Aug. 12--Boca Resorts Inc. has finally ditched its hockey sticks. The odd collection of resort hotels, ice arenas and professional sports that started life as Florida Panthers Holdings Inc., became a pure lodging company on July 25 when it closed on the $101 million sale of the Panthers to a group of South Florida fans. 

But while the sale resolved the company's schizoid business mix, questions remain about what lies ahead. Is management content to operate five hotels? Does it want to grow? Or, as some have speculated, was the hockey team sale the prelude to a sale of Boca Resorts to another firm? 

With hospitality shares in a three-year slump, Boca Resorts has been short of the inexpensive stock currency it used in 1996 and 1997 to buy its stable of Florida hotels. Instead it is adding amenities to the 963-room Boca Raton Resort & Club, its grand flagship property. 

Some lodging analysts wonder if the $300 million being poured into the legendary resort is merely gilding the lily. But Vice Chairman and President Richard C. Rochon said after looking at the alternatives there was nothing that promised a better return on investment. 

Boca Resorts still hopes to acquire up to 25 signature hotels with unique market niches and room for either cost-cutting or new development, Rochon said. But not if it means issuing additional equity at low prices that would dilute profits available to current shareholders. 

"Growth is very important, but profitability is equally important, if not more important," Rochon said. 

That focus on profits is clear in the path blazed over the past year. By selling the Panthers, Boca Resorts got rid of its biggest drain on profits. And by divesting the Arizona Biltmore Hotel in December for $335 million, it liquidated a misfit property, its only hotel outside Florida. 

But investors have been waiting for more. They were thrilled with the possibilities in late 1996 when the company, then a hockey-only pet project of Chairman H. Wayne Huizenga, began to buy deluxe waterfront hotels in rapid succession. 

The initial purchase of Fort Lauderdale's Hyatt Regency Pier 66 Resort & Marina, with 380 rooms, and the Bahia Mar Beach Resort & Yachting Center, with 297 rooms, sent the stock price into orbit as investors piled on to what they hoped was another Huizenga gravy train. 

Shares that traded at $10 in the fall of 1996 hit $32 by early 1997. Pumped up by the buying power of the stock, Huizenga in March 1997 engineered a deal to buy the fabled Boca Raton Resort for $317.8 million, a price that included debt assumption and stock, but no cash. 

Boca Resorts later acquired the Registry Resort and the Edgewater Beach Hotel, both in Naples, rounding out its Florida holdings. 

In buying the Boca Resort, Huizenga got an irreplaceable property that was not realizing its potential. Earnings before interest, deprecation, amortization and taxes were $26 million in 1997, and company officials said they have improved it since to more than $50 million a year. 

The fast-growing company then began looking for a West Coast equivalent, so they could retain lucrative business meetings that rotate to different parts of the country, and in late 1997 announced it would purchase the Frank Lloyd Wright-style Arizona Biltmore for $288 million. 

By mid-1998, however, the grand strategy of buying trophy hotels with stock hit a wall: investor fears of a downturn in the lodging sector. Shares fell from the mid-$20s to less than $10, which put them below the book value of Boca Resorts' assets, currently $12.25 a share. 

There was never a possibility of a hostile takeover, however. Although Huizenga owns 15 percent of the Class A common shares, he owns all 225,000 Class B shares. Issued at the insistence of the National Hockey League, which wanted Huizenga to have sole control, each Class B share carries 10,000 votes in stockholder matters. 

With the stock price suffering, the days of deal-making were waning. So the dealmakers pulled in their horns and focused on internal growth. And the lion's share of the resources went to the Boca Raton Resort. 

Boca Resorts began $300 million of upgrades that included a golf course renovation, a 140,000-square-foot conference building and a new tennis/fitness center. Workmen are now building a 30,000-square-foot health spa, a 114-room wing on the Intracoastal Waterway, and a two-story golf club house. 

Rochon said the prime motive for upgrading The Boca is return on capital. The $15 million spa may add another $6 million a year to cash flow, by bumping up occupancy rates a few points. The $35 million Marina wing could mean another $7 million of cash annually, he said. 

The renovations also address flaws in the original hotel design. 

While its Moorish interior detail is priceless, the 1926 Cloisters building is anachronistic. Modeled after a Spanish castle, it turns its back on the water. Its long, narrow approach makes parking a challenge. Many rooms are small. Guests can have a hard time finding their way around. 

"It was inefficiently laid out when it was built," Rochon said. 

Boca Resorts is trying to fix some of those problems as it expands by pushing the recreation functions to the front and the meeting space to the rear. About 70 percent of the hotel's guests are part of a group, with the remaining 30 percent there for a vacation. 

Meeting planners say there isn't much danger The Boca will lose business to new competitors, such as the 1,000-room Westin Diplomat Resort & Spa, scheduled to open in January. "One of the drawbacks for The Diplomat is the area that it is in," said Boca Raton meeting planner Paul Naylor. "Outside its four walls, Boca Raton offers a lot more than Hallandale does in terms of restaurants, activities and atmosphere." 

Does the Boca Resort need to add amenities to keep up with the Joneses? Forget about it, says Naylor. "They are the Joneses,"' he said. 

But reinforcing the Boca may be leaving the company's other hotels behind. 

In a recent focus group conducted by the Greater Fort Lauderdale Convention & Visitors Bureau, meeting planners in New York said the Fort Lauderdale area's most glaring weakness is a lack of top-flight four- and five-star hotels to host corporate meetings. 

While Marriott International upgraded its Harbor Beach Resort & Spa recently at a cost of $38 million, the nearby Bahia Mar and Pier 66 resorts have not kept pace. There is a plan to redo Bahia Mar, but not soon. "We are a long, long, long way from doing anything," Rochon said. 

Rebuilding the resort properly would cost hundreds of millions of dollars, Rochon estimated. For the moment, Boca Resorts has earmarked about $15 million to redo the 330-slip marina, starting next May. Annual revenues for Bahia Mar are between $20 million and $25 million. 

Chase Burritt, a hospitality partner at Ernst & Young, said the company is mining its richest vein of ore. "Boca Resorts is predominantly The Boca," he said. "They've probably been doing the same occupancy for the past 20 years. It's a very competitive hotel in the world resort market." 

Burritt said the 298-acre resort is extremely secure in its market share because of its location, craftsmanship and prime waterfront land. "You just can't build another Boca Raton Resort & Club," he said. 

Which raises the question of whether the company is grooming The Boca and its other properties for sale. Several firms might be logical buyers, including KSL Recreation Group, which owns the Doral Golf Resort & Spa near Miami, and Rockresorts, owner of the Cheeca Lodge in Islamorada. 

They have portfolios that fit strategically with Boca Resorts, and deep pockets. KSL is backed by leveraged-buyout firm Kohlberg Kravis Roberts while Rockresorts is a unit of Olympus Real Estate Partners. Efforts to reach officials from the two resorts were unsuccessful. 

Hotels in leisure markets such as those favored by Boca Resorts, KSL and Rockresorts have held up OK in the current travel downturn, which has primarily hit business travel. But lodging stocks may have a way to go before they come back into favor again. 

Last week, Boca Resorts reported a fourth-quarter profit of $3.3 million, down from $7.8 million for the same quarter a year ago. The stock moved little on the news, closing up 20 cents at $13.10 a share. 

It will take more than that to jump-start the stalled lodging empire that Boca Resorts once hoped to build. 

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