The future of destination resorts in Central Oregon

Tourism or real estate?

By Rachael Rees / The Bulletin

Published Jan 26, 2014 at 12:01AM

From the construction of new hotels at both Tetherow and Pronghorn, to the redesign of a lodge and pool at Black Butte Ranch, existing destination resorts in Central Oregon are making a comeback.

But the development of future resorts in Central Oregon is uncertain.

“It seems like we are at a crossroads,” Damon Runberg, regional economist with the Oregon Employment Department, wrote in an email.

Resort development boomed in the years leading up to the economic crisis. But the real estate crash forced several developers to abandon their plans and pushed other resorts into foreclosure or sale.

If existing resorts begin to expand and the real estate market continues to improve, then the region will likely see the development of new traditional destination resorts in the future, he wrote.

However, he said, it is also possible that the demand for luxury homes and exclusive subdivisions on destination resorts will remain low, and future development will focus on the experiences of overnight guests, which could take new forms.

Central Oregon is home to seven of Oregon’s nine active destination resorts, as well as three that stopped development during the recession. Development is underway in six of the seven.

Resorts provide jobs, although much of it seasonal, according to a report from the Employment Department. Statewide, they employed more than 2,200 people in June, which was still below the peak years before the recession. They also contribute to the local tax base.

Recent construction and improvements at Central Oregon resorts indicate the overall recovery and the health of the resort and tourism industry, post- recession, Alana Hughson, CEO and president of Central Oregon Visitor’s Association, wrote in an email.

“This type of infrastructure investment is now warranted because the outlook for tourism growth substantiates the demand for new product, and the resorts are responding to the demand and the improved economic climate,” she wrote.

But just because it’s a good time for existing resorts to grow does not necessarily mean it’s the perfect time to develop new resorts in Central Oregon, said Brent McLean, vice president of sales and marketing for Northview Oregon, the hotel group that owns Brasada Ranch and Eagle Crest.

“There are very large barriers to entry in building destination resorts in Central Oregon,” he said. “You can’t just buy property, build homes, build a golf course and you’re done, given the destination resort ordinance.”

If developers want to build residential communities with amenities, he said, they are also required to build a certain number of overnight lodging accommodations.

“That takes a unique developer,” he said. “They not only need to believe in the real estate market, but also the health of the hospitality industry.”

When Northview bought Brasada and Eagle Crest in 2010 from Jeld-Wen, McLean said, the focus shifted toward hospitality because of the state of the real estate market.

Since then, he said, overnight visitation has grown more than 500 percent at Brasada Ranch, and the resort has added accommodations.

But with the rebound in real estate, he said, the resort needs to focus on both.

“We’re at a very different point. We have a hospitality side of the business that is now making money,” he said. “Equally, we now have the opportunity to be able to release our homesites again … given the health of the real estate market, and with that, truly focus on and invest in the club or the value of membership at Brasada Ranch.”

But while the tourism industry and real estate market are improving, he said, he would question if now is the right time to develop a new destination resort, given the barriers and the proposed expansions of Tetherow, west of Bend, and Pronghorn, northeast of Bend.

“I think anybody who is considering (building) another would really want to consider if there is enough demand at this time given their development,” McLean said.

State Rep. Brian Clem, D-Salem, said building new resorts in a similar model to the existing destination resorts in Central Oregon wouldn’t be an asset.

“If it’s the old model, not about tourism, it’s just about people’s private homes … no I don’t think it would be that beneficial because there’s 10,000 lots (available) already and it would saturate the market,” he said.

The goal is to create tourism- oriented destination resorts, not first homes for people that don’t want to live inside the urban growth boundary, Clem said. And several developers have new ideas that break the traditional mold with concepts such as smaller eco-resorts.

“I want to see dollars flowing. Dollars going in, dollars going out,” he said. “Golf course communities where people get to retire and play golf, that’s not a tourism resort. A tourism resort is somewhere you go and visit and you check out … that’s a lot more dollars.”

— Reporter: 541-617-7818,