DiamondRock Hospitality Company has acquired the fee-simple interest in the Chico Hot Springs Resort, a lifestyle resort in Paradise Valley, MT, near Yellowstone National Park. The purchase price for the resort and adjacent ranch is $33 million. Chico was acquired from an individual owner-operator and is an independent resort, completely unencumbered by brand and management agreements.
The $27-million purchase price for the 117-room, 153-acre resort represents an 8.1% capitalization rate on 2022 net operating income (NOI). Year-to-date comparable RevPAR growth through the second quarter was 8.7%. The adjacent ranch, a 595-acre parcel purchased for approximately $6 million, provides on-site trails for hiking and horseback riding as well as potential for future expansion of the resort or residential lot sales. The company expects Chico will generate a 10.5% NOI yield on the total $33-million purchase price upon stabilization. The acquisition was funded from corporate cash on hand.
“Chico Hot Springs Resort is another example of DiamondRock’s leadership in identifying attractive investment opportunities that align with our focus on unique, leisure-oriented experiential hotels and resorts,” said Mark W. Brugger, president/CEO, DiamondRock Hospitality Company. “Acquiring owner-operated properties in unique markets often allows DiamondRock to achieve superior returns on high-quality real estate. Moreover, Chico has numerous of the attractive attributes we target, such as durable cash flow, significant ROI opportunities, irreplaceable location, fee-simple and fully unencumbered by brand and management.”
Chico Hot Springs Resort is an authentic western-style resort located in Montana’s Paradise Valley, close to the only year-round vehicle entrance to Yellowstone National Park. Situated at the base of Emigrant Peak, the four-season, full-service resort offers miles of trails for hiking, mountain biking and horseback riding, as well as expeditions for fly fishing, dog sledding, rock climbing and cross-country skiing. Guests can swim in two open-air natural mineral hot springs, which provide environmentally friendly geothermal energy to the property.
The resort offers a variety of accommodation options ranging from the historic lodge to cabins and chalets to glamping opportunities overlooking Paradise Valley, as well as three dining outlets.