When The New York Times columnist Maureen Dowd attended the opening of Margaritaville Hollywood Beach Resort in Hollywood, FL, she told John Cohlan, CEO of Margaritaville Holdings, she thought the company had created a new category of hotels—luxe casual. “I really liked that and I think it’s accurate,” said Cohlan, likening the experience formed at a Margaritaville hotel to one you see at a sporting event.
“If you go to a Jets or a Yankees game and you’re an investment banker and you’re next to a fireman, in your normal life, you might have nothing in common. Then the Yankee hits a home run. You turn to the guy and you hug him because you have something in common,” said Cohlan. “When you come to Margaritaville, you know you have something in common—a love of paradise.”
And while people might hear Margaritaville and think flip-flops and suntan lotion, Cohlan said it’s a brand that has broad appeal. “Over the holidays, our top suite in Hollywood went for $15,000 a night. That person is associating with people who are probably paying $350 a night,” he said, noting the demographic runs the gamut of price points, age groups, and business and leisure. “You don’t have to be a rocket scientist to know if you build it right, on weekends on the sand in South Florida, Margaritaville will do very well,” said Cohlan. “For a hotel to really be successful, you have to be doing business Monday through Thursday—that’s corporate groups.”
Citing the track record at the company’s restaurant portfolio, Cohlan said it wasn’t a surprise the hotels would do such good corporate group business. “Margaritaville is a very social concept; it’s about people who like to entertain and have fun. When you go to these meetings, you want your people to be interfacing with each other,” he said.
A lawyer who never practiced law, Cohlan began his career in private equity, working with well-known businessman Nelson Peltz. “Nelson wanted to live in Palm Beach where he had a home, so we moved the corporate office down there. I was 36 or so; I was single, it was the last place I wanted to go, but not only did I meet my wife down there, but socially, I met Jimmy [Buffett],” said Cohlan. And when he saw Buffett perform, he said, “I’m looking at these 100,000 people wearing the fact that they love the idea of fun surrounding this experience and I said to myself, ‘Wow. This is a brand.’”
Universal Orlando thought so, too. While today CityWalk is a bustle of shops, restaurants and more, the area looked very different in the 1990s. “They wanted to do a 20,000-sq.-ft. Margaritaville,” said Cohlan. “Jimmy is very intuitive and he didn’t really want to license his name. He called me and said, ‘If you would do this with me, this could be fun.’ I had this moment to stay with what I was doing on Wall Street or jump off a cliff and try to build something—which I did.”
While the partnership between Buffett and Cohlan began with restaurants, it expanded to include everything—from beverages to polos to headphones. “It quickly turned into a true lifestyle business,” said Cohlan. “If 20 years ago, I said to you, ‘What is the most logical application of this great intellectual property called Margaritaville?’ You’d probably say a place where you go and have a good time,” he said
“The challenge there is in order to do that like we did in Hollywood, you need $200 million,” continued Cohlan. “You had to essentially earn your right to attract the type of capital that’s required to do what we’re doing now. We started with the brand extensions. Now, we get to come back to what is really the core value of this intellectual property with all of this wind at our back. We probably created $1 billion of system-wide sales before we did our first hotel.”
Now, Cohlan said, the company has eight resorts open, including two vacation ownership properties and Margaritaville Beach Resort Grand Cayman, set to open shortly after Cohlan spoke with Hotel Business. The company has about 12 hotels in active development. “If you go back one-and-a-half years, there’s probably $1 billion of capital that’s gone into the ground with our name on it. If you go forward the next 18 months, there’s probably another $1 billion,” said Cohlan. This includes a resort in Orlando being developed by Encore Capital Management. With the first phases of the project expected to open by the end of 2017, the property will include a Margaritaville hotel, Margaritaville-themed vacation homes, timeshare units, 30,000 sq. ft. of function space, 200,000 sq. ft. of retail space, a dining and entertainment district, water park, wellness center, fitness trails and a destination water taxi system.
“We’re trying to create a diversified range of lodging opportunities in an experience-driven destination,” he added. “That’s an $800-million project at the entrance to Disney’s Animal Kingdom. There will be a hotel with 250-300 rooms, 500-1,000 homes once we’re finished with phase two, that you can rent. However you’d like to interface with that lifestyle, you’re going to have that menu.”
Looking to future developments, Cohlan said that the strategy is driven by destination, and destination can be defined broadly,” he said. “We have this fabulous property in Pigeon Forge, TN; I describe it as Orlando in the mountains.” Cohlan noted good fits could range from Chicago to San Diego to Las Vegas to plenty of locations in Texas and the Southeast.
Additionally, international locations pose a great opportunity. “In the Caribbean, we’re incredibly well-known,” said Cohlan, pointing to the company’s partnership with Norwegian Cruise Line.
“Our goal is to continue to build upon and sustain this Margaritaville magical moment that we’ve been able to capture in the business where we belong more than any other business: destination lodging,” he concluded. HB