CEO
DDRM
Over the past two decades, Anaheim, California-based DDRM has developed more than 30 hospitality based mixed-use projects, and CEO Stan Castleton has been the leader in making them successes. In January, just months away from the opening of his next major luxury development — the $260 million-St. Regis Deer Crest in Deer Valley, Utah — Castleton took time to reflect on the elements of a successful resort, the challenges he faces in the current recession, and how luxury hotels continue to evolve.
ET: With an education in accounting and agribusiness, what drew you into the world of real estate and development?
Stanley R. Castleton: My father was in the real estate business and that started my focus. When I left school I went to work at Arthur Anderson and all my clients were in the real estate business. So that was my real launch. The office, which was in California’s Orange County, just had a huge real estate practice.
ET: In your career so far, what were a couple of projects or situations that were most enlightening?
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Stanley R. Castleton: My first job after I left the accounting firm was with a small home builder. I learned a lot of things not to do there. I was their accountant, and within four months everyone else had quit. They had made so many mistakes. So I reached out to some real smart people in the trade and was able to turn the company around. I learned so much from them. We completed projects in Arizona and California.
ET: Did you have a mentor?
Stanley R. Castleton: I did have some people I looked to who really impacted my business approach and style. Two in particular. One was my boss at Arthur Anderson. He was an accountant but a very prominent guy in not only accounting but the real estate industry as well. Another was a partner, Bill Dubrowski, who was a former lender and very honest, straight-forward, and get-to-the-crux-of-the-matter kind of guy.
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ET: You are a leader in condo hotel development and marketing at the luxury and ultra-luxury level throughout the country. In today’s environment, what destinations will thrive and which will need time to recover?
Stanley R. Castleton: I think historically, the hospitality business in general has taught us that the places that are the easiest to get to will do better and recover faster. There are a couple of reasons for that. Even in the ultra luxury sector, money may not be the issue but time is. Thus the traveler wants to invest the least amount of time in travel and the most in having the experience. So the harder it is to get to, generally speaking, the tougher. The St. Regis, Deer Crest’s location in Deer Valley has that great appeal in accessibility with a thirty-minute drive on a highway to Salt Lake International Airport, a two mile-distance from Main Street, Park City and its true ski-in, ski-out location at Deer Valley Resort.
ET: It sounds like a scary time to be in real estate. Have you encountered a professional situation as challenging as this economy?
Stanley R. Castleton: No.
ET: DDRM has taken on a number of difficult projects and turned them around. Do you see more opportunity in this economy for rescuing projects?
Stanley R. Castleton: Historically have done better in those down times. Certainly we are looking at those projects and we get a lot of calls, pleas for help. I think we’ll survive as a company. Maybe even thrive, I don’t know. But you never know. This is a very different situation. An inability to get financing of any kind for commercial projects is a real concern. The thing that’s different about this situation from other downturns is the commercial lending infrastructure is not there anymore. The people who process and analyze loans don’t work at banks anymore, they are out looking for jobs. So even if a bank wanted to lend money, it would take months to tool up and create the process to loan money. Some banks are still doing very guarded and safe things, but that is the exception rather than the rule. And a worry is, when you take on a turnaround, sooner or later you have to re finance. But, if you can work with an existing lender it’s a different story.
ET: How about opportunities outside the U.S.?
Stanley R. Castleton: We are actively working in Mexico. There are things there that make it both easier and harder.
ET: Your next project to open is the St. Regis Deer Crest in Utah. Are other projects still on track too?
Stanley R. Castleton: St. Regis is a mature project and it will open in summer 2009. It is actually a pretty solid financial structure given all the circumstances. A project we were doing in Indian Wells is now slated for Palm Springs. We are no longer doing a project in Bermuda. We are working on a project in Ketchum, and pursuing one in Mexico. And we still have a significant presence in Deer Valley/Park City for large undertakings. But we have adjusted everything there to 2011 as a target date for sales or presales. I don’t think there will be any turnaround until maybe winter of 2010 or 2011 in the ski resort world.
ET: Have you changed expectations for sales since projects began?
Stanley R. Castleton: In our upper level projects, we don’t ever change our pricing. That is to protect those who already purchased properties, so we’re holding prices. Amazingly, even in the St. Regis, there is still a tremendous amount of activity. People are taking a lot longer to make a purchase decision. But at the $2,000 square foot and over level, they are still buying. It’s just slower.
ET: What is your advice to the person who is a buyer—one of your end consumers—in this environment?
Stanley R. Castleton: That depends upon the property under consideration. We like to think we focus on irreplaceable projects in their location. Those values will always be there at some level. So I would just recommend focusing on those projects, the ones that are ground zero locations and very special.
ET: At the high end of the market, how are projects evolving to be attractive to the hotel guest and condo buyer who only wants the best?
Stanley R. Castleton: That is the $64 million question. Some years ago we became frustrated about not understanding that. The really wealthy people are hard to get good information about. They don’t fill out exit interviews or do focus groups as a general rule. So we hired a company to gather resort stay information, whereby guests staying at hotels would evaluate the process in person. We had them check in as guests, and they got into conversations with people in the hotels’ restaurants, pools and spas. And over a year they got really good information on what wealthy people were looking for in a resort. I found it interesting that there were suggestions for changes to the hotel’s physical facility, but the big thing that people wanted was a place with a sense of community. If they had a family with kids, they wanted to feel they could go back every year because everyone in the family thought the resort was a cool place and that they would know the people there. So that’s where we’re focusing. It’s more about the people you hire and retraining the people who work there. There are some physical issues too, the new resorts have to be very much a family place. One of the many ways that the St. Regis, Deer Crest welcomes families of all different ages is by being diverse and creative in its year-round amenities.
ET: What are your goals for DDRM in next five years?
Stanley R. Castleton: Right now, to still be in business. A resort developer is kind of on the outside rim of the wheels spinning fast.
ET: What are your personal vacations like?
Stanley R. Castleton: I recently visited Rosewood Mayakoba. It is fantastic, and the rooms are very unique for the way they are oriented to the water. They faced challenges because of the configuration of the site but I like what they did there a lot. I visit a lot of resorts and take photos of the oddest things, like the plumbing under the sink or how the curtain rods fit. But that Rosewood property did a great job bringing the indoors out and the outdoors in. Most of my time is now spent in Park City.
ET: What else would you like to share with Elite Travelers?
Stanley R. Castleton: We focus on resorts, which offer a different experience than going to the St. Regis or Four Seasons in New York City. The decision-making process is very different. We’ve listened to people about what they want in resorts and we’re excited about what we can provide going forward.
