|By Lisa Fleisher, The Sun News, Myrtle
Beach, S.C.McClatchy-Tribune Business News
Apr. 1, 2007 - The Sheraton hotel at the Myrtle Beach Convention Center finished its year Saturday on a high note.
Not only is the city-financed hotel starting to pay off its own debt, it is even making up for past shortfalls.
Thanks in part to an aggressive sales staff and food and beverage profits, the 402-room hotel has quickly turned around its reputation and its balance sheet.
Revenues are up 23 percent over the previous year and profit grew 62 percent, General Manger Suzanne Hinde said.
Now when she gives her reports to City Council, Hinde gets thanks and congratulations instead of stern warnings about future performance.
It's a long way from three years ago today. On April 1, 2004, the Hotel Corp., a volunteer body created by Myrtle Beach to oversee the hotel, could not make a debt payment and had to default on some of the original bonds.
The city had to bail out the hotel, refinance $47.7 million in bonds and take over the debt. From then on, the city paid the annual debt payments from hospitality funds, which totaled around $4 million.
This upcoming year, the hotel expects to contribute around $2.25 million, more than the city expected. That frees up money for other projects, city spokesman Mark Kruea said.
"Perhaps the [proposed] boardwalk, perhaps the Rivoli Theater [renovation] project, other downtown work," he said. "As the hotel makes a bigger contribution, it frees up money that the city can use for other projects."
The original idea was for the hotel to pay off its own debt and soon start paying the city 3 percent of its revenues. Myrtle Beach probably will not see any of that money until 2014 or 2015, according to city estimates.
When it decided to build the hotel, the city had relied on feasibility studies conducted before the terrorist attacks on Sept. 11, 2001, which sank the tourism industry.
The market had not fully recovered by the time the hotel opened in January 2003. In addition, experts said the Radisson did not try hard enough to book large groups, a charge the company denied.
The failure was so great that it became a cautionary tale for other cities, said Mike Shelton, the city's budget director.
He said he recently received a call from a Virginia Beach, Va., official to go over the details of the partnership. Some officials there were worried about repeating Myrtle Beach's mistake.
Shelton said he told the official to keep an open mind.
"Well, we had a rough first couple of years there," Shelton said. "But they should continue to watch us, because I think you're going to see how it's done right."
The Sheraton name replaced the Radisson in September 2005 after the latter could not attract enough visitors and pay its debt.
The first thing Hinde did when the Sheraton moved in was take over the catering and food service, which had been run by an outside group.
That now brings in around 32 percent of the hotel's revenue, with 62 percent coming from rooms and the rest from miscellaneous services, such as parking fees and movies.
Hinde said her sales staff is pushing to get larger groups whose members would not only stay at the Sheraton but also at other area hotels.
That overflow generally goes to nearby oceanfront hotels such as Breakers or Camelot, and also to national chains such as the Hampton Inn at Broadway at the Beach.
The hotel ended the 2007 fiscal year Saturday with a better-than-expected occupancy rate of 63.2 percent, said Samuel Grant, finance director for the hotel. It had budgeted 60.4 percent.
In 2006, the hotel hit 54 percent occupancy.
Still, with Myrtle Beach gearing up to expand the convention center -- the city bought 28 acres with $7 million from the state -- the hotel's biggest problem by far is the lack of direct flights into Myrtle Beach from top destinations, Hinde said. Easy transportation is key for large, national groups when they decide where to hold their conventions.
"It's a very big obstacle when you're trying to go out on a national level," Hinde said. "We have lost groups because there are not enough [flights] coming in."
The lack of flights has unexpected consequences for the hotel; sometimes, an entire group will come in on one flight, and the hotel's shuttle buses have to scramble back and forth to the airport.
Still, the hotel expects strong years ahead. Bookings for conventions, which usually reserve space 18 to 36 months in advance, are good for 2008 and 2009, Hinde said.
"Everybody wants to hear the good news, and the good news is the hotel is doing well," Hinde said. "We only see it getting better."
Contact LISA FLEISHER at 626-0317 or email@example.com [mailto:firstname.lastname@example.org].
Copyright (c) 2007, The Sun News, Myrtle Beach, S.C.
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