Philanthropic Investing

Nurturing Boutique in a Chain World

My dream for several decades had been to buy a small boutique hotel or ecolodge in a culturally unique region of the world and partner with an experienced local. When I sold my company and became aware of the Center for Sustainable Destinations (then the custodian of the geotourism movement put forth by the National Geographic Society), my family became one of the first donors of both funding and pro bono research.

Inicio3-1Lo

Restoration with the help of philanthropic investors will turn this timeworn mansion in Quito, Ecuador into an atmospheric boutique hotel. Photo courtesy László Károlyi

We traveled to Croatia, Costa Rica, St. Croix, Ecuador, and the Bahamas in a quest to find the best opportunity to demonstrate a model/prototype project to NGS. This project would have to include the necessary geotourism requirements. What we found in each location were qualified hospitality owners that lacked the necessary funds to expand or to upgrade their existing offering into something they, we, and NGS would be proud to be associated with.

Out of several years of research, we coined a concept—The Philanthropic Investor. These two words are normally not compatible, but our concept was that since “giving” people money in developing areas has proven to be a mistake, we would find philanthropists/investors to partner with these qualified people (and in essence “loan” the money, using the facilities as collateral). Since our type of investors are financially independent and don’t need these profits to support our lifestyles, we would be obligated to sell our portion back to the local partner once the project was stabilized, and to do so at some smaller proportion of the profit than the 50% an investor would normally seek in that type of venture.

The idea is that those profits can then be reinvested in another similar project, and the concept can spread worldwide far quicker than any charity or individual investor could accomplish.

Our choice was a 26-room boutique hotel in Quito, Ecuador, operated in a leased building by an Ecuadorian who has traveled extensively throughout the world. He had launched the business over 20 years ago as one of the first boutique hotels in Latin America, patterning it after European prototypes. The staff was all local. The manager was schooled and promoted from within, having started as a chambermaid. The products for the kitchen were all locally grown, and local cultural and nature were promoted.

But most important, the business owner was the head of a marketing group for other small hospitality ventures: the Exclusive Hotels and Haciendas of Ecuador. One of the most common reasons for failures by small, culturally distinctive properties is insufficient funds to market and compete with the “big boys.” Forming small-hotel groups like this one expands funding for marketing. Moreover, with member properties strategically positioned throughout the country, such a group enables the potential for whole tours, using facilities regulated by strict quality control.

Interior, pre-restoration.

Interior, pre-restoration.

After restoration and ready for guests. Photos courtesy

After restoration and ready for guests. Photos courtesy László Károlyi

The current facility being rented, upgrading it was not possible. So I teamed up with another Philanthropic Investor, and we have partnered with the hotel proprietor to purchase a landmark mansion in severe disrepair. We are remodeling it to meet historical, sustainable, and geotouristic standards.

We hope to have the main structure completed for the Latin American Travel Mart in September of this year. The proprietor has the option to buy us out upon stabilizing the project.

Our intent is to reinvest those funds in the next Ecuadorian project. This will provide local jobs and provide the anchor hotel with a growing network of unique hospitality and transportation options in Ecuador.

We hope this will result in a model for future projects worldwide. If this kind of geotourism development makes sense to you as a potential Philanthropic Investor, contact Kit Carstens at info@destinationcenter.org. We will try to find a project in a region of interest to you and a respected hospitality operator there who needs a partner.

Kit Carstens

About Kit Carstens

Kit Carstens is a retired Illinois businessman and a passionate supporter of the geotourism movement.

2 thoughts on “Philanthropic Investing

  1. What great partnership! In 2014, which is the United Nations International Year of Small Island Developing States, it would be fantastic for philanthropic investors to team up with island property owners to create more sustainable boutique hotels. Grenada is one such island and I am among those property owners (with fresh, organic farmland / plantation house) disposed to sustainable partnerships for the nation’s development. Let’s explore together!

Leave a Reply

Your email address will not be published. Required fields are marked *