September. 03, 2010 - --The entrepreneur who brought luxury to gay hotels in Fort Lauderdale and pioneered Broward County's gay tourism push is embarking on another innovative venture: a full-service hotel, complete with a spa, gym, cafe and bar that is aimed gays and also "hetero-friendly."

Richard Gray is expanding the 12-room Royal Palms guest house that he developed in the 1990s into a 62-room resort, adding 50 rooms and other features in two adjacent motels that are being remodeled to create what he calls the "only full-service gay hotel in North America."

The expanded property near Fort Lauderdale beach is slated to open by January, targeting a younger gay clientele with what Gray describes as "edgy" details. A new white-and-grey decor with bright bougainvillea flowers aims to be "sleek, stylish and sexy." And guests can stay high-tech, with an i-Pad and cell phone available at check-in.

Rates likely will start at $99 a night, with suites at about $289 at the peak of the winter season, appealing to value-conscious travelers, Gray said.

"This is a new era for us, offering the gay traveler one stop-shopping," said Gray.

Hotel analysts say the new concept is promising. It's similar to the idea behind the successful Axel Hotel Group that operates full-service, gay and "hetero-friendly" hotels in Barcelona, Berlin and Buenos Aires, said David Paisley, a director at gay travel marketing specialists Community Marketing.

While older gays tended to enjoy exclusively gay hotels, younger gays -- growing up in more accepting societies -- are more open to modern boutique properties that cater to gays but also are open to everyone, Paisley said from his San Francisco office.

Businesswise, expansion also seems smart, said hotel consultant Scott Brush of Brush & Co. in Miami. Many hotels with 20 rooms or less are struggling nowadays, as the slow economy keeps room rates down but costs keep climbing for insurance, taxes, utilities, marketing and other basics. Adding rooms can spread some costs over a larger base. And opening a restaurant, bar, gym and other amenities can offer new sources of revenue for a hotel beyond just rooms, Brush said.

"A full-service hotel with 62 rooms can work. It really depends on the marketing ability of whoever is running the property," Brush said. "And Richard Gray has a good track-record."

Gray's project has a financing edge too. He's running the venture for an investor group, Sand Homes LLC of Fort Lauderdale led by Sweden's Par Sanda. Sand Homes bought the three adjacent hotels -- Royal Palms, MonteCarlo and Three Palms -- at a discount this year after the market slumped. It is pumping more than $8 million into the purchase and remodeling, with little debt on the deal, said Gray.

"That gives them a running start right there," said hotel consultant Gregory Bohan, who runs the Florida practice for Pinnacle Advisory Group. Hotels with big debt burdens have been hardest hit by the travel slowdown, trying to make both loan payments and cover hotel operating costs. With little debt, Royal Palms will be better poised to succeed, even with rates starting at $99 a night, Bohan said.

Sand Homes also is buying other Fort Lauderdale properties and mulling other tourism ventures in the area, though not necessarily gay hotels, Gray confirmed.

Challenges remain for the new hotel, of course. Bohan said it's hard to profit on a small spa with just a few treatment rooms. Costs for professionals in massage, manicures and the like can eat up revenues, he said. Gray also concedes some older guests may not like a larger, "hetero-friendly" hotel.

But consultants say Gray's groundwork in helping put Fort Lauderdale on the map as a top gay tourism destination and in building a brand-name for his upscale Royal Palms since 1991 can pay off.

While gay tourism is roughly estimated at 5 percent of travel nationwide, it accounts for about 10 percent of tourism in Broward County, the Greater Fort Lauderdale Convention and Visitors Bureau estimates. Fort Lauderdale last year ranked No. 7 nationwide among places gays visited and stayed in a hotel, according to Community Marketing's latest annual gay travel survey. And Royal Palms has earned kudos for service and attention to detail, including orchids on the bed and in the bathroom, Paisley said.

Gray sold Royal Palms,at 2901 Terramar St.,to two former guests in 2008 and was working as a consultant when Sand Homes approached him. Now, he's busy with construction, landscaping and planning, envisioning locals and tourists, gays and others sharing a drink or meal at the full-service resort this winter season.

"Hopefully," Gray said, thinking ahead to yet another innovation in gay tourism, "this can open the door for us to start up in other cities."

Doreen Hemlock can be reached at [email protected] or 305-810-5009.

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