Call it the privacy premium.
Remote island locations, luxury yachts and private chefs are among the posh perks of the most expensive resorts. But while compiling our list of the priciest resorts this year, something else caught our attention: Whether they are Miami or the Maldives--the fewer the guests, the higher the rack rate.
Exclusive-use resorts, which may only be booked by one guest group at a time, have gone from novelty to normal in recent years. And the people who book them are willing to pay above--sometimes far above--normal rates to have a whole place to themselves.
In the 1980s, when billionaire Richard Branson turned Necker Island, a private island playground in the British Virgin Islands, into an exclusive-use resort priced at $5,500 per night, such a thing was practically unheard of.
Today, Necker Island, which accommodates up to 26 people, is in such demand that rates start at $30,000 per night. Necker's highly visible success has given rise to a spate of similar resorts. For example, The Rania Experience, an exclusive-use island resort in the Maldives that opened in 2005, offers groups of up to nine a private chef, unlimited spa treatments and use of an 86-foot yacht, all for $13,000 per night--pricier per person than Necker.
Even traditional full-service resorts, like Cayo Espanto, a Belizian island with five villas, became available for island buyouts in 1999, a year after it opened. Rates start at $10,000 per night, with a three-night minimum.
Exclusive hotels and resorts are having their best year ever, and high demand means they can charge what they like, says Scott Berman, a partner in the Hospitality and Leisure advisory group at PricewaterhouseCoopers.
"To make it a private setting, they can even add a greater premium to an already record-setting room rate," Berman says. During high season in the Caribbean, the premium for privacy can be as much as 25% above the published rate, he says.
That estimate sounds conservative to us. At Cayo Espanto, individual villa rack rates start at $1,395. But for a full island buyout, at $10,000 per night, the resort is effectively charging a rate of $2,000 per villa. That's a privacy premium of more than 40%.
These top-end resorts, where rooms go for thousands a night, are still a very small piece of the market, Berman says. "When you add up the rooms, you're still in the hundreds, not the thousands," worldwide, he estimates. But a segment of the market is dead-set on private locations.
Beverley Matthews knows this first-hand. She and her husband, Shaun, ran Necker Island from 1984 to 1988, and they returned to manage it this spring. "We actually had one guest stay once for a month," Matthews says. "He booked the whole island. His trainer came and stayed most of the time, one of his best friends visited and his son dropped in. He was on a health kick."
To Matthews, running a $30,000-a-night resort makes perfect sense. "Travelers in the wealthy marketplace are becoming more discerning and more sophisticated," she says. "They're not just accepting whatever the latest 5-, 6-, or 7-star resorts are, because at the end of the day, it's still a hotel."
According to travel industry professionals, other factors are contributing to the popularity of private-island resorts. "There was a big shift in the private resort experience after Sept. 11," says Shelley McLaughlin, a sales manager at Sanctuare in Stamford, Conn. The firm does public relations, reservations and marketing for luxury properties including Necker Island and Musha Cay, an exclusive-use resort in the Bahamas.
"Whereas most other travel had been canceled for a good year after that, we saw a big rise in the private island experience," says McLaughlin. "Private-island travelers are sophisticated to begin with, so they are less likely to shy away than non-frequent travelers. They are more likely to have private planes. And private island areas are apolitical areas of the world." (That is, at low risk for terrorist attacks and easy to secure.)
For the second year in a row, Forbes.com has compiled a list of the most expensive resorts in the world, ranked by low-season rack rate. While we haven't included exclusive-use resorts on our list in the past, the abundance of such properties this year changed our minds. On this year's list of ten resorts, three of them are explicitly exclusive-use, meaning there's no way to visit them other than renting the whole place. Many others on the list are available for private rental, and the two featured villa-resorts, African Sapphire at Altamer in Anguilla and Casa Contenta in Miami, are obviously intended for only one group at a time.