|By Aaron Sharockman, St. Petersburg Times, Fla.|
Knight Ridder/Tribune Business News
May 6, 2004 - PALM HARBOR, Fla. -- The Westin Innisbrook Resort's golf courses are immaculate, so much so that PGA Tour superstar Ernie Els has called the links there the "best we play in Florida."
Off the pristine greens, however, the resort's finances are wilting.
Faced with losses totaling $53-million since 1999 -- $11.4-million last year alone -- resort owners are seeking to hand over Innisbrook instead of repaying $102-million in outstanding loans.
Golf resorts nationwide have struggled in recent years, experts say, but Innisbrook's problems are especially bad.
According to reports filed last month with the Securities and Exchange Commission, Tampa Bay's best-known golf resort has never recovered from a corporate travel washout following Sept. 11, 2001.
"There has been poor performance over the last couple of years," said Bob Geimer, the asset manager for Golf Host Resorts Inc., the group that owns Innisbrook. "Primarily, the biggest thing that has hurt Innisbrook is the overall hospitality and meeting industry which experienced sharp downturns starting in 2001."
Since October 2001, Golf Host, which employs 750 people at the resort, has failed to make its monthly payments on Innisbrook's mortgage. With penalties and interest, that bill stands now at more than $102-million. Golf Host is negotiating with the lenders, Golf Trust of America, to take over the resort in lieu of collecting any of the outstanding debt.
Golf Trust of America had planned on seizing ownership of Innisbrook by the end of 2003 but pushed back plans because of continued poor revenue projections. It's unclear when the resort might change hands, but both sides say an agreement is close.
Last year, the resort's primary food vendor demanded cash on delivery, according to the company's SEC filing. On any given night, most of its rooms sat empty. And Innisbrook needed $1.2-million in cash advances to stay afloat.
Now it's on the verge of changing hands.
"When you only have a couple avenues to attract business, and any one of those avenues is strained or closed down, you're in trouble," said Tom Manno, who managed Innisbrook from 1999 to 2001 and now is general manager at Doral Resort in Miami. "Without putting capital into the place, there's not a lot you can do."
With four renowned courses and lavish practice facilities, Innisbrook is a dream for most Sunday hackers, though it is not open for public play. The Island track is ranked among the nation's best resort courses and the rolling Copperhead course is a reprieve from most of the state's flat and wide-open layouts.
There also are 11 tennis courts and six swimming pools. The resort's 938 condos are privately owned, but about 600 can be rented by resort guests. Add in 65,000 square feet of meeting space, and Innisbrook is ideal for a corporate get-together.
But for the past three years, travelers have stayed away.
Room bookings have fallen more than 40 percent since 2000. Last year, six in 10 rooms were vacant. By comparison, four resorts around the country that Innisbrook identified as competitors had an average occupancy rate of 55 percent last year, according to SEC filings.
The hardest hit is the loss of Innisbrook's company and group patrons. Historically more than 70 percent of total guests, large corporate accounts have sharply fallen in the past three years. In 2001, corporate clients booked nearly 80,000 nights in Innisbrook condos. Last year, that number was down to 65,000.
That 19 percent drop translates into more than $7-million lost in revenues.
While Innisbrook's parent company traces its problems to a general economic downturn, Manno said a series of proposed renovations could have diminished the resort's financial misfortune. When he was hired to run Innisbrook in 1999, the resort was scheduling $30-million of improvements, he said. Among the changes, Innisbrook planned to add spa facilities, more restaurants and a concourse of retail shops.
The focus would have remained the first-class golf, Manno said, but there also would have been other options for guests. The changes could have attracted a whole new audience.
"They knew what their deficiencies were," Manno said. "We literally had the plans in hand, but we just couldn't get it funded."
In contrast, Manno said, Doral's 150,000-square-foot spa facility and public golf courses have lessened the need for corporate business to carry the full financial load.
"We have other business units that helped us along the way," Manno said. "We've repositioned ourself. Doral has always been known as a golf Mecca. Now, we've added into the spa, and we've seen some significant play off of that."
Tom Dempsey, the owner of Saddlebrook Resort, said business at his Wesley Chapel resort has rebounded after troubles following the terrorist attacks. Saddlebrook, which has two golf courses, a 7,000-square-foot spa and a 3,300-square-foot fitness center, listed revenues that equal Innisbrook in 2003, according to SEC filings.
But in the last five years, the resort business at Saddlebrook has recorded $10-million in profits, while Innisbrook posted losses of more than $50-million.
So far this year, Dempsey said, his business is better than ever.
"We're probably having the best first quarter in our history," Dempsey said. "The meeting business has picked back up. It's not back to normal. But it's getting better."
Nationwide, the lodging industry is improving, according to statistics from Smith Travel Research, a group that monitors the hotel business.
Hotel occupancy was up 4.4 percent from the first three months of last year. Through March 2004, industry occupancy reached 56.8 percent, according to the research group.
More golfers are out on the course as well, according to statistics from the National Golf Foundation. Through March, the number of rounds nationwide increased 5.3 percent compared to last year, the group reported.
Innisbrook has initiated a new marketing approach aimed at attracting more customers. Along with a new Web site, www.golfinnisbrookresort.com, the resort is specifically targeting golfers to emphasize the resort's most valuable business.
Golf Host also has continued to make significant investments in the 845-acre property, Geimer said.
They just haven't netted much.
"Fundamentally, the marketplace has turned around," Saddlebrook's Dempsey said. "Corporate America is traveling again. They're very selective where they go, however."
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(c) 2004, St. Petersburg Times, Fla. Distributed by Knight Ridder/Tribune Business News.