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American entrepreneur Chris Burch, 66, says his original motivation for entering the high-end resort business was more personal than monetary—he fell in love with Nihiwatu, a remote luxury resort on the island of Sumba in Indonesia, where he went to spend quality time with his three sons. After his visit there, he decided to buy the place in 2012 from the original founders Claude and Petra Graves. Now christened Nihi Sumba, he is turning the property into the flagship of what he hopes will become a global luxury hospitality brand, Nihi Resorts.
“It started as a small project, really for my children—that’s 100% why I bought it, to spend quality time with my sons,” says Burch. He also has three daughters with his first wife, Susan Cole, but Burch says they’re “not really beach people” and prefer to holiday with their dad at his property outside Paris. His boys are from his marriage to fashion designer and ex-wife Tory Burch. “My boys love Nihi, though. We try to go together twice a year, for two weeks each time.” Buying the property, Burch says, “came about just as a way to do something nice for my kids, and it turned into something that’s a special place for a lot of people.”
Indeed, the deepest satisfaction Burch gets today, he says, is not only from creating great memories at Nihi with his own children, but in seeing other families do the same. “As any parent knows, time goes by very fast. It gives me such pleasure to see families have a fantastic time at Nihi. It’s a luxury vacation, but it’s not just all about hanging out at the pool—there’s horse riding on the beach and hiking, a whole variety of cultural activities,” says Burch. “It’s really impactful.”
Burch’s foray into resorts is a far cry from his original career in retailing. Burch made his first fortune about two decades ago, selling the preppy clothing brand he and his brother Robert started, Eagle’s Eye, in a 1998 deal that valued the company at $60 million. During the years that followed, Burch’s wealth grew through canny investments in telecom, real estate, retail and technology. His debut on the Billionaires list came in 2013, after Burch reaped $650 million selling most of the 28% stake he’d held in the Tory Burch fashion business that he and his ex-wife had built over the previous decade. He fell off the billionaires list in 2015, but remains very wealthy.
It was in search of an off-the-grid getaway destination that Burch stumbled onto Nihiwatu. While more than 5 million tourists visit Bali every year, official figures show only about 15,000 visit Sumba. Many are heading to the Nihi Sumba resort that Burch and South African hotelier James McBride have been building on the foundations of the Nihiwatu property.
Nihiwatu, the name of the beach in front of the resort, is popular among surfers drawn by the perfect wave breaking just off its shore. When Burch first arrived in 2012, the resort had six bungalows and two villas overlooking a 2.5km stretch of beach, on the edge of a property comprising nearly 500 acres of unspoilt wilderness. The original founders also started the Sumba Foundation to provide education, medicine, clean water and other vital services to the local communities, a work that Burch has continued.
“When we first came to this resort in 2012, it was a very small place, but it had such a spirit to it,” Burch says. “Claude and Petra Graves had done such an amazing job of building this ‘lost world’ at the ends of the earth.” When Burch learnt that the couple were open to an offer that would allow the resort to improve and grow, he acquired a majority stake in 2012. With that transaction, plus the purchase of approximately 100 acres of additional land, and the rebuilding and expansion of the resort to its current footprint of 33 villas, Burch invested a total of $35 million into Nihi Sumba.
To transform the original, rustic resort into a truly world-class destination, Burch partnered with McBride. Burch got to know McBride when McBride was the general manager of New York’s Carlyle Hotel, where Burch lived for a spell. “James was a friend to me, he was so kind to me while I lived at the Carlyle,” Burch explains. “And I came to realize, this guy is a true genius. So when I was considering buying Nihi, I convinced James to come have a look—and we agreed that together, we’d build it as we envisioned it, together. It was a real collaboration.”
Burch considers Nihi to be probably the most irrational, emotionally-driven investment he’s ever made. Similarly, his partner McBride says, “There were many times in the dark days of building Nihi where my peer group thought I’d gone completely nuts or descended into midlife crisis.” The pair’s work has paid off, with Nihi Sumba winning numerous accolades, including Travel + Leisure magazine’s prestigious World’s Best Hotel award in 2016 and 2017. “I was blown away, shocked,” says Burch of the awards. “It just made us work harder. It’s really helped the hotel. Guest expectations, obviously, have gone up, but we rarely have a guest who’s not happy.”
Nihi Sumba has, to the surprise of the pair, performed well as an investment. “Neither Chris nor I initially thought that Nihi would make a nickel,” says McBride. “However, it’s turned out to be very successful.” According to McBride, average occupancy at the resort—where a one-bedroom villa starts at $1,545 per night during high season, while nightly tariff on a five-bedroom estate is $16,595—is over 70%. In terms of RevPAR (revenue per available room, a standard hotel metric), he asserts, “Nihi is the number one performing hotel out of the whole competitive set in the greater Bali area. We outperform everybody. Bulgari, Ritz-Carlton Reserve, the Amans—we outperform them all.”
This goes some way to explaining why Burch and McBride are scouring the world for locations to create new Nihi outposts. Doubtless with an eye on recent deals like the January sale of Bangkok-based Six Senses to the InterContinental Hotels Group for $300 million, they’re on a mission to expand the Nihi brand.
But they’re committed to doing it authentically. “It would be easy for me to set up a licensing company, just let anyone build Nihis anywhere in the world, and make a lot of money. That’s not what we want to do,” Burch says. Instead, he and McBride consider it essential that each new Nihi replicate Sumba’s recipe of sustainable luxury, responsibility, philanthropy and community engagement, in a wild seaside setting.
They’ve secured three suitable locations thus far: one in Guanacaste, Costa Rica; another in East Cape Baja, Mexico; and a third on the northeast coast of Iceland. With total projected budgets of between $50 to $75 million for the Mexico and Costa Rica properties, and $30 million for Iceland, each will feature between 30 to 45 rooms, on a similar scale to Sumba. Distinct from the brand’s Indonesian wellspring, however, the new Nihis will also boast a residential element, allowing individuals to purchase their own slice of paradise.
As Nihi embarks on its ambitious campaign of global expansion, there’s also potential for more significant, large-scale investment from interested outside parties. “We are raising money at the moment and we do have joint venture partners,” McBride says. “Unlike Sumba, this is not simply a case of Chris Burch writing a check. It’s a very different situation.”
April 16, 2019 at 04:14AM
Forbes – Entrepreneurs