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News for the Hospitality Executive

New Owner of  San Antonio's Downtown Fairmount Hotel
 Contracts with the Lancaster Group for
 Management, Renovation
By Melissa S. Monroe, San Antonio Express-News
Knight Ridder/Tribune Business News

Oct. 15, 2004 - The funeral home business has a lot in common with the hotel business. It's about preserving memories. It's a 24-hour, seven-day a week job. And, it's all about customer service.

That's according to Robert "Dick" Tips, the new owner of the downtown Fairmount hotel and a part of the family that has owned Mission Park Funeral Chapels & Cemeteries since 1907.

The 98-year-old Fairmount was formerly where Rivercenter mall sits, before its dramatic move in 1985. It made international headlines as the heaviest building to be moved through city streets. Since then, the hotel has had many owners and along the way lost its luster.

So why does a successful businessman who's busy expanding his funeral home business pour millions of dollars to renovate a dated, Victorian-style hotel without any investors? Along with that, why take the risk that fickle travelers will pay top dollar to stay in one of the 37 rooms?

"Without sounding pretentious," Tips said, "it's an incredible property and it was being neglected. It's about doing something good for the community." It's also about a quirky way to market funeral services with the hotel. Tips will invite funeral directors to stay at the hotel for free, so he can introduce them to his MTM Life Insurance company that sells estate planning and preplanned funeral packages.

Tips remembers when the Fairmount used to be a happening place and a hotel that had wonderful parties in the mid-1980s, compared to its early days when it was used for retail businesses, a permanent residence and a traveler's hotel.

After visiting the Fairmount for a New Year's Eve party in 2001, Tips noticed that it was in need of some renovation. He was living at a different downtown hotel that year, since his country home burned down while he was vacationing in New York.

Soon after the party, he bought the hotel and finally closed on the deal in June of this year. He didn't disclose the price tag of the South Alamo street property.

To help bring back Fairmount's charm, Tips has brought in former employees. Lainey Berkus of the CE Group is ecstatic about being involved again to help market the property like she did in the late 1980s.

The Houston-based Lancaster Group, which specializes in managing small luxury properties and oversaw the Fairmount from late 1986 to 1990, has signed on again as the hotel's management company.

To top it off, the couple that has designed many of Mission Park's funeral homes -- Val and Susan Dunis -- will help design the hotel.

Tips' image for the hotel includes transforming all the suites into elegant European-style rooms where they are no longer numbers, but names such as Monet, Platinum and Rey Feo. Tips is this year's El Rey Feo, a yearlong title and tradition of Fiesta.

Amenities include flat-screen televisions that drop down from the ceiling, phones in the bathroom, towel warmers, and 24-karat gold Italian glass mosaics in some of the rooms. Each of the three floors would have its own concierge service, and Tips is talking with national restaurant chains to give the dated eatery on the first floor a new look.

Although the hotel needs a face-lift, it hasn't been doing that badly. For the second quarter of this year, locally based Source Strategies reported that the property had estimated average daily room rates of $174, despite occupancy being just 46.7 percent. Its revenue per room, a measure of a hotel's health, was $81.36.

Todd Walker of Source Strategies said for a hotel that size, it should have room revenues in the $120 range. He cautioned that spending a lot of money on rooms doesn't mean success.

"But with the Lancaster Group operating the hotel, I don't imagine the spending will be out of control," Walker said. He added that the previous manager, Wyndham, wasn't used to running a small property.

Source Strategies President Bruce Walker said one example of a hotel overspending is The Havana Riverwalk Inn, which spent about $180,000 on each of its 28 rooms when it was advised to spend about $80,00 to $90,000 to ensure profitability.

Walker said the Fairmount should probably stay around the $100,000 to $125,000 range for each of its rooms and could command rates around $185 a night.

Lancaster CEO Bill Sharman said small properties need the basic ingredients of uniqueness, personal service, marketing and repeat clientele.

By the time renovations are complete by the third quarter of next year, Sharman said, he's confident the hotel will be able to reach the numbers it did 15 years ago.

"It was one of the top 20 properties in the state in revenue per room," Sharman said. "Occupancy was running about 70 to 75 percent and we had $160 to $170 in room rates." Though the new owner is not in the hotel business, Sharman said, what's significant about Tips is that he is well traveled and has been in small and large properties to know what works.

Berkus said what's even more important about Tips is that he's a local personality and has passion for this project, compared to previous owners who were not from San Antonio.

"It's only going to be a bigger and better experience the second time around," Berkus said.

But being the businessman that Tips is, he envisions that the preplanned funeral packages that he offers will soon include a free weekend stay at the Fairmount.

"We will bring more people to San Antonio (with this project)," Tips said. "I'm not looking to the hotel industry as a competitor, but they are my neighbors. I practice that same philosophy in the funeral home business. (The Fairmount) will enhance the hospitality industry."

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