October 12, 2010 --Years of slow tourism are taking a severe toll on South Florida's small inns, which lack the resources of bigger hotels to weather a prolonged slump.

Some mom-and-pop inns have closed, and others are struggling to survive. Investors with cash to spare are scooping up deals and in some cases, assembling inns into groups to boost chances for profit.

Mick Ball, who co-owns the 31-room Tropi Rock Resort near Fort Lauderdale beach, knows the problems well. Last year, when travel plunged, he and wife Patty blew through the rainy-day fund they'd accumulated operating their inn since 2002. This year, the couple raided savings to keep the inn open.

"In the eight years I've been here, it's only gotten worse," Ball said, estimating losses at his small hotel at about $80,000 last year and likely in that range this year too.

The problem, innkeepers say, is that costs keep rising -- insurance, utilities, taxes, food, gas and labor, to name a few. But revenues are down, because guest arrivals are off and room rates down even further. : What's more, large hotels have slashed prices so deeply that they now present real competition for inns.

Some visitors will play slightly more to stay in a full-service hotel that they might never have imagined they could afford, rather than check into a inn with more limited amenities, said hotel consultant Greg Bohan of Pinnacle Advisory Group and a former owner of a bed-and-breakfast in Vermont.

"People used to think it was a premium service to know the innkeeper and sit in the living room. The younger generation is not necessarily seeing the value in that. They want more the glitz and glamour of something like the W," Bohan said. "It's hard to be trendy when you have 12 rooms."

Hardest hit are small inns that bought their properties during the real estate boom and carry hefty debt burdens. Some have closed or sold out. Inns with little or no mortgage are faring better, though still face tough challenges, said hotel analyst consultant Scott Brush of Brush & Co. in Miami.

To brave the slump, many innkeepers are getting creative to cut costs, boost marketing and improve personalized service. Elaine Fitzgerald, who owns a handful of vacation cottages in Pompano Beach, has turned to keyless entry systems for her rooms, so she doesn't need staff round-the-clock to welcome arrivals.

"I don't have to be out here holding keys at midnight, if their flights are late," said Fitzgerald during a tour of her properties near the beach, some with lush landscaping and enclosed porches. "That saves money."

She also become aggressive in marketing. A former publicist, she writes her own press releases and organizes events to showcase the inns she promotes jointly as Beach Vacation Rentals. A recent release suggested renting her apartments with full kitchens as a way for travelers to cut costs on meals out.

Still, many costs can't be avoided, including taxes. Tropi Rock's Ball said his property taxes have spiked in recent years and now run about $70,000 annually, or about 14 percent of his shrunken revenues this year. Nor can he turn off the electricity or TV service. Ball recently wrote Comcast to protest a 12 percent rate increase to more than $11,000 a year for cable TV services that go unused when rooms are idle.

"And you can't get by offering just basic cable TV anymore. People want wi-fi too. There's an increase in required amenities," said hotel analyst Brush. "So, you need to make money on more than rooms."

Indeed, costs are so high that a handful of inns on Fort Lauderdale beach have closed or sold, including Blue Dolphin, Monte Carlo, Seagate and Three Palms. An investor group has bought up some at discount prices and linked two into an expansion of the gay-oriented Royal Palms guest house. That hotel will grow from 12 to 62 rooms, adding a bar, cafe, gym and spa to boost revenue sources "at a time when customers are not willing to pay much for rooms," said operations chief Richard Gray.

The big question is when tourism may rebound enough to boost room rates and help the inns. South Florida tourism is recovering but slowly. In Greater Fort Lauderdale, hotel bed tax collections fell 17 percent in the 2009 budget year, rose 1.5 percent in the just-ended budget year and could rise 3 percent this year -- still far off their peaks. the Convention and Visitors Bureau said.

Innkeeper Ball is not sure how long he and wife Patty can afford to keep Tropi Rock open. They rented rooms this summer at their lowest rates ever, as cheap as $56 a night plus tax, but still had vacancies. They've already let go one housekeeper and now unplug refrigerators in idle rooms among measures to trim expenses. They're working longer hours seven days a week, even cleaning rooms, as costs climb.

"If this drags on another year or more, things could get real dicey," said Ball, 60, who had envisioned a more bucolic life running a small inn. "You can't afford to keep taking money out of your retirement savings."

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

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