Frenchman’s Reef to Reopen by End of Year

The Senate ratified an agreement between the Government of the Virgin Islands and the owner of the resort at Frenchman’s Reef, known as CREF3, which will clear the way for a soft opening for one of the most popular and lucrative tourist destinations in the Territory by December 2022.

In June, the Economic Development Authority (EDA) approved CREF3’s application to recoup its projected investment of $244.9 million dollar for acquisition and redevelopment of the property as permitted by the Hotel Development Act (HDA). As prescribed by the law, the EDA agreement was forwarded and approved by Governor Albert Bryan, Jr. and submitted to the 34th Legislature for ratification. Lawmakers did so during a regular session held on Aug 30th in St. Thomas.

“With the Frenchman's Reef back online, the benefits to the territory from direct and indirect revenue from the resort are immense,” said Peter Brogan, a Vice President for Fortress Investment Group, which owns CREF3 as a subsidiary.

At one time, Frenchman’s Reef stood as the largest resort and one of the largest private employers in the United States Virgin Islands. Since sustaining extensive damage from Hurricanes Irma and Maria in 2017, the resort has remained closed.

In October 2019, DiamondRock Hospitality Group, the resort’s previous owner, had declared its intention to oversee the renovation, reconstruction and reopening of the resort, with an opening slated for 2020. Just a few months later, the COVID-19 pandemic took hold and dealt significant financial strain to DiamondRock, which later sold the property to Fortress Investment Group through its affiliate, CREF3, in May 2021.

To assist with the redevelopment costs, CREF3 applied for EDA benefits in September 2021. Those benefits, which the EDA board approved in June 2022, allow CREF3 to retain 50% of the Hotel Occupancy Tax and assess a 2.5% recovery fee for a period of 30 years, or until the investment of $244,940,000 is satisfied, whichever comes first.

In response to a question posed by Senator Alma Francis Heyliger, Brogan estimated that the project will generate $1.1 billion in spending in the Territory and $182 million in additional tax revenue over the next 10 years.

The resort, now dubbed The Westin Resort & Spa at Frenchman’s Reef, will feature 392 rooms including 28 suites. The Autograph Collection, a first of its kind resort that will occupy the southern portion of the property, will feature 94 guest rooms. In addition to lodging, the resort will house 10 different food and beverage outlets, a variety of pool experiences that will include a children's “splash pad,” a kid's club activity center, outdoor pickleball courts, fitness centers, a wellness spa with 13 treatment rooms, retail boutiques, a custom built catamaran and over 60,000 square feet of indoor/outdoor meeting and event space.

Representatives from Fortress Investment Group said they expect 400 employees to work at the Frenchman’s Reef. Compensation packages will include competitive and livable wages, reasonably priced health care plans, access to a 401K retirement plan, paid time off/holidays and potential reimbursements in tuition. With regards to employment, several lawmakers inquired about the quality of these potential jobs and urged the owners to hire both locally and beyond entry-level positions.

“We are really attempting to support you guys coming back strong into the community because of jobs and what you guys have done within the community over the years as part of the Virgin Islands,” said Sen. Francis Heyliger, who would later state: “We want to make sure for all of this symbiotic work we're doing with you that the people of the Territory are going to get quality jobs.”

Senator Janelle K. Sarauw also stressed the promotion of local, qualified candidates to managerial positions, which had typically been outsourced in years past and resulted in the migration of local talent to the mainland and Turks and Caicos.

“It was like a glass ceiling for locals,” said Sen. Sarauw. “But our locals would leave.”

Yet lawmakers seemed largely optimistic about the prospect of reopening Frenchman’s Reef and the potential for the Virgin Islands as a whole.

“I think this is a breath of fresh air,” said Senator Franklin D. Johnson. “When we talk about reopening the Frenchman’s Reef, it is well needed in this Territory. And I think everybody is very optimistic about it and just want to be sure for the direction we're going.”

All 15 Senators who attended the regular session on Aug. 30th voted in favor of ratifying the agreement, which will now move to the governor for final consideration.