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Pennsylvania's Pocono Mountains Experiencing Resort Revival;
Unprecedented Building Boom Includes Waterparks, Spas

By Bob Laylo, The Morning Call, Allentown, Pa.McClatchy-Tribune Business News

July 16, 2006 - -When Mount Airy Lodge shut its doors five years ago, it was a symbol of how far the four-county Pocono region, known as a honeymoon haven and a summer/winter resort, had fallen.

With the shuttering of the Poconos' signature resort, which opened in 1936 and once drew talent such as Bob Hope, Tom Jones and Tony Bennett, it was, as one former state lawmaker declared, "like the Poconos had closed."

The area had not actually closed, but there were visible signs of its failures. Some business owners had failed in the 1990s to reinvest and improve their properties, leaving vacationers and businesspeople to look elsewhere for their leisure and conferences.

The area took another hit after the Sept. 11, 2001, terrorist attacks, when fear and mourning kept people from traveling.

But now there are signs the Poconos are rebounding.

Mount Airy, in Paradise Township, has been bought by Scranton businessman Louis DeNaples, who plans to build a $360 million casino and hotel there if he gets a state gaming license. DeNaples is proceeding with plans to build the hotel even if he doesn't get the license.

Mount Airy is among several projects and proposals totaling more than $1.75 billion that has the Poconos' hospitality industry on the brink of an unprecedented building boom of amenities.

Consider:

  • Pocono Manor, which is competing against Mount Airy for a license to build a stand-alone casino that could hold as many as 5,000 slots, has proposed a $1.2 billion casino, hotel, convention center and retail area.
  • Great Wolf Lodge in October opened the Poconos' first new resort in 30 years -- a $92 million indoor water park and hotel off Interstate 80 and Route 611 in Scotrun that is geared toward families.
  • A $37 million spa called the The Lodge at Woodloch opened June 26 in Hawley, Wayne County. The spa, which has rates starting at $400 a day per person, has 27 treatment rooms, 14 massage rooms, six facial rooms, two couples' suites and two treatment combination suites.
  • Camelbeach water park in Tannersville this year opened a new $1 million attract called FlowRider, which allows park guests to surf or boogie board on an endless machine-generated wave.
  • Pocono Raceway in Long Pond plans a $50 million, 250-unit extended-stay resort that will have houses and apartments for rent, along with a clubhouse, theater and lounge.
  • Split Rock Resort in Kidder Township hopes to open a $17 million indoor water park next summer. Last month it opened a $2.4 million clubhouse at its 27-hole golf course, where plans also are moving ahead to add nine more holes and additional time shares.
  • Across Route 940 from Split Rock, an 18-hole golf course called Jack Frost National is taking shape, with nine holes opening in the fall and a full opening scheduled next spring.

Some local officials say the region's growth spurt began when Great Wolf, a company that has nine water parks in the Midwest and on the East Coast, decided to build in the Poconos.

Chris Salerno, marketing and sales director for the Great Wolf Lodge in the Poconos, said the company chose the Poconos because of its proximity to major metropolitan areas and because the area has a travel industry in place. "There's 28 million people within a two-hour drive," Salerno said.

The park, which fills during holiday weekends, has exceeded expectations, and is the best performer in the chain. Salerno said he's happy the resort served as a stimulus for the region.

Once businesses started investing in the Poconos again, it was contagious, said Robert Uguccioni, executive director of the Pocono Mountains Vacation Bureau.

"In any business, but particularly in the resort area business, there is a domino effect when people start investing," Uguccioni said.

Analysts also note that with an upswing in tourism nationally, there's a push to invest.

The proposals come at a time when the country's $645 billion travel industry is enjoying a rebound from the effects of the 2001 terror attacks, said Cathy Keefe, spokeswoman for the Travel Industry Association of America, a Washington, D.C., trade group.

Keefe said 2004 was the first year after 9/11 that the industry saw increases in every travel category, and 2005 continued that trend. The trade group, she said, is forecasting an increase of less than 1 percent this year because of high gas prices.

"Demand just roared back," Keefe said. "There has been this rush to expand."

In the Poconos, visitor spending is up 7 percent from 2001 to 2004, while the tourism payroll has increased 13.2 percent and taxes generated by tourism have increased 16.45 percent.

And everyone involved, be it the owner of a new water park or a new spa, sees potential for the Poconos because it's an easy drive from New York City and Philadelphia.

Uguccioni, who has led the Pocono Mountains Vacation Bureau since 1967, said the volume of development is unprecedented.

The Poconos have been a visitor destination for nearly 200 years. Visitors stayed with local residents as far back as 1820 to enjoy the scenery. The Poconos originally drew most visitors from Philadelphia, Uguccioni said, noting that Quakers built Pocono Manor and Buck Hill as retreats for their people.

Later, the Poconos were known as a honeymoon haven, with resorts featuring heart- and champagne-glass-shaped tubs.

For years, business was good.

The 1980s were a good decade, but the 1990s brought troubles because banks wouldn't give loans to businesses in the industry, even for maintenance, because they feared they would fail, Uguccioni said.

Former Monroe County state Rep. Joseph Batisto, who served with the House Tourism Committee before leaving office in 2000, said the closing of Mount Airy in 2001 and Buck Hill Falls Inn in Canadensis in the 1990s hit the area hard. He said they were two of the biggest and best-known hotels in the Poconos.

"When these two entities closed, the Poconos reputation took on a bad flavor," he said.

Both entities suffered from the same problem -- lack of reinvestment by management, Batisto said. But he also pointed out that some other properties, including Skytop and the four Caesars resorts, improved their facilities and kept attracting customers.

Batisto heard firsthand how the lack of reinvestment led to the demise of Mount Airy. A group of about 500 township supervisors held a convention there for about five years. But Batisto said they started to complain to hotel management and others that the rooms weren't being kept up, and eventually the convention moved elsewhere.

"The facilities took it for granted that people would come to the Poconos," Batisto said.

Some of that was reflected in a 1998 survey commissioned by the Pocono Mountains Vacation Bureau that showed just 29 percent of visitors thought Poconos lodging offered high quality and good value. Seven percent described the rooms as "pretty bad."

Many, including Batisto, credit Great Wolf's all-suite family resort for helping to turn around the region. And others are poised to follow.

W. Jack Kalins, owner of Split Rock, said Great Wolf set the stage for his indoor water park to do well. He said "there is talk" of more indoor water parks in the region, because studies show they can make money.

Kalins has experienced the ups and downs of the Poconos' hospitality industry. His company, Vacation Charters, filed for Chapter 11 bankruptcy protection in June 1993. It emerged from bankruptcy in February 1999 after completing a $6.7 million refinancing deal, and a few months later, Kalins bought the bankrupt Mountain Laurel resort in Kidder Township.

Since then, he's been adding to the amenities.

"In this business, every year we try to put in something new," he said.

But not all new endeavors have done well. The Poconos had hopes the $35 million Mountain Laurel Performing Arts Center in Bushkill, Pike County, built with a mix of public and private money, would help the region, but that hasn't happened.

Money problems forced scaled-back seasons, and the facility was sold in March for $23 million to developers who plan to use the arts center as an amenity for a massive condominium complex.

The center has announced it will host several performances this year, with the first being a children's show that was held earlier this month.

"It has not affected us positively or negatively," Uguccioni said of the center's money problems. "We wanted it to be a positive impact."

robert.laylo@mcall.com

610-379-3223

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Copyright (c) 2006, The Morning Call, Allentown, Pa.

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