It's not on the way to anywhere. In fact, it's about as far away from any population center (four to five hours by car) as any major resort in the U.S. So why build a highly themed, mixed-use project in a place like Lajitas, tucked away on 25,000 acres hard by the Rio Grande River in the Big Bend area of west Texas?
“That's exactly the point,” says Steve Smith, the eclectic Austin entrepreneur who owns and is redeveloping the complex into Lajitas, The Ultimate Hideout: a hotel, condo development, private club and residential community. “We believe there's a pent-up demand among high-end consumers looking for a place to get away from it all.”
Smith is a classic entrepreneur with interests that range from banking to oil and gas to real estate and now the resort business. He made his early mark as a driving force behind Excel Communications, a long-distance phone company that grew through network marketing. He's proud to say that the company achieved $1 billion in annual revenues in just nine years, faster than Microsoft did.
Smith's gamble on Lajitas (although he doesn't consider it one) took shape in early 2000 when he swooped into town to buy the property, then a run-down, second-rate resort, at auction.
Legend is that Smith bought the property sight unseen, and while that's not quite true (his first visit was the day of the auction), he had a squadron of experts performing due diligence on the property and its potential before he made his offer.
Two years later, Smith hired luxury resort veteran Daniel Hostettler as president and managing director of Lajitas. A native of Switzerland and a University of Denver hotel school grad, Hostettler's career has included posts at a number of high-end hotels and resorts in the U.S. and oversees. He joined Lajitas from La Posada de Santa Fe in New Mexico.
Smith believes Lajitas' mix of facilities, amenities and drop-dead gorgeous scenery is what his target audience — transient vacationers and more importantly, buyers of condos and second-home residences — wants.
“We offer the diversity these people seek,” he says. “In particular, today's second-home buyer tends to be wealthier, healthier, younger in attitude and more active.”
WORK IN PROGRESS
And while Lajitas has plenty to offer to consumers in this demographic and others, it's still a work in progress, with several more phases of an $80-million development in the works and on the drawing boards until it's completed sometime before the end of the decade.
It already has an array of top-notch accommodations, recreational facilities and culinary excitement to make it one of the top resorts in Texas and the entire Southwest.
What Smith bought at auction was actually the town of Lajitas, a hamlet of a few homes and fewer businesses between the Big Bend national and state parks and across the Rio Grande River from the even-smaller town of Lajitas, Mexico. The resort and town meld together so visitors feel they're really staying in a small western town rather than at a full-featured resort.
Centerpiece of the resort/town is a two-sided wooden boardwalk separated by a dusty courtyard in which a ripe imagination can conjure Pancho Villa strolling through. (In fact, Villa used Lajitas as a crossing point between the U.S. and Mexico in his days as a bandit.) One side of the boardwalk has the resort lobby and two-story Badlands Hotel and a series of small shops. On the other side are 92 new luxury condos that sold out within hours of going on the market earlier this year.
Naturally, recreation and a wide variety of it is a strong focus at Lajitas. The 7,042-yard Ambush at Lajitas golf course has four holes that overlook the Rio Grande and a unique par-one 19th hole with the green in Mexico. A small spa completes the traditional recreation mix.
To showcase the geography and culture of Lajitas, Smith formed Red Rock Outfitters, a one-stop shop for a slew of outdoor adventures: fishing, river rafting, biking, hiking, birding, jeep tours and horseback riding. Other unusual offerings include woodcarving and a marine fossil tour that highlights a time when Lajitas was under the ocean.
An off-site Hunt Club focuses on more rugged pursuits, including hunting trips for doves, quail, mule deer, coyotes and bobcats. At the shooting range, guests can try their hand at skeet and trap shooting and a growing competitive sport, cowboy action shooting.
The ultimate amenity for the very rich and a key element in the resort's success is Lajitas' private airport. Smith repaved and extended the runway to 7,500 feet so it can accommodate planes as large as Gulfstream IVs. High-roller club members and guests can also charter planes to get to the resort, and the property is contemplating scheduled air service to and from Dallas.
Food and beverage is also key. The signature outlet is Ocotillo, a joint venture with Jeff Blank, a star chef from Austin. The cuisine leans toward sophisticated Tex-Mex dishes like rattlesnake cakes, fried green tomatoes, elk and homemade and smoked-on-premises jerky.
Future development will include more accommodations, more recreation, more meeting space and a residential community. Smith and his team were able to negotiate with the state of Texas to reroute a highway that currently separates part of the resort from most of the meeting and recreational facilities.
That project is scheduled for 2006, followed by development of two-bedroom cottages around a small lake on the property and construction of a new 30,000-square-foot golf clubhouse, which will also house a new larger spa and additional meeting space. Another 18-hole golf course is also in the works.
Topping off the resort will be 300 to 400 private residences, many of which will be built in spectacular hillside neighborhoods overlooking the resort and the Rio Grande. A Smith-owned construction company handles much of the work.
So far, most of the success of Lajitas has been the result of good word-of-mouth and some well-designed buzz marketing. Aside from a few ads, Hostettler's marketing team has focused on public relations — both in-house and with an outside agency — to promote the resort. Results have been impressive and include substantial stories in Travel Weekly, the Houston Chronicle and a long full-color spread in Architectural Digest.
For the first two years, promotion centered on the key Texas markets of Dallas, Houston, San Antonio and Austin. Now, as the resort matures and expands, the marketing sights will extend beyond Texas to as far away as the East and West Coasts.
Direct mail and the Internet are also important marketing tools. These efforts are directed at high-net-worth individuals in the target markets, while all former guests of the resort receive e-mail newsletters to keep them up to date on progress at the property. According to Hostettler, the postal and web mailings help account for the resort's 40-percent return rate.
Direct sales of group business is another priority. Sales people in Chicago as well as four Texas cities solicit high-end corporate and incentive business. The goal is to increase groups from the current 35 percent of the resort's business to about 50 percent to help smooth out mid-week and off-season occupancies.
“Incentive groups in particular are always looking for a different kind of resort, and while we have golf, we also have activities like cowboy action shooting,” says Hostettler. “And for corporate groups looking for serious meetings, our location guarantees a captive audience that won't be distracted.”
Just as important is the marketing of Lajitas' residential real estate, a task overseen by Lou Perna, director of real estate and director of membership.
“It's a case of classic relationship marketing,” says Perna in describing the marketing push. “We work hand in glove with the hotel because its clientele is the same as our potential home buyers.”
Most Fridays, Perna and his staff host a cocktail party for in-house guests and club members who are on property. “It's very low key, and we don't bring up the residential opportunities unless a guests asks about them,” says Perna. “And, of course, our best sales people are the club members who attend the parties. They're satisfied customers, and they love to tell others about Lajitas.”
Smith considered adding a lodging brand to Lajitas, but he says the remoteness of the property scared off most of the chains. As an alternative, the resort recently joined The Leading Hotels of The World.
The management team has made the resort's independent status an advantage.
“We're able to build a five-star culture through a lot of autonomy,” says Hotel Manager Lloyd Van Horn. “Our attitude is that the customer is always right, and while chains say the same thing, it's really only independents like us that have the power to make it happen.”
The property's isolation (the nearest shopping mall, Wal-Mart or even major grocery store is hours away) creates an island atmosphere that helps the management team bond as a unit.
“It's really not too difficult to find line-level employees,” says Hostettler. “What our local workers may lack in polish, they more than make up for in friendly attitudes and willingness to serve.”
The terrorist attacks of Sept. 11, 2001 created a unique human resources challenge for the resort. While not an official border crossing, before 9-11 employees could easily cross the Rio Grande (either by wading across in the dry season or in small boats) to go to work. Guests at the resort would also cross unofficially to visit the town and perhaps have lunch or shop.
Now with tightened security along the borders, employees from Mexico must travel several hours to a border crossing and then several more to their homes in Mexico, which are only a few hundred yards from the resort. As a partial solution until and if border restrictions are eventually relaxed, the resort offers some transient housing to accommodate employees during the week.
“The HR challenge for us has been to find managers who enjoy doing a lot of training and who don't mind living in a remote location,” says Hostettler. A good example is Van Horn, who joined the hotel earlier this year from The Point, a secluded, exclusive resort in the Adirondack Mountains of upstate New York. “We need to do a better job to let potential managers know that we're here and that there are advantages to this lifestyle.”
Smith is a classic business builder. He sees an opportunity, pounces on it, creates a vision and then forms a team to execute the plan.
“My style of ownership is to be hands-on until someone — in this case, it was Daniel — takes the responsibility away from me and performs at the levels I expect,” says Smith, who visits Lajitas only about once a month.
“Steve is what a manager wants in an owner,” says Hostettler. “He focuses on the global concepts, not the minute details.”
Smith and Hostettler are actively looking for other resort opportunities, not as cookie-cutter replicas of Lajitas, but ones for which they can develop distinct visions.
“We're not interested in establishing a chain,” says Hostettler, “but we believe there are a handful of unique opportunities like Lajitas that meet the ‘hideout’ model of remote, exclusive and very different from other resorts but true to the history of the area.”
For Smith, the vision is even simpler to articulate: “We want properties in which guests receive the finest levels of service and facilities but also feel comfortable enough to put their feet up on the coffee table.”
THE BIG IDEAS
Contrary to popular thinking, super-rich high achievers like a slow pace once in a while. Part of the lure of Lajitas for this market, says Smith, “is the fact that cell phones never ring and the only people who know about guests' whereabouts are those they choose to tell.”
Yet these people aren't about to stay at a monastery. They have definite needs and demands besides the peace and quiet of west Texas:
Recreation must be varied, active and even a little offbeat. Golf, a spa and a luxury pool are musts, but so are exotic pursuits such as quail hunting, woodcarving and river rafting.
Getting there — even a resort as remote at Lajitas — must be fast and seamless. Guests and club members with private or chartered jets can get to Lajitas from the major cities in Texas in two hours or less. At landing, staff members greet guests and accompany them to the resort.
Food and beverage must be top-notch and should reflect the local culture. Lajitas teamed with Austin chef Jeff Blank and on-site Executive Chef Santiago De La Cruz to create what they call “cowboy cuisine born on the banks of the Rio Grande.”
If guests like the place, they may want to buy a condo or second home. At Lajitas, purchase options include on-site condo units and cottages and residential lots on nearby mesas and hillsides.
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