The Retirement Systems of Alabama is betting that its investment in upscale hotels is going to yield more than 12% in returns.
David Bronner, chief executive officer of the $30.9 billion fund who has been long involved in developing the states tourism industry through plush golf courses and luxury hotels said when the last of the eight hotels opens early next year, the fund will have invested more than $550 million.
If you have a world-class golf course, you need luxurious accommodations. And thats the idea behind hotels such as the Ross Bridge Golf Resort & Spa in Hoover, which the pension system developed. Mr. Bronner said large hotels typically lose money in the first couple of years, but Ross Bridge has begun making money this year, its first.
The other hotel thats still under construction in downtown Mobile will open in May.
This kind of investing is unusual for pension funds, but Mr. Bronner believes in taking a broad view. I have to change the state to make the pension fund go, he said. Its necessary to make sure that there is economic development and an economy that can pay their pensions, otherwise the pensions no good.