The Family Hotel and the Luxury Resort: From the Boom to the Bust

Ralph Lauren Dreams in California

It’s not a secret—Ralph Lauren plans to create a new American-inspired, high-end resort at the Newport Beach Convention Center. This is not an idle dream, and the real estate developer has already broken ground across the street. The hotel will occupy three floors of luxury condominiums and, hopefully, a parking structure; it will feature a spa and a restaurant, among other amenities.

But, as always seems to happen with luxury resorts, things appear less than dream-like on the exterior. It was recently announced that the project will feature a total of 5,300 rooms. And, even more surprisingly, that it will be a mixed-use development—a sort of mini-Disneyland for the upscale, family-oriented resort market.

If this seems like a strange place to develop a luxury resort—a sort of Disneyland for the sophisticated, luxury market—this sort of development has been around in California since the mid-1990s.

As I point out in my new book, The Family Hotel and the Luxury Resort: From the Boom to the Bust (Princeton: Princeton University Press, 2006), there were two stages in the history of this sort of project. The first occurred during the late 1990s, when the market for luxury resort-style hotels began to boom. The demand, coupled with the high costs of the high-end market, created a very high profit margin for anyone selling a luxury resort. The second occurred after the luxury market in California had experienced two major busts, the first in 2000, when Disney announced its decision to close its Anaheim resort, the second in 2006, when prices for luxury resorts became so high that investors could not make a profit on them.

In California today, there are two types of luxury resorts. There are luxury resorts that attract families, like Disney World’s California Adventures and SeaWorld San Diego’s Aquatica Waterpark; there are many luxury resorts that are more for the most discriminating tourists—the sort of place that has great restaurants and spa services—like the Waldorf Astoria and the Chateau Marmont. In the

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