Aug. 16, 2005 - The four-diamond Lago Mar Resort & Spa is getting a makeover, including a $15 million addition that will bump up rates to $800 a night in the winter.

Owner Walter Banks has filed plans with Fort Lauderdale for a six-story wing of rooms that will include a floor of covered parking, much larger and more luxurious bathrooms and individual room balconies.

The project would also replace a surface parking lot with a deck of tropical landscaping and add a 5,000-square-foot saltwater lagoon that will permit guests to swim with eagle rays, tropical reef fish and other sea creatures.

At the end of the process, the 204-room resort will gain 21 rooms, but also look much more contemporary, Banks said.

"We're not going to have full kitchens any more, but we will have much more sophisticated units," Banks said.

The renovations at Lago Mar are the latest example of the ongoing upgrade of South Florida's lodging assets. Developers are getting close to finishing the ultra-luxury St. Regis Fort Lauderdale farther up the beach and construction is well-along on the Q Club, a 333-room condo-hotel to be run by Hilton.

Elsewhere, Delray Beach-based Ocean Properties has overhauled the former Howard Johnson on Hollywood Beach and reflagged it as a 229-room Marriott. And in Boca Raton, plans are afoot to redesign several public areas at the 1,063-room Boca Raton Resort & Club.

Rising room rates are fueling the improvements, by giving owners the confidence that demand is strong enough to justify the costs of construction.

Through June, room rates have gone up by an average of about 9 percent in Broward County, compared with the first half of 2004, while in Palm Beach County they are up even more.

At the same time, the difficulty of getting construction materials, and particularly skilled labor, is putting a brake on some growth plans. Banks said his projected start date for the renovations is either June 2006 or June 2007.

"It's all going to depend on our ability to attract subcontractors that can finish it in a timely manner," Banks said.

The units produce a profit of about $3 million a year, and Banks said he doesn't want them to be out of inventory for more than seven or eight months.

He's especially keen that the new units be ready in time for the peak winter months.

The new wing is a mix of one-bedroom and two-bedroom suites, with the most desirable units with ocean views expected to go for $475 in the summer and $800 in season. That's about a 25 percent increase from 2005 winter rates.

A wing of 46 rooms built in stages from 1967 to 1981 will be demolished to clear space for the new suites.

The old rooms average around 800 square feet and many include full kitchens that are popular with repeat guests. But the trend has been toward shorter vacations and the units have narrow bathrooms with dated fixtures.

Redone, they will have a walk-in shower, soaking tub, private water closet and dual vanities. "That's the criteria for an upscale facility," Banks said.

In keeping with his conservative growth philosophy, Banks said he expects to finance the majority of the work from retained profits.

One casualty of the expansion will be a pair of tennis courts that will make way for the saltwater lagoon.

Banks said they aren't used and the location near the beach has always been a logical spot for a third swimming pool.

Lago Mar will retain two courts, but more because it is expected of a resort than because of demand, Banks said. "Tennis is maybe 20 percent of what it was 15 years ago," he said.

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