Is rehabbing an eco-resort more profitable than building one?

Rehabilitating a run-down resort can indeed be more profitable than building a new one due to several factors that can lead to cost savings, faster operational commencement, and increased appeal to potential guests.

1. Existing Infrastructure and Facilities:
   • Cost Savings: Rehabilitating an existing resort allows for the reuse of certain infrastructure, such as foundations, utilities, or partially functional structures. This significantly reduces construction costs compared to building from scratch.
   • Example: Instead of building new swimming pools, renovating and upgrading an existing pool structure can save a substantial amount of money.
2. Permits and Approvals:
   • Time and Cost Efficiency: Obtaining permits for renovation is often faster and less complex than securing permits for an entirely new construction. This expedites the project timeline and reduces administrative costs.
   • Example: Acquiring renovation permits for an existing resort with a known history may take a few months, whereas securing permits for a new build could take a year or more due to environmental impact studies and other assessments.
3. Location and Established Market Presence:
   • Existing Customer Base: An old resort likely has a database of previous guests. Rehabilitating the resort allows for re-engagement and targeting these loyal customers, potentially resulting in a faster return of guests and revenue.
   • Example: Sending promotional offers to the previous guests of the rundown resort can lead to a quick uptake in bookings upon reopening.
4. Retrofitting for Modern Amenities and Eco-Friendly Features:
   • Cost-Efficient Upgrades: Retrofitting the existing resort to include modern amenities and eco-friendly features can be more cost-effective than building these features from scratch. Utilizing sustainable practices can also attract environmentally conscious guests.
   • Example: Upgrading the existing HVAC systems to energy-efficient ones can save on operational costs in the long run and appeal to eco-conscious travelers.
5. Reduced Risk and Uncertainty:
   • Predictable Challenges: While renovation projects may have unforeseen challenges, they are often less unpredictable than building a new resort. Unknown ground conditions or unexpected environmental factors are generally less prevalent in existing structures.
   • Example: When renovating, you are aware of the existing structure’s condition and can plan and budget accordingly, mitigating potential financial surprises.
6. Preservation of Heritage and Local Appeal:
   • Cultural and Historical Value: Renovating an old resort can help preserve local heritage and maintain the authenticity of the property. This can be a unique selling point, attracting guests seeking an authentic experience.
   • Example: Keeping the original architecture or certain historical elements of the resort intact while upgrading facilities can attract guests interested in experiencing the local culture.
7. Faster Time to Market and Revenue Generation:
   • Quicker Opening and Revenue Stream: Rehabilitating an existing resort typically takes less time compared to building a new one. This means the property can be operational and generating revenue much sooner.
   • Example: A renovation project that takes 12 months can allow the resort to start generating revenue a year earlier than constructing a new resort that might take 24 months.

Rehabilitating a run-down resort can be a strategic and profitable approach, leveraging existing assets and established market presence while minimising risks and costs associated with starting from scratch. It can result in a revitalised, attractive resort that meets modern standards and exceeds guest expectations.

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