CHARLOTTE HARBOR, Fla. — Sunseeker Resort in Charlotte Harbor continues to lose money, according to a July 31 second quarter earnings call from its parent company Allegiant Travel Co.
The report showed that Sunseeker brought in $16.8 million, but had an occupancy rate of just 35% at a nightly average rate of $260. Gregory Anderson, Allegiant Travel Co President and CEO said the company expects the resort to lose $15 million by the end of the year.
Watch FOX 4's Charlotte County Community Corresponent Alex Orenczuk report on Sunseeker Resort's shaky second quarter, and the potential future of the hotel:
“We forecast our cash loss estimate for the year to be roughly $15 million. This includes a full year EBITDA loss of $25 million, expected to be offset by up to $10 million of incremental proceeds from business interruption insurance due to the delays in opening the resort. Clearly, Sunseeker's financial results are not meeting expectations.”
Allegiant has sought the expertise of hotel consultants from Prospect Hotel Advisors to help turn the resort’s financial struggles around.
“We are proactively addressing this by engaging Prospect Hotel Advisors and experienced hospitality management firm with a successful track record,” said Anderson.
The resort opened in December after several delays from hurricanes and the COVID-19 pandemic. The delays put the cost of the resort at more than $700 million, approximately $225 million over the initial budget.
On the earnings call, Anderson was asked how long the company was willing to continue losing money through the resort before seeking divestment, to which Anderson responded “I want to say that all options are on the table.”
Additionally, Maurice Gallagher , Allegiant Travel Co Executive Chairman of the Board, Chief Executive Officer added “that includes a sell or stake sell. And I think down the road, as we think about it, in the not too distant future, an option will be to remove it off of our balance sheet.
Fox 4 spoke with Michael Landsberg, Chief Investment Officer at Landsberg Bennett Private Wealth Management in Punta Gorda, who said the low occupancy rate, and hiring outside consultants could be cause for concern.
“The big concern that I had when I looked at the earnings report was, they have hired an outside firm which I think is a good idea, but they are looking at potential sales and sales of the property,” said Landsberg. “Ironically after six months, we all thought it would take a while to get moving, it seems odd that they are talking about already selling the property.”
Landsberg said the outside counsel could help the resort become more profitable, but it could also aim to make the property more attractive to potential buyers.
“Outside counsel can do a few things,” said Landsberg. “There are probably a few operational things they could do to be more profitable, are they marketing enough to conferences and are they marketing enough via their airlines? And the last thing which is probably the thing we don’t want to hear is what are potential suitors? Are they able to dress this up a bit to potentially be able to sell it off? Because an outside firm does that as well.”
Allegiant, primarily an airline company, is significantly smaller than other hospitality industry leaders. According to NASDAQ, on Aug. 2, its market cap was approximately $796 million, compared to Hilton and Marriott’s market caps which are $51.2 billion and $60.1 billion respectively.
“The project (Sunseeker Resort) was about $700 million and obviously they financed that with debt, but it's a large investment,” said Landsberg. “Whereas if it's a Marriott or Hilton, this might be one of 20 or 30 new projects going on. So, it's certainly not the same financial bet that Allegiant has made and if its not working I don't think they are going to have the ability to hold out for two or three years to let this run, I think they are either going to have to make it work right away or look for another option like a sale or potential sale.”
Landsberg said another indicator Allegiant could be looking to offload Sunseeker is the company’s falling stock price.
“Allegiant's stock is down roughly 40 percent year-to-date and over 60 percent in the last 12 months, so anybody who is offering money is going to realize they are hurting,” said Landsberg.
Dave Gammon, Director of Charlotte County Economic Development took a more optimistic viewpoint on Allegiant’s earnings report. He told Fox 4 that the resort is still recovering from the delayed opening and it just needs more time to be able to obtain recurring customers.
“It will get going,” said Gammon. “Remember, a lot of their business model was conventions, and you can’t plan a convention next weekend, or next month. They book years in advance. During all those delays they lost a lot of convention business and now that it's open they will start booking those again. I think in 2025 you’re going to see a very different resort than you see right now.”
Gammon said the investment Allegiant made in the Sunseeker is long term.
“They are not doing it for a short term quarterly report,” said Gammon. “I have faith in them, I know what their long term vision is. This is a long term play. They are there for a long time just like the airline, so it will come around.”
Aside from the earnings report, Gammon said having the resort open has already positively impacted the county.
“Our ad valorem property tax we expect for them is about $3 million, that doesn't count the tourism development tax or the sales tax,” said Gammon. “It's a tremendous generator of income for the county as it sits, not with the profit that they are going to be doing. So, it's a fabulous generator.”
