In December 2023, Allegiant Air officially opened a resort in Charlotte Harbor, Florida.
The resort, which spans 22 acres, has 20 restaurants and bars, and 785 rooms, was once called “transformational” for Allegiant by the carrier’s former CEO and founder Maury Gallagher.
The ultra-low-cost carrier decided to open the hotel — called the Sunseeker Resort — after seeing success with third-party hotel bookings.
But just over a year later, Allegiant is looking to offload its southwest Florida resort by the summer.
In a regulatory filing posted last Friday, the airline said it had concluded the hotel was “no longer fully recoverable,” after conducting an analysis on the resort’s cash flows, valuation, and other assets.
A Drag on Allegiant’s Fourth-Quarter Bottom Line
Allegiant CEO Greg Anderson said during a call with analysts on Tuesday that the carrier was either hoping to sell off the hotel or find a partner to take a majority stake.
“We have great confidence in Sunseeker’s future success and have observed material improvements in its financial performance,” he said on the call. “Nonetheless, we need to acknowledge that a new capital partner will be important for Sunseeker to achieve its full potential.”
The resort became a drag on Allegiant’s bottom line. For the fourth quarter, Allegiant recorded an impairment charge of $321.8 million for the resort.
The hotel also faced property damage costs of $5.7 million from Hurricanes Helene and Milton. Its occupancy rate was at 54%, which is low for a hotel, and it offered average rates of $238 per night.
Without the resort factored into Allegiant’s bottom line, the ultra-low-cost carrier would have otherwise had a successful fourth quarter. Allegiant’s operating margin without the Sunseeker would be at 13.2%, making it more profitable than Delta Air Lines and United Airlines during the last three months of 2024.
Even for the first quarter, the hotel’s occupancy rate is expected to peak at around 60%, which is still low for a resort located in a warmer area in the middle of winter. Anderson said the resort’s strongest quarter is typically the first. Occupancy rates during the third quarter of 2024 were at just 31%.
Anderson said that Allegiant is currently in talks with investors and floated the idea of major hotel companies like Hilton or Marriott becoming distribution partners for the resort.
“What we’ve learned is that investors want a seat at the table to determine who that distribution partner is or that flag, the Marriotts, the Hiltons and the likes,” he said. “And so, all of those potential flags or distribution partners have toured the property. They’re very positive on it.”
Obstacles From Day 1
Allegiant first unveiled plans for the resort in 2017 as part of an effort to revive a waterfront in Port Charlotte that never came back from the damage of Hurricane Charley in 2004, according to the Sarasota-Herald Tribune.
John Redmond, the former president and CEO of MGM Grand Resorts, joined Allegiant and spearheaded the project. The ultra-low-cost carrier had been planning to eventually open multiple Sunseeker Resorts at the time.
Redmond, who was CEO of Allegiant, resigned in 2023.
However, low occupancy rates and high construction costs hindered the hotel’s ability to succeed.
It cost over $720 million to construct the hotel, which was $225 million over Allegiant’s original budget. The pandemic and supply chain issues further delayed the hotel’s opening. Then, the resort experienced damage from Hurricane Ian.
Another downside to the Sunseeker was its location. The resort is about 30 miles away from the nearest beachfront properties in Fort Myers. The resort’s president told Bloomberg that a beach wasn’t an option due to limited real estate in Southwest Florida.
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