Takeover starts new chapter for Florida's Innisbrook

For residents of the Westin Innisbrook Resort, the past five years have brought one piece of bad news after another.

Resort losses totalling $53-million.

Large debts.

Lots of empty hotel rooms.

"You don't like to see all this stuff going on," said condominium owner Richard Ferreira, 64. "I know some folks are extremely unhappy. The rest are disappointed, as I am, that things haven't worked out the way we had hoped."

But there's optimism still at Pinellas County's most distinctive golf destination. A South Carolina company took over the resort last month from a previous owner saddled with more than $100-million in loans it could not repay.

Now, with a change at the top along with some newfound financial elbow room, most at Innisbrook feel the worst has passed.

"We want to remove the blanket that has darkened the skies for this resort for the past year or two," Golf Trust CEO Bradley Blair said in his first public remarks since his company took over Innisbrook on July 15. "I want to add value . . . and there are opportunities to be realized."

But first, Golf Trust must climb out of a hole dug by the resort's previous owner, Golf Host Resorts. Last year, that company lost $11.4-million operating the 845-acre property off U.S. 19 and needed a $1.2-million cash advance to stay afloat.

On any given night, more than half of the hotel's 600 or so hotel rooms were empty, and Innisbrook's primary food vendor demanded cash on delivery.

On top of that, Golf Host failed to make its mortgage payments, which were financed through Golf Trust. With penalties and interest, the bill stood at more than $102-million.

Rather than foreclose on the resort, Blair said, both companies reached a settlement last month. In exchange for forgiveness on the loan, Golf Host handed over Innisbrook. For the transaction, both sides set the resort's value at $44.2-million.

As part of the settlement, Westin will continue to manage the resort, and Troon Golf will continue to manage the golf course properties.

The change in ownership excites the resort's general manager, Jim McGlashan, who said the resort now has better financial stewards.

"Come the end of December, you will find a different story," said McGlashan, a Westin employee who has run the resort for nearly a year. "If everything that we see happens, you'll see the start of the recovery. In my 31 years in this business, given our starting point, Innisbrook has excellent potential."

A major addition is already on the horizon and in time for the start of the resort's peak season. By Sept. 30 all of the hotel rooms are scheduled to include high-speed Internet connections, McGlashan said.

A standard amenity at most upscale hotels, the computer connections were necessary to stay competitive.

"A lot of folks won't even book without it," said McGlashan, 54.

The Web isn't everything, though.

The resort could use some new selling points, McGlashan said, chiefly, a luxury spa to attract non-golfers.

Innisbrook had planned to add a $7-million fitness center and spa in 1999, but the idea fizzled after the resort's old owners were unable to finance the deal. McGlashan said he asked Blair to make the investment when the CEO visited the resort in late July. Blair said a spa isn't out of the question.

"We would evaluate it," said Blair, 60, who earned a business degree from Indiana University and a law degree from the University of North Carolina. "But I'm not confident we would move immediately to do something on that front. Whether under our watch it could get done is a challenge."

That's because Golf Trust doesn't plan to hang around that long. A publicly traded golf course investment firm that formed in 1996, Golf Trust is now in the process of selling its remaining properties, including Innisbrook, and going out of business.

The company once owned interests in 47 golf courses in 17 states, including Innisbrook's four layouts. Now, besides Innisbrook, only five courses remain. Golf Trust had hoped to sell all of its properties by the end of 2005, but Blair now says that timetable is "aggressive." Either way, Innisbrook, the company's biggest and most complex asset, will be sold again.

"We have a longer view, though," Blair said. "We'd like to see the revenues start to build back up. We would like to see more focus on the departments that have the highest profit within Innisbrook, golf and food and beverage. You've still got to have a head in the bed, but it's about the type of the person you put in the bed."

Ferreira, a condo owner who helped develop Innisbrook more than 30 years ago, said the transaction bolsters the resort's potential even if another change is imminent. For Golf Trust to recoup its original investment, the company needs Innisbrook to become profitable.

"With the base that's here, we think that there are positive days ahead," said Ferreira, who also ran the resort from 1985 to 1997.

Condominium association president Frank Wreath welcomes the change.

"We've been waiting for several years for it," said Wreath, 65. "The resort is kind of on an even keel right now. We're seeing a nice change in attitude. The place needs to be busier. With the new owners, they have nothing but the best for Innisbrook at heart."

And already, business is starting to rebound, McGlashan said, despite a sub-par start to the year.

Through March, Innisbrook's net income sagged 24 percent, or $331,000, below last year's levels, according to documents recently filed with the U.S. Securities and Exchange Commission. During the same time, bookings sank 3.6 percent and revenues declined 2.1 percent compared with those of 2003.

Innisbrook lost $1-million in March alone when a longstanding customer canceled its conference at the resort. That client has rescheduled its conference for this fall, McGlashan said.

The resort's second-quarter earnings report is not yet available, but resort officials said bookings later this fall and in the first quarter of next year are ahead of the previous year's pace. Blair said the expectations are relatively encouraging. McGlashan said Innisbrook expects 10,000 more leisure guests in 2004.

"We need to put (the financial difficulties) behind us," McGlashan said. "Facts are facts, but I'm glad as an operator that I can concentrate on the people. Once it's behind us, it's really full speed ahead. Ownership is committed to moving forward, and so are we."

And to boost the turnaround, Innisbrook has two big-ticket events already scheduled before the end of this year.

The PGA Tour returns the last weekend in October for the Chrysler Championship, the final full-field tournament of the 2004 season. In preparation for the event, resort workers have added trees and a new tee box to holes at the Copperhead course, one of Innisbrook's four layouts.

Last year, the pros gave Innisbrook an "A" for the week, and so far the world's No. 2 player, Ernie Els, and British Open champion Todd Hamilton have already committed for the 2004 tournament.

In November, Innisbrook will host a celebrity team golf tournament that pits American stars against their European counterparts. A contract for the U.S.-Europe Celebrity Championship is in place, but so far the only star confirmed is U.S. playing captain Samuel L. Jackson.

The celebrity event could attract a whole new type of customer, McGlashan said.

"It can be huge," he said. "A lot of people who aren't all that interested in golf will be captivated by watching Samuel L. Jackson golf."

The survival of Innisbrook is vital to the North Pinellas landscape, according to Pinellas County Commission Chairwoman Susan Latvala.

"They have probably the finest golf courses in the county," Latvala said. "They bring tourists here from all over the country. They have such an impeccable reputation. It's in the county's best interest to have them in a strong financial position so that they can remain viable."

Blair said he understands what Golf Trust is walking into. He's heard comments like Ferreira's that resort members have been disappointed.

He said some feel used. Under Golf Trust's watch, Blair hopes perceptions, along with the resort's balance sheet, change.

"I can feel their pain. I can see their pain," he said. "One thing I understand, they are our partners in the resort. As our well being goes, so does theirs. I don't have all the answers; they don't have all the answers, but together, we have enough intelligence in this crowd."

Source: St. Petersburg Times (Florida)