barrier Reef, next April and rebrand it as its first One&Only resort in Australia. The 726-acre island off the coast of Queensland has been a vacation spot since the 1950s.
In May, Kerzner International announced plans for a 150-room One&Only resort along the Red Sea in Saudi Arabia that will be built by Al Khozama Management Co., a Saudi developer and owner of luxury hotels.
And in March, Kerzner International reached an agreement for its first One&Only resort in Europe, to be built in Montenegro. The 60-acre, 150-room resort, which will be located on the Adriatic Sea on the country’s southwestern coast, will be developed by Triangle Investment and Development Ltd., an affiliate of the State Oil Co. of Azerbaijan.
The announcements reflect a bit of a comeback for Sol Kerzner, who has been in the hotel business since 1962 and developed South Africa’s massive Sun City resort in 1979.
Kerzner International entered the Bahamas as Sun International in 1994, acquiring the Paradise Island Resort then owned by entertainer Merv Griffin.
Four years later, Kerzner reopened it as the first Atlantis property, with 2,300 rooms and the world’s largest man-made marine aquarium.
In 2007, the resort underwent a $1 billion expansion, including adding the Cove Atlantic condo-hotel, the Reef Atlantis dolphin center and the 63-acre Aquaventure water park. And a year later, Kerzner International and partner Istithmar World opened the 1,500-room Atlantis, the Palm, in Dubai.
However, the ensuing economic downturn cut into Kerzner International’s business, and by 2011, the company was saddled with a reported $2.6 billion in mortgage debt.
As a result, last year, Kerzner International sold its stakes in the Atlantis and One&Only Ocean Club resorts in the Bahamas to Toronto-based Brookfield Asset Management in a $175 million debt-for-equity swap.
Kerzner also sold its 50% stake in Atlantis, the Palm, to Istithmar World for $250 million. Kerzner International retained management and branding rights on all three properties.
Follow Danny King on Twitter @dktravelweekly.