| By Cara Buckley, The Miami Herald
Knight Ridder/Tribune Business News Jan. 13--Five years after netting the deal, eight years after the 1,000-day black tourist boycott of Miami was lifted, R. Donahue Peebles has finally made good on his promise to build a black-owned hotel in Miami Beach. "The opening of our hotel allows Miami-Dade to say to the African-American
community, locally and nationally, that a promise was made and a promise
is being kept," said Peebles, 41, president of Peebles Atlantic Development
Corp. and majority owner of the Royal Palm Crowne Plaza.
But despite mixed success, Peebles, his voice booming, swagger intact, insists that the Royal Palm will be a winner. "This hotel is a cornerstone and a foundation," he said. "It's a great statement and great accomplishment. There should be more hotels like mine." Gleaming in fresh coats of white and buttercup yellow paint, with chunky Art Deco nuances poking out here and there, the Royal Palm blends seamlessly into the Beach's parade of refurbished hotels. Made up of two Art Deco hotels, the old Royal Palm and the Shorecrest, the new 422-room Royal Palm sprawls between the beachfront and Collins Avenue just north of 15th Street, yet another hotel in SoBe's hotel row. But deeper currents make this hotel one of a kind. The hotel's construction was pivotal in a 20-point plan, drafted and agreed upon by activists, city officials and lodging executives, that ended the black tourist boycott of Miami in 1993. The protest was triggered by city officials' decision to not meet with visiting South African leader Nelson Mandela in 1990. Cuban-American leaders were angered by Mandela's support of Fidel Castro, and Jewish leaders were upset by his support of Yasser Arafat and the Palestine Liberation Organization. The boycott badly tarnished Miami's reputation and cost the county an estimated $20 million to $50 million in lost convention business and tourist dollars. But the boycott also yielded good. One example was the creation of the Visitor Industry Council, whose purpose is to expand African-American participation in the county's tourism industry through mentorship programs and scholarships. Another was the Royal Palm, the initiative's crown jewel. "This was the prize," said Stu Blumberg, president of the Greater Miami & the Beaches Hotel Association. "It was the last one to be finished, but it was the first one on the list." The city of Miami Beach provided a $10 million loan to build the hotel, an amount Peebles said was gobbled up by unforeseen budget increases. He has 25 years to pay it back, on top of $490,000 in annual rent, plus 20 percent of any gross over $17 million each year for the next decade. "When you look at the net impact," said Peebles, "the Royal Palm has not been subsidized by the city." City of Miami Beach officials said they fulfilled their side of the bargain, and said they wish the hotel had opened sooner. "It's been a construction site for much longer than anyone anticipated," City Manager Jorge Gonzalez said. "He bought the property `as is.' If there were unforeseen conditions within that, those become the responsibility of the buying party, Peebles." In 1998, Peebles boasted that he would build about 10,000 rooms in 20 hotels coast-to-coast within five years. Two hotels resulted -- a Marriott Courtyard in Washington, D.C., and now the Royal Palm -- but not the others, including a calamitous convention-center hotel deal in Broward County and a hotel at the New Orleans International Airport. Peebles said his focus is back on real-estate development, a business he was schooled in by his mother, Yvonne Poole, whose real-estate appraisal company he joined in Washington, D.C. Poole also introduced her son to a crucial ally, former Washington Mayor Marion Barry, who appointed Peebles, then 23, to a powerful property tax assessment board. A skilled orator and dogged debater, Peebles went on to represent, successfully, commercial property owners, as well as himself. The call for a black-owned hotel drew him to Miami Beach. His successful bid on the high-profile project stimulated his appetite for the hotel business. The city required that a quarter of the hotel's executives be African American, a figure that Peebles said he has surpassed. The hotel will target groups and leisure travelers from the Northeast, according to its manager, Jesse Stewart. Industry insiders say the hotel will easily draw a good chunk of the African-American tourism market, worth $36 billion last year. "It's a good flag, a great address, an upscale brand that has a loyal following certainly within the corporate market," said Scott Berman, a hospitality analyst. "But recession or no recession, the first year of any hotel operation is the most difficult." Unnerved by the economy's straits, hotel lenders have gone into hiding, and financing has all but dried up. According to Standard & Poor's Corp., delinquency rates on hotels' mortgage payments doubled to 3.8 percent in the fourth quarter of last year. In Florida, 13 percent of hotel loans with collateral were delinquent. Peebles said he'll be able to service the hotel's debt, about $50 million of the total $84 million price tag, adding up to a debt-to-cost ratio of about 60 percent. "That debt-to-cost ratio is good," said Chase Burritt, an analyst with Ernst & Young. "It means a hotel can withstand the downturns like we're having now." And Peebles' lenders said they are resolute. "Despite the negative impact that the terrorist attacks had on the lodging industry, we feel that this property in particular has a very bright future ahead of it," said Michael Leonard, senior vice president of real-estate lending for Union Planters Bank. "Our support for Don and the project is unwavering." Peebles said he expects to gross $30 million the first year, and said that despite the economic climate, average opening rates for his rooms will approach $200 a night. Beachfront cabanas will fetch the most, with rack rates ranging from $550 in the summer to $659 during the peak season. The Royal Palm has teamed up with the 800-room Loews to form a 1,222-room block that will go head-to-head with the 1,206-room Fontainebleau Hilton for large meetings. Peebles said his hotel's and the Loews' edge will be their location in the heart of South Beach, a two-block walk to the million-square-foot Miami Beach Convention Center. African Americans in the tourism industry said the hotel's history and luxury billing will serve as a beacon. "The bottom line is it's breaking the barriers of an exclusive club," said Andy Ingraham, president of Horizons Marketing Group and head of the National Association of Black Hotel Owners and Developers. "In addition to being in a high-traffic area, it's one of the first joint ventures between a major hotel company and an African-American company. It's a new frontier." According to Ingraham, who tracks African American employment in the hotel industry, black workers hold between 30 percent and 35 percent of hotel entry-level positions, but there are fewer than 60 black executives in the nation's 30,000 full-service hotels. Fewer still are owners. Just 36 of the nation's 80,000 limited- and full-service hotels are black-owned, Ingraham found, along with about 40 smaller inns. "For African Americans, owning in the hotel industry has been an elusive dream," he said. "The largest impediment has been access to capital." Times are changing, slowly. Robert L. Johnson, founder and chief executive officer of Black Entertainment Television, owns nine hotels within his RLJ Development group. Former National Football League player Donnell Thompson's hospitality group owns six hotels and is developing a seventh. But Peebles is the first African American to build an $84 million hotel. And all eyes will be on him. "The proof will be in the pudding whether he can deliver a quality product," said Gerry Fernandez, president of the Providence, R.I.-based MultiCultural Foodservice & Hospitality Alliance. "If he is successful, others will point and say, `I can do that.' " -----To see more of The Miami Herald, or to subscribe to the newspaper, go to http://www.herald.com (c) 2002, The Miami Herald. Distributed by Knight Ridder/Tribune Business News. UPC, HLT, |
