Image by katherine of chicago via FlickrBy Bob Andelman
Maddux Business Report
September 2008

The economy may have the blues, and corporate accountants may be seeing red, but Tampa Bay’s luxury resorts are still pocketing plenty of green.

In an industry where group and convention bookings are made many years in advance, four-diamond resorts from Sarasota to St. Petersburg report still strong business ahead for the fourth quarter of 2008.

Resorts can’t seem to help being counter-cyclical at times, which may explain why, at a time when the financial sky is falling, hundreds of millions are being poured into bay area resorts:

• A new construction Ritz-Carlton in Tampa, 2011:

• A new construction Waldorf-Astoria in Sarasota, 2010:

• Proposed expansion and improvements to Longboat Key Club & Resort: $500 million

• Additions to The Ritz-Carlton Sarasota

• Improvements to The Colony Beach & Tennis Resort: $20 million

• Improvements to Innisbrook Resort and Golf Club: $25 million

• Improvements to Saddlebrook Resort: $2.3 million

• Improvements to Renaissance Vinoy Resort: $10.5 million

• Improvements to the Don Ce Sar Beach Resort: $13.5 million

(The total includes some projects completed within the last year and/or officially announced for the coming years.)

BUILDING SPREE

Most of the new construction action is in Sarasota, so let’s start in the city where Ritz-Carlton sparked an upscale revival movement seven years ago. In those seven years, The Ritz-Carlton has added a spa, beach club and golf course. That, in turn, put more pressure than ever on existing properties such as the Longboat Key Club & Resort and The Colony to upgrade and improve even in areas in which they only indirectly compete. And it means that the recently announced Waldorf-Astoria has to sparkle on Day One.

“Sarasota, I think, is a very exciting project,” says Edward J. “Ed” Russo, senior director of marketing for The Waldorf-Astoria Collection (a Hilton brand), which has announced that one of the first new construction Waldorf-Astoria branded resort hotels will be located in Sarasota. Although Russo declines to disclose the pricetag for the project, he says plans call for 220 guest rooms, 67 branded residences, and a separate 59 guest accommodations on Lido Key. “The main building, in the city, is complexing with The Proscenium development of retail, corporate offices and the hotel. It’s got great components.”

(The Proscenium, by Lion’s Gate Development, is a proposed upscale, mixed-use project located on two Sarasota city blocks. Plans also include: ballroom/meeting/exhibition space; an 800-seat performing arts center managed by Nederlander Worldwide Entertainment, office space and retail/restaurant/entertainment space.)

The first of the four announced new construction Waldorf-Astorias – which take their name from the famous New York City hotel – is under construction in Orlando with a planned opening of September 2009. The second is Sarasota – scheduled to open at the end of 2010 – to be followed by Beverly Hills and then Montreal, both in 2011.

“Sarasota has a little bit of society there,” Russo says. “One of the components of Waldorf-Astoria is society. Not only corporate business but weddings, affairs, and anniversaries. That’s our pedigree. That’s why Sarasota works for us. These things match up to the brand.”

At Longboat, the resort’s ownership and management is combining land available for development with an acquisition opportunity and rolling it all together in a $500 million development. “It was time for Longboat to go one of a couple ways. One was to manage its aging. The other was to renovate and rejuvenate. I selected the latter,” says general manager Michael Welly. “We had delayed a number of projects; they all seemed to fit together as a master plan.”

“The master plan project was borne out of the fact we had this land,” Welly says. “And over a couple years of looking at the market, and what the club and community seemed to need, the scope of the project was developed.”

For half a billion dollars, Longboat will redevelop its existing condominium hotel, reception building and pool deck to make the complex grander and larger. Rees Jones has been hired to scrape and redo the club’s golf course. A new clubhouse is planned, as is redevelopment of the wellness/fitness center. Thirty new upscale town homes are in the plan, plus two residential condominium towers totaling 168 additional condos. A brand new 222-room hotel is planned on New Pass. Across the street from it will be a meeting and cultural center to support the hotel. “The size of that space is similar to The Ritz’s,” Welly says, “a 12,000-square-foot ballroom with breakout space. It will also be meeting space for club members. Our lighting and sound system will allow us to invite the symphony and opera over to have performances. It will be used not only as meeting facility but it will be a town center, if you will.”

The resort completed a $6.5 million renovation to all its 218 luxurious rooms and suites in 2007. This followed several other recent projects, including the installation of a new pool deck and lobby furniture, the re-design of the resort’s signature restaurant, Sands Pointe, the debut of Mind & Motion Studio, and upgrades to its 9,000-square-foot Island House Spa, which features 12 treatment rooms.

Ground was broken on a new $4 million tennis facility in April 2008, including 20 state-of-the-art clay courts, a 7,200 square-foot clubhouse, a tennis pro shop, locker rooms, meeting rooms, and a wellness-themed restaurant. The Tennis Gardens is scheduled to open in early 2009, and will feature a stadium court with seating for 600—expandable to 2,500 by installing stadium seating on an adjacent court—to host high-profile celebrity tennis events.

The resort also acquired Longboat Key Club Moorings, a 291 slip, deep-water marina—the largest on the west coast of Florida—in December 2007.

Just north up the beach, The Colony Beach & Tennis Resort is working with its condominium unit owners to pass an assessment that would pay for a planned $20 million renovation of the property. “We were hoping to get it started last year,” says Katherine “Katy” Klauber Moulton, president of the Colony. “But in this economy it’s been more difficult than usual to get the owners started.”

In addition to a cosmetic overhaul and improved hurricane resistance to structures, Moulton says plans include interior suite renovations and an expanded spa (from five to 12 treatment rooms) and fitness center (triple the existing size).

“At the same time, we will be starting a new conferencing facility,” Moulton says. “Right now our meeting space is split. It will be combined into one new building that can accommodate 300 to 350 people in multiple rooms; literally a whole new conferencing facility.”

Not included in The Colony’s $20 million in changes would be additional money for 50 new hotel units it hopes will be approved for the property.

In St. Petersburg, the Renaissance Vinoy Resort – which was sold in December, but retains its Marriott flag – announced a 2009 spiffing up of its 361 guest rooms ($10 million) and is already renovating its golf course and ballroom (total $500,000).

“It’s a nice commitment on behalf of our new ownership group,” says Vinoy GM Russ Bond. “They like what they see in downtown St. Petersburg and I think they will help us continue.”

A change in ownership five years ago also provides benefits to the Don Ce Sar Beach Resort, which went from independence to being a Loews Hotel. Besides the benefits of a national reservations and sales organization, the Loews affiliation makes it easier to finance improvements such as a new $11 million, 11,000-square-foot beachfront spa, which opened in Spring 2008.

“We built it because to be competitive in the luxury market, you have to meet or exceed the guest’s expectations, which are high,” according to Don Ce Sar GM John Marks.

The resort also recently added flat-screen, HD televisions in all rooms – something all the resorts have done or are doing. It is also building a new fitness center, triple the size of its existing facility, at a cost of $500,000, and spending an additional $2 million to renovation 20,000 square feet of indoor meeting space.

Further north, Saddlebrook Resort in Wesley Chapel and Innisbrook Resort and Golf Club in Palm Harbor are each taking pains to revive their once renown brands through renovation and fresh marketing.

At Saddlebrook, for example, the main restaurant was renamed and outfitted with a show kitchen. Kitchens in all condominium units are being replaced and modernized. A new approach to room service includes an in-room deli. All new golf and service carts are on the way. Both golf courses have been renovated in the last two years. The conference center is getting a $300,000 facelift. And substantial cosmetic improvements to the spa were underway this summer.

Innisbrook, which was purchased a year ago by Salamander Hospitality, is a different story. It’s a unique property – four golf courses on 900 acres and 1,000 condominium units, 600 of which are in a rental pool that act as the hotel.

“We thought this was a great property that’s been neglected for the last seven years,” says Chuck Pomerantz, vice president and general manager. “It was operated more as a real estate play. It wasn’t being run like it should be as a unique destination resort.”

Salamander committed $25 million to two years worth of renovation. The money covers all the clubhouses, all 65,000 square feet of meeting space, swimming pools, and the four golf courses. It also includes a 12,000-square-foot luxury spa with 12 treatment rooms, an outdoor relaxation area, and a 24,000-square-foot fitness facility.

“It’s competitive out there,” Pomerantz says. “We don’t have to be the most expensive but we think we can give best-in-class in service. We see a big opportunity.”

COMPETITION

Every resort general manager operating within the Tampa Bay area resists the notion that it competes directly with any other local resort. They all say they seek their business nationally, even internationally.

“The Ritz-Carlton is not competition for us,” says Michael Welly, GM at Longboat Key. “It’s not that we don’t have groups that look at both, but we offer something different. We look at our competition throughout Florida, not locally. The Ritz-Carlton has amenities, but it’s more of a business hotel than a leisure resort.”

And yet, there are certainly advantages to being in a market that gets The Ritz-Carlton nod of approval.

“The Ritz has not adversely affected our business. In fact,” The Colony’s Katy Moulton says, “I believe in the long run it has been a great value-added to the community. With the addition of the hotel rooms it gave us the opportunity for greater air service.”

“The Ritz has opened a lot of doors for us,” Welly agrees. “The quality level, the pricing, the amenities. The quality level has been such that it opened an opportunity for us to understand that the market is there for that.”

Russ Bond says that the Vinoy and its local counterparts may well go head to head, but the bigger battles are fought with comparable resorts in Arizona and California. “Sometimes groups look East Coast one year, West Coast another. I wish it was just the Don and two or three others. But it’s

‘What else can delegates do when they come here. What can spouses do? Can they go to the beach?’ Once we get them here the first time, they’re like, ‘Wow, I had no idea.’ Our CVB and the others are working hard to change perceptions. We are not on a lot of peoples’ radar. We want to think we are, but we’re not. A meeting planner says they’re going to look at Naples, Ft. Lauderdale and Orlando. ‘Have you thought about St. Petersburg?’ Why? Where is it?’ That’s what we’re competing against.”

The story is the same in Sarasota.

“We compete against ourselves – other Ritz-Carltons,” says James E. McManemon, general manager of The Ritz-Carlton in Sarasota. “Our bigger concern is awareness of our destination. I work a lot with local hotels in the CVB. What’s smart is to increase the pie for Sarasota – then everyone has a bigger portion.”

For that reason, he’s not sweating the eventual arrive of a Waldorf-Astoria resort hotel.

“Another higher end hotel coming in would allow increased awareness of Sarasota; Sarasota can afford to have that,” McManemon says. “When someone says something is coming, you can’t hold your breath. Waldorf is not a known quantity. It’s one hotel, built a long time ago. It’s a mystique. More important is to concentrate on the airlift into SRQ. We will be affected if the airlines pull their flights. We – The Colony, Longboat Key Club – have to help the airlines find ways to keep airlines coming here.”

THE ECONOMY

As this is written, gasoline is well over $4 a gallon and it isn’t hard to imagine $5 a gallon by year’s end with other commodities rising in its wake. Those prices lift everything they touch – and even the individuals and companies with money to burn are feeling some pinch.

“Obviously, the economic situation affects us like it affects us other people,” says McManemon. “What we’re doing about it is meeting with people, to listen to them, partner with them, and make sure they understand our value proposition during these times. That’s what you do when things are tough. You don’t continue to do what you always did. We have to have our finger on the pulse with travel agencies, meeting planners and individual customers.”

McManemon says he is looking at the resort’s trends further out, watching demand and changes in demand on a daily basis.

One thing that The Ritz-Carlton and others have noticed is a swell in in-state business.

“We’re benefiting from shorter trips,” McManemon says. “Markets like Tampa and Orlando are traveling to us more because they still want to go to the beach. We’re even seeing some people who live in Sarasota checking in to take a vacation at home. They can spend a little more by staying close.”

This is not a group whose Plan B – for the most part – is cutting prices.

“There are those who say, ‘Let’s discount immediately.’ We’re not,” says The Ritz-Carlton GM.

“I am not seeing the sky falling,” agrees Longboat Key’s Welly. “We have been fortunate to be a little immune to it. And we think Sarasota will be one of the first economies to bounce back. We have had some group falloff due to the economy. But we’ve seen the drive economy pick up. Our overall business is about 5 percent up over last year.”

Greg Riehle, GM at Saddlebrook, says that events and occupancy at the Wesley Chapel resort were up 30 percent in the first half of the year, but that said, the rest of the year “presents some challenges.”

“We’re doing some aggressive things to get business,” Riehle acknowledges. “We’ve aggressively dropped prices. That’s aimed at social travelers but we’re also trying to attract local companies who may want to hold meetings here. The Super Bowl in Tampa gives us all a nice anchor to start next year.”

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