Hospitality Lawyer: Baja Mexico - So what's a brand?

I’ve noted in prior postings that Baja is red hot, and that Trump has become a brand. So what is noteworthy about this latest development?

Trump Baja report from the Associated Press
The AP report was fascinating. It reported $122 million in presales for the Trump Baja California project in Mexico. That has to be great news for Irongate, a west Los Angeles development partner of Trump in the project. According to Irongate, construction of the $200 million-plus Trump Ocean Resort Baja Mexico is expected to begin by the end of March 2007, with the first of three towers to be completed by the end of 2008.

And the units aren't cheap. Prices range from the mid-$200,000s to more than $1 million. A giant screen in the ballroom of the hotel where the sale process was conducted, showed that 188 of the first tower’s 232 units - worth about $46 million - were spoken for by noon, including five of six penthouses in the 27-story building. Names were called one by one, with each person given only a few minutes to decide. The screen displayed the names of four people next in line.

What's interesting about all this?
This is interesting for a number of reasons.

First, if you have not noticed, there is a huge housing slowdown that is so significant that it threatens the nation's economy. It has hit almost every sector of residential housing, including condo hotels in many areas. Second, although some purport to dislike the man and many admire him as their personal hero, Donald Trump—whether a star, a real estate mogul, or a brand—has become something transcending his name. He has become a brand. And although many incorrectly believe that he is the developer of all the Trump projects, his “involvement” or “partnership” in many projects is probably best described as something much closer to a franchise or licensing arrangement. He is, I submit, a brand.

So what?
Brands have become more important in hospitality, mixed-use and residential products-- and brand extension from one component of a mixed-use project (say a hotel) to other components (such as residential condominium, fractionals or time share).

More than ever, brands... or successful brands anyway … have really shown their power in the recent months. And Trump is among the power houses.

As we noted in earlier articles, Trump projects have achieved a level of success beyond many of their peers, and at a time when a number of comparable projects – particularly mixed-use projects – seem to be struggling more than they have in prior boom years. See the posting on his 8 hour sell out in Hawaii.

This would seem to suggest some combination of factors, including the other major brands' reticence to become involved in this hotel mixed-use product type, Trump’s selection of superior product, better partners, great location, incredible relevance and value of the Trump name to provide brand-like values for consumer comfort in consistency, quality and value, and so on.

In other words, among all the other things he may have become, “The Donald” is now a brand, and apparently a very successful one for hospitality product that is highly sought after and difficult to obtain.

Some further thoughts
So, what's in a brand? And what does it mean?

Well, whether it is Trump, Four Seasons, Mandarin, Shangri-La, Hilton, Hyatt, Starwood, Marriott, InterContinental or whatever, the brands seem to be on the upswing. How far has the pendulum gone. What does it mean to have a brand? When is a brand relevant? What makes a good brand? What does that all mean? That is the subject of a posting to come soon...

About the Author
Jim Butler is recognized as one of the top hotel lawyers in the world. He devotes 100% of his practice to hospitality, representing hotel owners, developers and lenders. Jim leads JMBM’s Global Hospitality Group® –– a team of 50 seasoned professionals with more than $40 billion of hotel transactional experience, involving more than 1,000 properties located around the globe. Jim sees the condo hotel phenomenon as just one part of the long-term trend toward "hotel-enhanced mixed-use" where hotels work together with shopping center, residential, office, retail, spa and sports facility components to mutually enhance the entire project's excitement and success.

Jim and his team are more than "just" great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them. They are a major gateway of hotel finance, facilitating the flow of capital with their legal skill, hospitality industry knowledge and ability to find the right "fit" for all parts of the capital stack. Because they are part of the very fabric of the hotel industry, they are able to help clients identify key business goals, assemble the right team, strategize the approach to optimize value and then get the deal done.