Summit Hotel Properties is betting that the future of luxury hospitality is treehouses, not beachside resorts and ski chalets.
An $818 million real estate investment trust has acquired a 90% stake in Onera Fredericksburg, a luxury “glamping” resort in Texas Hill Country. The REIT paid his $5.2 million for stock to acquire his 90% stake in his adjacent 6.4-acre parcel.
The resort has 11 separate “tree houses”, which is a misconception. A treehouse is as much like a box on a branch in a backyard as a lion is to a domestic cat. Treehouses are modern self-contained apartments with amenities such as private pools and floor-to-ceiling windows. Gone are the good old room numbers. Each treehouse has a name such as ‘Monarch’ or ‘Spyglass’.
According to Onera’s booking page, a two-night weekend in mid-December will run you between $1,500 and $2,300. The company aims to be the pinnacle of the “glamping” market, according to founder John Cole.
Cole said Onera started as a “side job” during the pandemic. Outdoors, secluded from other travelers, and expanded horizons, as people sought the opportunity for safer travel. People who wouldn’t normally stay outside the Ritz started ‘glamping’. This is a trip that combines the more pandemic-friendly environment of a campground with luxury amenities.
“I didn’t even see him wearing sandals, but I found upstate New York because of COVID-19,” Cole said.
Fredericksburg plays a role with Austin similar to what the Catskills do in New York City. Once the center of a failed attempt to establish a German colony in Texas, the town sits in the heart of Texas Wine Country, with dozens of vineyards just a short drive from the Onera site. In recent years, Hill Country has seen an influx of wealthy buyers seeking compounds for their second home and retirement.
Cole said Onera plans 10 properties similar to the Fredericksburg Resort. Breaking ground on his second site in Wimberley, another of his pastures in the Hill Country not far from Austin. Cole declined to name other markets he hopes to expand into, but he said they are similar to “destinations discovered during Covid.”
As part of the transaction, Summit will have the opportunity to acquire a 90% stake in future developments. Luxury hotel assets like Onera are uniquely positioned as a hedge against inflation in the hospitality industry, according to a recent CBRE report.
Of course, success is no guarantee. Especially for hospitality startups at the time, which proved difficult for start-ups and hospitality businesses. The $5.2 million investment is a rounding error for his REIT on Summit’s scale. But it’s still a big investment for an early-stage company that claims to have new formulas for tapping high-end markets in a post-pandemic world.