Allegiant has brokered a deal to sell its Sunseeker resort to Blackstone for $200 million, which should create some financial relief for the company after the property underperformed since opening in late 2023.
Sunseeker was conceived roughly seven years ago when Allegiant purchased property on Florida’s gulf coast. The resort was originally scheduled to open in 2020, but its debut was delayed by three years due to the pandemic and supply chain disruptions.
Allegiant’s quarterly reports for 2024 show the 785-room resort never had an occupancy rate higher than 54%, and the lowest was 31% in the third quarter. The property did sustain damage and disruptions in operations from two 2024 hurricanes—Helene in September and Milton in October. Average daily room rates were $330 in the first quarter, $260 in the second quarter, $204 in the third quarter and $238 in the fourth quarter. Occupancy rates improved to 70% in the first quarter of this year with an average daily rate of $284. Sunseeker pre-tax losses also narrowed in the first quarter to $7.7 million compared with $13.9 million the year prior.
Las Vegas-based Allegiant in late July 2024 opted to engage in a strategic review of Sunseeker with Prospect Hotel Advisors and in May of this year said the process for a potential or partial sale was on track for completion by summer 2025.
“While a sale had been anticipated by many investors, there was significant uncertainty about the ability to complete it by the summer given the current macro uncertainty as well as the structure, whole or part, and price,” Raymond James analyst Savanthi Syth wrote in a research report.
Syth said the purchase announcement “is generally in-line to better than expectations, albeit the sale price [is] likely below more bullish investor assumptions of $250 million. importantly, it removes a sentiment/earnings overhang.” The selling price is also less than the $720 million Allegiant spent in developing Sunseeker.
“Blackstone’s extensive hospitality holdings and their execution capabilities make them the ideal counterparty for this transaction and also to help realize the full potential of Sunseeker Resort,” Allegiant CEO Greg Anderson said. “Furthermore, it supports Allegiant’s strategy centered around the airline, and we plan to use the proceeds from the sale to repay debt and strengthen our balance sheet.” The companies expect to close the transaction in the third quarter.
