Latest / GAIN Momentum / Addressing Beach Erosion at Tropical Resorts | with Bridget Baumgartner

Transcript

Addressing Beach Erosion at Tropical Resorts | with Bridget Baumgartner · GAIN Momentum

• GAIN Momentum episode #113: Addressing Beach Erosion at Tropical Resorts | with Bridget Baumgartner === Adam Mogelonsky: Welcome to another incredible episode of the GAIN Momentum podcast. And why it's so incredible is first off, we have my friend Carlos Lugo joining me as co-host, and second is we're talking about a very important subject here with Bridget Baumgartner, the co-founder and CEO of ReefStarter. So, Bridget, it should be apparent from the name, ReefStarter, all one word, but please tell us what ReefStarter is and what problem you're solving for hotel owners. Bridget Baumgartner: Thanks, Adam, and thanks for having me on your podcast. And Carlos, great to see you as always, Carlos Lugo: Good to see you as well Bridget Baumgartner: ReefStarter is a company that was started to help resort managers, owners, and other coastal property owners hold onto the beach that makes their property so valuable. So if you ask a hotel manager what the most important asset of their beach resort is, it's almost always the beach itself. And more and more, these beach assets are becoming difficult and expensive to maintain. They don't just stay in place because they're already there. ReefStarter is a new type of living infrastructure that we install offshore, and what it does is it reduces the erosion that causes sand loss on the beach, and it also helps to dampen the effects of really large storms and wave energy. And so it allows resort managers and owners to maintain that really important asset with less constant expense Adam Mogelonsky: Right. So this whole idea of beach erosion, we're gonna diagnose that because that's a huge line item on any hotel's P&L. But what are hotels or resorts doing right now to protect their beaches from erosion, and why isn't it working? Bridget Baumgartner: Well, it's an interesting question. When we first started this company and started talking with resort managers and owners, what we discovered is they don't really have very good solutions available to them today. They're doing what they can based on what they have to work with, which usually comes down to just adding sand back to the beach. And the reason that they do that is because the engineered solutions to the problem oftentimes cause other problems themselves. So for example, you can put a sea wall up to protect, you know, the building that's closest to the ocean. But you do that at the expense of the sand itself because that changes the way that the erosion happens. It actually increases erosion. Or you can armor the coastline with a variety of products that actually detract from the natural beauty of the beach. And so there's always this trade-off with the existing solutions. And rather than choosing one of those things, most managers will choose to add sand even though they know it's going to wash away over time. Adam Mogelonsky: Yeah, so they're just, you know, I guess they're treating a gunshot wound with a bandage, but not actually stitching up the wound, in other words Bridget Baumgartner: Or even just removing the gun, yeah. Adam Mogelonsky: Yeah. Yeah. So, you know, it's almost, it's also interesting that a lot of beach resorts are actually built on paved over mangroves, which is a living coastal defense. And from the name ReefStarter and what I know about coral reefs, it seems like you're adding back in a living defense for the beach. Is that how it works? Walk us through it. Bridget Baumgartner: That's exactly how it works. And, you know, part of the reason that this problem is not just that it exists, but is growing for coastal properties is that natural reefs are kind of going away over time with, you know, the warming of the ocean, a variety of disease epidemics that have come through the marine ecosystems. And that loss of the natural protection is what's exposing the beaches to more and more erosion, so that wave energy can get closer and closer to shore, whereas before, the natural reefs and the mangroves would've prevented that. What our product does is it adds back that same natural protection because it is in fact shaped like a natural reef. That's one of the benefits is because it's shaped the way a natural reef was, it behaves the way a natural reef would have, and it's habitat the way a natural reef is. So in addition to the coastal protection that it brings, it also brings a brand new site for fish and all kinds of marine life to move in and actually restore the natural capacity of the ecosystem right offshore Adam Mogelonsky: Right. So in my mind it, you know, it seems like a win-win, right? You're restoring the environment to have more sustainability, to reduce costs of beach erosion, while at the same time telling a great story because you're adding back coral in and, and, you know, there's more fish and you're repopulating the fish population and so on. But how does it impact how the beach actually looks? Bridget Baumgartner: Well, actually it'll blend seamlessly into the natural environment over time. So we've designed our structures to very closely mimic the shape and the texture of a natural coral reef. We started with 3D scans of a natural reef, and that's what we created, and that's what the fish like. They recognize the shape and they say, "That's where I want to live." But for a coastal property that is really valuing the natural beauty and the unblemished look of the property, this is something that, you know, nobody will really notice. I mean, it'll look very much like a natural reef over time, and that's one of the benefits, especially to resorts that have clientele who are really looking for that pristine environment. Adam Mogelonsky: Yeah. So that's all good. We understand the product now in a broad sense. But as we know, hotels are very P&L focused. So do you have any idea how much the average resort is spending on sand replacement to prevent beach erosion? Bridget Baumgartner: And actually it's a shocking amount. It's anywhere from hundreds of thousands to even, like, low millions of dollars every year, every other year, depending on where they are. Yeah, so it's not a question of whether or not coastal protection is something that resorts spend money on. They do. What the problem is right now is that they spend money on solutions that are not durable. They're very temporary, and so as soon as that sand goes on the beach, you start the clock to when you have to do it again. Adam Mogelonsky: Wow. Carlos Lugo: I do know of a couple of clients that would be in constant communications with about this. One specifically spending a little over $100,000 a year alone, just on putting sand back into the beach, and they're losing it year in and year out. So it's almost like a... It's not really a solution in a sense, right? You know, we're really talking about doing... It's more of a managed decline, if you want to call it that. Adam Mogelonsky: Yeah. That's probably the perfect term for it. And part of that managed decline as well is because there's so many resorts around the world, so many beaches, the world's supply of sand is running thin. Is that something you're seeing, Bridget, being closer to this information? Is there an actual metric where the cost of sand is going up over time? Bridget Baumgartner: Yes, the cost of sand is going up. The avail-- You have to order it way in advance, so people pay for their sand two, three years in advance. You know, that's money that's left your books, and it's not earning anything for you. So it's not just the cost though, it's getting more difficult to get permits to get sand because of the extractive way that they actually get the sand and where it has to come from. You can't use just any sand. It has to be very special kind of sand from a place that's nearby. So depending on where you are in the world, sand is getting very short supply. It's harder to get permits to get more sand. And all of that is feeding into the overall cost of maintaining a beach. Adam Mogelonsky: Wow. And you know, me, I like to catastrophize at times, but could you ever see a point where there's no more sand to replenish for a resort from beach erosion? Bridget Baumgartner: Yeah, and when you, if you think about like the real constraints of, you know, the financial situation and the permitting situ- I don't know that, you know, we'll run out of sand in the world. It'll be somewhere. But I think yes, the ability to have access to it, definitely I see that as a real near possibility, especially when you take into account the regulatory situation. I do see a very near-term future where certain regulatory agencies are just not willing to allow that to happen because it is very destructive to get the sand. Adam Mogelonsky: Yeah. And I guess one other P&L aspect to all this is insurability. And a lot of tropical resorts now, I mean, climate change is real, storms are getting more erratic, more severe. How does climate change accelerate beach erosion aside from some of the mechanisms you've already talked about, like ocean acidification destroying reefs and how does your product tie into this whole insurability crisis that's happening? Bridget Baumgartner: Part of the, a big part of the insurability crisis is the not knowing. So, Adam Mogelonsky: Right Bridget Baumgartner: Insurance, you know, is based on the ability to predict the future with some degree of certainty. And as the climate is changing, and as storms are becoming not just more severe but more erratic, happening in seasons where we're not expecting them, the insurance company sees that as uncertainty, and uncertainty leads to higher premiums. So you basically, when you buy insurance, you are paying for whatever amount of uncertainty is in the equation that calculates your risk. And that tail, they call it, of uncertainty is becoming much, much longer. One of the things that our product is designed to do, and we haven't talked about this yet, our product comes with sensors that measure the hydrodynamics and reduce that amount of uncertainty for insurance companies. Adam Mogelonsky: Right. So, yeah, we could get into the sensors and the data and all that, but essentially you're approaching the financial situation from two key angles. Number one is you're preventing the sand replenishment costs, you're lowering that. And then through data, you're able to show that the hydrodynamics are more stabilized, and therefore you're giving insurance companies a better base case by which to reduce premiums. Is that what you're saying? Bridget Baumgartner: Yeah, and I liken it to car insurance, right. Until fairly recently, car insurance was based on what demographic you were, right? If you were a male and you were under 30 years old, you probably paid a lot for car insurance, even if you were a fantastic driver. But now you can get personalized data for how you actually drive, right? And that data can be used to lower your premium, or raise it, I guess if you were the kind of person who didn't know you were a bad driver and you opted for one of those personalized premiums. But, and so, you know, if you're like my nephew who has never done a thing wrong in his life and is only 20 years old, he can use the personal driving data to show that he's a good driver, right? And he doesn't need to pay through the nose for insurance premiums. The same thing can be done if you have data on a structure that mitigates your storm exposure, right? So a structure like ReefStarter, which reduces your chances of incurring a lot of loss on the coast during a big storm, you need to be able to prove that, right? 'Cause otherwise they just look at the area that you live in, right? And it's all kind of lumped together like, so-and-so had a big storm and had a claim, so therefore you have that same risk, right? Because you're nearby. So the data is really important in saying, this property is different from the one next door or for the ones in the region, and it's done something to mitigate the risk of a claim and therefore deserves a lower premium. That's the idea of the data. Carlos Lugo: Yeah. I wonder, we got some friends down in the Caribbean that have lost, in the last, like, eight years about, I don't know, half an acre of the beachfront line there. It's now getting to a place where it could potentially compromise, you know, the pool area, now it's getting close to, like, the foundation. If we could prove something like that, Bridget, right, would that be something that potentially could help, right? Like mitigate these types of scenarios, from an insurability standpoint? But at the same time, these same friends of ours down there, they have seen a spike in their insurance. They haven't put in any requests or anything to fix the property in the last 10 years. No claims at all. Yet the insurance has actually increased by like, I don't know, 400% in the last, like, eight years, which is kinda crazy. So yeah, there's a lot more to the equation, but I guess what I'm wondering is, you know, with something like this, being able to save the beach line also as a result will more than likely save the asset itself. Bridget Baumgartner: Well, you know, in many cases, the beach itself is the first line of defense for the pool deck, right? So the loss of sand on the beach is what exposes the structures near the shore to erosion and eventual failure, right? We see this a lot actually. People actually call us when their foundation is already gone. It's like, well, we want to get there before that happens, because if you can maintain your beach, then you have a buffer between the ocean and your structures. But once that water starts hitting the structure, then you're in a much more expensive situation for repairs, right? And so yeah, we have seen a lot of that and, you know, so it's both: you want to mitigate the exposure to damage, right? 'Cause that will lead to you having claims and higher insurance premiums. But then you also want to be able to show the insurance provider that you've mitigated that risk somehow, right? And here's some proof that we've done that and that it works, and that we're actually building back the beach and not allowing it to erode, which is gonna attack our structures eventually. So it's kind of a circular thing. Adam Mogelonsky: Yeah, there's tremendous value here. You know, the insurability, the lowering of beach erosion replenishment costs, and then protecting your physical assets, cabins, pools, anything close by. That's great. We see the value, but what about the time to value? So coral by itself doesn't grow overnight. How long does it take for you to build that verifiable living defense that is coral? Bridget Baumgartner: So the way that we've designed this technology is that it will provide coastal protection as soon as it's installed, and these things can be installed, depending on the size of the coastline we're protecting, anywhere from, you know, a couple of weeks to a month or so. This is not a long installation process. And because of the size of the structure, they work immediately for reducing erosion and protecting against high wave energy in storms. The coral that we anticipate growing back, depending again on where in the world this is built, if you have a coral ecosystem available, that will happen over years, right? So the fish will move in immediately. Some other critters will move in, but the coral itself grows slowly, as you know. And so we've designed this thing to work without the coral. It's very attractive to coral. Coral will grow on it, but it doesn't need the coral to do its job. It can still be a habitat for everything else, and it can still protect the coastline while we wait for the coral. And that's one of the things that distinguishes our approach from, say, coral outplanting, which is another great approach to generating coastal protection, but it's slow. Like you pointed out, it takes decades, maybe longer. Adam Mogelonsky: So, could you walk us through then, I guess there's a manufacturing process in all this? Bridget Baumgartner: Yeah. So our structures are made out of modular blocks that are meant to interlock. So they go in without any kind of attachment to the seafloor. There's no metal. There's nothing that corrodes. It's just precast marine cement. So any place that can make, you know, cinder blocks can make our structures. And they're made close to the site, so we're not shipping them from far away. We use local manufacturers. And then they're installed offshore with cranes and barges, very standard marine construction equipment. And again, we use local contractors for that as well. Adam Mogelonsky: Wow. So, we see the value now, we see the time to value, and we understand the product. But why approach hospitality with this? Why not just go to big government or municipal entities that could get you placed across multiple beaches or a whole island or a whole state, let's say? Bridget Baumgartner: Well, we definitely have our sights on all of that. But to begin, we started with hospitality because the incentives are so well aligned in hospitality. So, you know, rather than these benefits of the ecosystem growing back and the natural beauty—all of that is nice to have in a municipal kind of setting. But for hospitality, this is like a direct benefit that they can monetize. And so, we just found that their incentives and our incentives are very well aligned, and that they would be able to capture the benefits of what we're offering immediately, whereas with some other situations it's more of like a public good. Adam Mogelonsky: Right. So the whole idea of restarting a reef in some way, shape, or form, I'm reminded of this beautiful property in the South Pacific called The Brando, which has set up its own marine conservation area. And not only are they realizing value through conservation, but they've developed a whole brand name that they've turned into a massive ADR play, average daily rate, in terms of astronomical prices. So could you talk about the program at The Brando, 'cause I'm sure you've studied it, and tell us about how ReefStarter can tie into this whole idea of a marine lab or a discovery center to then add a premium experience for guests? Bridget Baumgartner: Yeah. And people love this idea of being able to go and learn about nature—like the type of people who stay at The Brando are also the kind of people who are really invested in nature and restoring nature and being very green. And so this is right in line with their customers and what they appreciate and value. And if your clientele have disposable income and are choosing where they stay not based on cost or price, then yeah, I mean, there's a lot of room there to offer them things that they can't see anywhere else and to get that crowd there. And so, yeah, we're very much interested in the research angle. You know, we didn't talk about this, but the co-founders of my company are all scientists. Like, you know, I'm a molecular biologist by training. So we are building these things so that people can understand the ecosystems and the ecology around them better. And the sensors, all that data is contributing to science. And to the extent that we can extend that to the clientele of the resorts where we put these things, yeah, those programs kind of happen naturally. The ADR angle, you know, not just at The Brando but in general, the trend I believe is that there's a 30% premium put on ADR for properties that have access to snorkeling. Snorkeling is a huge deal, right? People love it, and they don't want to go far away from the resort to get it. And so if you have premium snorkeling on your site, there's a price that goes along with that. Adam Mogelonsky: 30% Bridget Baumgartner: 30% is the number according to the literature. Adam Mogelonsky: Wow. That's massive. Carlos Lugo: We've talked about this in some capacity, right? Imagine how many times I've been to, let's say, a resort of the same type. Like my wife, for instance, she loves going to one specific resort 'cause she loves it there. And then we go back, let's say every two years, right? In a situation like this, Bridget, would you say that this is something where you could probably even get some accessories where people could actually clamp down there as you go back? I think about places I've gone to, like in the Dominican Republic, or even Monterey, California, where you go to these places and you could actually put a padlock somewhere and put your name on it, right? Imagine a world where you could actually go down there, put like a padlock or something that you clamp onto that reef. You could come back the next two years and be like, "Hey, let's go back down there." Stuff like that, right? That you could use to increase your ADR and give an experience as well. Bridget Baumgartner: Yeah, we envision a lot of different accessories, let me just call them, being designed for this. The way that our technology works is, you know, there are a bunch of interlocking blocks. You can interlock them with anything that's got the right shape, right? So you can imagine accessorizing blocks and adding them later, right? Like it doesn't have to be in the first instance of the installation. But as the technology develops, as the sort of clientele develops around it, you can continually add experiential accessories. And I think, anywhere from virtual snorkeling to putting your lock on the reef or getting your picture taken as you swim by—all of these things are possible. The reefs themselves can have added power and data right there on the reef. So, all kinds of electronic, experience-type accessories can be thought of. That's sort of ReefStarter 2.0. But we envision being able to add these things as they come online and have a catalog of things that people can either choose from or customize for their property. Adam Mogelonsky: Right. So you've talked about sensors, now data. So what data are you collecting, and where is its value long term aside from the hydrodynamics story to tell to insurance companies? Bridget Baumgartner: So the hydrodynamics is key, not just for insurance companies, but for the resort itself to understand its own situation. A lot of resorts are self-insured, as you know. They want to know what their risk is. And then there's the habitat itself. Habitat quality is something we can measure. It's anything from water clarity, pH, salinity, temperature, things like that. But then also the ability to monitor what lives there. You know, so there are cameras that will take pictures of things and provide an opportunity to share with guests what's going on on the reef and how that ecosystem is evolving. Also, we collect things like environmental DNA, which will tell us how the ecosystem is doing on a more scientific level. So there's a range of things that we're planning to collect and do collect. And then it's a matter of getting the right dashboard or interface for the resort to track all of that and see what really matters to them. Adam Mogelonsky: Wow. Yeah, that's incredible. Yeah, and then of course the whole idea of a dashboard there to tie into a resort's existing push for more sustainability. That whole thing is what Carlos and I do in terms of integrating data, and you can have all this extra data now going into the energy management system to show that as well. So it's incredible. Bridget Baumgartner: Yeah. Carlos and I nerd out on that all the time. Carlos Lugo: Yeah. Yeah, we do. And you know, this is what—do you know what I really like about this whole concept and solutions being put together by ReefStarter? I see a time where the ecological outcome is going to be aligned in a way that provides an economic incentive, right? And so, I don't know if we touched on this, Bridget, but maybe you could tell us: how long does it take to build and put something in the water? You're not gonna see an ROI on something like this in the first 90 days, right? But long term, the possibilities could be endless based on the data that's provided, kind of like the insurability discussion we just touched on a minute ago. But I just like the entire frame of how this is actually helping not only the ecosystem, but also the asset manager, the owner, et cetera. Bridget Baumgartner: Yeah, the ROI—you have to think about it more like infrastructure than an amenity, right? This is more akin to putting solar panels up, where it reduces your energy bill, and yeah, it takes a little while for that to make it worth your while, right? But these structures are meant to be there for decades. The half-life of marine cement is something like 50 years. So the ROI is long term, but depending on how much a resort is spending on the beach and the sand, it can add up very quickly. Now, the uplift, let's just say from the ecosystem that develops around that structure, kind of depends on where it is in the world and what was already there to begin with. But for a property that never had snorkeling nearby or had a degraded reef—it used to be a very nice reef, but is not anymore—the ROI or the uplift from the ecosystem is going to be in only a few years, not decades. So yeah, there are different ways of measuring ROI for this kind of thing. But we tend to think of it as infrastructure, and so we look at 20-year timeframes. Adam Mogelonsky: Wow. Yeah, you know, what I'm thinking of here is—you mentioned this earlier—alignment in a lot of ways. Part of the biggest problem in tackling climate change is not the fact that we have deniers, but that core economic incentives have been misaligned between the push for more laws and then things that can actually benefit individual people and businesses. So in this case, we're seeing that alignment emerge between something that can help a business as well as help the environment. With that in mind, though, we've talked about how you can have an ROI within years, not decades, with this technology. What does a deployment actually look like? How do you come in? How do you assess what's needed? When do you install? And then what does it look like within 12 to 24 months? Bridget Baumgartner: Sure. The deployment varies depending on the regulatory environment that you're in. But generally, what happens is we assess a property first in a conversation with the manager or the owners to find out what the needs are, where their pain points are. We look—you know, we use Google Earth and we check it out. But really we have to go there and physically assess the site, get in the water, feel what's going on with the wave energy. And then we have a variety of proprietary tools for designing a structure that should work for that property, depending on what the problems are. So if it's an erosion problem, we focus on that. If they just want to snorkel, that's easy. And we use state-of-the-art modeling to reproduce the environment in a simulated environment and test how our structures will behave over long periods of time. So we want to make sure that if we build something that we think is gonna protect the beach, that it actually does, and it winds up adding more sand to the beach rather than allowing it to be removed. So we do all of that and come up with blueprints for building the structure. And then there's a permitting process, and that, again, varies from jurisdiction to jurisdiction. That could be a year long, or it could be a month long, depending on where you are in the world. The building of it is, like I said, several weeks. We have to create the blocks, which we do locally. And then they're installed with cranes and barges. The first 12 months after deployment, what we would expect for a beach erosion protection project is to be able to measurably demonstrate that the wave energy is reduced and the energy that normally takes that sand away has been mitigated. That would happen immediately. The ecosystem would begin to develop around the structure probably as we're building it, to be honest. The fish are gonna see it and move right in. This is physical habitat for them, you know; it's a three-dimensional structure. So in the first year from deployment, we expect noticeable, measurable erosion protection of the beach and a developing ecosystem that people can enjoy by snorkeling. Adam Mogelonsky: Cool. So all that's good, but you're a startup, right? Bridget Baumgartner: Exactly. Adam Mogelonsky: So, where are you starting? Bridget Baumgartner: Right now, we are in the midst of our first two pilots. We are going through the permitting process now in the Florida Keys and also in the US Virgin Islands. We have a number of resorts that are interested, some of which we're talking to about being partner pilot projects with us. So we intend to be rolling out the first two or three projects in the next 12 months. That's kind of where we are. And then once those are online, we'll be ready to hit the ground running. Adam Mogelonsky: Cool. And, you know, we're talking about reef restoration, but you're a scientist, and you're having conversations with other scientists. What else have you thought about doing with ReefStarter to help the environment in other ways? Bridget Baumgartner: So we work very closely with coral restoration partners who can grow small coral fragments to outplant onto the reefs to sort of jumpstart the coral restoration so we don't have to wait for the natural recruitment of corals. We have a number of research projects that are going to be going on around these first installations to understand the ecology of how ecosystems develop, right? That's a rare opportunity to see an ecosystem start from the beginning, right? And so we're working with universities that are interested in doing those kind of studies. And then we're also developing, sort of on the side, ways of monitoring those things so that we can get into the ecosystem or biodiversity credit kind of thing that people are interested in doing. But, you know, we really lack that ability to measure these things consistently. And so we have a number of research-type things going on on the side. We also partner with citizen scientist groups to help train non-scientist people to go and learn how to observe ecosystems and monitor their health, especially dive clubs that do that. So yeah, we have a number of, you know, like I said, we're academics at heart, so that part of things comes very naturally to us—to look for things to study and to do in a sort of non-profit kind of way. Adam Mogelonsky: Wow. Well, it's an absolutely fantastic story. It's a fantastic product and this is exactly what the world needs because we're in 2026, and climate change is real. It's becoming more and more severe every single year. But I'm firmly a techno-optimist. I can't speak for Carlos, but I believe that we will solve climate change through technology and through good, economically sound practices around that. So Bridget, it's been fantastic learning about your product. Is there anything else that you'd like to add to this discussion? Bridget Baumgartner: No, just that I do, like you, believe that we can come up with solutions that don't have all of these trade-offs, that it is possible to add something of value, like economic value to the world, that is also beneficial to the Earth and to our well-being as creatures who live on the Earth. And so yeah, I'm aligned with you on that, and I really hope that the market responds accordingly because we're excited to solve these problems with a very friendly way to do it. Adam Mogelonsky: Yeah. Carlos, anything else to add? Carlos Lugo: Yeah, certainly. Well, thank you both for having me here. I love the conversation. I love everything ReefStarter is doing. And I would just say also to any owners, asset managers, and investors in properties that you don't have to choose between saving the resort and saving the beach, right? This is really not a trade-off. This is a product I think that can help you not only protect your asset, your shoreline, your guest experience, and your long-term insurability all in one shot. But you gotta start somewhere, and I think looking at solutions like ReefStarter for sure is the way to frame all that around it. Adam Mogelonsky: Yeah. Bridget, thank you for the delightful conversation. Thanks for coming on. Bridget Baumgartner: Thanks for having me, Adam.